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NZ unemployment 6% in June quarter; Worse than expected (Update 4)
New Zealand's unemployment rate rose to a seasonally adjusted 6% in the June quarter from 5% in March, Statistics New Zealand said today. This was above economist expectations of around 5.6% and 5.7%. (Update 4 includes further economist comment.) Economists are saying that the higher than expected unemployment figure was partly down to an increased labour force participation rate over the quarter, which indicated more people were actively looking for jobs than before. A rising unemployment rate is cited by many as being a dampener on the housing market and will keep the pressure on Reserve Bank Governor Alan Bollard to keep the Official Cash Rate at or below 2.5% until late 2010. The 1% increase was the largest quarterly increase since the September 1988 quarter. Seasonally adjusted, the male unemployment rate was 5.7% (up from 5.1%) and the female unemployment rate was 6.3% (from 4.8%). The working age population (WAP; ages 15-64) rose by 0.3%, or 11,500 in the June quarter, which was reflected in the increase in the total labour force (employed + unemployed), Stats NZ said. The labour force participation rate rose 0.1%, indicating that 68.4% of the working age population was in the labour force. The number of working age people not in the labour force rose by 0.2%.
"The increase in WAP was partly due to a 1,400 net gain in permanent and long-term migration (s.a) during the June 2009 quarter," Stats NZ said. "The male labour force participation rate rose to 75.2 percent (up 0.4 percentage points), while the female labour force participation rate dipped to 62.1 percent, from 62.2 percent in the previous quarter. Despite this decrease, the female labour force participation rate in the latest quarter is still the fourth highest since the survey began," Stats NZ said. Full time emplyment fell 1.1%, or by 18,000 over the quarter, while part time employment rose 1.3%, or by 7,000, Stats NZ said. The level of people 'underemployed', those who worked part time but would like to work more hours, increased in June. "The number of underemployed people may serve as a measure of underutilised labour in the economy," Stats NZ said. "Of the 514,100 people employed part-time in the June 2009 quarter, 22.2 percent (114,300) preferred to work more hours. This compared with 21.2 percent in the March 2009 quarter and 16.5 percent in the June 2008 quarter." "In the June 2009 quarter, 28.7 percent of males working part-time preferred to work more hours compared with 19.5 percent of females." Unadjusted figures 
Unadjusted figures (see chart) show that 5.8% of the sampled labour force was unemployed at the end of June, up from 5.6% at the end of March. There would have been 133,500 unemployed workers in the labour force, with 65,300 of those female and 68,200 male. The male labour force is 12% bigger than the female labour force. The unadjusted labour force participation rate fell 0.3% in the June quarter from March. The number of the working age population not in the labour force rose 1.3%. The sample is 15,000 households and 30,000 individuals each quarter. Here is ASB economist Jane Turner's take on the seasonally adjusted figures:
(U)nderpinning the strong pick up was not so much in the loss in jobs, employment declined just 0.4% (close to the market expectation of -0.5%, but much better than ASB's expectation of -1.3%). Rather, the rise in unemployment came from stronger population growth (working age population increase 0.3%) and an increase in participation. Over all there are more people hunting for jobs (an increase in the labour force of 0.6%), and the modest decline in number of people employed saw the unemployment rate jump sharply. Despite the 6% unemployment rate, this result has one positive offset, as more people are hanging onto jobs throughout this recession. The more muted decline in employment was a result of full-time employment falling 1.1% offset by a 1.3% rise in part-time employment. The definition of part time employment is working less than 30 hours a week. As a result the shift in jobs from full-time to part-time may reflect firms attempt to reduce hours worked by each employee in order to save job losses. Total hours worked fell 1.9% over the quarter, suggesting that over all labour income earned by the household sector is still declining. There was good news and bad news in the release. The bad news is that measured unemployment is likely to be high going forward: the number of people chasing jobs is higher than anticipated. The good news is that the combination of rapidly reducing wage growth and only a modest drop in employment strongly back up anecdotes that the pain of falling labour demand is in part being borne by wage freezes or reduced work hours rather than outright layoffs. The eventual drop in employment over the course of the recession may be contained by these measures, which would mean some families avoid the stress and disruption triggered by redundancies.
BNZ economists said Thursday's unemployment figures "cemented" their message that September's Monetary Policy Statement was very much live for an OCR cut.
While we're not over the line on this, the odds are virtually 50%. And even if there is enough to keep the Bank from cutting on the day "“ for example, if the NZ dollar abates, or the economic news picks up more patently "“ then it can always signal a near-term OCR cut in its forecasts for all to see. Don't say we haven't been warned (especially those betting on OCR increases within six months "“ that is, the market at large).
However, Westpac economists said they expect the RBNZ to keep the OCR at 2.5% until late 2010.
This labour market report was weaker than we expected, but in the bigger picture it only confirms what markets already knew - New Zealand has experienced a severe recession. Markets are now firmly focussed on the nascent economic recovery, and today's data shed no light on that. And in any case, the unemployment rate came in close to the Reserve Bank's 5.9% forecast. Therefore there was little market reaction. The slack labour market, illustrated both today and in Tuesday's wage report, does show that inflationary pressures are non-existent. Even if the economy recovers quite sharply, the Reserve Bank will feel little pressure to hike the OCR as early as markets suggest. Equally, we seriously doubt the RBNZ will act on the easing bias it promulgated at the last OCR review, because we believe the economy can recover with an exchange rate approaching 70 cents. We expect the RBNZ to remain on hold until mid-2010.
ANZ National economists said the figures reiterated their view that the recession would be shaped like a 'bathtub with waves'.
Today's figures reaffirm weakness in Q2 for the economy, easing pressure on core inflation, and headwinds the household sector faces going forward. Feedback effects from a rising unemployment rate and a de-leveraging consumer remain a key feature of our expectation of a protracted and bathtub (with waves) shaped cycle. In this environment we continue to expect the RBNZ to keep the OCR low for an extended period, and well into 2010.
Herein we find the dichotomy
Herein we find the dichotomy between the financial and the real economy. For all the 'green shoots of recovery' being cited and the cries of 'higher prices, higher prices' from the property 'perma bulls' the underlying economic pathology is deeply deflationary.
Do not underestimate the growing effect of unemployment on government tax revenues, for the sea of red ink flowing across the books both here and overseas is the 'big one'. At some stage it will probably be necessary to either slash public spending - having elevated expectations over decades to a ludicrous degree - or there will have to be an outright monetization of government debt.
In my view, nothing will ultimately stop the process of deleverage - for this is part of the immutable economic order. Yet, along the way, we may well pay a visit to Weimar - just a brief one, just brief enough to destroy the middle class!
greate time to gear up
greate time to gear up on housing!!!! In a few years your rates may be 4% higher and you will be out of a job, but so what - you can sell the house for 50% more than you bought it for and come out on top.
For all the people who
For all the people who go on about immigrations effect on demand for houses....
The last 3 MONTHS have seen 23,000 people lose jobs.
So what if we get a 'huge' 20,000 more people a year immigrants, its nothing compared to the loss of demand we see as people fall out of employment
Well, not surprising AT ALL.
Well, not surprising AT ALL.
I know a lot of people who have been made redundant, the economists as usual were talking all this stuff down, they are in their ivory towers with no concept of reality
Once again the economists' forecasts are significantly wrong
So...Tony Alexadner said last year property prices might only fall by 30% if unemployment rose above 6%. That has now been achieved so why does he rule out falls?
Of yeah, because we have such a supply problem
Yeah right!!!!
Josh, Very good point. And
Josh,
Very good point. And why are we bringing in all these immigrants if we dont have enough jobs?? Maybe most are students (do they get counted as immigrants?). Surely the govt must look to put the brakes on when unemployment is sky rocketing.
here is TA in 28
here is TA in 28 August 08 saying unemployment reaching 6% is "extremely unlikely" (page 6)
http://www.bnz.co.nz/binaries/w280808.pdf
one needs to be very careful when criticisinbg other people's forecasting records!!!!
LOOKING at the above unemployment
LOOKING at the above unemployment graph notice how steep it rises, almost vertical.
Something tells me accounting for all the people not registered IE: with partners over the threshold $533 etc..
We are actually already ay 7%
Bet this gets the alarm bells ringing at HQ -- HONEYMOON OVER SPI's come down to EARTH AND JOIN THE REST OF US!
Josh and Jimmy even 20,000
Josh and Jimmy
even 20,000 immigrants translates into 6,000 houses(one immigrant family of 3 needing one house) and that too only if you have a good job and deposit.
Tony alexander admitted yesterday that interest rated could be 2-3%higher in 12-24 months.
defintion of bank economist= vested interest and detached from reality on a huge pay to spin and doctor in the media.
The US Fed. Reverse continues
The US Fed. Reverse continues to churn out mega-auctions of Treasury notes. The market's appetite for these is waning rapidly. Expect interest rates to rise, and to do so quickly. Irregardless of what Wooly Bully Bolly does here, rates will surge next year. Bernard and T.A. may be able to serve the humble pie back to their detractors.....one lives in such hope.
Skope factory in Christchurch taking
Skope factory in Christchurch taking on 50 more staff so its not all doom and gloom on the job front.
http://www.stuff.co.nz/the-press/news/2722944/Skope-announces-new-jobs
Large scale immigration does not
Large scale immigration does not - and cannot - compensate for the inevitable debt deflation that follows the sort of consumption filled attack of collective insanity we westerners have engaged in during the post-war period. On the contrary, the 'immigration years' have been characterized by chronic economic underperformance in which we have simply borrowed from our future, our children's future, and their children's future. Mass immigration suits politicians, and the elites that command them, because it artificially inflates asset prices (good for the banks and seducing Joe Public) and it provide quasi-subsidised labour for big business (good for the banks and the corporate top brass).
A powerful argument can be advanced that mass immigration has actually caused huge economic damage to the west, particularly in recent years, because it has led to such a mis-allocation of resources. Forcing a capital starved nation to borrow even more offshore, so that the established population can compete for houses with migrants, is just about as mad as it gets!
TA also said in early
TA also said in early 2008 when prices started falling with high interest rates that it was good news for cashed up buyers to snap up a bargain. A year later prices were down 9% or average $30,000, prob most of these poor buggers deposit at the time.
The 'dead cat bounce' recently will sting a few more people of there hard earned deposit, hopefully banks aren't setting up people for forced sales later as rates rise, which would see the paper loss realised and permanent
Josh : If you follow
Josh : If you follow Kiwi-Banks lead, not much of a deposit is now needed to secure your slice of suburbia. 5 % will do it, and no extra fees nor penalties. That bouncing cat may not be quite as dead as some thought it was............Meoooooooooow !
Mean while back in the
Mean while back in the country, Nobilo have started dumping grape growers its very sad for many and on top of Montana. Wages in the dairy sector, some went in on Thursday noticed the wages had gone through but on Friday they had gone again. Its getting ugly no one is getting paid. fencers through to Electricians, the banks appear to drawn a line and they are not moving. This will filter through slowly, lower taxes less spending higher unemployment. 6% and its only beginning.
http://counterpunch.org/lindorff08042009.html
Malcolm, "A powerful argument can
Malcolm,
"A powerful argument can be advanced that mass immigration has actually caused huge economic damage to the west, particularly in recent years, because it has led to such a mis-allocation of resources"
Completely agree Malcolm. Imiigration should supplement a growing economy (ie when there is skills shortage), it should NEVER be used to drive economic growth via stimulating demand for housing. Housing growth should be a function of increasing incomes. As you say, existing immigration policies benefit big business and banks. Existing residents lose out via increased prices. It is a complete sell out. NZ and Aus are prime examples - our immigration levels are far higher than most other countries and likewise our house prices and debt levels. There was a good article a month or so back in the NZ herald i think showing how although Akld GDP growth has been good over the past 10 years, GDP per person has actually fallen. And this at a time of rapidly rising prices. Guess what figure the govt reports????????
Real unemployment is close to
Real unemployment is close to 8% for sure and it will keep rising. Expect a deluge of spin from the army of PR bludgers appointed by the govt to wallow in the trough of public cash. Don't expect anything of value from Brash. The name of the game is protect your stash. Long term we will see much higher mortgage rates for much longer and for unemployment to remain high for a very long time. The massive fiscal debt being built up will begin to suck up more tax(income) from the families who saved and avoided the stupidity of the property madness. They will be expected to pay for the idiocy of Labour and this current mob. The perk parasites will manipulate the rules and fudge like mad to hang on to their freebees. Another Parliamentary European perk tour for MPs will be organised and sold as a tourist winning strategy. 2011 will arrive and the pork slicing party machines will gear up for another round of lying to the peasants in exchange for votes. About then Brash will get to bend the knee and his long awaited report will be quietly buried in the Beehive basement where all reports go to die.
<blockquote> Total hours worked fell
Demand is obviously down. Lets concentrate on higher productivity so even less people are needed to meet that falling demand.
The ship is sinking, but we have Don working on designing a more efficient engine. To me that looks like a smokescreen to hide high government wages and spending.
Wally, "2011 will arrive ...
Wally,
"2011 will arrive ... " But remember the world cup effect. I am expecting houses to rise 200% in response to the demand for rentals in Mt Eden over the 6 weeks. It a sure thing.
PeterR, "The ship is sinking"
PeterR,
"The ship is sinking" - absolutley. And the only way to fix the leak is to stop pissing interest overeseas every year to pay for mortgages on inflated houses. The ONLY way forward is a housing crash.
Don't wish too hard, jimmy.
Don't wish too hard, jimmy. We're all in the same waka, and a measured correction to fundamental values would be better than a crash. A nation of impoverished, imprisoned home 'owners' is not the place we want to live in.
Spin doctor..."well we could bang
Spin doctor..."well we could bang on about some green shoots or some s..t like that some-more"
Govt spokes..."nnnnaaa I don't think they'll go for that again..
Doctor.... they might if Corrin Dann pitches it ..?
Govt sp... who the f..k is Corrin Dann...?
Doctor.... he's on the telly ,he's real pretty an he wears nice suits !!
Govt sp.... O K, and get him to beat up an angle where at least they'll get more time with the kids....
Doctor.....Done see you at six a.m...watch this space ! ..oh yeah sorry I'll tape it for you....
Roger: Its a bit like
Roger: Its a bit like the specials they have on LCD TVs just before the LED TVs are released. Buy houses quick before you release they're on a long slow road downward as our economy continues to produce less than it consumes...
George, "A nation of impoverished,
George,
"A nation of impoverished, imprisoned home "˜owners' is not the place we want to live in."
Would you rather a nation of deluded impoverished, imprisoned home "˜owners' . Once we eliminate the phony wealth of inflated assets, the advantage is that those coming into the market are not required to take on huge debt. This provides IMMEDIATE benefits to the country's NET deficit which is REAL as opposed to phony. It also gives a wake up call to others to get their finances and savings in shape. Those boomers about to retire relying on their inflated assets have no sympathy from me, as they are the ones who have benefitted most from the farce that is the NZ housing market AND they are still going to get a govt pension which is more than will be available to gen X and Y. If they want their cake and eat it too, then they can pay for it themselves not off the back of FHBs paying too much.
jimmy, the problem with a
jimmy, the problem with a housing crash is that it will expose the 'emperor as having no clothes'. This is the tragedy of a consumption based prosperity, because so much government revenue (and local authorities) is based on feeding - parasitically - upon the illusion of wealth that asset inflation creates. This will be one of the key reasons why GST was introduced. Not to lower the overall tax take (correct policy) but to massively increase it off the back of the money supply explosion that was being instigated in the early 1980s. This issue of the money supply was the great battle that Enoch Powell effectively lost, despite the huge influence he had over Margaret Thatcher and Sir Kieth Joseph, and New Zealand (contrary to opinion advanced here) did not lead it simply followed under the auspices of a certain Roger Douglas. I just pinch myself and wonder what social conditions are going to be like in parts of this country if Messrs. Key and English et al have to start slashing government expenditure - ie welfare benefits - to reflect an acutely contracting tax take. You are absolutely right that the only way forward is a housing crash but George's observation is most wise! "A nation of impoverished, imprisoned home owners is not the place we want to live in."
Unfortunately, as Ludwig von Mises reminded us, there is simply no way of postponing indefinitely the punishment that always follows an illusory prosperity based on credit.
Malcolm, I'm not saying a
Malcolm,
I'm not saying a ""A nation of impoverished, imprisoned home owners " is a great place for everyone to live in. But 2 points:
1) It is a lesser evil than one in which we are deluded and increase the problem as a result
2) In balance it is a great place for new entrants to the market and savers.
3) In balance justice is better served ie those unjustifiably enriched are put back to where they should have been all along. Those who bought at peak, may feel bad, but they will in fact be better off as most want to upgrade to a more expensive house at some point.
Malcolm. <blockquote> Unfortunately, as Ludwig
Malcolm.
Not indefinitely, but there is great scope to make the end result far worse by dragging the process out.
jimmy, in essence I agree
jimmy, in essence I agree with everything you say and have argued at this site, on many occasions, that house prices must return to their long run average at 2-3 times annual income. Even from current lower levels this would still imply massive falls!
The problem is the dislocation that such an event, albeit as you correctly opine a highly necessary one, would bring. Essentially, what is required is a paradigm shift in the way that money is viewed - and that is why we are ultimately going to have face a Titanic struggle with the bankers in the battle for a return to sound money under a precious metal standard. As Lord Acton foresaw many years ago - the war we cannot avoid will be "the people versus the banks".
I doubt if you've ever
I doubt if you've ever lost absolutely everything, jimmy. Or been at an age when 'it's too late to start again'. And that's what the destructive power of negative equity does. One looses one's house; one's family and one's self esteem. I hope you will never have to experience that. But if you do, then run through points 1,2 and 3 of your posting, and see how much better it makes the situation. Our country has arrived at it's Rubicon moment, and destroying the savings base stored in housing, overnight, with a crash will destroy not only the lives of those directly involved, but indirectly yours as well. A crash, by any definition, is catastophically destructive. Much better to engineer progressive change than impose it.
Malcolm - I take it
Malcolm -
I take it that you are an "Austrian" (as I think I now am). Isn't the standard Austrian view that any pain/hit that needs to be taken should be taken sooner rather than later: that the malinvestments due to easy credit (incl. bubble housing and bank loans) need to be exposed and dealt with to avoid moral hazard?
As has been noted the basic problem is that the losses (across the western world) have been incurred its just that they haven't all been exposed yet.
If NZ is a nation of "homeowners" and not savers - how would a moderate amount of inflation, say 10% per annum, change things? (not that it could be engineered reliably). People would still be poorer in real terms but nominal house prices would be level/up meaning people wouldn't be in negative equity and could sell if they got into trouble.
George ... while I agree
George ... while I agree with your sentiment entirely,... I doubt Jimmy or anyone for that matter will be imposing anything.......... this will play out all by itself as a result of global greed in the guise of development ...and there will still be those looking to capitalise on the implosion.
Good luck to you and may you find some shelter.
@marky mark: The chief effect
@marky mark:
The chief effect of inflation, which makes it at first generally welcome .....is .... a false sense of wellbeing, in which everybody "seems" to prosper.
http://mises.org/tradcycl/avoidinf.asp
marky mark - I guess
marky mark - I guess I would be classed as an Austrian! On the U.K. domestic front I was also very influenced, as a schoolboy, by the economic ideas of Enoch Powell - whose contribution to the debate is always overshadowed by that infamous speech on immigration. The problem is that economic theory always comes up against political reality - and the reality is that politics are always, ultimately, about the returns on violence threatened or deployed. Just imagine what would happen if our esteemed leaders were to explain to New Zealanders that their prosperity is substantially a scam, that their main 'asset' is to plunge in price, and that public services are to be slashed to the bone! This is the essential problem with all libertarian thinking - is it right to confiscate a huge share of a man's labour and transfer it to someone else without his consent? Of course not. Yet government has the muscle to take, the same as the armed robber has the muscle to take, and no amount of rationale argument is likely to influence the situation.
My personal hope for the future is our young people because, ironically, they might just be open to the classical ideas of men like Hayek and Mises. They are the group whom we have scandalously betrayed - not the 'boomers' who were deranged enough to believe a static, non-income producing, decaying 'thingamy whatsit' like a house could make money by magic - literally ridiculous! The return to the gold standard is the best thing we could do for our kids, because it would stop the bankers screwing up their world and allow rationale financial decision making to be restored and genuine hard-work and enterprise to be rewarded.
NZ's % of home owners
NZ's % of home owners is less than USA and Australia last I checked, and home ownership has been decreasing since 2002.
Why?
The boom has allowed people to re-invest there increased equity from there first home into 1, 2, 3 and more additonal homes, so they can milk them for all they're worth too.
The solution? Relistic interest rates of 10% plus. People who have 5 or more houses all leveraged up will no longer be cash positive as rental yields fall well below what they're paying on there mortgages and so the wise thing to do is sell.
Considering the very large percentage (40-50%) of homes are owned by these people who have one or more houses, the result will be oversupply of houses for sale, and affordable houses for first home buyers as the balance of ownership is transferred from greedy tax dodging property investors back to hard working families trying to buy there first home
"stop the bankers screwing up
"stop the bankers screwing up the world" and the thieving morons that sneak into govt everywhere Malcolm! Sorry but you haven't a hope in hell of preventing the thieving going on. Much as it would be interesting to be on the gold standard, I doubt it would stop the criminals in the govts from carrying on with their rorts. Nixon the crook was just the last in a long line of crooks and the one to clearly designate the USSA as an untrustworthy nation. Madoff confirmed this. If the youth of today are interested, and I doubt it, they would be wise to avoid bank debt at all costs. Save and pay cash for stuff they need. Rent and be happy to invest savings in the few reputable companies around. As for this expectation that National will strive to put right the disfunctional pigsty of an economy, yeah right. Their rump is heavily invested in rural and residential property and keen on keeping the property bubble going as long as possible. If that means thieivng from taxpayers to prime the market, it will be done. Watch out for a capital injection into Kiwibank, times to coincide with spring. Sadly, the only way forward for the well skilled young New Zealanders is to bugger off as quickly as possible. Learn Mandarin and work for a foreign multinational in China.
Josh, also add a capital
Josh, also add a capital gains tax for people own houses that they don't live in (eg. second , thrid, fourth houses) . The primary house wouldn't be subject to the CGT
Wally, it was precisely because
Wally, it was precisely because Richard Nixon knew that America could not finance the Vietnam war that he took the country off the gold standard. This left the U.S. free to produce increasingly worthless pieces of paper with which to pay for the privilege of losing that conflict and, subsequently, for an ever more profligate lifestyle - trouble is the game may be up. Yet a period of financial difficulty can focus the mind and this is nothing new. England's King Alfred the Great put it far more eloquently than I can - and these are words from over a thousand years ago!
"In the midst of prosperity the mind is elated, and in prosperity a man forgets himself; in hardship he is forced to reflect on himself, even though he be unwilling. In prosperity a man often destroys the good he has done; amidst difficulties he often repairs what he long since did in the way of wickedness"
To Rob & any who
To Rob & any who promote a CGT on homes other than 1st homes, or stopping the rort of LAQCs etc. Anything like that is never going to happen. Absolutely out of the question.
The recent hoo-haa over MPs cross-renting properties to each other shows that. MPs are up to their elbows in rorts over rentals, they are never going to change the rules to take their snouts out of the trough
http://www.stuff.co.nz/the-press/news/2720732/Parties-take-pot-shots-ove...
"More MPs have admitted they rent out their Wellington homes while claiming taxpayer-funded housing allowances.
In some cases, they rent out their houses to their backbench colleagues.
He [English] said MPs had rented out properties for years, with many choosing to use them as part of their superannuation scheme."
So levelling the playing field to take away the inducements to plough more borrowed overseas $$ into housing with zero productive or export output is off limits. Verboten. End of story.
My money is on the
My money is on the wickedness continuing Malcolm. And Philly is right, the mp rorts and the nationwide gambling on property will not stop, because there are too many in the corridors of power creaming it and dead keen on keeping it going.
http://www.cnbc.com/id/32308378 Aussy unemployment stayed at
http://www.cnbc.com/id/32308378
Aussy unemployment stayed at 5.8%.
George, I'm a gen xer
George,
I'm a gen xer in the unenviable position of looking at buying a first time house and I can honestly say I'd love a housing crash. Several years ago I started saving, working at one point 3 jobs so I could put away roughly $500 weekly, and I was actually loosing money versus the rise in house prices. Thanks to the DOUBLING of house prices it seems all my hard work and a serious amount of cash savings is in effect worth 0, nadda, zilch. Years of toil and hard work so I can put it in the hands of incumbent and greedy property moguls. This on top of a student loan as well. So I have lost a lot, and trawling the property press for over valued houses (as a non owner) is an intensely depressing situation to be in. I know it's a bit selfish but I can't help feeling like a crash would be a great thing and bring some reality to the situation.
Wally/Philly. Where would you place
Wally/Philly.
Where would you place politicians stuffing the economy to protect their own interests on the continuum from self interested to self serving to corrupt?
Did anyone notice Alex's new
Did anyone notice Alex's new photo?
Josh Says: The solution? Relistic
Josh Says: The solution? Relistic interest rates of 10% plus. People who have 5 or more houses all leveraged up will no longer be cash positive as rental yields fall well below what they're paying on there mortgages and so the wise thing to do is sell.
Josh the solution is to get all that speculative investment into productive enterprise and make zillionaries of people that create jobs, pay tax's and earn export dollars as apposed to funding the stupidity we have with asset inflation and making it a tax haven to boot.
A high interest rate effects the productive sector more than the speculators as we have seen. Sorry this is not the answer Josh unless you think we can survive without exporters.
Yeah ta Gaz, we're workin
Yeah ta Gaz, we're workin on that. May replace with a slightly different one tomorrow, will see what me Ma thinks ;)
@mark: Please don't misunderstand me!
@mark: Please don't misunderstand me! I'm actually batting on the same side as you. This is what would happen. There'd be a crash.... and you know what?, you wouldn't buy! Because you'd be scared stiff that there was more to come, and even though your hard saved money had come back into value, you'd be even more protective of it. That's why rapid deflation is so destructive. It distorts behaviour rationally and economically. My suggestion is only that a measured realignment of true value won't scare the pants of you, and allow you to enter the market at a time and price that suits you, and not produce mass 'wealth' destruction on the other side of the ledger.
Mark, your situation speaks so
Mark, your situation speaks so powerfully of why we have to return to gold as the basis for the monetary system. A young person should be able to save, knowing that the money they set aside is a store of value - not some unbacked paper IOU which is all the New Zealand Dollar, Pound Sterling and the Greenback are. There is nothing magical about gold (I don't even think its particularly pleasant to look at) - although it does have important physical properties. Its appeal lays in the fact that it is a historical monetary medium whose supply cannot be expanded by government (read bankers) decree. Your generation has been betrayed, simply because, by chance of when you were born, you were not able to access all the newly created money early enough. That is why you find yourself saving hard but chasing an ever more elusive target.
But herein lies the problem
But herein lies the problem as I see it, Malcolm. Pandora's box was fully opened in 1973, and the pestilence is all about us. I cannot see a way of returning to a gold standard without terrible global conflict. Or maybe that is it. Maybe the War Generation has to be reincarnated , at a cost that will make house prices seem the least of that gerenations problems. When the gifts of the Gods had been removed from the box, all that was left was hope. Let's hope for the best, then.
Malcolm, Completely agree. George "Because
Malcolm,
Completely agree.
George
"Because you'd be scared stiff that there was more to come, and even though your hard saved money had come back into value, you'd be even more protective of it. "
Or after a crash we might just think that we can now buy for roughly what it costs to rent.
Mark, pass the word to
Mark, pass the word to all X and Y you know. Leave the country and lets see what the boomers do with their houses! I am off to oz myself. Better to spend the rest of my life renting in a warm place surrounded by deadly spiders, than freezing my behind paying someone else's gold plated early retirement!
I agree with Malcolm, but
I agree with Malcolm, but like George wonder how a return to a gold standard could be done - and by the way it doesn't need to be a 'gold' standard, it could be a basket of commodities, just something in the 'real world', an objective reality, out of the control of politicians.
I must get more time at some stage in my life to read up more on 'free banking', for this also, I suspect, may well be a solution. It has gained some bad press, though recent studies are showing much of this bad press was unwarranted - probably conducted by Keynesians more than likely - and that free banking had worked well in our not so distant past (namely, in the US).
The most important consequence to be achieved is to get the State, and governments (the two are different), out of banking, control of money supply, and the setting - distorting - of interest rates, and let banking back into the sphere of laissez faire.
BE's comment, Unemployment will get
BE's comment,
Unemployment will get worse - English
http://www.stuff.co.nz/business/industries/2727894/Unemployment-will-get...
@steven - not if he's
@steven - not if he's one of them.
It makes me feel really
It makes me feel really sad reading posts like Mark's and Fred's. Working 3 jobs to squirrel away $500 a week - that's some serious effort and it sucks that Mark's goal drifted away before his very eyes.
George I know this is
George
I know this is true, and the way I think about the issue is somewhat emotive, but it's hard not to think this way sometimes. It just sucks that I did what I thought was the "old school" right thing to do - work my arse off, live cheaply and save like mad, and at the end of it all I'm left (in real terms) with nothing. We seem to live in an economy which doesn't actually reward hard work and saving at all - the housing market is a gigantic get-rich-quick scheme and every government policy seems to support it.
George said: "I cannot see
George said: "I cannot see a way of returning to a gold standard without terrible global conflict."
George, an interesting observation but I believe the precise reverse to be the case. Think back to 1914 and the start of the greatest war the world had ever seen. What had occurred in 1913? - the setting up of the US Federal Reserve. The fact is that world war one would have been over in months, if the Victorian system of sound money had prevailed, because the combatants would have run out of gold very quickly. I would suggest that it was the very stability of Europe (with just the Crimean and Franco-Prussian wars being of note in the nineteenth century) that the 'banksters' were determined to derail - and fiat money was their thermo-nuclear weapon. Of course, the great powers (Britain, France, and Germany) never recovered from World War 1 and then we wound up with another great conflict that further impoverished and diminished Europe - whilst greatly enriching the United States and establishing the U.S. Dollar as the world's reserve currency. In my view, the real danger comes from the fact that Uncle Sam is going to need a 'mega-crisis' to inflate away his debts and, historically, war has achieved this. Anyone who is aware of the shenanigans involving the steady encircling of Russia must have their suspicions that something is being planned. Moreover, had it been necessary to pay in real money - rather than U.S. treasuries - do we seriously believe the invasion of Iraq would have taken place? Throughout history, monetary debasement and war are found co-exiting.
Wot's happening in the world
Wot's happening in the world today..... ?
Hmmm.... Oil price over $US70, interest rates trending up, unemployment spiking, incomes & rental prices stagnating, over-leveraged households struggling, current account deficit 8.5%, farm prices crashing....
Now what would that neutral economist Tony Alexander say was a realistic outcome for highly over-priced house prices to all that?
Oh, silly me! Of course, all that above is good news so far as housing goes!
Mark & Veedub: Just be
Mark & Veedub: Just be patient. The only risk you run is inflation taking off & gobbling up your cash pile, doesn't seem a short-term risk.
AS for the stats, the
AS for the stats, the unemployments rates dont reflect a lot of what is happening eg reduced hours and pay. My workplace had to find 20% cuts - it did this by making 2 workers redundant and everyone else took 10% pay cuts. The 2 redundancies get reported, NOT the pay cuts. The cuts probably have roughly the same effect on the economy though in terms of consumption.
That's not all that's happening
That's not all that's happening Philly. Commodities are heading higher along with US toilet paper rates. Stevens across the Tas is very close to raising and the big four will go first. Our lot will follow the next day. If they don't, deposits will evaporate. So an extra 2 or 3% by early in 2010 is a real chance. Bollard can chop the ocr into kindling and it won't matter. Oh don't worry yourself about the mps invested in property because they will vote themselves a raise in perks to compensate for any rate rise. See, that stuff always floats to the surface and the pong, jeeeez the pong.
Reserve Bank must act now
Reserve Bank must act now
The New Zealand Manufacturers and Exporters Association are calling for the Reserve Bank to drop the Official Cash Rate (OCR) now, rather than waiting for the next Monetary Policy Statement in September. The dollar has continued to rise since the last OCR review and looks set to rise further if no action is taken, so immediate action is needed to alleviate the strain on exporters.
Reserve Bank Governor Dr. Alan Bollard said at the OCR announcement last week that, "The level of the dollar in particular, is not helping the sustainability of future growth, and brings with it additional economic risks." He went on to say, "The forecast recovery is based on a further easing in financial conditions. If this easing does not occur, the forecast recovery could be put at risk. In these circumstances we would reassess policy settings."
NZMEA Chief Executive John Walley says, "Financial conditions have worsened rather than improved since last week and some economists are predicting that the dollar will get to 70 cents. The unemployment rate has already hit six percent; further jobs will be lost in the tradeable sector if the dollar persists at these high levels."
"Everyone in the real economy, farmers, miners and manufacturers, will feel the affects as the dollar surges. Attempts to talk the dollar down have not worked. The Reserve Bank needs to make a 50 basis point cut to show currency markets they mean business."
Just to reiterate:
"further jobs will be lost in the tradeable sector if the dollar persists at these high levels."
Another Jobs Summit anyone?
Roger Thompson: "The market’s appetite
Roger Thompson: "The market's appetite for these is waning rapidly." hence why the US is talking about index linked bonds....so no matter what the inflation they hold their value in real terms....now that could be crippling...
Jimmy: "why are we bringing in all these immigrants if we dont have enough jobs?" These temp visas are being cut....however there is a difference between a (say) brick layer and (say) an IT project manager....different industries and different skills......you cant cross train....so some skills are still needed.
simon7: "We are actually already at 7%" typically youth un-employment is double, even triple the main number.....thats a lot of testostrone filled young men with no jobs....and not likely to get them for a few years....
Wally: Just the job for you, http://www.trademe.co.nz/Trade-me-jobs/Marketing-media-communications/Co...
;]
"A nation of impoverished, imprisoned home "˜owners' is not the place we want to live in."
More like, "A world of impoverished, imprisoned home "˜owners' is not the place we want to live in."
but there is no where to go........its here and its all over....so the choices are 20~40% drop in many things, or 2 decades of stagnation maybe more, which amounts to a worse result.....once ppl are kicked they move and sort themselves out, otherwise they will just hang on and its death of a thousand cuts.... the grossly in-efficient and in-competent need to be cleaned out, instead they are being supported by the efficient and competent who are being hog tied as a result....thats plain crazy.....and it wont work.....there seems to e a gamble that growth will come quickly and be at 3% plus.....it wont work...even if it does it wont be sustained....3% of 85mpd = global surplus so after a year of 3% oil will bw at $150 again....
regards
Les, has it occurred to
Les, has it occurred to you Bollard might have very good reasons for not cutting any more? Just a thought Les! Now what might those reasons be I wonder!
"Bollard might have very good
"Bollard might have very good reasons for not cutting any more?"
Because it wont matter.....the OCR at 2.5% is in-effectual....mortgages are still 6%...they should be 4.5%. Bollard is toothless, his dentures have been pulled by externals....there is a bun fight for depositors....watch that climb past 5% no matter what Bollard does.....might as well get rid of him....
regards
Just got in doing a
Just got in doing a recky around town !
Jo public all seem very scared at moment WONDER WHY?
Superb comments by everyone, starting
Superb comments by everyone, starting to get to the essence of the matter.
Buy low/ sell high. The
Buy low/ sell high. The dummies guide to making money.
If we cut the OCR to, say, zero (cheap), which way is there for interest rates to go in the future, and hence what will the FX speculators do? Probably not sell the NZ$....
Wally - wot steven said.
Wally - wot steven said. But if you can't believe that, stick with the orthodox view and take it that he'd not want to aid our next sought after property bubble. Having said that, with what is coming out now around MPs expensing issues and about potential conflict of interest (MP property speculators v. policy change that would rebalance the economy, but reduce propery prices) you might well have to think again with that line.
Or, we have the noble savers/depositors arguement - too low and, they're off.
I like steven's assessment, (I've said same too elsewhere here) it'd demonstrate what NZMEA, PEC and others (your good self included) have been saying for a while - NZ's monetary policy is shot and the OCR needs a mate, in the form of an, effective, credit volume control, so that our OCR is not so out of kilter with the global norm (if we stay truly orthodox) leaving our $ mega-traded and up and down like a whores draws on Manchester Street on a Saturday night.
Cheers, Les.
Josh: Asset bubbles inevitably lead
Josh:
Asset bubbles inevitably lead to wealth concentration, trickle up if you like. Real, valuable jobs in the real economy grow and spread wealth via well paid highly skilled jobs "“ that is called trickle down.
Sadly the former has been sold as the latter in New Zealand.
good article from the Dompost
good article from the Dompost dispelliing the return of housing (a certain economist we all love is not quoted, note):
http://www.stuff.co.nz/dominion-post/business/2725391/Poor-spring-housin...
The way our economy is
The way our economy is structured, very much depending on each other I see a domino effect talking place soon, which will lead fast in more unemployment. I wouldn't be surprised to see figures up to 10 -15% by October 2009.
I posted this yesterday for
I posted this yesterday for some light relief........ and while I am not nostradamus it was a bullseye !!....................
Spin doctor"¦"well we could bang on about some green shoots or some s..t like that some-more"
Govt spokes"¦"nnnnaaa I don't think they'll go for that again..
Doctor"¦. they might if Corrin Dann pitches it ..?
Govt sp"¦ who the f..k is Corrin Dann"¦?
Doctor"¦. he's on the telly ,he's real pretty an he wears nice suits !!
Govt sp"¦. O K, and get him to beat up an angle where at least they'll get more time with the kids"¦.
Doctor"¦..Done see you at six a.m"¦watch this space ! ..oh yeah sorry I'll tape it for you"¦.
Between 6am and 6.30 am we had more green shoots, tempered by Dr Nana's plea for a lower currency.......................
At 7.20 am we had a timley interview about too many children aged up to two year olds in child care and how thats affecting the bonding process particularly with "mothers" who may be..soon to be out of work....... .
And so we may conclude from that (as intended) the job-loss stats female my have an upside?..... or..
"they get to spend more time with the kids" ... come oooonnn guys ya gotta laugh at that whooo! the spin doctors are running out of ideas an THAT can only be good for reality and bad for realty.., ha now is the hour to "put the slipper into em" happy hunting.
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