Here's our summary of key economic events overnight that affect New Zealand, with news the BA.5 Covid risk is rising 'significantly' and threatens how our economy will operate.
But first up today, we need to report another weak dairy auction. It was down -5% in US dollar terms and down -6.3% in NZ dollar terms. The falls were led by SMP which was down -8.6% followed by WMP which was down -5.1% from the prior event two weeks ago. These reductions are compounding now; in the ten events since the start of March there have been eight with losses and the net fall is now -23%. That is doing to change minds when it comes to payout forecasts, and especially as the retreats for SMP and WMP have been at the sharp end. Somewhat unusual has been the recent firming of the NZD, and that can only be a 'bad thing' for payout forecast estimates.
In the US, early data for last week's retail sales were stronger than the usual positive levels.
There were also a string of quite positive earnings reports out today, and that has juiced up Wall Street equities.
American data on housing starts wasn't so flash. Their housing sector has been cooling amid soaring prices and mortgage rates. New building consents also fell, but they are still high compared to pre-pandemic levels. Housing completions remained high.
China's holdings of American government debt have fallen below US$$1 tln for the first time since 2010, with concerns about the risk of Russia-style sanctions possibly accelerating a long-term financial decoupling driven by political tensions. The tally stood at US$981 bln at the end of May, shrinking by almost -US$23 bln from April and dropping -9% over six straight months of declines. Overall foreign holders of US securities now total US$7.4 tln, up +3.8% from year-ago levels.
Meanwhile China is seeking to suppress a UN report into the situation in Xinjiang.
China released data overnight that showed it citizens are prioritising saving over spending as the economic risks seem to be growing.
Those risks include sudden lockdowns as a result of their national pandemic policies. More than 20 provincial-level regions in China have reported locally transmitted COVID-19 cases in the latest round of outbreaks, and unlike the previous round, cases are found in some inland and small cities, posing challenges to the country’s epidemic control efforts.
In India, their currency is now at its weakest level ever against the US dollar. It has lost about -7% of its value against the greenback this year, a victim of higher energy prices and economic uncertainty. This stress is promoting it to try and ditch the USD for certain imports, especially with pariah states like Russia. (It still wants to be paid in USD for its exports however.) The rupee is also near historic lows against the NZ dollar although current levels have been around since the GFC.
The Turkish lira is in the same boat. And the rise in Turkish inflation just keeps on going.
The rising American interest rates are putting extreme pressure on many emerging market economies.
In Australia, plans to wind up its pandemic taskforce have been shelved as new variants of the virus sweep the country. Indoor mask wearing is now a new recommendation as the BA.5 variant imposes a 'significant' new threat to public health there. Sickness absenteeism is rife, limiting how companies can operate. New Zealand is facing the same threat.
The UST 10yr yield starts today at 3.01% and up +5 bps from this time yesterday. The UST 2-10 rate curve is a bit more inverted today, now at -21 bps and their 1-5 curve is also slightly more inverted at -6 bps. Their 30 day-10yr curve is now at +114 bps and noticeable steeper. The Australian ten year bond is up +3 bps at 3.56%. The China Govt ten year bond is up +1 bp at 2.81%. And the New Zealand Govt ten year will start today up +4 bps at 3.74%.
On Wall Street, the S&P500 is up a very strong +2.6% in their Tuesday trade. Overnight, European markets were all up about +2% except London which was up +1.0%. Yesterday Tokyo ended up +0.7% in their Tuesday session. Hong Kong was down -0.9% and Shanghai was flat. The ASX200 ended its Tuesday session down -0.6% and the NZX50 was virtually unchanged.
The price of gold will open today at US$1711/oz in New York which unchanged from this time yesterday.
And oil prices are up +US$2/bbl at just on US$100.50/bbl in the US, while the international Brent price is up even more at just over US$104/bbl.
The Kiwi dollar will open today up more than +½c at 62.3 USc. Against the Australian dollar we are little-changed at 90.2 AUc. Against the euro we are also little-changed at 60.8 euro cents. That means our TWI-5 starts today at just under 71.
The bitcoin price rose again from this time yesterday and by +6.7% to US$23,510 and a new one-month high. Volatility over the past 24 hours has been very high at just under +/-4.9%.
There will be no video version today due to staff shortages.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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147 Comments
Sometimes a little so-so, but this list is a doozy, every one:
https://www.theautomaticearth.com/2022/07/debt-rattle-july-19-2022/
We are looking at a systemic re-set.
In some ways I'm on your page. What I want and value in life doesn't really gel with consumerism, time is very fleeting and "things" ultimately have little value.
But very few people have managed to accurately predict fundamental system changes and catastrophe. The future to me seems like a mixture of fantastic technological change, but also environmental ramifications and cultural and societal decline.
But probably more of a whimper than a bang.
Great reply. A clue is the difference between energy and technology. I cite the difference between a Model T and, say, a Ford Ranger. Technologically light years apart. But if you don't fill their tanks - the Ranger is as useless as the 'T.
Many people are 'energy blind', of often conflating the two. And the Seneca Effect is immutable, with a finite resource.
Pa1nter,
I think you put it well, but when dealing with pdk, you have to remember that his view is rigid. A collapse of civilisation as we know it is inevitable and not far off. He believes the picture painted in Clugston's Blip that 2050 is when this will happen. I have the book and have read it through. But pdk goes further yet in his belief that mass depopulation must happen and it doesn't matter much how; war or plague. or whatever works. He wrote that on a post here some months ago. This is why I no longer engage with him; his views are too extreme.
I certainly agree with some of what he says; eg. the importance of a falling EROI and I have no doubt that we face great problems in the transition to a low carbon economy. The primacy of GDP will be swept away as part of this and I do worry about the many issues my grandchildren will face, but I refuse to accept that the changes cannot be made. of course, I may be proved wrong and that in the end is what separates pdk and I. He refuses to countenance the possibility of error.
Tend to agree Link. 2050 seems a little too soon unless there is some form of catastrophic collapse. Mind you Putin and Xi may drive that collapse. But the powers will seek to avoid it, and when they realise it is inevitable, manage the draw down. That's when things will get interesting.
I see Tony Alexander on OneRoof spruiking about house price rises in the near future again. Man, what’s this guys angle? I understand he is sponsored by the industry and has his biases, but just once I’d love to hear him talk about the societal mess unaffordability causes…just once.
Yes. you were wrong. Economics-trained, perchance?
It was a proxy - an expectation that there would be energy and resources available 'later'.
Those who issued it, studiously avoided measuring either stock.
I put this link upon this site a decade ago:
https://www.financialsense.com/contributors/chris-martenson/the-trouble…
Ignorance; to ignore.
One way or another, we will have to re-align our trading-tokens with the realities of life on the planet (ecological, physical, chemical). What we have done is to divorce the tokens from reality (and with that, our driving narrative; that GDP growth was the sole goal).
As we move past the carbon-energy Blip, I expect less usury, less tolerance of parasitic (in an energy sense) token-accrual.
How that happens, is up for debate - but I suspect we are too far down the tracks for a smooth reconciliation. Too many bets, not enough planet. And to compound things; Russia and the Brics have made their move - perfectly timed, lessons from Kissinger '67, '73, '75 applied to the US fracking timetable - and caught the West with their energy pants down.
Which few economics-steeped reporters understand the import of (although the reality is slowly dawning re Germany/winter). And the ramifications for us here, sans Marsden Point, sans much real industry, sans a lot of skills, are........... interesting.
Agreed. There still seems to be some ways to go before they get to the really hard questions. they will look to alternative sources of energy, fossil fuel use will dwindle but not vanish, as electric and fuel celled vehicles for ordinary folk replace ICE cars. I don't think travel will be able to be stopped or limited much. They will eventually be force to accept nuclear again, but the new technology applications will be more efficient and safer, while solar, wind, tide and what ever other options (can we suck atmospheric heat up and turn it into electricity? The Brits would love that at the moment!) can be developed. But ultimately they will be forced to talk about population size (because it is people consuming the energy, and the more people the more energy is required) and start encouraging or mandating that people not have many (if any) children. It will need to be world wide. The problem areas will be places like India, about to pass China in population, and religion based procreation practices. The sooner the discussion starts the better but it has to start.
The declining prices for dairy products are now looking ominous.
By historical standards, the prices are still very good, and there is no obvious reason to expect a crash.
However, from a broader perspective of the NZ economy, what we are seeing is not a good sign as the gulf further widens between exports and imports.
KeithW
I believe the plan for the next 20 years also remains the same with tourism in the mix.
Every FTA we sign has meat and cheese exports written all over it plus the trade delegation go around the partner nations selling NZ as a dream holiday destination.
This could just be the beginning of a socioeconomic disaster that ends in lower living standards for much of the population.
This could just be the beginning of a socioeconomic disaster that ends in lower living standards for much of the population.
I think we are already someway down this path. Having recently done some travelling around the North Island I couldn't believe what I was seeing in some places. Many many down and outs on the streets, just as many undesirables looking for trouble.
On the outskirts of many towns there are 'pop-up' villages of vehicles covered in tarps where people are living. A real shame and I imagine that is just scratching the surface. No change in sight unfortunately with a Govt that continually tells us everything is great, nothing to see here.
And the answer isn't to 'fix what we've got' it's "more people" that's the answer to everything. (Shakes head in despair)
“We’ve got a stadium that the ratepayers are going to have to front for,” McKenzie says. “And unless we start developing more, and getting more ratepayers in Christchurch, it’s just going to be an ever increasing debt on the ratepayer of Christchurch, which is totally wrong.”
there are 350,000 working age adults in NZ on a main benefit -- this is an increase of nearly 80,000 since Labour came to power -- and the only reason the unemployment rate has dropped is because over 100,000 people have been moved to long term no requirement to look for work benefits in this period.
WE are talking over 11% of the working age population not working ..... If we dont want immigrants -- the answer lies in getting even half these people back into productive work -- which should be one of our main focuses --
Sure i get taht people dont want to go and pick fruit for $25 an hour -- or work in cafes and bars at $22.50 -- however if that is there choice -- i don't see why we should be paying them $400-500 a week in benefit for no contribution ?
The biggest bit of imported crap was neoliberal economics.
We believed that, and exported all our productive capacity; washing machines, bicycles...
Now we-re ever-so self-important. We own? An aging fleet of houses and infrastructure, to which we have assigned ever-bigger numbers which a large part of the world are deciding they won't recognise. As we chose to discount theirs, hithertofore. And out skill-set? Mostly useless. The rump of the skilled, are in rest-homes, untapped. Bored, and shuffling off this mortal coil. Discontinuity complete.
We believed that, and exported all our productive capacity; washing machines, bicycles
Dig your work Power but sometimes I can't fathom what your vision is.
It seems to me that it is based around 50% less popn (globally) and a reversion to an economic model and lifestyles practiced by the Amish people.
Now I don't think that's necessarily bad but I don't really see how it's going to happen.
Hi tech luxury in an uncrowded landscape for me. Where we don't have to scrabble for scarce resources.
That sounds to me like you lying on the couch with your iPhone in a location you have to drive your solar-powered Subaru 10 km to see another human being.
You will still need drones to deliver your Uber Eats.
Delusional much is the idea is the that CBD et al is productive. Actually such are drones on the productive economy.
Take a look at the locus of exports from our dear isles. You will find it far to the south. The money that Auckland (for example) relies on is produced far away.
They're mostly dead now, but they were more on the case, than anything we've seen since. Tells us we're not a very mature society.
But I'm more concerned with the Systems stuff; the feed-back loops (like that Rhine piece - where they're trying to ship gas but the river is too low, and winter is approaching, and they're staring down a the barrel of a +10% GDP drop compounded by a physics problem which is unanswerable - with EU and USD knock-on considerations).
I think we will revert to local food-production, more seasonal eating, and to massive infrastructure triage/repurposing. Just what we do about the unrealisable pension-expectations, investment-expectations and debt-repayment expectations, I'm not sure. But avoiding the discussion, doesn't seem (to me) the best option.
They're mostly dead now, but they were more on the case, than anything we've seen since. Tells us we're not a very mature society.
Now I'm going to challenge you here Power. Just because these people had their own vege plots and didn't use plastic bags, they still used and benefitted from urban infrastructure as we know it today. They were not getting around on horseback and some would have had had institutional type jobs. Practical yes. Early virtue signallers yes.
Incidentally, I once had a kitchen hand job with the publisher of the NZ Whole Earth Catalogue. Many years after, he and his family lived a upper middle class existence with all the trappings of cars, etc.
https://archive.org/details/beyond-tomorrow-1975-values-party-manifesto
Not much in there has dated.
Compare that to the Douglas-Luxon continuum? Totally a mantra out of its time.
The bigger worry is societal maturity - lack thereof. The idea of Wellbeing was absolutely on the money - but has lost mandate (Tragedy of the Commons problem, at base-line). As long as we vote for our short-term hip-pockets (and construct a false mantra around that, like castigating duopolies etc) we're doomed to collapse. Because the current trajectory is based on an unmaintainable rate of draw-down.
Japan is back at pole position in the buying of U.S. debt while China continues to sell and is now below the $US1 trillion.
https://www.cnbc.com/2022/07/18/china-holdings-of-us-debt-fall-below-1-…
Russia has sold around $10 Billion since March and has been buying gold while it's cheap. Interestingly, wage growth in Russia appears to have been growing strongly.
https://www.statista.com/statistics/1010660/russia-average-monthly-nomi…
Those Russian stats stop at 2021, and are nominal in Rubles.
The real disposable income figures aren't flash
https://www.statista.com/statistics/1055790/russia-disposable-household…
What is better for the NZ economy overall - higher dairy payouts - or lower prices of dairy products in shops?
Mind you - I dont think the price of these is falling yet in stores in line with the decline international prices. Kinda like petrol - goes up like a rocket, falls like a feather?
I don't think the govt knows what is better for the economy either. I read they have recently backed an oat milk venture in Southland. Very woke but generally a niche market globally where the countries that drink oat milk produce their own oat milk (or buy it from a country not as geographically isolated as NZ).
Yes, the economics of oat milk look questionable except perhaps as a niche product for internal sales in NZ.
There is no doubt we can grow good oat crops in NZ but we are unlikely to be an international player in the oat market as our costs will be too high.
So, if we are going to produce oat milk then we either have to convince international consumers to pay more for our oat milk than oat milk with already established brands from other countries, or else have a lower cost of processing. Both of those possibilities would seem challenging.
Also, oat milk is low protein and therefore is not a nutritional substitute for high-protein dairy.
KeithW
I am a dairy drinker but my daughter is dairy intolerant, so I have had the chance to try almond, soy and oat milk. Oat milk is the only one that actually tastes nice. It also has a better environmental profile than other alternative "milks". I would go as far as to say I quite like the stuff, particularly on cereal, it is a bit of a funny colour in a cup of tea but pretty good in coffee. The global Oat milk market is forecast to be worth $6.8 billion by 2026 with a CAGR of over 13%.
Not had the chance to try potato milk yet but apparently this is being explored in NZ too.
All of these, except soy - which has its own issues - are low protein.
Have your tried A2 milk? Many people intolerant to ordinary milk can drink A2 milk. I have a close involvement in the science of why this is the situation. No promises, but it is worth a try.
KeithW
So investing in anything other than Dairy Milk is woke?
“The amount spent by Kiwis on plant-based milk almost tripling from $52 million in 2017 to $144 million in 2019 – so the demand is definitely there.”
“We know that oats grow well in Southland, and being low in water use, land use and emissions, they are an excellent raw ingredient for an environmentally sustainable alternative-milk option.”
New Zealand Brands Boring Oat Milk and Parrotdog Brewery Have Teamed Up to Make an Oat Milk Beer
https://concreteplayground.com/auckland/food-drink/new-zealand-brands-b…
Its bizarre isn't it. Surely we should be looking for high value, high growth markets. Its like the couple on Country Calendar who were recently criticised for their high environmental and welfare standards. Yet they knew their customers and delivered what they wanted at a premium price. I think perhaps it is the traditionalists that fail understand business and economics. To stay in business you have to deliver what your consumer wants, many consumers (particularly wealthy ones) are ahead of government policy in terms of their environmental and welfare demands.
I guess it depends if there's scale there.
Burger Fuel makes a nicer product, but has languished for the best part of 20 years.
Macca's is still chocka.
That's not to say there's not a potential opportunity there, but also that end of the market can't be limited, and also subject to faster changing tastes.
https://corporate.mcdonalds.com/corpmcd/our-purpose-and-impact/our-planet.html
Maccas have committed to net zero and also have commitments around regenerative farming and biodiversity. Their supplier quality auditing is amongst the strictest in the industry.
We only need to scale to a slight degree. NZ is small, almost everything we do should be niche. Huge dairy without substantial changes to it's waste and inputs isn't really sensible given the amount of environmental damage it does. The health effects of massive nitrates, for instance, leaching into our drinking water are just starting to be felt. As is it's environmental footprint which is pretty poor. Our dairy products theoretically are targeted as clean and green to higher end consumers, who unsurprisingly, are more and more focussed on these production factors. It's not sustainable long term without significant changes and probably scale back.
Surely we should be looking for high value, high growth markets.
This is the narrative that's been pushed by NZTE etc for quite some time. There's a few issues. Markets like Japan are increasingly looking for value for money and the Chyna market is heading in the same direction. It's wonderful having this vision of selling sustainable and environmentally righteous products to the world's 1%ers, but it is definitely not easy and tastes / needs change very fast.
Dairy prices fall again
The US$ exchange value is surging against pretty much every major currency (except CNY right now; hmmmm). And it's not just the euro. Oceania, for example. Commodity collapse isn't just macro stuff. Tightening Euro$ money for Aussie & NZD, too. Link
If you import more than you export, and you have to actually pay cash for the imports and get cash for the export, then you have to borrow money. And once you borrow money, because most trade is denominated in dollars, this means you have to borrow US dollars. You don’t buy imports with your own currency.
This is absolutely true. At the level of the individual we purchase imports with NZ dollars. But at the level of the country, these all have to be financed with either exports or borrowings. There are some very challenging times ahead.
Our external current account deficit, sitting right now at around $23 billion, is not sustainable. And when the financial reef fish cotton on to this, the exchange rate will further decline.
KeithW
The deficit expansion has definitely been influenced by the collapse of tourism and the large decline in international students. The reason the decline in students is less than the tourism decline is because many students were already here at the start of COVID.
However, the tourism decline has been considerably counterbalanced by the decline in Kiwis travelling overseas.
Putting those issues aside, there is now a big deficit in the dollar flows associated with the X-M of physical goods. And there lies a big problem.
KeithW
Forget proliferation of products that make global money details incomprehensibly complex. The big picture can be simple. TIC data aggregates are very clear and easy to understand: growing deflationary money that matches what markets have priced. Link
Still high level of repo fails, collateral scarcity. Treasuries held in custody at FRBNY continue to get used by overseas investors (the same who don't buy USTs as investments). More than $170 bln gone since last March, a big amount. youtube.com/watch?v=eRyFY7
Why ‘maybe’ Keith?
what promise do you see in China, that others like myself, don’t.
xi has been an absolute disaster for China. Human rights abuses have escalated, they have managed to piss off all of the West, even Europe now, and they are siding with another authoritarian brother in arms with his nasty war…
so please tell me why you think China still has great potential?
KW's comment was linear. Therefore suspect. Draw-down has been exponential, and multiple things are happening concurrently, feed-back looping as well. This is not 50 years ago. In that time, China has become a complex, energy-demanding, entropy-parrying system; they're now facing the same set of dilemmas we are.
Hmmm... take a look around - ICC should investigate massacre crime by British forces: Global Times editorial
Most people in China do not see Xi as a disaster.
He certainly sorted out a lot of the corruption within officialdom.
Also, the new generation of people entering the workforce are much better educated than those moving out the other end.
I agree that China has become more authoritarian. That is a real issue.
Actually, they have not sided with Russia. And a halt was placed on the development of new agreements. But you cannot expect them to stop purchasing energy from Russia as their whole economy depends on that.
There are many reasons why China still has potential. As just one of many examples, they are globally totally dominant in the manufacture of renewable energy systems.
But I agree their economy has some significant challenges right now. And I would not expect growth to rebound, even in the long-term, to anywhere near the historical rates.
One of the things I learned on my very first trip to China in 1973 was that things there were more than a little different to what we read in the mainstream media. That has not changed.
Keith W
It's expediency, not that old 'communist' (which neither ever were) chestnut. But KW's lines:
' But you cannot expect them to stop purchasing energy from Russia as their whole economy depends on that.There are many reasons why China still has potential. As just one of many examples, they are globally totally dominant in the manufacture of renewable energy systems.'
are the crux of the issue. Renewable cannot beget renewables; the EROEI isn't good enough (and it ain't gonna get much better: batteries are already going on fire; sure sign of approaching chemical limits in terms of energy-density. So renewables can only prolong fossil energy (I have lived off-grid more than 20 years, but I've always seem my PV as 'stored oil'. We will end up on renewable energy, but we will be doing orders of magnitude less; as will China.
Triage - will be the only game in town
Come on Keith, are you kidding me??? I know you are a staunch friend and supporter of China, that is very clear indeed, but really??? Goodness me.
Surely you realise that an absence of loud global statements of support for Russia DOES NOT EQUAL non-support for Russia's actions.
You seem like a very intelligent man, but I think your pro-China bias is blinding you.
China clearly does support Russia's actions - or as an absolute minimum does not have a problem with them - and in some ways is benefiting from them (but in net terms is almost certainly worse off).
"Most people in China do not see Xi as a disaster." Many still revere Mao too and believe most of the BS the CCP put out about him. These are consequences of a constrained information flow Keith. The CCP control the internet and whenever they can they jump on people who find work-arounds for those controls. What is 'true' in China is not necessarily so in the wider world.
Exactly. And would we really know if lots of people thought he WAS a disaster? Of course not, because of censorship.
Also, even assuming most of the population like Xi, that does not mean the direction he has been taking the country in is a good one. I would argue he's taken the country down an awful path, that's undone (and more) the good progress that had been made up to the point he came to power.
The number of ugly economic stories is growing in the MSM.
A story today in the Herald about the massive plunge in new build housing enquires. All very predictable of course.
I still have my doubts about the OCR being any higher than about 2% this time next year. Economic carnage is really going to hit by the end of 2022.
Economic carnage has been hitting for quite some time. The sheeple have just been too drunk on asset prices to notice the wheels falling off, until now.
This is the train of thought I'm on too. Even Robbo has toned downed his narrative about being comparatively better than the rest of the world. My intuition tells me things are getting much worse, not better. Gun crime and ram raids in AK seem to be a good indicator of something very wrong in the socio-econ fabric.
Yep. That’s the problem with neoliberalism and the ‘Greed is Good’ mantra it and it’s adherents like Yvil espouse.
At some point the piper is paid, once inequality and poverty and desperation has built and built to breaking point.
The neoliberals seem to think that they will all be good, because they have ‘done well’. And due to their own hard work and ability (haha).
But they are oblivious to the degradation of society until they start to be affected by things such as violent crime. Even then they probably don’t care, they can live behind barbed wire fences and security cameras. Is that ‘freedom’? No thanks!
unfortunately we have a failure of a ‘Labour’government that has wasted its ‘Mandate for Change’.
Dark days ahead for this country.
Yes...I have lived in multiple developing countries and it boggles my mind that some in NZ seem so happy to pursue policy that leads us toward such living conditions. Drive high wealth inequality through exploitative policy, then end up hiding in gated subdivisions from the problems such policy creates.
Building a strong middle class, affordable housing supply, and good social mobility actually made NZ a pretty decent place for most to live by the 1980s. Devaluing work and transferring wealth to land owners is not creating a better place for most - including those who end up having to hide from the social problems we're creating.
I watched a video the other day about the crackheads & tent cities in Vancouver......and I have seen them in person in LA and other places in the US.
I don't think people thought that these issues would come to NZ but they are here now.
Unfortunately National are oblivious to what is coming.And Labour although well meaning are overwhelmed by it.
I can only see it getting far worse in a recession.
It’s been building for a while, like the run up of a large tsusami, but that tsunami hasn’t reached the shore yet.
The bad news stories will accelerate between now and years end.
In the massive construction sector, the job losses won’t really start to mount until from November. There’s still plenty of housing projects halfway through construction, some of them will fall over, but most will be completed, maintaining employment.
But there’s a big drop off of projects to commence in 2023.
watch out for big job losses in building, tradies, real estate (don’t underestimate how much agent work has been supported by new builds), architects etc.
https://www.nzherald.co.nz/business/construction-slowdown-new-build-inq…
One commenter on the article had this to say below...have to agree,demand out stripping supply has driven a lot of the cost increases,hopefully this means the Nats & ACT might put off bringing in anymore Filipino labourers by the planeload.Give the industry time for a reset.
"NZ Certified Builders chief executive Malcolm Fleming said general feedback from its members indicated they had 12 to 24 months of work lined up..."
"However, inquiries had slowed and the market conditions next year would be different from the past two years when demand outstripped supply."
So, 'inquiries have slowed' but there's work lined up for the next 1 to 2 years.. Meanwhile, there are significant numbers of public & sector partnership housing projects in planning ..
Can't see what the problem is here, certainly not in line with this doom & gloom article of 'companies going bust & job losses'... !
The 12 to 24 months of work lined up comment is rubbish.
Many of those projects will be canned for a range of reasons.
There are other far more accurate comments in the article, alluding to pain coming in about 6 months or so.
public projects? That’s more the commercial rather than residential sector although Kainga Ora will certainly keep some builders going, but many in the industry don’t do work for KO and don’t have the capacity / capability to do so.
I don't see the need to increase the OCR aggressively beyond this point as a complete pullback in spending and spending intentions is already underway. We went first, we don't need to be still going last.
The only counter to that is to maintain currency strength and with rates higher than similar economies again I don't see the need.
It's a nuanced approach to pause and see what the impact is and I don't think our media and politicians do nuance well these days.
Powerdownkiwi - Scarfie stayed with me on Monday night and we had an interesting systems discussion.
I tend to agree with you that we do have a serious energy problem. This has been clouded by climate change, with not enough focus on the impulse nature of fossil fuels, we used to talk a lot about peak oil, but people do not understand what the increasing cost of oil coal based energy will be and how that will flow into food production and distribution.
You are right we will move to seasonal eating, local production. a lot less exporting of food thus less importing for others. The two parts of the puzzle are educating people what the bigger systems problem is, and I guess providing some answers possible solutions, same person does and probably will not succeed at both.
As an engineer I get less energy = less food production = less people.
Its easy to see the problem but many do not want to be told without a solution.
The coming financial reset is largely due to the bubble being funded with cheap energy to pay the interest charges..... as the interest can no longer be paid for the debt , it needs a reset. If the available energy is 50% of the previous estimate, its a big reset, will be more for some countries... NZ is actually well positioned hence the USA billionares having hidy holes in Wanaka etc.
I am also not sure what happens to superannuation expectations, etc but as the game changes people just have to adapt.
For those who just do not understand the need for energy and cheap energy just watch Germany over the winter.
NZ is NOT well positioned here, well not yet.
We need to dramatically reduce our need for oil, which means significant ramp up of electric vehicles and maybe hydrogen heavy industry. And to do that we need to build a LOT of dams/wind turbines/solar, all of which requires forward planning from governments who can see beyond their own re-election. However, we have short term governments who are almost entirely knee-jerk and couldn't plan their ways out of a paper bag. That does not make us well positioned.
To change this, we need governments that understand the problem and are elected for a lot longer than the ridiculously low 3 years. I would suggest 5 years if we want them to have a mandate to actually fix anything. The actual people in power get shuffled all the time due to their competence levels, and we tend to elect parties for 9 years anyway, so it's not a huge change.
Maybe we have to nationalise power companies and bring back the Ministry of Works,then the stuff like pumped hydro & utilising Manapouri's power for hydrogen when Tiwai goes might actually get done.As it stands we will probably have a change of govt,the usual Nats/ACT austerity measures will mean they can all these projects to save some bucks.Say what you want about govt departments & bureacrats,we got more stuff done as far as big nation building projects then.A bit like 'Yes Minister'...nod and smile to the govt,then get on with it.
Privatised power companies are too profit driven in short cycles.
Perhaps I should have said better blessed resource wise, we have a lot of hydro and renewable power gen as a % of total electricity, but we generate distant to demand and infrastructure lacks redundancy.
We are blessed with a climate where we are able to be a next exporter of food..... think about how much fosil fuel is used in agri in NZ vs everything else.... we are well positioned to feed ourselves with even limited hydrocarbon use.
We are not well positioned to maintain infrastructure independently, thinking major power transformers copper wire etc etc let alone antibiotics pharma etc..... you not only would have a smaller population but also a younger one......
We have a lot of water......
We are surrounded by a lot of water - having sailed offshore its hard to get here... but we have little defence of this position.
Our biggest issue as PDK says is we have a blind spot, and its huge.
We are waaay over our carrying capacity of the land without significant inputs, which come from fossil fuels, some of which comes from NZ (Kapuni plant I think produces most of it?). So if we were to turn off urea tomorrow, expect outputs to drop 50%. Then we have to transport farm outputs, requiring fuel. Then maintain all that infrastructure used to do it all. All of that is fossil fuel based and becoming harder to do.
Sure NZ has it a lot better than say Dubai, but we don't have the political power to change the situation nor the capacity or capability for the population to accept what must be done. Unless we radically change our politics (which when it comes down to it is based on "which party will enable us to keep drawing down resources the most"), then we won't change anything.
Tired of the constant stream of lies of peak oil. The world is awash in oil. Let supply and demand succeed, if it gets too costly then human ingenuity will prevail and a better, more efficient energy source will surface. The bubble was not funded by cheap energy, it was created by the private central banksters Ponzi scheme of money creation, outstripping productivity.
The reset you talk about will be an asset grab for the 1%, as happened in the USA after 2008.
Bollocks
Figures please.
Your comments are ignorant, in the prima facie sense of the word. We are circa half-way through a finite resource, given doubling-times your comment is pointless. The fact that we are down to fracking (the base rock, there is nothing left) should tell you something.
Yet you keep bleating. Are you religious too? It tends to go with the need to believe.
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