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American data uninspiring; Japanese exports rise sharply but imports more; questions about leadership in China; Aussie jobs data stable ahead of election; UST 10yr 2.84%; gold and oil up; NZ$1 = 64 USc; TWI-5 = 71

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American data uninspiring; Japanese exports rise sharply but imports more; questions about leadership in China; Aussie jobs data stable ahead of election; UST 10yr 2.84%; gold and oil up; NZ$1 = 64 USc; TWI-5 = 71

Here's our summary of key economic events overnight that affect New Zealand with news a pall of uncertainty is still hanging over investment and financial markets, uncertainty about how the drive to quell inflation will turn out for asset prices.

US jobless claims rose slightly last week but remained below the 200,000 level in 'actual' terms, and the total number of people on these claims dipped below 1.3 mln and another new record low.

American existing home sales fell in April, and fell more than expected and the third retreat in a row. They are now down almost -6% from the same month a year ago, and the inventory of unsold houses is rising even if it is at historically low levels. Those that are selling are in the higher price segments, so average selling prices are rising, now at US$391,200 (NZ$610,000).

US mortgage rates dipped unexpectedly last week.

The Philly Fed factory survey is still expanding, but at a sharply reduced rate. However new orders and shipments rose. But employment decreased, and the price indexes remained elevated although edged down. Their looking-ahead indexes remained positive but reflect more muted optimism for growth over the next six months.

Japan's exports rose strongly again in April, the second highest level ever after the record-breaking March result. But the rise actually disappointed analysts. And it came as imports surged, so it was overshadowed by the rising cost of oil and other raw materials which meant it has largely been overlooked.

Japanese machinery orders bounced back in April, building on a good March result. The latest data was higher than analysts were expecting, and builds on the more specialised machine tool order data we noted a few days ago.

In China, some observers are suspecting that President Xi has been forced to share power with Premier Li as a result of a string of policy mistakes. If so, it could mark a turning point in the hardline approach Xi has been pursuing. Or it might be just wishful thinking. In any event, China seems caught out by its hubris over the past few years.

Sri Lanka says it can't pay its debts, and is in "pre-emptive default". The G7 is moving to help, but China seems reluctant to give up the huge debts that it is owed.

In South Africa their central bank raised its benchmark rate by +50 bps to 4.75% at its overnight meeting, as widely expected. This is the 4th consecutive hike and the biggest in over six years. They too are responding to elevated inflation risks stemming from geopolitical tensions.

Although the Australian jobless rate held steady at 3.9% in April from March (NZ = 3.2%), their participation rate slipped to 66.3% (NZ = 70.1%). The total number of jobs rose by only +4000 when a +20,000 rise was expected. But more than +92,000 of that rise was full-time jobs, whereas part-time roles fell -88,000.

Over the past week there has been little change to the cost of shipping containerised freight by sea, but the cost of shipping bulk cargoes has risen.

The UST 10yr yield will start today another -5 bps lower at 2.84%. The UST 2-10 rate curve is unchanged at +24 bps but their 1-5 curve is very much flatter at +73 bps. Their 30 day-10yr curve is also flatter at +234 bps. The Australian ten year bond is now at 3.29% and down -4 bps. The China Govt ten year bond is unchanged at 2.82%. And the New Zealand Govt ten year is little-changed at 3.62%.

On Wall Street, the S&P500 is staying down after yesterday's very sharp fall, little-changed in Thursday afternoon trade. Overnight, European markets were all down about -1% except London which was down -1.8%. Yesterday, Tokyo ended down -1.9%, Hong Kong ended down -2.5% but Shanghai rose +0.4% on lockdown easing expectations. The ASX200 ended its Thursday session down -1.7% but the NZX50 ended down a much lesser -0.5%.

The price of gold is on the move today, up +US$25 since this time yesterday at US$1841/oz.

And oil prices are +US$3 higher today and now just under US$109.50/bbl in the US, while the international Brent price is now just over US$110/bbl.

The Kiwi dollar will open today nearly +1c stronger against the US dollar, now at 64 USc. Against the Australian dollar we are firmish at 90.6 AUc. Against the euro we are almost unchanged at 60.4 euro cents. That all means our TWI-5 starts today at 71 which is up +40 bps from this time yesterday.

The bitcoin price has risen +3.3% from this time yesterday and is now at US$29,946. Volatility over the past 24 hours has been high at +/- 3.3%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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125 Comments

All eyes on RBNZ now for our next interest rate announcement, now that it's clear we're not going to get any meaningful relief from the Government when it comes to inflation. It's going to have to be the NZD that does the heavy lifting for us instead.

Up
6

Agreed with the first part of your post but I doubt the NZD will help reduce inflation, if anything the NZD is likely to fall,  which will make tradable inflation higher

Up
17

Interested in why you think it will fall Yvil?  

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0

In uncertain times, money generally flows out of smaller, more speculative currencies like the NZD and towards deemed "safe heaven" currencies like the USD & CHF

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21

Fair enough that makes sense, the RBNZ is really in a jam here (somewhat of its own making), need to raise interest rates to slow inflation but can can't raise interest rates due to excessive mortgage debt.  

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5

I agree - there is a large possibility it will fall

1. Currently Dairy prices are falling - NZ's number 1 exported good - that will result in lower demand for our currency as global demand and hence demand for NZ dairy declines. 

2. US interest rates will also keep rising - offsetting the NZ interest rate rises - this will create more demand for the US currency.

Either dairy demand needs to pick up or NZ will need to increase interest rates faster than the US for the Kiwi dollar to start rising

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16

Good points!

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2

Well, it looks as if the US dollar is just starting to feel the effects of all the money printing over the last few years. Safe haven or not, it has to find it's true value relative to the new dollars printed at some stage. The long term prophets have all said it has to drop relative to other countries' currencies at some stage. We might be wrong, and I am too scared to invest against the dollar, but it will happen at some stage, so why not now?

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2

1. Currently Dairy prices are falling - NZ's number 1 exported good - that will result in lower demand for our currency as global demand and hence demand for NZ dairy declines. 

 

Except Global Dairy Trade auctions are conducted in USD terms.

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0

Maybe the Government could come save the day and bring in State Advances Corporation mortgages at 3% for Owner Occupiers on existing lending.  Then let the market do it's thing and adjust to rising interest rates.  

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9

Not a bad idea. Limit them to FHB's only, they must be owner occupiers and not own any other property. That could work.

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3

What about the FHBs who were used as cannon fodder in 2020/21? It was the stupid LVR removal decision that really screwed them, so I reckon anyone in that group also deserves to access any relief that gets handed out. 

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5

Possibly could be some structured provision when they need to refinance to allow them to shift across? I agree that FHBs have been screwed, and should get some support. Considering Rastus's comment below, I wounder whether there should be some means to protect people from the consequences of their FOMO? Can this be done?

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1

No one was used as cannon fodder, we all make our own decisions and we reap the benefits (like so many FHB who bought earlier) or pay the price.  Let's stop always blaming everyone else, let's grow up and take accountability for our actions!

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12

I'm all for personal responsibility, but that does highlight that a measure of the same should have applied to the property market earlier.

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4

That's fine in theory - but would you be happy being in the first group of people in decades to whom that actually applies to, when in the past every stop has been pulled to protect others from paying the price for their decisions? 

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3

And would you say to retirees that we are no longer increasing your Super, you should have saved more?

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2

No, but I would definitely say for example that people who earn a decent amount and also get super might need to pay a higher tax rate, and that people who get super and also have significant assets should maybe pay some tax on the increase in value of those assets. 

The idea that superannuitants are poor and that pensioners need to be 'looked after' looks outdated when you consider the facts. As a generation, current pensioners are the wealthiest generation in history, and were wealthier compared to subsequent generations at comparable ages along their entire lifespan pretty much. Of course there are many pensioners who are not wealthy at all and depend only on the pension, and I wouldn't want to mess with super itself for the sake of those people. But as a group? Current pensioners have done extremely well out of the political policies in place over their lifetime. Asking the wealthiest of them to bear just a little bit of the burden to ensure successive generations have opportunities even close to similar (not to mention the burden of doing something about climate change) is not too big an ask. 

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1

So you want to share the burden of irresponsible borrowing across those that didn't and haven't and are still asset less?

 

 

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11

Well doh, that's how capitalism works.

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3

Irresponsible borrowing or irresponsible lending?  

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3

both. They are not mutually exclusive.

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0

The RBNZ needs to, and will have to, raise the OCR, too bad for asset prices, mortgage debt and don't forget disposable income.  This means spending is going to reduce markedly, and in my opinion, this will lead to a recession in 2023.  The result of this, I think, is that inflation is going to evaporate in 2023 and the RBNZ will rapidly lower the OCR again, I guesstimate in the second half of 2023.  

I have backed up this position by fixing my mortgages 1/3rd for 2 years and 2/3ds for 3 years back in July 2021

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8

Second time in two days we've agreed on something - probably a sign of the apocalypse. I have done pretty much the same, for the same reasons - fixed in June 2021, evenly split across 2, 3 and 4 year fixes. 

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3

Hi Yvil,

I agree with you but the only thing that makes me a little nervous is the cost of imported goods might keep inflation higher if the NZD goes/stays lower

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7

No choice if the market wishes to address this unsustainable imbalance with the ROW.

Considering the full 2021, New Zealand recorded a current account cap of 20.2 billion, totaling 5.8 percent of its GDP Link

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1

Orr specifically requested help on this, so you wonder if they might have reduced what they wanted to give originally..

Restaurant Brands will be pleased

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2

Clearly the Kiwi needs some defending at this point or we'll just import more inflation.

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3

Improving the inflation situation by giving everyone some money is a new one

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25

The money is almost inconsequential. Especially as it is paid in instalments.

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7

It's an extra $800m flooding into the economy at a rate of 250m a month. It will have some effect, not none.

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5

Everyone?

House 1 has 2 working adults. One on $200k the other part time on $50k. One person receives $350.

House next door also has 2 working adults. Both on $75k. Neither receives a handout.

Household 1 combined income $250k got some cash for a few extra bottles of Pinot.

Household 2 combined income is $100k less and they get nothing.

 

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9

Household 1 pays $19,130 more in paye than household 2.

Perhaps extra effort,skill and years of hard work are allowing household 1 to subsidise household 2.

Household 2 should be thankful household 1 exists. 

They should at least offer to mow the lawns or be in attendance to pour the Pinot

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8

Ahh yes the day that people understand the data and are thankful.  

If that ever happens (it won't) then we will have forgotten to focus on ourselves and deal with reality.  So this won't happen but if it did, those that paid more a) would feel better about being one person and paying more than another person who can only use the government services in the same manners as they can and probably b) be happy to pay more and lastly c) want to move past money into doing other things to help others less successful but thankful.

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1

Someone's pay and subsequent tax is not necessarily an indicator of how hard they work.  We have this upside down system where often the most critical of people are generally paid the least and the least critical seemingly are paid the most.  

For example, how much money does a CEO make for a company?  I can tell you the warehouse team in our company are the most critical to the continued success and profitability of the business yet they're paid the least.  The sales team can do everything right, but if the dispatch team continuously stuff it up then say goodbye to repeat business.  

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7

It is not about working hard, certainly there are those who work very hard indeed and are not paid as well as others who work less.

We are also all critical, one part of a system will not work without another.

In my view it is largely (but certainly not exclusively) about the ability to do the work.  A CEO could work in the warehouse with appropriate training (this will take a day or so) but a warehouse person will not normally have the experience or education to do the CEO's job.

https://www.youtube.com/watch?v=pRTU6IEepPM

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4

More complex decisions take longer to manifest themselves in results, whereas not collecting the rubbish on rubbish day is an instantaneous cluster. 

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0

Yes, witness light rail in Auckland, those complex decisions are still holding off on manifesting anything for as long as possible :)

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2

I'm sure the dollars are manifesting in certain individuals bank accounts 

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2

"uncertainty about how the drive to quell inflation will turn out for asset prices"

Badly, the answer is, badly

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5

To get some context, the market capitalization of FANG stocks is now down a stunning $2 trillion from its record highs in Nov 2021...

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5

David I just want to say thank you for these morning summary's, not only are they fact-filled but your insight/opinion adds colour.

For example in the US housing para. "Those that are selling are in the higher price segments, so average selling prices are rising, now at US$391,200 (NZ$610,000".  The choice to add that additional information gives the reader much more insight into the data.

Good stuff.

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14

Interest.co has done more than any other site, to further the conversation.

But the vernacular is still 'economic' - still of yesterday rather than tomorrow. That has caused much discussion in my circles, as tho the why(s).

See others are cottoning on:

https://bylinetimes.com/2022/05/17/global-banks-privately-prepare-for-d…

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8

byline times = fake news

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1

Probably best you read the actual article. It fits in with what is actually happening all round the world at present.

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2

Agreed PDK ---  If we are to create a more wealthy , equal and happier society --    then everything we do - starting with anything new -- and all new money --  should be judged and measured against both environmental and individual wellbeing criteria not just financial. 

Its one thing to call it a wellbeing budget or climate budget ---  but thats just a name -    this looks like another borrow 10Billion -- deliver very little budget -- and another huge missed opportunity. 

 

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3

Huge selloff yesterday. RRP set for 1.30% in less than month. And 4w bill is stuck under 0.50% getting huge bids in the "repo hours." Don't forget derivatives, too, need collateral esp. when wild price swings. The utility of Tbills (not bank reserves). Link

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0

So China has bought Sri Lanka. Great port Colombo. Highly strategic for sure. Another headache for India undoubtedly.

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7

Sri Lanka should do an Evergrand to China.

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11

What did they pay for it with? Speculation fueled debt on overpriced housing? The whole Chinese house of cards is a joke (much like everywhere else). 

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0

And Tucker Carlson had drawn some flake for promoting the White Replacement Theory. President Biden's criticism of Fox, after the Buffalo slayings, might have been the catalyst.

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0

We need a tucker Carlson replacement 

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1

Tucker Carlson replacement theory?

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1

Is the demographic displacement of Whites happening or not? If it is natural, is it allowed to be stopped using policy? If not, then is it not the policy of the State that whites are to be displaced?

The system has been attacking people for merely saying it, not that it isn't true. Any analysis of Census over time suggests it is a true hypothesis.

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1

Where are they being displaced to?

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1

As a proportion of the population. If you really want to talk about displacement, if you have to move out of your neighbourhood because the crime rate spikes after the arrival of certain crime prone ethnic groups, you are ethnically cleansed from an area. It isn't a hard concept.

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1

Cut back on the hyperbole. It may be pretty unpleasant to feel you need to move out of your neighbourhood because of a spike in crime, but it's not 'ethnic cleansing.' 

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5

It explicitly is on a small scale. This is not a hard concept, it is purely dishonest to pretend otherwise.

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1

US stock markets were weak, I'm guessing that Kiwisaver growth funds, will report a loss this quarter.

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0

I have to laugh about the govts ineptitude at changing the default funds to more risky ones at a time where stock markets are at historical highs. Personally, I recently changed most of mine to cash. Which for some reason returns less than a bank term deposit but hey, its not going down any more.

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3

I cashed out my KW about a month ago, it was dropping every day then, very happy with decision.

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1

Default funds are for new Kiwisaver accounts - so mostly with very low balances. They should be growth oriented despite the falling markets.

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1

KS Aggressive fund is down about 15% from its peak in Dec 21, -7.8% p.a currently

I think even this is being helped as the conversion back to NZD for the 60% held in International Equities from USD/AUD is going up as the NZD drops

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0

Yep pity those who waiting on house prices to dip if they going to use their KS funds for a home deposit, they can't seem to get a break. Oh and with the expected interest rate rises on top of inflation for the cost of living....

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3

If you're wanting to use your funds within a few years you shouldn't be all in equities or an agressive fund.

This is pretty basic personal finance stuff.

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5

Exactly. Financial literacy is appalling.

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2

Are you talking about the government?

 

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7

Every investment has gone down, I have growth and conservative, not one has gone up this year. Even the cash sitting in the bank is being eaten away.

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4

Exactly, there is a lot of hubris on this site (yes I'm guilty too :)) in regards to people being financially unprepared, making poor choices etc.  Life phase and luck are huge factors in peoples ability to find returns.

Up
15

Very true.

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1

Yup. I did all the supposed 'right' things - saved an emergency fund. Saved a 20% deposit to ensure I would be attractive to banks and to protect against possible downturns. Kept my KS in conservative/cash because I was going to need it in less than 5 years for a deposit. I'm in an OK position, but I would be substantially better off if I had just said 'stuff all of - I'm going to buy a house at the limit of my borrowing power with as small a deposit as possible as soon as possible (screw the emergency fund) and keep KS money in aggressive funds until the last possible minute.' Did I make a poor decision? You could only know that in hindsight. 

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1

al, you're not going to like what I'm about to say, but if you want to answer your own question really truthfully and honestly, you will have to admit "yes I made the wrong decision".  I could even take it one step further and say, you did not take advice from some commenters on this site who have advised for many years not to postpone, not to listen to the naysayers and buy a house as soon as you could afford to.

Up
0

Yvil, it's not that I don't like what you say, it's that it's not really relevant given my situation. While I would have been better of to buy a house as soon as possible, there are some personal reasons why it wouldn't have been particularly likely that I would have been able to do that, even if I had decided to. My decisions about my housing certainly long predate me being on this site, and it's certainly not the case that I 'listened to naysayers' on interest and that was the problem, nor that I 'failed to take advice from some commenters' (by which I assume you mean you). It makes you look foolish when you chide someone about their decisions when you are not in possession of all the facts. It also makes you look a bit foolish when you miss the entire point - which is that it is very easy to say these things in hindsight. You yourself have repeatedly revised your predictions of what's going to happen in the housing market - which is of course sensible to do in the possession of new relevant information, but goes to show that predicting exactly what is going to happen in the housing market, particularly when you are talking in time frames of longer than a few months, is incredibly difficult. To make the point, if I had not made the sensible preparations I did, and had happened to be buying just a few months later than I did, I would now be in a pretty precarious financial position - or I would have had to postpone indefinitely something I had been working towards for a very long time, with no guarantee that the situation would actually significantly improve. 

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0

Al, you seem to be contradicting yourself a bit, in your first post you said "I would be substantially better off if I had just said 'stuff all of - I'm going to buy a house at the limit of my borrowing power with as small a deposit as possible as soon as possible" and in your reply above you say "While I would have been better of to buy a house as soon as possible, there are some personal reasons why it wouldn't have been particularly likely that I would have been able to do that, even if I had decided to"

Anyway, from what I understand, you now own your own house, this is great!  Don't worry about where the price of houses is going this year or the next, in 5, 10, 20 years it won't matter the least, you will just remember making a great call getting your own place.  Good on you

Up
0

Great point, my wife and I have had 2 kids, saved a giant emergency fund (intended to purchase an investment property or business but currently sitting on the sidelines) and paid down the mortgage over the last 2-3 years of travel restrictions and low interest rates. It has set us up currently to weather the storm on the horizon.

I think the last couple of years have been great to start a family and stay at home. But all a pure fluke based on where we were both at in our stage of life vs concurrent economic and political climate/conditions. 

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1

I can't see anything "flukish" about saving an emergency fund while raising family and paying down your mortgage.  To me it looks like you are taking charge of your finances very well

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0

Couple of colleagues, did exactly the same thing but they bought middle of last year based on the type of advice given on this site.  They are not in a good place. The fluke is in the timing. 

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1

And to top it off being told to get over it because people were taking out 4 mortgages at 35% interest rates 40 years and they have no idea what hardship is.  

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4

Yup. Throwing 50 hours into a salaried job and going backwards and being told you have to just work harder by people who got time and a half on overtime they actually got paid for and could service a deposit on a single income, with wage increases and inflation that helped erode the debt they very briefly had huge interest to pay on.

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12

With very high mortgage rates came very high term deposit rates.  The financial illiteracy of taking out a mortgage at 20%+ rates for a house 3 x the average annual income when they had the option of 15%+ term deposit rates is astounding.  Imagine if FHB today could even have 15% term deposits rates when saving 3 years salary just for a down payment, let alone actually buying a whole house for 3 years salary.

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4

To be fair, 50hrs is standing still.

Try 70 and call me in the morning.

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1

One day you might learn that not all things in life are a dickwaving contest. Ask the Japanese how 100 hour weeks worked out for their managerial class. 

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5

The Japanese work ethic is more about culture and face than financial necessity. 

When I was a kid (and I'm only just not a millennial by a shave) most parents worked second jobs. Today at least 30% of the workforce will work well beyond 50hrs a week - these people will eat your lunch. Women entering the workforce has had a further deflationary effect on wages.

It'd be nice if people could just work a 9 to 5 and have a super comfortable life, with the ability to even build some wealth, but that's not a world we have. You have the most control over your financial situation.

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1

Weird, when I was a kid house prices weren't spiked through the roof relative to incomes through lazy speculation and I can recall few parents taking on second jobs out of necessity just to cover the basics on a starter home.

I'll let you figure out why that might not be 'the world we have', but I think we both know me trying to convince you it's not something you can 'bootstraps' your way around like most boomer talking points suggest is a total waste of everyone's time. 

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3

I'm about Pa1nter's age - my parents bought a 5 bedroom house on a third acre section on a single junior primary school teacher's salary (For perspective that's $52k-$75k now). Things were very tight - I remember getting roasted for spending 20c of change for the milk at the dairy - but we made it through and my parents are comfortably semi-retired - my mum says she wished she'd scrimped and saved less in those early years with the two mortgages etc and enjoyed life a bit more, but I can't complain.

 

 

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1

What I don't get is shallow thinkers persist in blaming an entire generation, but will not mention the politicians at all. Yet the problems persist, but different generations now provide the politicians and have done so for some time. It's a lot like Hitler blaming the Jews for Germany's problems, or american whites blaming the blacks for America's problems. None of which is correct or accurate, but they sure can spin a rationale to support their perspective. Is it some form of genetic defect that prevents people from see the truth?

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5

Who is 'blaming an entire generation'? The comments above are complaints about stupid advice being given by people who experienced vastly different circumstances. That's a legitimate thing to complain about, but it's not the same thing as blaming someone for the difference in circumstances. 

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1

Ah No. The entire tone of many comments is critical of Boomers. The problem is when asked, boomers want the current generations to do well too. In addition there are many Boomers who are suffering as well. The problem is it is not the Boomers who created the current mess. It is the politicians. When the last Boomer has died this will be no less true. It is the politicians who have inherited the system from earlier politicians, and who do nothing to fix them, or actually make them worse. We should not be scape goating those who had no control, but demanding solutions from those who do. These solutions need to be effective, producing real results. But more importantly when those politicians seek to entrench their power and reduce accountability, we should firmly reject them.

There is a call to tax on changes in 'value', but who defines that 'value'? 'Value' tends to be a somewhat vague thing that is constantly changing. So if an upwards change in value is to be taxable, then surely a downwards change should be deductible as well? But value is not real money, but a theoretical change that really means nothing until who ever holds the asset does something to realise that value, such as borrow against the change in value, or sells the asset. The assumption is always that the asset 'value' has appreciated, but what if it has declined? If someone was mortgage free, but their property value had declined and they went and borrowed against it to pay for a refurbishment, how should that be treated?

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3

I guess you grew up in a more affluent environment than me.

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0

Yeah I am trying to stay positive however at the least it does feel like whenever I get close to reaching the goalposts (by following the prevailing wisdom "upskill to improve career", "live within your means" etc), they are then moved and the people who lived like Aesops grasshopper get some more handouts to close the gap again

 

Up
11

I took money out of my savings to get a haircut at a mall a couple of weeks ago. I also noted with some wry black humour that my value dead is now far more than I'm worth alive, from an actuarial perspective. How did we create an economy where being alive as a going concern isn't actually financially viable for so many? 

Up
7

Easy. We monetised everything. Possessions, experiences, dreams even. My mum cut dad's hair all his life. They lived their whole life in the house they bought in 1948 for  475 pounds. We need to enjoy far bigger bits of our lives without giving other people, especially foreigners, any of our money. 

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10

Agreed and true, however I know there are some (many) on this site who are unable to get that security.  The security of a place you can control the future of, that enables that wider life, that empowers them to live a bigger life from that platform.

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2

Don't forget that not too long ago there was a prominent economist, regularly interviewed by the media who argued quite strongly that renting was a better option for the current generations. He stated all the economic reasons about not tying up their wealth in fixed assets and so on. He's somewhat silent on that these days.

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4

He's done more than remain silent - he reversed his position a few years ago.

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0

There are actually two of them, perhaps two of the three best social commentators we have on economics did so to their significant personal loss.

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0

yes poor chap. He was under the mistaken impression that inmates would not overtake the asylum.

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0

Yeah this, everyone has become a specialist that *has* to purchase most goods and services required to go about their day to day. Unless that specialisation is highly valued, most people are going to come off second best.

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1

Fortunate at the time - post-war - to have governments focused on making home ownership more affordable too, rather than increasing house prices for a "wealth effect". That secure start without onerous debt is a massive boon, economically, to family life, to social outcomes. Reversing course on what we use houses for has been a terrible policy change with very negative effects. 

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4

Got a statement from Simplicity on my Kiwisaver last night. 30 minutes before that statement came in, Simplicity sent out a communication saying "things look bad now, they'll come right later". The timing made me laugh, it was so obvious they were setting people up for a lower amount. As it was, still up on last year.

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“The farrago of magical thinking, technocratic hubris, ideological delusion, self-dealing, and sheer shortsightedness that produced the crisis in Sri Lanka implicates both the country’s political leadership and advocates of so-called sustainable agriculture: the former for seizing on the organic agriculture pledge as a shortsighted measure to slash fertilizer subsidies and imports and the latter for suggesting that such a transformation of the nation’s agricultural sector could ever possibly succeed.

...imposing a nationwide ban on the importation and use of synthetic fertilizers and pesticides and ordering the country’s 2 million farmers to go organic.

The result was brutal and swift. Against claims that organic methods can produce comparable yields to conventional farming, domestic rice production fell 20 percent in just the first six months. Sri Lanka, long self-sufficient in rice production, has been forced to import $450 million worth of rice even as domestic prices for this staple of the national diet surged by around 50 percent. The ban also devastated the nation’s tea crop, its primary export and source of foreign exchange.

…Sri Lanka, meanwhile, is the world’s fourth largest tea exporter, with tea accounting for a lion’s share of the country’s agricultural exports, which in turn account for 70 percent of total export earnings.

… While the proximate cause of Sri Lanka’s humanitarian crisis was a bungled attempt to manage its economic fallout from the global pandemic, at the bottom of the political problem was a math problem and at the bottom of the math problem was an ideological problem—or, more accurately, a global ideological movement that is innumerate and unscientific by design, promoting fuzzy and poorly specified claims about the possibilities of alternative food production methods and systems to obfuscate the relatively simple biophysical relationships that govern what goes in; what comes out; and the economic, social, and political outcomes that any agricultural system can produce, whether on a regional, national, or global scale.”

https://foreignpolicy.com/2022/03/05/sri-lanka-organic-farming-crisis/

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CHRONOLOGY OF EVENTS LEADING TO THE CURRENT ECONOMIC CRISIS (not organic farming just in case you read the above post)

The origin of the economic predicament in which this Indian Ocean nation finds itself can be traced back to the three-decade-long civil war and the subsequent rash move to markets, instead of continuing with state-funded essential services. These developments manifested themselves by way of low GDP growth rates and extensive unemployment in the early years of the current century. Their subsequent exacerbation since then, however, owes as much to the policies and measures taken in the last three years by the Rajapaksa family, who made it to power with a slender majority in the 2019 hustings.
The Easter bombing of a Christian congregation in early 2019 had caused international tourism to come to a screeching halt, bringing with it widespread economic and social consequences. For decades, it had been a major foreign exchange earner for the island-economy. To tackle the resultant depletion in foreign exchange reserves, the Government resorted to moves such as banning the import of new cars. In pursuance of its election-promises, the Rajapaksas followed it up with a significant lowering of direct tax rates. Without the accrual of expected benefits in stimulating private investment and raising the level of economic activity, this instead caused the tax-to-GDP ratio to drop by a third in three years.
As few could have predicted, this was then followed in early 2020 by two years of the Covid-19 pandemic, which inflicted further suffering. Apart from the health-related consequences, other restrictions including those on the general movement of people disrupted most domestic and imported goods’ supply chains. Average earnings for workers slid appreciably. With the government’s capacity to spend on Covid relief measures having shrunk due to lower tax revenues, household expenditure for dealing with the pandemic rose. The effects of lower public expenditure were compounded by a steep decline in foreign remittances from overseas Sri Lankan workers.

https://www.sundayguardianlive.com/opinion/sri-lanka-crisis-caused

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Going back a bit more.  Boxing Day 2004. Hardly helped either. 

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Check out the money trail for all the Chinese "loans". As usual, mostly to corrupt politicians, a la Solomon Islands.

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So extremist environmental policies bring a country to it's knees.

It's heading the same way in NZ, just not quite so abruptly.

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Hypothetical scenario but does it seem like the best outcome for the "squeezed middle" in next years election would be if National/Labour formed a coalition to keep their fringe policies under control?

I know they never would because you have to be either left or right but to me as a layman they do seem to have more in common with each other rather than the other minor parties they traditionally pair up with

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I wonder if it would be an unexpected win for NZ to mix the parties in the opposite way and to see a Labour-Act coalition, or National-Greens.

Sounds like a joke at first but then again a new joke might be better than the same old joke again and again?

Red-Yellow : Labour's stated goal might be to improve support for the poor and outcomes for low-middle income earners. ACT generally want a return to the way things used to be - combining the two is entirely possible because it certainly used to be easier to be low income in NZ.

Blue-Green : National always claim to produce a more efficient government and more support for business to improve outcomes for all. Mix in some Greens and together they promote green tourism and immigration/growth, tax reduction for green business and even woke business.

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I suspect the issue is all one sided.

I doubt National have an issue working with Greens. I think this would be a good outcome. But the Greens have vetoed that idea. Their SJW policies appear to be more important than their green ones.

Same with Act and Labour. I think Seymour would relish being a kingmaker. But Labour would just say no. Personally that combination would result in a plane ticket overseas for me. I can not think of two worse parties.

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National is a party that stands for less regulation and less tax to allow business to make more money. How does that fit in with ratcheting up environmental protection regulation and raising taxes to spend on environmental protection/remediation? It doesn't.

National would like to be a partner with the Greens in the same way they took on the Maori party. As a token they can use when challenged about not doing enough with certain issues. But giving the party very little say in how things are run. Till the minor parties support base crumbles, and the party can't get the votes to stay in parliament. Job done for National.

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In the UK the Conservatives were voted in with a big majority of 80 seats. But in reality after election,  they have spouted off Labour and Greens policies that were not in their manifesto.  Point is once a party is elected into government out comes the hidden agenda and policies that the voters knew nothing about.

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Because without the "environment" you have no business.

You would be surprised how hard it is to farm on gravel, rock, and sand, with no viable fresh water, or other useful organic matter.

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"Low maintenance section, perfect for lock and leave investment"

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The Three Pillars of Sustainability

  • Social Sustainability. Social sustainability includes environmental justice, human health, resource security, licence to operate etc
  • Economic Sustainability. Economic sustainability includes job creation, profitability etc
  • Environmental Sustainability. Environmental sustainability focuses on the well-being of the environment.

No point focusing on just one of these, you need all 3 to keep going as a business or a species

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Economic Sustainability to sustain a species?

Tell that to all the animals. Economics is a relatively new invention, and to be honest. Profit is the thing that destroys the systems.

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Depends on how you define profit. I read this explanation recently I think from PDK?

If you are a wolf and you expend more energy catching a rabbit than you gain by eating it then it was not an economical decision to chase it.

If the wolf gains more energy then they can use that to feed their young to continue the species

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National is a party that stands for less regulation and less tax to allow business to make more money.

Really not even that though. They've become a party of property investors governing for their like - and want to head that way again by dropping all reasonable tax from investors so that productive work has to pay the taxes that fund NZ society.

If they were seriously the party of business they'd drop company taxes significantly and raise - for example - an LVT on the unimproved value of land, to encourage more investment in business and less in unproductive speculation on assets.

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surprised national have not tried to start a pure environmental party --  i know many many people with very strong sustainable enviromental thoughts who would vote green if not fo the looney tunes policies that would effectively see welfare recipients way better off than those working two jobs! 

At the last election -- i think it was nearly 180000 people switched from blue to red for the first time ever --  and many did it becuase they saw a Labour majority as teh lesser of two evils -- fearing a Labour /Green  - where the greens had the deciding votes 

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That could lead to some really good outcomes as it would mean that committees would not just be echo chambers of like minded people. The big issue would be how to make sure things actually progressed rather than  just getting stuck in a grid lock. 

Maybe some KPI/SLAs for politicians to monitor their outputs? (Would be handy come election time to see who high achievers objectively are vs those that can talk a good game)

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Can someone explain to me the reason for spending $ 327 million to merge RNZ & TV1 ... wheres the benefit , the upside to that  ?

... whereas , Pharmac got half the increase in budget they wanted  .. and they import medicines which heal , which save lives ... isn't that where our priority ought to be ?

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Radio Red is taking over, Caesar rewards those that are faithful.

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maybe so but The Hosk wanted even more

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... just imagine  ... you've got a budget to spend $ 327 million  ... would you choose to merge RNZ & TV1 ... or , do something useful with it ... 

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Does anyone know why our PAYE tax rates are such weird numbers ... 10.5 %  up to $ 14000 ... why 10.5 , and not a simple 10 % ... why $ 14 000 , not a nice round $ 20 000 ... 17.5 % from $ 14001 to 48000 ... 17.5 ? ... why not 15 or 20 % ... why $48000 , and not a tidy figure like $ 50000 ...

... Robbo could have undermined the Gnats by shifting the tax brackets ... 12 years of no changes is pushing most people into the 30 % tax zone  ... but he didnt , he wouldnt  ... he thinks that'd be inflationary if you got to keep more of your own money ...

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Because the whole lot is just tweaked in a spread sheet to find the bottom line which is the total tax take. You don't actually think they are just making up numbers without knowing the bottom line ? Typically the numbers change every year but the only people who would know it are accountants and those doing payroll. The government needs to stop taxing your savings and if National had any brains they would make that an election promise and they would ROMP home. So easy to just buy votes, promise people a couple of hundred extra bucks a year in their back pocket, job done. Labour are just going "hard and early" on the same idea.

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