Here's our summary of key economic events over the weekend that affect New Zealand, with news still driven out of the United States.
High and persistent inflation is the greatest near-term risk to the American economy and financial system, the US Federal Reserve said in its semi-annual Financial Stability Review. It also warned of rising instability in the trading of American government debt. An unexpected future shock could amplify existing vulnerabilities and shadow banks - leveraged financial firms other than regulated banks - are the main risk they see.
All this comes as the American prepare to vote in the mid-term elections. All the signs are that the Democrats will lose control of both houses of Congress, and making the Biden Administration's final two years very hard to govern effectively. Fortunately, they have used the first two years to install a very effective economic repair. The new Congress will focus on its culture wars.
Also over the weekend US non-farm payrolls rose more than the conservative forecasts, up +261,000 s.a. in the headline result and well above the expected +200,000.
But as regular readers will recall, we prefer to watch the 'actual' numbers and those rose +1,172,000 in October from September and taking their paid workforce to a massive 154.3 mln, and easily its largest ever. That is +1 mln more than the 'seasonally adjusted' numbers report. The pay for +1 mln extra people is likely to be highly stimulating and power American consumption for some time to come. That will also be adding to inflationary pressures, bolstering demand. They have a paid workforce +3.4% larger than this time last year. (New Zealand's paid workforce rose +1.2% in the year, for comparison and we were surprised at our expansion.)
By any measure these are strong numbers. Their participation rate rose to a modest 62.2% (NZ = 71.7%). As might be expected, less than 20% of their jobless are 'long term unemployed' which is consistent with a very strong labour market. (In NZ almost all jobless are long-term unemployed, as we have previously noted.)
It is now a chicken-or-egg issue going forward. Will the new expanded employment drive an economic expansion? Or will a stuttering economic expansion make the higher employment unsustainable? Seemingly endless 'warnings' that the US economy is running out of steam have so far proven unfounded. But there is one cloud in today's US jobs numbers - the vast increase in paid workers were at hourly rates that rose slightly slower than inflation.
North of the border, Canada also reported a strong and strengthening jobs market. They expected a +10,000 rise in paid jobs but actually reported +108,300 new jobs - and even more for full-time positions, and a reduction in part-time jobs. Their participation rate is 64.9%.
Adding to the positive vibe, Japan's services sector is well on the mend, with it expanding at a faster rate in October. They reported faster growth in activity levels and employment and optimism in that sector is now at all-time highs.
In China, they said they are sticking to their zero-Covid policies, dashing hopes of some easing. China says it is still facing complex and severe pandemic outbreaks in the country and with winter approaching they are worrying about the current uptick gaining more momentum. All this is despite rising public and local government pressure to move on from the costly and disruptive policy.
China's seemingly endless promises of "reform and opening up' are just pointing out how closed and controlled their economy is, even if they know they do need those economic reforms. Their Party Congress focus on control and security indicates a deep distrust of their own people and market forces. It is hard to see how international companies can have much confidence in supply chains that rely on China after these recent shifts.
And in a detail confirming the sidelining and downgrading of the influence of their central bank, the Party has gone after a senior manager there, with a standardised accusation of corruption. Officials with economic experience are now suspect.
Singaporean retail sales rose more than expected in September and extending a new positive trend. They are now up +3.2% from August and up more than +11% from year-ago levels.
German factory orders fell in September and by more than expected. This extends a recent weakening trend. Export orders are holding these from being even worse.
In Australia, their residential rental market is in crisis with vacancy rates at 1% or below in most urban areas. There are reports that some renters were making up to 100 applications for a home unsuccessfully, sometimes after receiving a no-grounds eviction with a set end date. The conditions for widespread social unrest are brewing in these circumstances.
And the Australian central bank expects a couple of tough years for Australians, with real wages continuing to fall as inflation persists and unemployment starts to rise. These forecasts are part of their latest Monetary Policy Statement from the Reserve Bank of Australia. They echo their new Government's warnings. "Given the importance of avoiding a price–wage spiral, the board will continue to pay close attention to both the price-setting behaviour of firms and the evolution of labour costs in the period ahead," it warned. They are also concerned that recent jumps in rent, especially in Australia's two biggest cities, might further entrench inflation.
The UST 10yr yield started today at 4.16% and unchanged from Saturday. The UST 2-10 rate curve is a little less inverted at -50 bps. Their 1-5 curve is slightly less inverted at -41 bps. And their 30 day-10yr curve is little-changed at +50 bps. The Australian ten year bond is up +3 bps at 3.90%. The China Govt ten year bond is unchanged at 2.72%. And the New Zealand Govt ten year will start today also unchanged at 4.60%. A week ago it was at 4.34%.
The price of gold will open today at US$1683/oz. This is up +US$8 from this time Saturday.
And oil prices start today little-changed from this time Saturday at just over US$91.50/bbl in the US while the international Brent price is just on US$98/bbl.
The Kiwi dollar will open today at 59.3 USc and a +¼c higher than this time Saturday. For the week it is up +1¼c and a strongish revaluation. Against the Australian dollar we have stayed firm at 91.7 AUc and near our highest since April. Against the euro we are up slightly at 59.6 euro cents. That all means our TWI-5 starts today at 69.7 and our highest since mid September.
The bitcoin price is now at US$21,260 and up another +2.4% since Saturday. Volatility over the past 24 hours has been low however at just on +/- 0.5%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
84 Comments
One of our children is up against it with the rental shortage in Australia. Still no way they are looking to return to NZ and suffer under the worst PM and Government in living memory.
Why not ? Labour is gone next year anyway guaranteed.
.... yes , but look at the shambles they've left behind for the Gnats to clean up ... we should vote for Waste Management to come & clean up this mess ... then hand over the running of our nation to Singapore ...
Yep, ditch democracy for a neodictatorship. Good thinking.
GBH,
Fine, get rid of this lot, but do you really believe that a Luxon led government will materially better? I really don't care who is in power, just that they govern for the whole country, though that's probably too much to ask for.
My question is; are we just let down by successive governments, or, as I suspect, do we get the governments we deserve? I have lived here for almost 20 years now and while I am very happy to call NZ home, I increasingly see the all too many flaws in our society.
We won't know if a Seymour-Luxon government is better than Ardern until 2026 ... but .... but anything is better than continuing along the current path which is clearly not governing for the whole country ...
... vote ACT , vote TOP ...
I mean it's become increasingly clear Labour look after the bottom end of the country and Nats look after the top end of the country. Which leaves the middle (i.e. most of us) with nothing but an increasing cost of living and ridiculously high house prices.
You want change, it's not going to come from either of those parties, you need a coalition partner with about 10-15% of the vote, i.e. real teeth. Unfortunately most of the public vote for their tribe/colour as they are too dumb to see my first paragraph.
Yep and its going to get worse for Labour not better, watch their support drop into the 20's when the economic pain really sets in next year. JA will quit prior to the election.
Will be interesting if she stays on because she can’t stand the waste of money of by elections so that will mean staying in parliament representing her electorate for another three years won’t it. Or on the other hand she should just switch to the list and preclude the possibility.
In practically every poll people say they trust politicians the least, but then people actually seem to believe what politicians say about their plans. The deafening cognitive dissonance is quaintly amusing.
A change of Government will make ZERO difference
Because the underlying problems are physical, systemic, and inexorable.
The only thing that can be altered, is who gets what share of what's left.
But ultimately, a powered-down economy will only support egalitarianism - meaning the neolib/selfish approach is doomed, longer-term. Cooperation will trump competition (which saps too much of the remaining energy).
What so we just give up and leave clowns running the show ? Nah NZ still has a good 20 years plus going for it and longer if we actually wanted things to improve.
On the slippery slope now, well & truly. Gravity takes over. Aside from the odd one like John Major, governments don’t defy gravity. Watch out now for the infighting & self interest scramble as jobs go on the line and in this regard how the ovepowerful Maori grouping in this government, react with their agenda to be curtailed accordingly?
Labour's "announcement" yesterday was merely just adjusting a threshold for inflation. It's not a new policy, or a new benefit. It's actually just clawing back some of the losses in access in real terms to things that Kiwis have lost by letting governments not update things on an annual basis. It's just giving back something they've actually taken from us through crappy governance.
Instead now we get these things changed when an election rolls around or a party polls poorly. This is a cruel and irresponsible way to run a country, and exactly why anything with an income or cost threshold needs to be automatically updated annually by schedule, and not left to politicians who get the benefits of more money to play with by ignoring administrative reality.
Election year ahead....desperate Labour to throw dole, dole and more dole.
Economy fundamentals are bad and will be worse in 2023, add Labour desperation.....deadly cocktail and perfect recipe for disaster.
It's not dole. It's a childcare subsidy, but to qualify you had to be earning close to unlivable wages or the bare minimum in a place like Auckland. That's how out of date the old threshold was. Apparently that was acceptable until recently. Not only do they clip the ticket on the inflation component of our earnings when it comes to tax, but they're dressing up the catch-up in thresholds and eligibility levels as some benevolent act.
We've already paid for it, and we will keep paying for it, regardless of whether they actually give it to us or not. We need to stop acting like this is a genius political ploy and not calling it what it is: long overdue updates of badly out-of-date thresholds, from governments who have clipped the ticket and kept the goodies for themselves.
Much as I detest Labour don't write them off. Expect more of the "borrow and bribe" from Robertson, but on a vast scale.
A biggie might be a promise to cancel student loans, but of course only after they are elected. Quite corrupt.
They rely on New Zealanders to fall for it, and too many of us have come to expext ongoing free lunch.
The cause and effect of spending borrowed money and increasing cost of living is pretty clear to the general population right now.
I doubt that any election bribe that might seem inflationary or paid for by borrowing will be a vote winner.
Really? I look around the world and see exactly the same problems that we have in NZ replicated in every country, only worse - the US, UK and EU all with 10% plus inflation, health systems in crisis everywhere, labour shortages and striking workers, property markets retreating (that's a good thing). A change of government's not going to fix any of that.
If the election is beyond doubt I'd love to see the government to have a status quo budget with no new initiatives, perhaps with an inflation adjustment. It's immoral and reckless to spend up large to win an unwinnable election. All it does is take the new government temporarily down a peg.
Labours paying additional tax charity support for families on $100kpa+ iwho choose to have kids they cant afford is a real slap in the face to taxpayers who choose not to have kids they can't afford.
https://i.stuff.co.nz/national/politics/130393837/childcare-subsidies-t…
1) $100K household income is pathetically low in a city like Auckland.
2) Is $100K too much income? Or can these people not afford kids and shouldn't have them? Which is it? Your comment is unclear here.
3) Five days a week of daycare is close to $340 in Auckland. That's almost $18K. For one child. But you need two incomes to support a mortgage so most people will take an $18K hit in after-tax earnings in addition to the increase in living costs (two cars to run to get to two jobs etc) because they're not getting a mortgage AND earning under that threshold anyway.
The real slap in the face is to taxpayers who are trying to raise families in stable houses and work the jobs to make it happen, who then as a result don't qualify for any assistance at all, who still get hit by bracket creep but get to watch the Govt write a $190m cheque because their polling numbers are tanking. But the joke's on Labour, those people are already voting for them. They simply have no concept of what it costs to live in NZ and how badly out of date all these threshold and caps actually are.
That's their fault for working hard & trying to provide a good future for their families. They have no one to blame but themselves for missing out on the benefit.
kiwikidsonlyifyoucanaffordthemonyourownnz
Kiwiscouldaffordkidsiftherewasntsuchastupidpropertybubbleandsomanygreedyvampiresquidschargingstupidlyhighrents.
Unnafordablehousesandhighestrenttoincomeratiosinthedevelopedworld.
Most of the people here whinging about people getting childcare subsidy were around in the days when you could capitalise your family benefit in advance and it was enough for a house deposit.
In 1976 as a factory worker one income family the only thing we could capitalize the $3/wk family benefit for (1yr) was a sewing machine. If you worked as a public servant the captured Govt made life a lot easier for you including taxpayer subsidised low 3% interest interest State advances housing loans while we paid 15% for the first mge, more for the 2nd and 3rd...
You could capitalise it only for buying a first home ... up to $4,000 per family, at a time when you could buy a house for $15,000.
You could also argue that investing children who will spend their working life paying tax, and investing in parents progressing their careers and increasing their income and therefore tax bill, is well worth it, no?
The alternative is parents who can't afford to work, the cost of which is much higher and the outcome much less beneficial to society.
It's never really a good time to have children. Ever. A lot of time and energy and resources required - especially once you have more than one. Cost levels out in a way, but effort is seemingly exponential.
It's a bit simple and non-scientific but IMO if you've found any excuse not to have children, then having children is not your top life priority. There's something more important to you, be it lifestyle or money or time or standard of living... maybe that you don't want to raise a child in such an expensive country, in which case what is keeping you in this country? Overly simplistic view, I know. Especially though all this cost "crisis".
The adjustments are just that, income bracket adjustments of something that's been in place a long time. I'd rather my tax go there than on accommodation supplement or the dole. It benefits the future society that I will benefit from too so fair investment.
IMO if you've found any excuse not to have children, then having children is not your top life priority. There's something more important to you, be it lifestyle or money or time or standard of living...
If you fall into this camp don't have kids. They're not accessories, they're people who deserve parents who put their needs first
Agreed - it's just more redistributive, "don't bite the hand on election day that feeds you" tinkering with thresholds that should be indexed to inflation anyway. Nothing substantive to address the cost of living, no bold policies to lower food prices, or make housing cheaper, or reduce energy prices (which would benefit everybody and mean less need to apply these targeted band aids).
Will the Labour party ever be able to escape its belief that the only way people can be supported is by shuffling a bit more tax in their direction (on the proviso they 'tick red' every three years)? I'd imagine not ... in the same way National will never be able to escape its obsession with enriching property speculators.
When even the died-in-the-wool Labourites on Reddit NZ are saying this is a rubbish announcement, you've got a problem (probably why Robertson spent his entire speech talking about National - who are living in his head rent free - rather than trying to put forward a positive vision of what his party has achieved).
Both houses will swing to the GOP. President Biden has some “friends” on the other side, but it won’t be enough and he is being perceived as old and tired, falling and failing. A Republican president next time round looks odds on and therein lies the question of Trump and for that, there is not a simple answer.
Seems the US voters are between a rock and a hard place. Sleepy Joe on one hand and a narcissistic shoot his mouth off on Twitter, Trump on the other.
Not much different here from a choice perspective. Labour or National. Don't like either.
"they have used the first two years to install a very effective economic repair."
I must have missed something. Biden has contributed directly to drastic increases in energy costs. If that's one of the things classified as repair I'd hate to see what'll happen when they allow thing to fall into disrepair.
nigelh - that comment mirrors Morning Report's: "not happy with the direction you're taking them in"
The energy 'costs' are due to depletion and reducing EROEI; they are NOT due to political moves. Oil Co capex is inevitably rising exponentially, while the work do-able with the energy delivered, is reducing exponentially. The graphs cross.
Don't blame any convenient 'other'.
US jobs expand fast
The HH Survey (esp FT jobs) diverges from Est Survey, guess which one the Fed chooses to believe? In 2007 it was the Est Survey which was the wrong one. This time is different? Nah. https://youtube.com/watch?v=c5hEOh
It is now a certainity that OCR will touch 5%, if not more.
The Fed has months ahead of further tightening at 50bps per hit. Remember that rates do not usually peak until they are above inflation. That crossover point is going to be somewhere in the mid-5% range
https://www.bloomberg.com/news/articles/2022-11-05/fed-watchers-put-fin…
By next month should see most mortage rate in 7s and next year in 8s and can only hope that it never reaches in 9s.
yes this inflation spiral hasnt been tamed. Next two US rises will both be 0.5, and then 0.25s. A lot of talk of slowing spending, but in reality isnt happening. Strong jobs and wage increases. Central banks have predictably raced to OCR 4%, but have to keep going. Next year will be where it gets interesting. All the bank economists and property gurus got it wrong this year. Zollner ANZ was the closest to market reality, The Prophet Interest.co.nz was the most accurate forecaster in NZ, cant be disputed.
The rental crisis in Australia will likely put the brakes on the house price fall. People forget how essential it is to have rental properties available.
You wouldn't need so many rentals if housing affordability improved, because the well-heeled renters who were inclined could afford to buy. Snakes and ladders.
Maybe check out what's gone on in Ireland. They did all the checkboxes of how to make homes 'affordable', LVR, DTI, taxes, the works. Now there's no houses to rent, and few can afford being buyers. What's the opposite of win-win?
I'm not really sure a housing market where FHBs are priced out and investors made up something like 40% of all purchases, while getting their finance underwritten by the same FHBs they were outbidding was much of a win-win situation either.
The best way to make housing affordable is to build more houses. Anything else is just a make-work spreadsheeting scheme for some policy wonk to spend years dithering on, long past the point it would actually have been effective.
The best way to solve housing 'affordability',
is to have less people...
fewer people...
Hey, PDK is here for physics, not spelling.
Grammer not spelling :) Couldn't help myself.
"Grammar"
like I said I couldn't help myself.
Is he really? The Malthusian premise for the last 250 years has always been that catastrophe awaits x+ years ahead and has yet to be correct once. Steps over into the absurd more than the physical.
For instance the absurd 80% population reduction our Malthusian friend prefers is unlikely to be a cost free exercise.
Incorrect on all points.
Firstly, there were 1 billion present, in 1800. There are 8 billion and climbing, now. So linear appraisal (your '250 years' comment) is invalid.
Secondly, Malthusian is a shoot-the-messenger put-down. Tends to denote a weak argument, does shooting-the-messenger.
Thirdly, physical trumps all; the long-term carrying capacity of the planet is entirely dependent on consumption-rates. Choose one, and I'll tell you the carrying-capacity. I don't give a r/a whether you wish to attribute an emotion to that figure (absurd); that's just from your wished-for POV. Doesn't count.
Fourthly, I do not 'prefer'. That, again, is messenger-shooting. I warn.
Fifthly, you fail to define 'cost'. If it is in debt-issued, computer-held digits, who cares? If, however, you mean REAL costs (resource draw-down, energy-depletion, pollution over and above sink-capacity) then continued attempts to 'grow' are the biggest cost-incurrers, attempts to continue BAU flat-line come next, and efforts to powerdown, are the least costly.
I suspect you have swallowed the emanations of a belief-system known as economics; it is coming to a point analogous to the Church having to admit there wasn't a 'home for little children, above the bright blue sky'.... It did a lot of denying, too... Vested interests, all that...
I'd define cost in terms of lives lost.
Drawing conclusions based on terrestrial data only leads to awful conclusions. In reality energy is available by the billionfold larger than what our planet has to offer, if we expand outwards to reach it. Expansion ongoing is needed to maximise future benefit.
I'd agree denying the reality of space beyond the sky seems silly. People should look outwards more and see what is there.
Cameron did - and channeled 'unobtanium' as a result.
Think about it - he is no slug
I'm guessing that's why he bought in NZ.
Come on now, this is simplistic. It's a grab-bag of cheaper housing, better land use, lower population pressure and your old favourite, energy usage (be it time, commuting costs or actual overheads of being alive like power costs).
At the moment we are telling people who live here to have smaller families and only building houses that are tiny and unfit for family living (and cost an arm and a leg) while throwing open the gates to migrants and their parents - often who will live together in one house and that in turn shifts the supply of the market towards massive houses that take 1.5 life-times of earnings to pay for. We don't have the available land to build anything in-between, so price floors get dragged up, even on the two-bedroom townhouses.
It beggars belief that Labour are letting in 6 parents for every immigrant.
6 non-working dead weights, to suck up our resources and our housing.
Meanwhile, we have Kiwi kids sleeping in cars. There is a woman with a 4 month old baby sleeping in a car at our local park. It is sickening.
Who can we vote for that will slow down immigration??
Can you please provide evidence 6 parents are coming in for every migrant.
That's not what I wrote.
Misreading, or deliberate tro11ing?
Below are your words which I have copied and pasted:
Labour are letting in 6 parents for every immigrant.
I have not seen any evidence this is happening, so it'd be nice to be privy to where you're sourcing these hot takes.
Can you please provide evidence 6 parents are coming in for every migrant.
You are either a fool, or trolling.
Use Google if you want to look up recent changes to immigration laws.
Dp
If the polls are to be believed, the NZ sh!t storm Key created and Labour was unable to stem, seems about to have the spigots opened again by another one dimensional Nat drone. NZ punching above its weight again, in stupid!
You are just going to shit your pants when you look at the house price increases from 1999 - 2008.
Remind me, who was in charge then?
House prices rise faster under Labour governments. This is not a disputed fact anymore.
Oh please…..
You have made some great points higher up and then come out with this drivel about house prices rising faster under Labour governments.
while that might be objectively true, it’s a simplistic statement that does not unpack correlation versus causation.
For example - Nats came to power just after the GFC struck, there were several years of economic weakness and then the earthquakes…. That’s 4-5 years of major economic headwinds sucking the life out of the housing market.
Second example - the RBNZ taking the OCR to nearly zero in 2020 and stimulating an immense housing boom. Note - the RBNZ did that, not the government, although the government probably didn’t help by including employment in the RBNZ’s mandate- although I think they might have cut to the same extent even without that change to mandate.
where I think there is some truth to your allegation is in what the Clark government did, or rather didn’t do. Big immigration from 2000 to 2007, and they did jack about enabling and building housing. That period was fundamentally the foundation for our housing problems.
while that might be objectively true
Good, so we're agreed. Arguably the only thing that stopped prices rising faster under Labour was the GFC. There was the very real chance that prices could have been even higher come the 2008 election, although I feel like that would have drastically improved Labour's chances of getting re-elected.
For my mind, I largely don't have an issue with the migration settings, but the Clark Govt's biggest sin was realistically the criminal under-investment in infrastructure to support population growth - true, we did benefit from having less Crown debt when we needed it, but we could have been better off with things like proper rapid transit and core services that grew in line with our population. Our ability to service current population levels or even build stuff to catch-up with where we should have been then has all but disappeared. That kind of thing helps unlock productivity, not just adding a million people for a cheap GDP hit like we seem determined to do over and over again.
Prices had effectively stopped rising significantly before the GFC. Remember the collapse of mezzanine finance circa 06/07?
Clark did little around housing as well. They started to increase social housing through 2003-2006, but it wasn’t big. Plus, they didn’t make any effort to push councils along in rezoning through that period.
Big population growth plus insufficient house building equals xxxxxxxxxx
Immigration had a big impact on house prices back then. NZ housing was comparatively cheap for English immigrants and returning expats in the wake of 9/11, with one pound equaling three dollars
The big problem with "look whats going on under XYZ govt" is that whatever is going on today had an origin going back years. It's literally giving our snail pace decision makers way too much credit for how quickly their actions are felt.
The free market here in NZ was heavily promoting negative gearing and tax free gains in housing from 2000 onwards. Additionally it was probably the first time in history that an entire generation (gen x), are having to compete with the previous generation (Boomers) for housing.
What effect did the Asian Banking crisis (late 90's) and .com boom bust (2000's), and resulting monetary policy have on international money flows seeking safety in NZ property?
Clark and Cullen, in their attempts to rebalance domestic investment in the NZ economy definitely made a mess with their tax policies and massive WFF bribe. Obviously they and the expert economists were unable to see that everything was being pumped into the housing market. And this became the norm, promoted by everybody. It doesn't negate the fact that National in 2008 championed fixing housing affordability and blatantly lied. But what are governments really meant to do when they and their majority constituents demand unearned income and wealth?
Monetary policy that focuses on CPI inflation without taking into account asset price inflation is just as responsible as badly targeted fiscal policy by central and local governments. We the people, in our greed, selfishness and fear are ultimately responsible.
Note: In 2000 I was able to purchase a very basic house in a good suburb at 2x household income, $240k 100% financed at 7.5%. I had no thoughts about capital gains or my home being a nest egg, it was a home not a financial investment. And no, I didn't benefit from the gains, personal circumstances changed and I haven't been able to have the privilege of owning a home since 2003. Maybe it's because I don't have a vested interest that I can see what a cock up we've made turning homes into the "housing market", the "property ladder" and "residential property investment".
Indeed. Problems in Sweden too with rent controls. Ideally you want enough rentals where good tenants don't have to struggle so much to get a place. They should have a fair amount of choice. To achieve this landlords need to be encouraged and rewarded sufficiently. Governments suddenly changing the rules and creating hardship is unlikely to result in a win-win.
Could be the opposite. Maybe it's many landlords preparing to sell with vacant possession.
I thought that too but Sydney is experiencing this:
A seasonal spring rush of properties for sale has failed to materialise and new listings fell 2.3 per cent last month from the previous month, SQM Research data shows. Link
Maybe landlords are still in the preparing stage?
Adelaide and Perth have astonishingly low rental vacancies.
Perth’s rate fell to a record 0.3 per cent and Adelaide recorded the tightest rental market among the capital cities with 0.2 per cent
The PM has only herself to blame.
Under her leadership the value of housing stock increased from 1 trillion in 2017 to 1.5 trillion in 2021. Pretty much all of this increase in value was tax free. Much of it owned by foreign investors though elaborate trust schemes.
If we had a 15% CGT we would have collected 75 billion in revenue from this increase. Imagine what we could do with that. My first action would be to create a tax free band of 0-$25,000. Maybe a second band of 10% from $25,000- $75,000. This would significantly increase the after tax income of working class Kiwi's, significantly increase the disposable income of working class Kiwi's & significantly increase the quality of life of working class kiwi's.
The wave of Jacindamania was only rideable for so long. Working class kiwi's need real policies to help alleviate the declining quality of life they are facing. These policies were not forthcoming by the PM. Instead we get a "climate emergency" while she jumps on a jet and travels down to Antarctica for God knows what reason.
"America voters ignoring strong economy"
Obama sky high energy price polices are coming home to roost for the democrats.
"For months now, high gasoline prices have been arguably the most visible political pain point for President Joe Biden. In most towns, they can be seen every few blocks on signs at filling stations. It’s the fundamental commodity Americans need to go to work, buy groceries and get around.
But in the runup to the US midterm elections, another energy cost is coming into focus: skyrocketing electricity bills. "
https://www.bloomberg.com/news/articles/2022-11-06/sky-high-electricity…
Not necessarily. If owners move and want to sell but can't because it will crystalise their losses, they may put their property on the rental market. Or they might Air B&B it, which has been a reason why rental accomodation has decreased.
Yes, the tourist rental market is sucking in a lot. Why deal with needy tenants' day-in day-out, when you can get a generally accepting holiday maker pay the weekly rent across 1-2 nights.
Less wear and tear, less agency fees, and still the sweet, sweet, nectar, that is capital gains.
After all we are only 1 year down in the actual costs of houses. Anyone that bought when Jacinda was campaigning on the crisis back in 2017 is still going to have a very merry christmas should they sell.
"The US Federal Reserve.... warned of rising instability in the trading of American government debt."
That's not just a USA warning. It's leaking out everywhere.
The Bank of England risks hurtling toward another bond market crisis as new signs of strain bubble up and threaten to force another intervention, City traders have warned. They have pointed to mounting stress in the so-called “repo” market and short-dated UK debt, known as gilts, just weeks after the post mini-Budget bond chaos pushed Britain’s pensions funds to the brink of collapse.
https://www.telegraph.co.uk/business/2022/11/06/bank-england-risks-repe…
It's hard not to feel that 'something nasty' is not far away as we head into a northern winter. And I just don't see lower interest rates immediately ahead. We might look wistfully at the days that we had a chance to refinance at 7%.
The premise of the buyback program is to “improve liquidity”, an overused euphemism for all the real problems no one wants to state forthrightly. Everyone talks about a breakdown in the Treasury market, implied problems in liquidity, yet hardly anyone addresses the real issue; why there is so much demand for certain segments of the Treasury market increasingly at the expense of others.
Truth is there are dependably liquid USTs and other securities which are…not. Of those which are, the very instruments Salomon Brothers and its ninety-seven fellow felons, so to speak, were cheating for, those are whatever have just been auctioned most recently. These securities are called on-the-run (OTR), the ideal instrument because it most closely matches the current fundamental factors of maturity length and market condition.
A ten-year Treasury note, for example, one that was auctioned off five years ago is today considered part of the five-year UST bucket. But while it has a maturity of five years, it has five-year-old characteristics in its coupon. And the price has moved around over that half decade to reflect the changing market demands for yield.
All that makes it less than ideal for trading and, yes, collateral purposes. You can use this off-the-run (OFR) note for repo or as collateral in, say, a currency swap, but when times get rough and the dealers on the other side grow cautious, again, those dealers only care about the liquidity characteristics of the collateral you are offering.
A brand spanking new five-year note, on the other hand, there’s going to be a thoroughly dependable market for it. Even though both the OTR and OFR are absolutely free from credit risk, they could be treated very differently in a collateralized financing transaction.
This is no theoretical case; it has happened on more than one occasion, the last in, of course, March 2020. A case that, to this day, everyone still gets very wrong.
The mainstream, Fed/Treasury narrative is that Fed buying of USTs was necessitated by a “breakdown” in the Treasury market. Ha! In fact, the Fed said so in its prepared minutes from the chaotic, crisis-filled March 2020 FOMC meeting:
“In the Treasury market, following several consecutive days of deteriorating conditions, market participants reported an acute decline in market liquidity. A number of primary dealers found it especially difficult to make markets in off-the-run Treasury securities and reported that this segment of the market had ceased to function effectively. This disruption in intermediation was attributed, in part, to sales of off-the-run Treasury securities and flight-to-quality flows into the most liquid, on-the-run Treasury securities.”
Everything since has made it seem as if the Treasury market was broken and the Fed fixed it when buying under its massive QE. No one ever stops to consider let alone ask why so many OFR USTs were being sold in the first place!
The problem wasn’t dealers or even OFR, it was a massive, widespread dollar shortage which caused mainly but not exclusively foreign reserve managers to liquidate any USTs they had – which were largely OFR – in a losing attempt to stay on top of local dollar illiquidity (which is allegedly what the Fed does with its central bank liquidity swaps, but we all know it doesn’t; just no one says it out loud). Link
Canada has signalled a plan to attract 1.45 immigrants due to their 1 million person labour shortage ....
.... clearly they haven't got a surplus of people malingering on a Jobseeker plan ...
I do wonder how many nurses & doctors Canada want ... folks we desperately need in NZ ...
I'll just post this chart again to help us identify who is really living off the taxpayer:
Remember this when the PM says we can't make ECE subsidies universal or increase the 20 hours subsidy to 40 hours, or even pay it out at a better rate to ECE centres. It's just garbage.
Public spending on childcare assistance .8% of superannuation, yet the former welfare payments are means-tested. Kiwis are taxed on individual income, but welfare payments are tested on family income.
The government is gradually indexing welfare across the board to inflation/wage rate but claims indexing tax slabs to these stats as tax cuts for the rich.
I’m not sure I could agree ‘Fortunately, they have used the first two years to install a very effective economic repair’ Nor that Biden and fellow Democrats havent been front and centre in the culture wars.
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