By Bernard Hickey
Reserve Bank Governor Alan Bollard has delivered a speech titled "Looking into the Crystal ball" in Christchurch which details 8 risks to a gradual recovery in the New Zealand economy through 2011.
In a wide-ranging speech to the Canterbury Employers' Chamber of Commerce, Bollard said economic forecasting was always difficult and had become more difficult in the wake of the Global Financial Crisis as the behaviours of people and businesses had changed. He compared economists to meterologists.
Speaking a day after the RBNZ left its Official Cash Rate on hold at 3%, Bollard repeated that the central bank would hold interest rates until it was sure the economic recovery was more robust and there were clearer signs of inflationary pressures re-emerging.
Economists expect the Reserve Bank will start increasing the OCR again from June or September and the Reserve Bank has forecast short term interest rates are likely to increase by around 1% over the next two years.
Bollard listed a possible Chinese slowdown, US gloom, commodity price boom and sovereign debt bust as risks for gradual NZ recovery in 2011, although he also said the bank had forecast the Rugby World Cup could boost the New Zealand economy by around NZ$700 million.
He described the GFC as a "deep and damaging event" which had meant the recovery had been "rocky and fragile."
“Even in New Zealand where we have been less affected, recovery has been slow and patchy. In fact 2010 was a disappointing year: we initially saw recovery happening, but the second half went unexpectedly soft (as it did in many OECD countries). During 2011 we expect the recovery to pick up and gradually become more secure," Bollard said.
Bollard detailed 4 international risks for the economy over 2011.
1. US Economic Gloom or Boom
"If this US domestic gloom continues or worsens, it is difficult to see American consumers playing any part in driving world recovery. Further, it could impact equity markets, and start to focus financial markets on the size of US state and Federal debt, he said.
"But just as possible, the US may surprise us with economic strength over 2011. Many US businesses hoarded cash over 2010. But now flow of funds data show non-financial firms started borrowing again in the third quarter of last year, though retaining cash from bond issuance rather than undertaking new investment. It would not be difficult for businesses to ramp up investment quickly, and then demand for labour could increase almost as rapidly as labour was shed going into the crisis," he said.
Under this scenario, US consumers would start to spend again, acting as an engine of growth for trans-Pacific trade.
“In this scenario, the US dollar would presumably appreciate, taking some pressure off the New Zealand dollar and providing an improved opportunity to rebalance our economy towards export growth.”
2. Sovereign debt reaches crisis point
Bollard said the GFC had cruelly exposed some governments with high public debts and sovereign debt problems could worsen further in 2011.
"Managed sovereign defaults could still occur, and these could impact the banking systems of core European countries. Investors continue to re-evaluate the price of sovereign debt in the euro area. Moreover the countries that have implemented austerity plans could find the terrain rougher and the recovery harder than first thought," Bollard said.
"This would imply more spill-over to the wider euro area economy. Some eastern European economies on the periphery could suffer, and countries outside the euro area might not be immune. Renewed fragility in funding markets could have other effects. Slow growth and high debt in Japan, together with its skewed demographic profile, could worry volatile markets, and other Western countries would not be immune from this," he said.
"A scenario of renewed capital market fragility would also make life much tougher for Australian and New Zealand banks, and that would be extremely damaging to our economic recovery."
3. Emerging markets outperform and bubbles burst
Bollard said there was a risk that activity in the BRIC emerging nations (Brazil, Russia, India and China) overheated.
"In the short-run strength in the BRICs is underpinning the global recovery and this could intensify further. If this happens, it will boost New Zealand’s trading prospects. At the same time there is a real risk of over-heating," he said.
"Much of the strong growth in China was driven by the extension of credit through the latter part of the crisis. This helped China to post double digit growth rates for most of the past year. But now there are general signs of over-heating through Asian economies, risking asset bubbles: Chinese asset prices, Hong Kong and Singaporean property, capital inflows into other East Asian economies, inflation in India, and house prices in Australia.
"A worse scenario for New Zealand would see the Asian banks, which until now largely have been insulated from the Global Financial Crisis, affected by deflating asset prices."
Bollard said a material slowing in the Chinese economy appeared a likely scenario as policymakers there applied the brakes to control rising prices.
"This could be very disruptive, risking loan defaults, poor bank balance sheets, capital controls, exchange rate tensions, import protection and a regional slowdown," he said.
"One effect would be to hit industrial commodity prices. A disruption of this magnitude would have another undesirable effect: knocking Australia’s terms of trade, and exposing rising imbalances in that country. New Zealand would lose the advantage of the China/Australia growth locomotive that has helped drive our own export demand over the last twelve months. In such a situation, some of the shock would likely be offset by a lower New Zealand dollar, though this would have to be balanced against higher imported inflation."
4. The Commodity Boom intensifies
Bollard said it was possible the commodity boom could intensify, boosting prices for New Zealand's exports and for key imports such as oil.
"But as oil prices rise, this places pressure on inflation not just in New Zealand, but globally, risking a bursting of the commodity boom just like the 2007-08 event. Indeed if oil prices escalate beyond US$100 for long, growth in much of the world will suffer again," he said.
Bollard then detailed 4 domestic risks or scenarios for the economy in 2011.
1. New Zealanders save but don't spend
Bollard said there was a risk that the cautious approach of New Zealanders over 2010 could herald a structural rather than cyclical change in consumption and savings behaviour.
He even raised the possiblity of another loosening of monetary policy if it caused a marked recession.
"House prices could be forced to drop much further to reach true economic values. This would cast a pall of gloom over the market, with homeowners keeping houses off the market, not re-building, and trying to pay off mortgages faster, saving more, and spending less," he said.
"The construction and retail sectors would suffer as a result. Under this scenario, the Reserve Bank might have to reconsider some further monetary policy stimulus. Such restrained spending would keep domestic demand in check for 2-3 years, constraining growth short-term but building a stronger base for long-term growth."
Bollard even raised the prospect of an exodus of people from New Zealand if consumption was constrained too much.
"The positive side of this risk is that it would accelerate New Zealand’s much discussed rebalancing, reducing the current account deficit, improving competitiveness, reducing exchange rate pressure, relieving pressure on funding markets, and reducing our external vulnerability generally. The negative side is that New Zealanders would have to reduce their consumption compared with pre-GFC years, and that could create an emigration exodus."
2. Financial market fragility
Bollard said another scenario for 2011 was a disruption on global financial markets caused by European sovereign debt that made bond investors much more wary of buying government bonds from indebted small countries, such as New Zealand.
"Funding market fragility would be bad news for our public debt. If participants in fragile sovereign funding markets were to form a view that New Zealand exposure is less attractive, credit rating agencies might re-assess New Zealand sovereign debt, meaning that debt servicing costs could rise," Bollard said.
"If the market were to form the view that the government deficit was increasingly structural and hard to correct, and if the New Zealand Government were forced to consolidate faster, this could generate a contractionary effect on consumption, which would be difficult to counter with monetary policy. And in such an environment, looser fiscal policy would not be a serious option."
3. Construction boom
Bollard said the NZ$5 billion of repairs expected after the Christchurch earthquake could create labour and housing shortages that lifted inflationary expectations.
"In addition the relatively strong inward migration, the limited investment during the last few years, growing demand in the Auckland region, and leaky homes rectification means that the stock of housing could be falling behind demand," Bollard said.
"Rectifying these would put additional pressure on resources, increasing prices already lifted by GST and other taxes/charges. Households might start to ratchet up their expectations about future inflation and in such a case the Reserve Bank could be confronted with the need to increase policy rates to dampen the accelerating inflation outlook," he said.
4. The Rugby World Cup
The Reserve Bank expected the Rugby World Cup could add about NZ$700 million to the economy over the six weeks of the event, which represented about 0.3% of GDP.
A Horwath Asia Pacific Ltd report prepared for Rugby World Cup organisers and updated in 2006 estimated the tournament could add NZ$507 million to NZ GDP.
A Deloitte report prepared for the International Rugby Board in 2008 estimated the tournament would add 201 million pounds to GDP, which is around NZ$420 million at current exchange rates. Deloitte predicted total direct economic activity from the event of 456 million pounds.
"More optimistic assumptions about multiplier effects would suggest a stronger impact, during months which are normally a tourist down-time. Winning the World Cup would also boost general confidence."
Meanwhile, Bollard also said Reserve Bank forecasters had on average predicted the All Blacks would win the World Cup final against the Wallabies by 23.9 to 15.6.
"How likely is it that New Zealand will win? We have asked our expert team of forecasters to answer this question. They have pointed out several solid facts: we have always won the World Cup at home; we will have a Cantabrian leading the team and another directing the back-line."
Here is the powerpoint display that went with it.
(Updated with more detail, links to full speech, full powerpoint, and background with links on Rugby World Cup)
96 Comments
As quoted on RadioNZ news "House prices to fall further in 2011"
Wash your mouth out ,Alan
Olly to the rescue.;o)
Quote his actual words: "One possibility we could confront during 2011 is that the cautious household reaction we saw over 2010 turns out to be a structural change in behaviours rather than a cyclical response to a marked recession. House prices could be forced to drop much further to reach true economic values .""
No point jumping when it's not clear which way to jump. We don't want Bollard gambling with our future by guessing which way things are going and raising or lowering OCR at the wrong time.
So far he has played his hand correctly, if he had jumped and tightened last year like so many were demanding there would be no chance of an economic recovery and the NZD would be even higher.
Firstly dear Julz it is important to be... ready... to jump as the boat beneath you starts to list and bubble ........ "wait and see" was not the policy of titanic survivors. As to gamble..? Fortune favors the brave... this man is beyond "dovish" he has reached the level of Stuffed Parrot.."if you adn't nailed him to the perch he would be pushing up the daisies"
He is in effect a bookeeper with a title operating in a redundant environment observing the need to be seen not heard.
So noted Peter C...and so I regret any unintended offence to Julz or your good self....my attempt at being poetic was perhaps a little off the mark....but that I assure you is all it was.
my apologies for the perceived patronisation.
as to my after hours activities...I care not to share on this occasion.
Regrettably - your reference to Monty Python's dead parrot sketch may have much more alignment with New Zealand's economic reality that we all care to admit. However, Bollard's tie is usually a lovely Norwegian Blue - so perhaps all is not yet lost! I am just wondering if we get any wafers with it . . .
Albatross!
Ohhh.. you mean like when Bolly and his moronic side kicks waited 5 years after the housing bubble began before actually putting up the OCR to do something about it? Or when as soon as he thought (5 years too late) he had it under control he rapidily dropped the OCR in 1% increments to allow another 2 years of bubble land to continue!
Yeah, good one!
Yes, it really seems like Bollard wants to say that he thinks recession is more likely than a "mild recovery", but for some reason (hint hint) he's painting a more positive picture but with a whole lot of disclaimers to protect any modicum of credibility he has remaining....
If Bollard ever says anything negative the risk is, it becomes self-full filling.........so he wont....the spin will always be positive...if like this, aneamic.
How many ppl in here and elsewhere would be screaming for his head if that happened? its like a collection of voodoo witchdoctors in here sometimes.......
But when I see lots of commentators saying probably double-dip and the most optimistic of those over the last 6 months saying the odds are getting worse....ie its more probable then at least Alan B. appears to be taking note....
Maybe this is why JK and BE are looking to sell the family silver...foreign investors have cash today and the SOE's wont be worth as much in 6~12 months........just why Air NZ hasnt been dumped though I dont know, I'd sell it and run, worse case by it back in a few years at $0.
regards
Full speech to avoid confusion
"But as oil prices rise, this places pressure on inflation not just in New Zealand, but globally, risking a bursting of the commodity boom just like the 2007-08 event. Indeed if oil prices escalate beyond US$100 for long, growth in much of the world will suffer again," he said.
He gets it.
Only partially:
"One feature of the post-crisis world has been the ability of emerging markets, characterized by the BRICs grouping of Brazil, Russia, India and China, to recover rapidly from the massive fall in global demand during the recession."
A massive fall in global demand, but the risk for NZ is:
"One possibility for 2011 is that the commodity boom could intensify, surprising us with stronger export prices for primary exporters, continuing the theme in 2010."
Something with demand doesn't equate.
And the risk assessment for a collapse in demand in commodities is covered where? Sorry, that risk is to be skirted around and not directly mentioned.
Scarfie - do you like this?
Saudi Arabia, the world’s largest oil exporter, will increase production by 3.4 percent in 2011, according to Banque Saudi Fransi.
Saudi Arabia will pump 8.48 million barrels a day, from 8.2 million in 2010, the Riyadh-based bank known as BSF said in an e-mailed report dated yesterday. That compares with an average of 9.1 million produced from 2004 to 2008, the bank said.
Don'cha love it? 0.5 million down on the average, but 'UP' screams the headline.
Dime gets you a dollar that 2010 figure is a trend - you'd think $65-100 a barrel a reasonable incentive, but a whole million down for the year?
Bet their water-cut is approaching 90%!
Water cut, 90%.....dunno from what I can read their many legged hydra holes are shutdown before that. They have some good fields that still have areas that can be worked, but they just need to drill more and faster....to make up for others declining...
Oh but wait, they were supposed to be producing 9.2mbpd......Ive seen other pieces like this....they are "increasing" production.....except the old figure looks nothing like the old, old figure.......
Last piece I saw said dont worry we have 4Trillion barrels of oil and have only used 1 trillion....just what made up that "4" didnt say, well, must be hvy oil and oil sands....we wont get 60mbpd off those....6 yes.... Now in conventional oil the figure is about 2.2Trillion...so he's admiting we are half way and at peak oil in effect....
The other kicker is of course as they say in the same breadth "dont worry" well its Ok "there is on alternative". Then to put the last knife in, the Dow guy pipes in he wants price stability and has concerns that his downstream customers cant or wont pay the finished goods prices when the crude costs so much.
Hello recession....
regards
right on again scarfie
Don't believe the myth that NZ is such a corruption free country. We have a different, more subtle, less direct and even more dangerous form of corruption - not the money changes hands if you do me a favour, but more a systemic "favours for mates" form of corruption. Or, known by another name, "Cronyism"
Once upon a time I thought Bollard was alright - now I just think he's a muppet, vomiting out a load of spin
I've seen it a lot with intelligent and successful people - they get to a point where their integrity and honour flies out the door in the name of status, posiiton, money
Matt I have recently finished the book "False Economy" by Alan Beattie.
He outlines in the book why some economies flourish, while others that could do well don't. There are some interesting comparisons.
Interestingly he says corruption is not an impediment to good performance, but it has to be mild and predictable. He cites the differences between India vs China and Indonesia vs Tanzania. China is easy because of its centralised governance, ie: only one person to pay off, whereas India it is so convoluted that it is hard to find the right person to bribe.
Suharto made things work despite being maligned by many, where as Nyerere was full of good intentions but blew it. See Suharto allowed corruption, but when anyone got too big for their boots he sacked them. He apparently sacked the entire customs department at one stage! You could actually say the Indonesia probably performed better during his rule than New Zealand did.
But you are right, this cronyism is insidious and Beattie outlines why. The palming off of work to your mates results in lack of competition, which results in inefficiencies. We do have a major problem with being unproductive in this country.
The thing about mild corruption is at least you know where you stand, with our lot they make out they have out best interests at hand, but then stab you in the back.
I even know of former and current senior Police that are right in the thick of it.
PDK,
yes that is very interesting. People I have come across that have worked in the oil industry are certainly looking hard at electric cars and biofuels.
I still think that there may be a major drop off in demand for a decade or so, but even if so we still have to start adjusting. I read somewhere that shipping uses about 50% of the oil, do you have any figures on that?
Do you know Pete Bethune?
Dr Bollard better decide which side of the fence he is on.
In 2009 he said:
http://www.nbr.co.nz/article/rb-governor-warns-currency-housing-risk-11…
Answering questions today, Dr Bollard said the Reserve Bank did not want to see a household sector reinvigorated with confidence ploughing back into housing in a major sort of way.
Today he says he will loosen the purse strings if house prices fall too much:
He even raised the possibility of another loosening of monetary policy if it caused a marked recession.
"House prices could be forced to drop much further to reach true economic values. This would cast a pall of gloom over the market, with homeowners keeping houses off the market, not re-building, and trying to pay off mortgages faster, saving more, and spending less," he said.
"The construction and retail sectors would suffer as a result. Under this scenario, the Reserve Bank might have to reconsider some further monetary policy stimulus. Such restrained spending would keep domestic demand in check for 2-3 years, constraining growth short-term but building a stronger base for long-term growth."
Bollard even raised the prospect of an exodus of people from New Zealand if consumption was constrained too much.
Would Dr Bollard please answer two straight questions:
(1) Does he want the property market to improve or not?
Yes or no.
(2) Does he want people to spend or to save.
Yes or no.
And just how can one answer yes or no to these questions?
Surely the options to respond to are given in the questions.
His answers would presumably be
1] He wants the property market to remain flat, continuing to go up or continuing to slide both create problems so a steady as it goes situation will be desired.
2] He would want moderate saving and moderate spending, again too much of either creates problems
Pretty basic don't you think?
There is no way to escape the price that will be paid for the years of stupid wasteful property splurging idiocy. The price is now being forced on the economy. The banks have the RBNZ between a rock and a hole. Jump into the hole and they push the rock in after!...The govt is hiding out beneath the rock!
Govt and the RBNZ will not act to deflate the bubbles any faster than the rate of debasement...3 to 4% per year. If the decline picks up speed, cheaper money will be tossed into the flames. That is the game being played.
The 8 black swans Bolly refers to and any others, are separate to the "game". Even if bugger all goes wrong, this recessionary situation will continue for a long long time and Bollard can see that a new age of thrift has enough of a toehold on this economy to throw off all the advertising BS and garbage dreamed up to stop it.
People have had a bloody guts full of the BS that successive idiotic govts have deemed as good management. Now all the pollies can watch as families say "NO"....and if that means a fiscal bomb going off under the Beehive...so be it.
The stupidity began when a moron thought it would be good if the banks were allowed to carry on lending 100% and more on property with valuations provided by other bloody idiots. Has that situation changed in any way....NO.
Yeah well...the crystal ball that Bolly uses has "property of the trading banks" stamped under it...
This country is owned by the banks and the "game" is kept alive by govt and the RBNZ for the benefit of the banks. To make it worse the peasants are too thick to realise they are being farmed.
Guess who will end up owning most of the power shares when the dust settles!
This is very true. They are being farmed, and milked, but the cows are becoming increasingly stubborn because they are wary of parasites.
Its also clear Bollard is running out of ideas on how best he can serve the Australian owned banks without appearing too obvious, and thats manifesting itself as "double-talk".
Bollard is acting like a person thats under enormous stress to do what he knows is morally wrong. And a person under that kind of pressure would opt for the easiest way out, and thats to be as ambiguous as possible without appearing incompetent.
The public have grown used to the idea that spending is bad. Afterall, how often were they told off about it and what it was doing to the country.
So now its "cool" to spend less and pay off debt. Its the "patriotic" thing to do, even if it means spending weekends at home and putting off plans for big spend ups. And it doesn't matter what Bollard says, thats how its going to be until the public can see for themselves that things have improved and that their power and food bills won't suddenly double overnight.
The public have seen they are powerless to stop the rising cost of living, and even more powerless to get corresponding increases in their earnings. That gap, and the speed at which its grown, has frightened the life out of consumers.
Saving is now a matter of survival, and people sleep a lot easier knowing they've got the cash to sit out a doomsday should Bollards optimism turn out to be smoke and mirrors, just like its been all too often in the past.
And as far as the Australian owned bank (farmers) are concerned. Bollard no longer has the credibility to serve them, and that should be of concern to the Government because of the power the banks have, and what they might do next to get what they want.
The public have started to learn. It has taken two years and then some for the faint signals to register inside the mush between the Kiwi ears. Watch now as the banks drive home the message with an all out effort to get families to splurge on credit once again. The advertising industry must be loving this. No more long running garbage about a dumb arsed Yank doing well at a bank. Now it's got to be a fresh bit of bait every week.
Notice how the poodle media have refrained from any suggestion they might expose the parasitic role banks hold inside the flesh of the economy...not a bloody peep. Ask on the street if a peasant knows what Bollard's game is...and you see a blank face. Ask if they know what a serf is?
The new rules for the OIO are total BS. The sale of rural soil to anyone with a fat bank balance anywhere remains a key plank in the govt and banker plan to protect the property bubbles at all cost. The mortgagee sales are being dribbled into a dead market. The poodle media are spreading rubbish stories about property opportunities to be had. The name of the game is "aim for the greed...aim for the greed".
Meanwhile stupid the student is unaware of having taken the first injection of debt drugs. This is really funny and sad at the same time because you would think the teenage mob with it's texting and mugbook behaviour would by now have realised all they have to do is work together in saying "get stuffed...we don't want to go to uni or tech college"....this would hit the ruling banks like a hammer to the head. Imagine the screams from the Beehive...the banks would be jerking Tolley's strings for sure. "Stop this thing from happening...we must get them hooked on debt...we must keep the game going....the system depends on it..."
What a wanker! It defies belief that he gets paid half a million dollars for regurgitating material that has already been published on the popular economic blogs for the last few years. Unbelievable!
Meteorologists, who aren't the best of forecasters, have a much better track record than this clown.
Yeah i recall a relative of mine looking to buy a second house; the valuer came to value the primary home and valued it about 20k above what it would get on the open market, which meant my relative had 20k more equity, and could borrow 100k more!
Floors were uneven, he made a note saying minor floor board issue not costly to repair, when in reality it could cost 10s of thou.
I am not too clued up on how these valuers are regulated but seems they lack accountability and by marking up prices of homes in the first place, they feed credit and demand that blows the bubble even bigger... Just as bad if not worse than the mortgages given away in the states...
Absolutely Bernard.
I know of one instance in Whangarei where the valuation originally came in at 97,000, but was promptly told that it was too high. The sale had already been agreed upon at $80,000. The valuer went away and revalued.
It was a related party purchase so the valuation was critical to the sale, but there was already a relationship between the agent and valuer.
Totally unethical, but minor in scale to some of the schemes around.
And now banks and govt. want the people who didnt buy into the fantacy land of never ending house appreciation to 'spend more' to help take some of the burden of all those who have overendulged.
They want us to lose as much money as the 'borrow and spend' majority by getting in and buying now, just so the fall out is less servere. The future 10 years of house price appreciation has been priced in and moved forward during the credit fuelled bubble; not going to get roped into owing 200k and ending up paying 400+k on an asset that will go down in value in real terms
The big wet in Queensland set to continue...cyclone on its way and a second lining up to follow that....what will this do to the kiwi au split? We could see 90 cents again in no time.
I think Bolly forgot to check whether the weather would allow him to weather the fx storm from being too happy yesterday...now the Kiwi is off to the races and he will have to sell it and buy aus to keep the bird down!
Gidday muzza...would you have built on the deck in any of those flood prone zones in aus...when you could see the old homes were up to four metres up on poles?....My money is on a final building code demanding new homes stand a yard above the highest flood level recorded.
The originals knew what to expect from the driftwood and crap hanging high up in the gums and the native people would have told them what a big wet would mean.
It's official.
http://news.yahoo.com/s/ap/20110127/ap_on_bi_ge/us_financial_crisis_inq…
another Tui moment.
UK consumer confidence suffers 'astonishing collapse'
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/82868…
Bollard is right on the mark after all.
The property market is on the brink of collapse!!
Rentals available have dramatically increased by a whopping 1% nationwide while only tighening by a mere 16% in the main centres.
Investors wll be slashing their wrists at this dreadful news.
http://nz.finance.yahoo.com/news/Number-rental-listings-irnnewstalk-383…;
"Number of rental listings up"
Nina Burton, On Friday 28 January 2011, 15:38 NZDT
If you're looking to rent and you live anywhere but Auckland or Christchurch, you're in luck.
Latest figures from Trade Me show rental listings for the three months up to December are up 1% compared with 2009.
Head of Trade Me Property Brendan Skipper says it's helped by owners of unsold property turning to the rental market.
But he says unfortunately for people in Auckland and Christchurch, supply of rental homes in those cities is down 16%."
..... just between you and me , Mr Newland , the property market in New Zealand has been on the brink of a collapse for nigh on 3 years now ........... I have it on good authority from a guy called Bernie , who is a barista , and makes double-shot lattes for the financial intelligentsia at some rag-tag website .....
....... anyhow , shouldn't be too long now ........ property bubble about to collapse ...... yup ........... just a moment more .......... you got any peppermints , whilst we wait ? ........ prefer to eat a gummy bear ? You're a weird bugger , Olly , but I like you ..........
And you hope for what Muzza...more of the same...did you not notice how the 'crash' warning from S&P got Key off his rear end...got some action for a change. It's a hard ask Muzza but if economies are manipulated to soften the busts...what you get is what we have. Think about it.
Egypt is not looking so good.
http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=10702849
and am just waiting for this one to download
Egypt..oh yes...next please...Libya!... Saudi Arabia..Iran....that's the trouble with 'democracy'...it comes with the peasants wanting to be free of the crooks and thieving pollies...wonder how many billions Mubarak and family have stashed away for the departure day!
Take a look at the financial markets in the us....Monday could well be crash day...dang sure I'm not buying. Bernanke will be though...expect a big fed splurge on Wall street to hold the tide back.
Oil likely to shoot higher. Diesel and petrol in NZ...up up up.
Comment on cnbc...."gold has become money"
Gold has become munny ? ........ If its on CNBC , expect the precious metal to fall below $US 1000 /oz. this year .
........ a wee pop on the Chinese property bubble ought to help that , along with keeping oil well below $US 100 / barrel ...........
Speaking of Egypt , after November , Labour's leader will wear a sour-Goffy-puss ............. .... " scha-schink " , the sound of Cunny's knife sliding into Goofy's back !
"... the Reserve Bank could be confronted with the need to increase policy rates to dampen the accelerating inflation outlook"
QED the inflation outlook is accelerating as you read Bollard's comments!
This is why the builders etc taking on work in chch are demanding hefty hourly pay or massive amounts to complete repair work. They know they must grab every cent they can squeeze from the insurance companies and the companies are determined to extract it all back from home owners plus some on premiums...meanwhile the power companies have hiked charges... Councils are demanding double the official inflation rate increases on rates. Schools will hike the "donations" by heaps. Diesel and petrol are rising this weekend.
And the banks have put some tastey bait on the hooks...5% deposit and cheap mortgage rates...you just don't want to miss out here suckers...grab your chance to be an idiot.
Bolly admits in his OWN book that he is clueless to what the whole economic meltdown actually entailed. He even got people from the RBNZ to inform the NZ media not to ask certain questions in advance that would embarrass him at media conferences!
The guy is a black hole of economic knowledge. It goes in but nothing good ever comes out or is seen again that makes sense
Mercury and Contact are AGAIN putting up power prices. Contact have stated 7% increase in March. Nice, lets add that too the CPI shall we and then dismiss it like all the other REAL commodity price increases that put REAL inflation near 15% a year! Not the BS figure of 5%
The crystal ball is full of soggy aussie mortgage debt.....
"THE banks are likely to see a $1 billion surge in bad debts as a result of the devastating floods across eastern Australia, with many home owners and businesses caught in the disaster facing financial ruin.
The disaster is likely to trigger a $200 million jump in bad-debt charges for the big four banks, while regional lenders such as Bank of Queensland and Suncorp also face big losses.
Brokerage UBS has warned that banks will also be left with mortgages on properties that no longer exist, and that some houses and commercial property developments in flood zones now face having their value slashed, potentially triggering further write-offs.
Most banks have frozen mortgage repayments for up to three months for flood-affected home owners, but have said it is too early to gauge what the financial impact of the disaster will be, because government assistance or insurance cover would determine whether some borrowers could continue to manage any loan payments." the age.com
Now what will the stonecutter lords of the economies do...sit back and say "oops"...or put the squeeze on the rest who hold mortgage debt!
Queensland and its flock of black swans...Anthony on its way..... http://www.bom.gov.au/products/IDQ65002.shtml
OIls gone up in a hurry up %4.3 last night.
From the Telegraph something in Japan that should be on Bollards list of 'ifs'
>>>>>
Julian Jessop, from Capital Economics, said the unfolding drama in Tokyo has global implications since Japan is the world's top external creditor with $3 trillion of net assets abroad. "This is potentially a much bigger story than any default in Greece," he said.
The concern is that Japanese banks, pension funds and life insurers may forced to repatriate large sums to cover losses at home if the fiscal crisis triggers a jump in bond yields. This could set off a worldwide fall in asset prices.
http://www.telegraph.co.uk/finance/globalbusiness/8287339/Warning-shot-…
Alan Bollard has confirmed what I have been saying on this site. There is a risk we as a nation emphasise saving too much and therefore not enough is spent keeping the economy going. And I am not talking about spending on property. You have to have rocks in your head if you are currently doing that especially with borrowed money.
We have to continue to keep spending in retail,service and contract industries otherwise the economy will just keep winding down in intensity and there will be a growing number of unemployed people needing to be supported by a dwindling number of people paying tax.
Phil Goff is after the rich, those paying earning $70k plus. His talk about taxing them harder will be detrimental to the economy as again it will take spending power away from those nasty people who Phil thinks are rich. No wonder we are such a poor nation.
And about to get poorer, ex-agent. Whta happens next? As spending drops and jobs become more at risk, the workers start to take, yes, pay-cuts to keep their jobs. Less and less money goes into the spending system, and workers take less and less wages to keep their ever dwindling job posibitlities. It has to happen. There is no escape from too much community debt, other than work - for those lucky enough that have/keep it. And those that don't have work are about to start competing with those that do, with the only tool they have left- the value of their labour.
Suez canal closure concern:
http://www.zerohedge.com/article/suez-canal-closure-concerns-go-viral
and
Mubarak speaks:
http://www.zerohedge.com/article/mubarak-speaks
and
Thousends protest in Jordan
http://english.aljazeera.net/news/middleeast/2011/01/201112812515750919…
Some personal experiences in Egypt a few years ago:
- Police is using batons to beat a crowd, including women, surging to get into already overloaded bus
- Police using batons to beat a crowd back trying to get on to overloaded ship
- Cleaning staff in hotel are only males, grubby and lazy, upon a complaint getting abusive, I watched them pouring rubbish from the just "cleaned" rooms out the windows into an backyard, wind blew half of it back or into other open windows
- Beautiful beaches littered with literally tens of thousands of plastic bottles and other rubbish
- When not buying in a shop in the bazaar because we said we are not certain the item is genuine, we were literally manhandled and kicked out of the shop
- every woman at reproductive age was pregnant
- 80 millions population, only a narrow strip along the Nile is fertile
- country survives only because of financial aid of the USA
- thousands life in the so called "City of the dead" , which is a huge cemetery, because they cannot find a roof over their head
In contrast to this, Jordan was very clean, civilized and people were obviously quite well educated and well spoken.
But this are only snippets from travel experiences.
That's not restricted to doctors over there snarlypuss. Last year a petite young friend with her partner was walking down the street in Cairo, modestly dressed i.e. long pants, no low cut blouse, when she noticed a guy moving up close behind her. Before she knew what was happenning the Egyptian had passed her as as he did so grabbed her breasts. Her partner is not a small chap and they were surprised at the fact the runty Egyptian was so daring considering the size of her partner.
Interesting.
From www.indexmundi.com :
Birth rates:
Egypt - 25/1000 (2010 est)
Jordon - 27/1000 (2010 est)
New Zealand - 13/1000 (2007 est)
So I guess you must have observed alot of prenant women in Jordon as well?
Put yourself in his shoes Justice...feel the weight of concern and the jerking of the Stonecutter's strings attached to your limbs etc...then you have the worry of what to do with $500ooo each year(less tax)....could you cope with worries like that Justice...well could you?
Gertraud T
Have you seen the demographics, the Middle east is on the road to Anarchy.
The rapid population growth is such that youths under the age of 24 now make up 50-65 percent of the population of the Middle East.
http://www.brookings.edu/papers/2003/06middleeast_fuller.aspxI understand the French in Canada used to call it "revenge of the cradle".
http://en.wikipedia.org/wiki/Revenge_of_the_cradle
From The Economist here;
http://www.economist.com/node/12891035
The only thing that wories Mr Bollard is what he does not mention: The AUD going down against the NZD, so if you see the AUD going under 1.25 he will surely loosen the purse strings. or at least get vocal dumping the NZD. No matter what oil or the rest of the things that worry him do.
Thank you for the effort you have put into your blog Iain. Interesting reading.
So from what you say while Maori have a beef with the crown, where there problems really lie is with bankers.
I guess the red necks out there that berate Maori for trying to redress their grievances are going to share the same problem soon, their assets being stripped through acts of artifice and deception.
Maori have had the wrong target to seek redress and there is the risk of having their lands taken all over again.
It is actually fraud that is being perpetrated against the general population, because it is criminal thinking behind it.
Yes well speaking of Hone, what if his crowd decide to use spreading worldwide unrest to reclaim all lands covered by the Declaration of Independence of the Confederation of Northern Tribes? That would upset a few property investors.
Covers a fair bit of land from the Waikato north.
But you can't lose with land, it doubles in value every 8 years right. Save as houses.
What if Hone reads and learns like most of us at interest.co.nz?
I actually like the guy because whether you like what he says or not, at least you know he isn't lying about it.
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