Bernard Hickey presents a special report on the Reserve Bank of New Zealand's Financial Stability Report that took place on Wednesday morning in Wellington.

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16 Comments

by Les Rudd | 11 Nov 09, 12:40pm

Bernard - at 2mins in,

Bernard - at 2mins in, If RBNZ can selectively, stipulate and tighten capital requirements for rural lending, why can the same be done for speculative residential property investment? What is holding them back from holding back this key source of inflationary pressure?

by Wally | 11 Nov 09, 12:46pm

That's a 'no brainer' Les...."what

That's a 'no brainer' Les...."what is holding them back"....you mean to ask "who is holding them back".

by Les Rudd | 11 Nov 09, 12:58pm

Wally - yeah, I recall

Wally - yeah, I recall you and I bantering on similar recalling that Simpsons episode where Homer joins the a secret society in Springfield, the chorus of the song they were singing being, "We do, we do" in answer to the question of, "Who controls etc, etc" Maybe it is actually like you and Jacko were discussing here:

http://www.interest.co.nz/ratesblog/index.php/2009/11/06/opinion-how-neo...

Who knows?

by PeterR | 11 Nov 09, 4:57pm

The FSR on dairying: <blockquote>

The FSR on dairying:

As noted in previous Reports, the distribution of this debt is heavily skewed, with many farms holding relatively small amounts of debt, while a smaller proportion are very heavily
indebted.

Something for the dairy debt deniers to digest.

The RBNZ is though putting a very positive spin on their assessment of the problem as illustrated by this statement regarding MAF's data on the distribution of farm debt:

It is likely that large corporate farms (which in many cases have been more highly geared than smaller operations) are underrepresented in this sample.

There is of course not even one large corporate dairy farm in the sample as MAF clearly spells out:

The dairy models represent seasonal supply properties (i.e. excludes winter milk and town supply) that are owner operated and supply to Fonterra. The West Coast South Island commentary-only report is based on seasonal supply owner-operated dairy farms supplying to Westland Milk Products.

The point about corporate dairy farm debt not being represented in industry surveys is though well made.

by AndrewJ | 11 Nov 09, 5:30pm

PeterR Our own little subprime

PeterR
Our own little subprime bomb just waiting to detonate. Sh*t going everywhere, not just in our rivers.

by andy hamilton | 11 Nov 09, 5:40pm

Les - you mean this:

http://www.youtube.com/watch?v=eQ-KZyniB4c&feature=related

by PeterR | 11 Nov 09, 5:40pm

Andrewj And a possible (at

Andrewj

And a possible (at this stage it is still mostly based on hope) extra $100 million a month in dairy farm incomes from the increased payout projection is hardly going to stem the tide of $300+ million a month increases in farm debt.

by Farmer Will | 11 Nov 09, 5:46pm

Ah, but assuming the $6.05

Ah, but assuming the $6.05 payout happens, many live to get through one more season. I spoke to an equity partner of a southland dairy farm today. This will holt their downward slide for a few months.
This is going to drag out a lot longer than we originally thought.
Not so for other industries I suspect. Sheep and Beef, cropping, vineyards, orchards... Debt debt debt all drowning in a sea of it.
I just read your comment PeterR as I posted. Similar thoughts.

by Wally | 11 Nov 09, 5:48pm

Yep you got that right

Yep you got that right Les. Them puppet masters know a trick or two. Got the pollies by the snouts when it matters.

by Les Rudd | 12 Nov 09, 7:17am

andy hamilton - thanks for

andy hamilton - thanks for that.

Wally - it sounds like 'The Stonecutters' have got it in for electric cars mate, cover your copper, beware:

http://www.youtube.com/watch?v=eQ-KZyniB4c&feature=related

Enjoy.

by Wally | 12 Nov 09, 7:24am

Can't run you tube Les!

by Jacko | 12 Nov 09, 7:39am

@Les & Wally, not to

@Les & Wally, not to worry, the Stonecutters got a website, http://www.nzba.org.nz/

by Les Rudd | 12 Nov 09, 7:49am

Jacko - ha, ha, that's

Jacko - ha, ha, that's not nice. However I see they are doing right by their members and pushing back:

http://www.stuff.co.nz/the-press/news/3054227/Inquiry-finds-banks-pocket...

"A spokesman for Finance Minister Bill English said the Government had predicted nothing would come out of the parliamentary inquiry "and nothing has".

I don't think that's correct, some useful stuff has come out of this inquiry and I hope government will start resolving some of the problems highlighted.

(I just can't that blasted song out my head now, shame you can't view the clip Wally.)

by David | 12 Nov 09, 8:21am

Anyone see Roger D on

Anyone see Roger D on seven last night?
He is fully loosing it!
Ripped into a genuine guy, small manufacturer, that suggested we should try and support kiwi made products. RD said if we were going to spend $300 on a kiwi product we should buy $100 Chinese tat instead. No mention of where the $300 came from in the first place of course.
He's still stuck in his 80's neo con fantasy land, and nasty with it.

by Steve Netwriter | 12 Nov 09, 8:44am

I think the title should

I think the title should be:

Special report on the RBNZ's Financial UNStability Report.

by backpacking gear hiking | 25 Nov 09, 11:02am

Thanks for taking the time

Thanks for taking the time to talk about this, I feel powerfully about it and love learning more on this matter. If possible, as you gain expertise, would you mind updating your blog with more selective information? It is exceedingly helpful for me.