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NZIER says QSBO shows economic recovery is stalling, warns RBNZ not to stifle recovery

Posted in News Updated
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The New Zealand Institute of Economic Research's Quarterly Survey of Business Opinion, which is closely watched by the Reserve Bank, shows signs the economy's recovery stalled in the June quarter.

"Of concern is a renewed weakness in manufacturing, construction, and investment intentions. Small firms – which tend to lead the economic cycle – experienced deteriorating conditions in the June 2010 quarter," NZIER said.

(Updated with ASB economist Christina Leung's view that the RBNZ will keep hiking; JP Morgan economist Helen Kevans' view the RBNZ will still hike the OCR to 3.75% by the end of 2010 despite the weak QSBO, BNZ economist Stephen Toplis' view that the RBNZ may pause hikes in 2011, Westpac's view that rate hikes are still on)

“Firms are less optimistic as the economy has yet again failed to deliver on expectations of a strong recovery. Seasonally adjusted business confidence eased from 36% to 28%. The recovery may be stalling. The outlook is still fragile,” said NZIER's Principal Economist Shamubeel Eaqub.

NZIER said the signs were worrying and the Reserve Bank should be careful not to stifle anaemic domestic demand.

"At this stage of the cycle we would normally see the economy recovering strongly. Slowing momentum of global economic growth and financial market dislocation add risks to the economic outlook. In this environment the RBNZ needs to take care not to stifle already anaemic domestic demand and derail a fragile export recovery."

NZIER said pricing indicators were flat, indicating subdued inflation in the economy.

"Pricing intentions and cost pressures are building, but firms’ pricing power is low given weak demand. Elevated pricing intentions may also reflect a raft of one-off policy measures (the ETS, ACC levies and GST)," it said.

"Capacity utilisation of manufacturers and builders remained elevated (90.8% from 90.5%). But this was concentrated in the export-focused building materials sector. Non-exporters, the main driver of domestic inflation, report historically low capacity utilisation."

NZIER said the survey showed an improving labour market.

"Job shedding eased (-7% from -15%) and labour is becoming harder to find. However, hiring intentions are not picking up. The lagged effects of labour market weakness will dampen wages for at least another year," the NZIER said.

ASB economist Christina Leung said inflation pressures still existed despite the softer outlook.

"This is reflected in the surge in firms' pricing intentions and cost expectations. Part of this surge is likely to reflect greater awareness of the higher headline inflation over the coming year as a result of the raft of Government charges," Leung said.

"The current level of firms' own assessment of trading conditions suggest economic growth over 2010 will still be reasonably healthy. On the inflation front, one of the RBNZ's key assumptions is that the Government charges-induced high CPI inflation will not change price and wage setting behaviour. In light of this, a continued persistence in pricing intentions should be of concern to the RBNZ," she said.

"With the recovery remaining on track and inflation pressure still in place in the NZ economy, we expect the RBNZ will continue to steadily remove monetary policy stimulus over the coming year."

JP Morgan economist Helen Kevans said she still expected the Reserve Bank to lift the Official Cash Rate by a further 100 basis points by the end of the year.

"We believe, though, that the RBNZ will continue to hike the OCR at each of the remaining four meetings this year, providing that economic and financial market developments evolve as expected; this will take the OCR to 3.75% by year end," she said.

"This forecast relies heavily on growth in New Zealand’s major trading partners remaining strong in order to underpin strong export growth in coming quarters as domestic consumption continues to ease."

Pause in OCR hikes?

BNZ economist Stephen Toplis said in a research note the Reserve Bank may now pause its schedule of rate hikes in 2011, although inflationary pressures remain a niggling concern.

"We are seriously weighing the scenario of the RBNZ, after squeaking through a few more rate hikes over the coming months, pausing for a time into 2011, before following on to 5.50-6.00% beyond that," Toplis said.

"We should probably switch to this plan-B, if potential growth disappointments, as signalled in today’s QSBO are anything to go by. However, the survey’s niggling inflation “issues” leaves us with our existing view on the OCR for the meantime." 

Westpac's economists said the figures were still consistent with a steady pace of recovery, but the price pressures could not be dismissed as merely a blip.

"The evidence of rising price pressures and a lack of spare capacity won't come as a surprise to the RBNZ: they have drastically revised down their assumption about the economy's potential growth rate, which means even a subdued recovery can be expected to generate inflation pressures," Westpac's economists said.

"Even without the impact of the various government charges, the June Monetary Policy Statement projected annual inflation to return to 2.7% by the end of next year. We continue to expect a series of gradual rate hikes over coming reviews, barring a more serious turn of events in international markets," they said.

Here is the full NZIER media release

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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What will it take before it

What will it take before it dawns on all that anaemic domestic demand and a fragile export situation represent the new normal. This is it baby.

Recession and stagnation the

Recession and stagnation the new normal?

Isn't that what the government and central bank are there to save us from?

If they can't, shouldn't both be sacked?

sacked or beheaded?

sacked or beheaded?

What a surpise, Wally is the

What a surpise, Wally is the first to post a comment on a "doom and gloom" article to let us all know that the sky is falling. What do you do all day exactly? Because you're pretty much always the first to post a comment in articles like these.

And what are you? A real

And what are you? A real estate agent?

This is the effect of peak

This is the effect of peak oil, at $70~80US a barrel its at a price that causes stagnation/recession....I feel for some employers especially small ones...



I feel like a drive :-)

I feel like a drive :-)

This by Brash in 1998 with

This by Brash in 1998 with charts, has an interesting resonance about it.
B.H. had you read this..? back in the day.

Christov, the link doesn't

Christov, the link doesn't work. Are you referring to his 1998 Myths about Property Investment Speech?

Here's a great line from it (written in 1998):

"Some observers have suggested that house prices are likely to fall sharply this year, and some have suggested that they could well fall by as much as 40 per cent over the next few years (parallel to the fall in real house prices between 1975 and 1980). Others have drawn attention to the fact that, at present levels, house prices and average rentals are at historically very high levels in relation to the average wage."

You've got to love "predictions"!

Christov FYI I've fixed the

Christov FYI I've fixed the link
Interesting speech. Sigh.


Ta B.H. ..ok then why the

Ta B.H. ..ok then why the sigh.. There was a point I was making.
and it wasn't to highlight any prophetic tidbits Dr Don may or may not have included.
I was interested in your view in regard to same shit different day scenario and the RBNZ effect on the economy in 12 years.
By drawing comparisons to publications of recent times I conclude every day top be groundhog day's just the shit gets shuffled a bit.
My apologies for the imposition on your time.

Christov No worries. I read


No worries. I read it and sighed. Brash was saying 12 years ago we were borrowing too much to invest in housing and we had better be careful. And that was before the 2002 to 2007 housing boom.

He was worried when household debt to disposable income was at 80%.

It is now at 155.4%.

Yet his speech included no solutions.

Here's how he summed up

"It is not obvious to me that we should be content to be a heavy user of the savings of others indefinitely, especially when a significant part of those foreign savings is being used not to generate faster economic growth but simply to buy ourselves larger houses."

And then earlier this year in his 2020 Taskforce report Brash said we had not (repeat not) over-invested in housing and did not suggest any change to the property tax regime.

It took the Tax Working Group to suggest real change (only for the government to ignore most of it)

We have a government that refuses to alienate its property-owning backers, who are largely the older and richer voters who were born before 1965.

The same sort sighted and selfish generation that has no qualms getting a free education, free health care and free pension and expecting following generations to pay for it.

But no worries.... until the bond vigilantes blow the whistle

I'm trying to attract their attention...


Thanks for that post BH, but

Thanks for that post BH, but I was reading all of Brash's emails years ago.

Many Thanks B.H. your sigh

Many Thanks B.H. your sigh was then well deserved. and for what it's worth I agree with much of your sentiment.
My conclusion was that the RBNZ is a permanently hamstrung monetary watchdog..... "the market" pretends to await directive outcomes from the RBNZ while orchestrating pre-emtive moves to suit "the market" Bank over lending on property speculation.

Apart from statistical information gathering a bloody waste of time.
Govenor is no longer a suitable title... Head book keeper.. methinks.

Brash knew the coo, Bollard

Brash knew the coo, Bollard on the otherhand is a lost soul stuck in his own bubble

Why do some economists think

Why do some economists think putting up interest rates will put up the currency?

If the result is more saving and less borrowing then putting rates up will put downward pressure on the exchange rate as we become net savers.

Impact on fx from higher kiwi

Impact on fx from higher kiwi yield (i.e. higher NZ interest rates) is far greater than little movements in doemstic save/spend behaviours

Not when our rate is one of

Not when our rate is one of the highest for FCI's to dabble in

Steven, this is nothing

Steven, this is nothing whatsoever to do with peak oil, it is simply all the Keynesian chooks coming up to roost. Nothing more complicated than that.

Europe is having to change its way back to smaller states, and far less government spending, which is good - although they are set for years of civil unrest to some degree or other. The new government of England is the only government in the world at the moment that is impressing me. Due to that country's orgy of government spending, borrowing, and printing to date, they have huge problems to overcome, but they might have finally voted in the right men to steer them through their severe times ahead - a pity we didn't in NZ, but then, there was no one to choose from.

The huge problem the world has, is that Krugman and Obama are the two biggest Keynesians' of them all, as it is ending up; they are hell-bent on destroying the US economy, and they surely will do. I have no idea what's going to come out of that, but Obama's strategy at the G20, and Krugman's remarks on a half hour CNN interview just this last weekend, should have every liberty loving individual quaking in their boots.

My personal belief is that America is now headed for a worse depression, quite possibly, than the 1930's. And that's bad news for all of us, for surely Asia can't avoid the fallout from that. (And it has nothing to do with peak oil, to return to your point, they have way too much oil at the moment, all through the Gulf of Mexico ... the problems are Keynesian economics (which is just socialism), it's the philosophy of socialism, it's the fiat money system centred on central banking. That is, it's lack of laissez-faire, and huge, parasitic Nanny States.)

Tribeless, [new]Keynesian


[new]Keynesian economics had nothing to do with this recession, it clearly lies at the feet of the Likes of Greenspan a Rand the chooks as you put it are resting on Rand's headstone, not Keynes.

Peak oil has everything to do with it...capitalism and globalization need cheap energy to exploit natural resources, transport them, process them and deliver them....

"England is the only government in the world at the moment that is impressing me" they are doing exactly what they shouldn't do to avoid the Second Great Depression, however I dont think it can be avoided, the correction to fix the failures came too late and was in-adequate, that can be laid at the feet of Brown and Bush.

"Krugman and Obama are 8><----- hell-bent on destroying the US economy", Reagan and Bush had already destroyed it.......Obama was left too big a mess and too few tools to do it, plus a corrupt political system...Krugman has had no say it this disaster beyond saying for many years Greenspan etc were wrong.....dont lay the blame for this mess here, lay it where it belongs on the neo-classical / fresh water schools the darlings of the right.

"My personal belief is that America is now headed for a worse depression"

On this we can agree....

"the problems are Keynesian economics"

no, fascist / laissez faire economics....The let anything go brigade who then propped up the corporations with the voters $, that's way more fascist....


Indeed if you look at Canada

Indeed if you look at Canada and India these two had good regulation in the banking sector and have survived quite well.

But as PK says, there is no big enough dose of reality or evidence for some ppl....this is what lays you out as a fanatic/fundamentalist "libertarian" the inability to see anything that does not fit in your world view, which in case you have not noticed 99.9% of us dont share.


It's not 'just' about

It's not 'just' about over-regulation, it's about fiat money, it's about the whole Keynesian package of big government spending and taxing, that is, socialism, that the West has foolishly bought into.

But yes, your posts, representative of many of the bureaucrats that run us, no doubt, point well to why we are doomed.

Is it not true that

Is it not true that historically oil price shocks have preceded recessions? From memory (possibly questionable!), typically when the US has spent more than around 4% of GDP on oil a recession has soon followed. I think the price of oil has certainly contributed to the timing of the recession. I also think the recession had to happen; one cannot keep borrowing more and more money because the interest payments eventually kill you.

If there is so much oil available (as you say there is), why has it gone up in price by a factor of 7 in the last ten years? Why don't the US drill a few more wells in Texas and let as much gush forth as they need? :-) Why go to all the trouble of importing it - surely that's expensive. :-)

Here's another thing to think about - I believe the UK used to get a large amount of its gas from the North Sea. This has peaked, and (as of 2000?) has gone into terminal decline. Now each and every year they have to buy more and more gas from elsewhere. How does that affect their budget?

The Mexicans would also be annoyed with you for 'dissing' peak oil - Cantarell, the world's second largest oil field, located in Mexico, has been in decline for a number of years now. It puts out less oil with each passing year. How does that affect the Mexican budget?

In fact, I believe that around two thirds of the world's oil fields are in decline.

At least we do agree on one thing; actually more - I agree with much of your post, but in particular that a depression is just round the corner.

'Rates rises wrong as economy

'Rates rises wrong as economy stalls: NZIER'

Shamubeel Eaqub at NZIER was almost* alone among economists* urging the Reserve Bank not to raise the Official Cash Rate last month, and the latest QSBO bore out his caution, he said.

"The domestic economy is very weak, the international situation remains particularly volatile. The Reserve Bank should have waited and the numbers we are seeing show that., It's a mistake to be raising interest rates when the economy is not growing."

* Hmm, I seem to recall a few practically minded engineering types also calling for RBNZ to hold off - as it was a MISTAKE and WRONG to hike.

Cheers, Les.

Are you getting to enjoy the

Are you getting to enjoy the new normal 'zero growth at best' economy Les?...This is it economy well passed its 'use by' date...
I'm expecting Bill to give the spin doctors a bloody good telling off..."Now look here you lazy lot, I told you often what was what, now back to work and make it clear, the peasants think some growth is near, to fail to make em think that way will be the last of your bloated pay"

Dunno about enjoyable Wally,

Dunno about enjoyable Wally, but I think it'd be more bearable if some people weren't adding insult to injury calling for and hiking the ocr, unnecessarily, especially when we have other money volume based tools available to use now. I dunno why they ain't calling for and using said tools more robustly?

Australia here we come - and I don't mean closing the income gap by 2025.

Suck on this Les...the 'death

Suck on this Les...the 'death cross' is just another bit of hype!
buy that copper quick.

The hawks are winning the

The hawks are winning the day....its good to flagellate yourself but even better if you can beat up others all in the name of your own broken neo-classical ideology.

"I dunno why they ain't calling for and using said tools more robustly? "

I think the RB is going as fast as it dares myself with the limited tools it has....MP is still the big one.


It'd be ok if what the

It'd be ok if what the neo.lib hawks are dogmatically peddling wasn't so flawed:

The tools they have are not so limited now, they could go faster with them, and because some would exhibit faster response to particular inflation sources (use of LVRs with particular asset classes) it means they could be more comfortable keeping the foot off the brake, for now. Not that the tradional brake (ocr) is anything like the most effective way to slow things down, when eventually, things do gather pace.

Ominous for 4th July, from

Ominous for 4th July, from Ambrose,

"Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high."

(True US unemployment is somewhere around 17% apparantly, a staggering number)

"Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.

The share of the US working-age population with jobs in June actually fell from 58.7pc to 58.5pc. This is the real stress indicator. The ratio was 63pc three years ago. Eight million jobs have been lost."

and the PIs like "The Man" think all is well and getting better and us bears need prozac....

Still, might some some real bargins come the new year.


Speaking as a home owner who

Speaking as a home owner who has recently purchased (April 2007), we have just come off of our fixed rate (was 8.45%). We have not benefited from the OCR cuts until just recently. The extra money that we are saving on interest payments we are now saving towards paying off our mortgage. As we only have a finite ammount that we pay towards the mortgage ( the rest of our income goes on the bills, food and bringing up our 2 small children), if the RBNZ raises interest rates, then that just reduces the amount of money that we save (and pay off of or mortgage) and instead just gives it to the bank. The economy is weak, and raising interest rates is the last thing stressed households need, particularly with Rates, ACC, GST, and other cost increases just coming up.

Agree, regards



Don't fool yourself, the

Don't fool yourself, the Banks make their margin irrespective of whether the rates are high or low.

You are really giving that 'extra' money to savers via higher deposit rates.

Why did you buy in April

Why did you buy in April 2007? That was when the market in NZ peaked. Did you not read the news then? Why didn't you wait until prices dropped and interest rates dropped as they did. Depending on your deposit you are probably in negative equity. I find it hard to feel sorry for you. Buyers have been really sucked in by the agents,mortgage brokers, bank managers and alike who will not bail you out. They were only interested in the commissions,bonuses and fees you earnt them.

Recently read an UK article

Recently read an UK article regarding "the danagers of talking ourselves into a double dip recession".

However it seems to me that the majority of economists and the like are hell bent on talking up "the so called recovery".

As a lay person on the street all I see is empty shops and the shops that aren't empty are having sales.

The recovery may be happening if your a dairy farmer, but for the rest of us, its a case of just trying to make ends meet.

The forementioned economists are still using the same models that didn't see the recession coming are are now still saying the recovery is just around the corner, though the upturn will be slower than normal...... Wake up!!!

Raising interest rates is crazy, especially when the world economies seem be heading towards a double dip, if not a depression to match the 1930's

"...the danagers of talking

"...the danagers of talking ourselves into a double dip recession"

When are people going to learn that economies aren't "talked" into anything.

Markets (eventually) respond to fundamentals which are in no way influenced by "negative" or "positive" thinking and talking.

The recent hype-driven real estate bubble was short-lived because how could it be otherwise?

The fundamentals will always triumph.

In nature, there is not such

In nature, there is not such thing as fundamentals or technicals etc. These are human constructs, which we (people) have placed certain meanings to.

ie What is the fundmentals of the Dow at 10000???...nothing except the belief that people place on it that for some reason it is an important milestone.

Fundamentals: "When


"When everything is rising in price but you haven't had a pay increase in years, you will not be able to buy some of those things."

"You cannot spend more than you earn forever."

"You cannot pay for something which costs more than you have without first obtaining a loan."

"When there are more things for sale than there are buyers, some of those things won't sell."

"When as many people are dying as are being born, and as many people are leaving as are arriving, growth will be minimal or nil."

Those are all fundamentals, and they are current fundamentals, and they are why the NZ residential property market can go no place but down.

good one

good one

Fundamentals may finally

Fundamentals may finally impact but a lot of the misslead masses will spend themselves into even more trouble in the meantime.

As I wrote many times the

As I wrote many times the world changed forever. Without revolutionary reforms we are doomed.

Mr Key is probably talking in S. Korea about importing the next shipment of 350 Millions high tech public transportation and other equipment and the export of 80 Millions export of cheap logs ?- Bravo PM – what a deal !!!

Mr Key it would be far better to travel here in New Zealand visiting producers/ manufacturers talking and create better conditions for Kiwi companies/ exporters.
It would be far better having an economic strategy, placing orders for our infrastructures needs here in New Zealand. It would be far better to create skilled and better paid jobs here in New Zealand. It would be far better to bring the skilful and experienced Kiwis back home to set up new businesses and to work in interesting jobs. It would be far better to lift our profile, working for the next generation, so we can afford an average life standard in a safe environment.

Mr Key when are you going to stop our unbalanced economy causing a massive Real Estate industry. When are you going to stop our greedy and megalomaniac farming industry, which runs into trouble on many fronts ? When are you going to stop the current trend, pursuing “Uneconomic Growth” ?

Mr Key you are the wrong person to complain in saying - quote: Prime Minister John Key says he doesn't want New Zealanders to become tenants in their own country as foreign companies seek……….

You and the former government created that

Prime Minister it is up to you and your government to create conditions, so we are in charge of our own economic, environmental and social destiny.


Only when we open the gates

Only when we open the gates and have around 10m population will our "Godzone' have any legs, any scale, any efficiencies. But too much NIMBY, tree huggers, red tape and a Waitangi Tribunal to even consider the benefits of such a Nirvana.

Kia Ora

Yes. When all of NZ comes to

Yes. When all of NZ comes to resemble south Auckland, we will know Nirvana.

Relying on the Ponzi economy

Relying on the Ponzi economy to keep your rents growing are we Bojangles?

Hope you like congestion.

Ok then here's what he

Ok then here's what he covered to whet the appetite.

New Zealand's balance of payments deficit: does it matter?

Do large current account deficits really matter?

New Zealanders' enthusiasm for borrowing

The lessons of Asia

New Zealand different from Asia in several crucial respects

So the deficit is not a matter for alarm, but we should not be complacent

If we want to reduce the deficit, what needs to be done?

The key challenge: how to increase national savings

Now who said what..what this in the Short term...then long term(if you consider 12 years to be longish.

The key challenge: how to

The key challenge: how to increase national savings

How can we safe as a low wage country, while importing most everything – a third world scenario.


Agreed Anon.. but if you get

Agreed Anon.. but if you get a chance go have a look at the speech not for merit or otherwise.. just the content, as I said has an interesting resonance.

We could save via not buying

We could save via not buying all the shit Harvey Normans and Smith City push down our throats? The government could remove the RWT on savings accounts under 1 million. And the banks could be forced to play fair on TD rates

The average household can't

The average household can't save in this country. We are a low wage economy and that's the way we will remain for at least another decade. The last lot that did have savings got too greedy and put it into finance companies, Blue Chip etc and lost the lot! So if you think savings will be the fix for the NZ economy you're dreaming.

"growth" or "recovery"

"growth" or "recovery" reliant on 'DEBT' is NOT REAL recovery. It's just the same old talking points and political rhetoric being repeated via the like of the real estate agents, finance minister and RBNZ to try and get you to spend what you don't have!



Justice OK, then let's try


OK, then let's try recovering by eliminating debt as fast as we can through governments cutting spending in the aim of balancing their budgets as quickly as possible. It worked really well in 1930.

I'm for that

I'm for that

Aha, a budding John Steinback

Aha, a budding John Steinback relishing the prospect of observing and writing about another catastrophe of human misery ?. A year or two of sugarbag days would be good for us all eh.

Did you hear Barefoots press

Did you hear Barefoots press release today Bernard trying to drum up landlords to push up rents? in the hope of pushing a few more into the lost world of property speculation and mortgages

landlords are pooing

landlords are pooing themselves right now .....

Justice - quite right. Just

Justice - quite right. Just as you are only as wealthy as your house value minus your residual mortgage, so too debt-fuelled growth.

Tribeless - whoever you are, I regard you as a close-minded moron.
Steven is quite right, and I suggest you look closely at the Prof Bob Lloyd piece on here recently - the graph where combined global GDP's overshot oil supplies, from 2005 (as my kind had predicted for years - name me one, just one, economic activity which could survive without energy) onward.

The missing triangle is the debt. Plain and simple. So you might get it.

Bernard - why were you

Bernard - why were you calling for RBNZ to hike? Hiking was WRONG and a MISTAKE:

NZIER comment:

NZMEA comment:

Now watch PRIDE take precedence over PRUDENCE.

More madness.

Cheers, Les.

Hiking is good and NEEDED! If

Hiking is good and NEEDED! If they don't then your dollar goes backward even faster than during the property boom which was the biggest single contributor to raising the cost of living for many people at that time and WHY we are here NOW in this situation. But only the CPI figures seem to count with the moron economists that inhabit the RBNZ. I would double the OCR by Xmas

How perverse.

How perverse.

Bernard wrong? Never...

Bernard wrong? Never...

NZIER are one of the best of

NZIER are one of the best of a pretty bad bunch of kiwi economists.
any one working in the REAL world of business knows that things have been, and continue to be fragile. Of course certain parties with vested interests have been talking the recovery up - they always will.

I agree with Les Rudd that OCR hikes should be resisted for the foreseeable future. We need some breathing space here.

I can tell you from personal experience that there are quite a few small and mid sized businesses that are only just hanging on....I'm not sure how much longer many of them will be able to hang on for. I wouldn't be surprised if the recent declines in unemployment are reversed

WHAT? There was a recovery!

WHAT? There was a recovery!

I'm going to say something

I'm going to say something some people won't like to hear or acknowledge. There's too many of us! and an awful lot of the jobs we have are just consumption based. Maybe it's time we thought about REALLY saving the planet, Not with a BS stealth tax called ETS, but with government incentives to STOP breeding or atleast having less, maybe via a scaled tax on children? more you have more you pay. Humans are polluting and environmentally destructive as a whole(you can argue that fact if you like. Someone has to talk about it sooner or later, one day the oil IS going to run out and I beleive farm tractors and havesters still run on it.

Why not?. The one child

Why not?. The one child policy has worked really well for China -now facing a demographic catastrophe as a result. Russia faces the real risk of being unable to operate its basic infastructure by the middle 2000's because of a population implosion. NZ is slightly better off due to higher birth rates.Under your system the rich could breed unfettered. Lower socio economic groups would of course immediately pay up the tax for each succeeding pregnancy.They'd get the money from ..... umm.

How perverse.

How perverse.

The euro is most likely to

The euro is most likely to weaken in the second half of this year against the Australian, New Zealand and Canadian dollars, said Nick Bennenbroek, 39, global head of currency strategy in New York at Wells Fargo, the biggest U.S. home lender. The bank had a margin of error of 4.76 percent across all currency pairs and was the top forecaster for the dollar against the yuan.

“Our overall view is that the euro will continue to weaken and Australia, New Zealand and Canada will rebound over the next year,” said Bennenbroek, who joined the bank in 2007, beginning his career in finance at the New Zealand Treasury in Wellington. “These are medium-term trades we believe people should be putting on now.” The euro will end this year at $1.20 and conclude 2011 at $1.08, he said.

The bank was the top

The bank was the top forecaster for dollar/yuan with an error of 4.76 percent,was that when it was fixed or pegged?.What is the time frame for NZD/AUD and loonie to rebound as NZD has already rebounded.Given that Wells Fargo is generally USD bullish which currencies is NZD rebounding against-multi year highs against GBP/Euro already .Oddly enough one of Goldman Sachs biggest plays this year is short NZD?Euro weakening,now that will not be difficult.

How many kids did you have

How many kids did you have Justice/Middleman?

How about a bit of austerity and lets push the pension out to 70 yrs of age

29 year old More than one

29 year old

More than one but I paid lots of tax so it's I was allowed to keep on breeding under justice's rules.

Pension age out to 70 . Whaaat? . I've paid taxes all my life and I was promsied a full non means tested pension at 65 by sucessive politicians. I'm only getting what I've paid for and deserve, it's my right.

How about growing the pie?

How about growing the pie? How can we do that, by selling houses to one another?

Fascinating to watch that

Fascinating to watch that reality slowly beginning to dawn on people isn't it?. A paradigm shift in thinking. We live in historic times.

Interest rates

Interest rates increasing,petrol tax increases,gst increases,ETS cost increases - looks like our experts are determined to snuff out any signs of life in our badly battered & extremely fragile economy.

Thanks for "comment of the

Thanks for "comment of the Day" status Bernard.
Along with NZIER I rate ANZ's economists quite highly, and once again I enjoyed their weekly report:

In the next 20 years (yes

In the next 20 years (yes it's going to be a long time), the "new normal" (what ever you want to call it) will be that there will be inflation for necessary survival thing and deflation for everything else. This will happen in the globe scale. Mark this thread, be prepared.

Justice@8.35 - nail on the

Justice@8.35 - nail on the head. If you don'e address population, no other action works.

28/9 y/o - same comment.

NM- not a bad guess, but I think your timescale is too long. If you go through half a resource (likt oil) in 100 years, the graph saysd you go through the second half in 18.

The problem - the boolian algebra - is that the oil drives everything else, and if it isn't increasing, then all activities aren't increasing, which gives the lie to the 18 years.... or does increasingly desperate demand make it happen anyway? Given that it is food, the way we produce, transport and buy it.

The fascinating question is whether some good leader(s) manage to guide an orderly morph to a sustainable regime and a non-growth fiscal model, or we all descend into a scrap over the remnants.

Gillard is there, the King of Saudi Arabia is there, but our mob are still bleating 'explosive growth', and the new British finance minister would appear to be having a borrowed bob each way

We have a way to go!

There cant be explosive

There cant be explosive growth without explosive use in oil and oil is in decline. Ergo, we are at the start of a long decline.

Whether our politicians actually have the acumen to do anything about it remains to be seen. Growth growth growth just cant happen without more more more resources, and the state of the worlds resources is...

Personally I imagine it will fall to individuals and local communities to actually do something.