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90 seconds at 9 am with BNZ: What our biggest financial disaster means for the economy
Bernard Hickey details the key news over the weekend in (slightly more than) 90 seconds at 9 am in association with Bank of New Zealand, including news of New Zealand's biggest natural and financial disaster since the Hawkes Bay Earthquake of 1931.
The 7.1 magnitude earthquake on Saturday shattered houses, roads, water pipes, sewage systems and the Port of Lyttelton.
Treasury have estimated the cost of repairing the damage at over NZ$2 billion. The Insurance Council is expecting claims in the hundreds of millions of dollars. See more detail here.
Some have estimated up to 20% of housing is uninhabitable and will have to be rebuilt, along with roads, bridges, pipes and the ports.
The Earthquake Commission will pay the first NZ$100,000 to repair damaged houses and the first NZ$20,000 for damaged contents.
However, many small and medium businesses have suffered major disruption and not all will be covered by their insurance.
There will be an influx of spending and funds into Canterbury, which may boost economic activity in the short term.
But this doesn't disguise the loss of wealth accumulated in housing and infrastructure that will need to be replaced from national and local savings.
Related Topics
In many cases we will see a shuffling of savings into spending across time and between parts of New Zealand. See more here on the Paradox of the Broken Window.
The New Zealand dollar fell only slightly this morning to 71.8 USc despite the scale of the disaster.
The Earthquake Commission will have to liquidate some of its NZ$6 billion in savings, two thirds of which are in New Zealand government bonds. These sales of government bonds may pressure interest rates higher, although a Reserve Bank hike in the Official Cash Rate next Thursday is now seen as extremely unlikely.
Some have also suggested the surge of spending into Canterbury and the shortage of resources locally may push up inflation in the region.
Your views and experiences. We welcome your comments below.
58 Comments
hey Wolly...you're a rock
hey Wolly...you're a rock star now!
Uncle Bernard gave you a plug in yesterdays article in the Sunday Star times about this site.
We are not worthy of your eminence?
Great name Donald Here's
Great name Donald
Here's that article
http://www.stuff.co.nz/sunday-star-times/business/4093494/Matters-of-lif...
Wolly is a rock star
cheers
Bernard
If I recall
If I recall correctly........Wally was at one point connected to the Foreign Office.... a long forgotten blog.
think it was the Cunliffe interview.
Jeez you have a memory there
Jeez you have a memory there Christov...Foreign Affairs old bean...we all want them!...you don't think I should change to being "Free Wolly" do you?
Ta Wally ......... my wife
Ta Wally ......... my wife doesn't call me Dumbo... just because I've got a big trunk.....................er I think..?
Great article, but Wally,
Great article, but Wally, don't you feel taken advantage of now, not getting paid a cent and all? lol.
I have me enuff Elley...so
I have me enuff Elley...so how do you explain to the family in France what a 'Kiwishake' amounts to?
Good question and great title
Good question and great title for a recipe, thanks. I haven't spoken to them other than by txt but we'd rung on Wednesday for our daughter's birthday and they said they'd buy flights to come see us in December... I'm not sure that's still on now.
They never understood why we'd leave France, family and friends to settle in NZ to be honest (and I gave up trying to explain a long time ago). But we told so much good about NZ to my cousin and his wife for the first couple of years that they moved here too 6 years ago(Wellington). So now we get blamed for enticing other family members this far away too. Can't win :)
You better hope Wgtn doesn't
You better hope Wgtn doesn't cop the big one then! Since 1855 they calculate the whole place has been squeezed up 18 inches (not that metric rubbish) and is also skinnier!....
18 inches is far more in mm
18 inches is far more in mm = 457.2mm !!
Quite true. He's got a degree
Quite true. He's got a degree from the most highly regarded French engineering school and is a uni lecturer and researcher in quantum physics so I'm guessing he may have done some probability calculations and decided the risk was low enough before settling. Or maybe the location and weather conditions were just too much of a draw for a winsurfer like him!
Great. And we thought he was
Great. And we thought he was bad now...
Safe as houses...
Safe as houses...
FYI, the poor old Aussies -
FYI, the poor old Aussies - http://www.businessday.com.au/business/nz-quake-set-to-shake-australia-i...
Wolly, The oracle from Omaha,
Wolly, The oracle from Omaha, sorry I meant , Wolly the oracle from down South.
Bollocks.
Bollocks.
What does Big B mean when he
What does Big B mean when he says he don't pay you Wally............?
Tell me that ain't so.............
Oh .............er ........I gotta go....Luv ya work Wally ...!
P.S. Wally maybe you should
P.S. Wally maybe you should send out for coffee......?
Natural disasters, especially
Natural disasters, especially under the influence of Climate Change can and will harm our one sided economy enormously. With more diversity and flexibility particularly in agriculture, it could be an advantage for NZ’s export.
We need to be more self- sufficient in our infrastructure needs.
Some more interesting
Some more interesting information:
http://www.dailymail.co.uk/news/worldnews/article-1309194/New-Zealand-earthquake-rips-new-fault-line-world--moving-earth-11ft-right.html
Reading, then acting in the current time of the 21st century, I think we shouldn’t always wearing bigger glasses, but occasionally one single magnifying glass.
No. All we need to invest in
No. All we need to invest in is dairy farming and residential property. We'll be RICH!
Just other infos: History
Just other infos:
History suggests Saturday's destructive 7.1 Canterbury earthquake could be a trigger for a series of major earthquakes which New Zealand must prepare for, scientists say.
Victoria University's geophysics professor Euan Smith said Saturday morning's magnitude 7.1 quake did some things "as expected" but "had some surprises as well."
http://www.stuff.co.nz/national/4098378/7-1-earthquake-more-to-come-scientists-warn
Oh great, that's really
Oh great, that's really reassuring. Not. I guess we should be glad for the casualty-free wake-up call and make sure we're all better prepared for the next occurences.
In recognition of his
In recognition of his eminence "The Wallymeister", we are giving away free Wolly burgers all day.
Or maybe that should be doughnuts...they do have an empty hole in the centre?
Is AH = Wolly ?
Is AH = Wolly ?
Was that "our" Elly" on the
Was that "our" Elly" on the news in the weekend?
Dang...i love these warm
Dang...i love these warm fuzzies...uncle bernard was right when he said we were one big happy family on interest.co.nz...sigh!
The real problem will come
The real problem will come from rash decision making by eager beaver people who do not take the time to consider unintended consequences. A bloody mad rush to 'do it all and do it now'..this must be avoided. granted the rail line and roads, sewage and water are all critical needs. But care must be taken to ensure massive local inflation does not take off. Charge out rates and fees etc should not be different to the day before the quake. It will be for govt to keep a sharp eye on who is trying to cream what from this mess.
The problem as I see it
The problem as I see it is.."Who the heck in their right mind would want to live on an active Geological fault?" When these cities were first built ,Fair enough they didn't know any better.Their would be a lot of people thinking, like this, and God forbid if it gets a shake in the 8 magnitude,,what ever the building codes,it will be history, the drift to Auckland can only be accelerated..
So to the city built on 7
So to the city built on 7 volcanoes then?!
Yep. Won't be pretty if/when
Yep.
Won't be pretty if/when Rangitoto goes off again.
Or Mt Eden.
Or Mt Wellington.
Or...
Think you will find White
Think you will find White Island to have a higher probability factor with an ensuing tsunami.
Bay of Plenty would be..........................whew.! can't imagine....
Not many people would be
Not many people would be willing to say that The Big One is not likely to occur in the foreseeable future.
Most geologists are expecting it, and probably on the South Island's Alpine fault.
A big chunk of the country's power generation and transmission system will be knocked out.
And that power, powers our
And that power, powers our biggest city, Auckland. So again....why move there..? Seems Christchurch is the go. At least they've go theirs out of the way!
Volcanoes Give you a warning.
Volcanoes Give you a warning. When the Alpine fault goes, it dosn't leave much time to take evasive action. Anyway the further North the better Kerikeri to the Cape,The weather is as good as Australia, only mugs live below 35 degrees south.
Thta's what the dead
Thta's what the dead volcanologist on Mount St. Helens thought! But, yes. The further north the better......
So you live for the weather??
So you live for the weather?? Poor you...
Too bloody right
Too bloody right mate!..Beaches sun surf ..no Winter just Autumn then Spring. Low power bills.The Suntan stays all the year round.and! and! no bloody fault lines.
The north? Constant,
The north? Constant, inescapable humidity, no matter what the season. Mozzies and losers day in, day out.
Gimme the High Country any day, sun or snow.
Relax!! the Hypothermia is
Relax!! the Hypothermia is restricting blood flow to the Brain, and combined with Altitude, it can be a nasty cocktail, and cause the mind to get confused. The flooding that you are experiencing at the moment..has only come after the never ending round of weather warnings, put out by Jim Hickey..and the soon to follow freezing rain, might indeed finish you off. But have no fear! at some stage in the future, the Earth will shake your coffin to the surface, and as your eyes adjust,on that day of your resurection.You will realise that... when you had life. You could have lived it in the Sun!..but it was your choice!... you chose the Abysmal Climes.
You are stark raving crazy,
You are stark raving crazy, or otherwise just making a pathetic attempt at taunting South Islanders.
It is the North Island where most of the floods are today for a start.
Highest temperature ever recorded in New Zealand was in... Canterbury, South Island.
Highest number of sunshine hours in New Zealand? Auckland???!!! Don't think so.
By the way, I was born and bred in Auckland. The weather is not why I moved, but I know which weather I prefer. And the South Island is less prone to natural disasters than the North anyway.
Mind you, it's a good thing you enjoy the heat - it's going to be REAL hot when Rangitoto starts up again. :-)
I rest my case..your
I rest my case..your rantings..require no furthur comment.
Hawke's Bay farmer
Hawke's Bay farmer crushed by cow. This shows that things can go go wrong anyplace, anytime
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10671522
Considering I live at 730m
Considering I live at 730m ASL, flooding is a non-issue.
Now see what you've done
Now see what you've done Bernard!
He's started trying to sound sensible ...won't work ,Wally...stick to the script!
Hey is dat you
Hey is dat you Nonny..(mk1)....?hmmmmm.
The real extent of the true
The real extent of the true losses to Christchurch business's will take months to unfold.
I have a gut feeling of thousands of family business's shattered. In much the same way that our own family business, Sisson Kayaks, suffered when it was 110% (10% gaps in policies) destroyed by fire in 1996. But this Christchurch event is for each family much much worse. Read on - I have an important point to make.
Sisson Kayak's stock and plant policies had not kept up with inflation. Fortunately we still owned a surviving bike factory next door - so we some infrastructure. And we still had a warm home to retreat to. Still - the situation was terribly bleak - and we would never want to re-live it.
But in the midst of our carnage - our Business Interruption Policy kicked in. We had made a handsome profit the previous year. The resultant monthly shower of dollars made re-instatement of the business worth while.
I fear for the small business people of Christchurch. Many will have been in a trading-loss situation awaiting the much promised 'upturn'. Their Business Interruption Policies may in fact return them zero - reflecting the performance of their most recent reporting period.
This possibility needs to be addressed at a high level within the next few days. Insurance companies and banks need to be collectively dealt with on behalf of Christchurch business - right now. Not in 6 months time. When it will be too late to save these family business's.
And the city of my childhood needs these family business's. Without them the city will be nothing.
Grahame Sisson, Sisson Kayaks Ltd, Methven, Canterbury. (zero EQ damage in our kayak factory)
Good point GS...how far back
Good point GS...how far back do the insurance calculations for trading loss go?
I agree - this will be a huge
I agree - this will be a huge issue for the small and larger business community. Many have been trading in a loss or at break even through the financial crisis. It would not be fair to look at only the more recent trading history.
I will speak to a few insurers and see how they plan to deal with this and also talk to Chris Ryan and the Insurance Council.
Something needs to be done or it could kill many small businesses that are crucial to the economy of Canterbury and NZ.
The best advise that I can
The best advise that I can give to the typical ChCh family business is this:-
Pull out your insurance policies
Read them
Read them again - every word.
Read them again - every word - and making numerous notes using Post-It's - "this is what this fine-print really means".
Read the whole lot again 6 times.
Make sure that you understand the meaning of every clause - before the meeting with the assessor.
Realise that the happy negotiation must be initiated by your own policy knowledge.
The uninsured will be a
The uninsured will be a really worried lot . Most likely the Government will decide to give help to people without insurance too.
I'm sure I detect sarcasm in
I'm sure I detect sarcasm in your post, Alex. Quite Right. With all due respect to the plight some will find themselves in; Why should the Government bail out the unisured? They ran the risks ~ they took the reward of paying no premium, and now reap the penalty of getting caught out.
So we can all cancel that
So we can all cancel that part of out policies?
If the govt is insuring us anyway, why pay twice?
Alan.
lead on....... regards
lead on.......
regards
Okay - no buildings cover for
Okay - no buildings cover for earthquakes in my insurance portfolio as of right now.
Alan.
I know this does not sound
I know this does not sound good, but it will take a very long time to re build some of these areas, it will be years for some and their businesses will not survive. Not only the owners but those who they employ will be out of work, sure builders/plumbers etc will be in demand, but there were not many builders working out of the CBD.
For those who have houses to get rebuilt or fixed I imagine it will be a very very long line....some areas will have extensive ground work needed to be done before any re building can happen.
I see it hasn't been only
I see it hasn't been only silt sand and mud oozing from the ground in Chch..some of the scum has come to the surface as well...... http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10671483
In regard to G.Sisson post
In regard to G.Sisson post above if your insurance is through a broker arrange to have a chat with him re fine print (e.g. clause a or b) on your insurance, ours was with us when the assessor came and knew the ropes and what we were entitled to...