IMF issues grim 2020 forecasts; Wall Street retreats; China the only growing economy but has its own problems; UST 10yr yield at 0.68%; oil down and gold unchanged; NZ$1 = 64.1 USc; TWI-5 = 69.1

IMF issues grim 2020 forecasts; Wall Street retreats; China the only growing economy but has its own problems; UST 10yr yield at 0.68%; oil down and gold unchanged; NZ$1 = 64.1 USc; TWI-5 = 69.1

Here's our summary of key economic events overnight that affect New Zealand, with news equity markets are in a sharp selloff.

The IMF now says global activity is expected to fall -4.9 percent in 2020, 1.9 percentage points below their April 2020 forecast. They say the pandemic has had a more negative impact on activity in the first half of 2020 than they anticipated, and the recovery is now projected to be more gradual than previously forecast. If the expected rebound happens this will leave 2021 GDP some 6½ percentage points lower than in the level they were expecting at the start of 2020. The adverse impact on low-income households is particularly acute they say, and will probably add more to extreme poverty than at any time since the 1990s.

It's a grim realisation that is impacting equity markets. Wall Street is sharply lower, with the S&P500 down -2.5% so far in mid-afternoon trade and taking -US$640 bln off the market cap overnight. That follows even steeper declines in Europe overnight, down more than -3%. Yesterday, Asian and Australian markets were flat although the NZX50 Capital index did rise +1.1% on the day.

Not helping American markets was a sharp and unexpected fall in mortgage application data for last week.

But the rise and rise of the pandemic infections is the main reason investors are suddenly gone risk-off.

The IMF report is tough reading. It sees the US -8% lower at the end of 2020 than 2019, and the EU -10% lower. Japan will be -5.8% lower while China will be +1% higher and among the large economies, the clear 'winner'. India will be -4.5% lower. Australia is seen shrinking -4.5% (and that is less than their April forecast) but New Zealand doesn't get a mention in this update.

Keeping the Chinese growth going is proving hard work for local banks. Many Chinese commercial banks are offering interest rates for consumer loans at lower rates than to businesses, supposedly to lure quality individual customers. But such loans are raising concerns about their possible unlawful use in the real estate and stock markets.

And Chinese firms are having real trouble refinancing their offshore bonds, with defaults reaching record levels. But easy money and government support inside China has default levels falling.

The latest compilation of COVID-19 data is here. The global tally is now 9,295,400 which is up +141,000 since yesterday and a rising pace. Global deaths reported now exceed 478,000.

A quarter of all reported cases globally are in the US, which is up +23,000 since this time yesterday to 2,349,000. US deaths now exceed 121,000. The number of active cases in the US is now up to 1,580,100, up +15,100 in a day.

In Australia, there have been 7521 cases, +29 since yesterday. Their death count is up +1 to 103 deaths and their recovery rate just under 93%. There are now 494 active cases in Australia (+19).

The UST 10yr yield is down -3 bps at 0.68%. Their 2-10 curve is flatter at just under +50 bps. Their 1-5 curve is marginally flatter at +14 bps, while their 3m-10yr curve is also also flatter at +57 bps. The Aussie Govt 10yr yield is unchanged at 0.90%. The China Govt 10yr is down -4 bps at 2.91%. But the NZ Govt 10 yr yield has not joined the down-trend yet, up +3 bps to 0.96%.

The gold price is unchanged at US$1,766/oz.

Oil prices have fallen sharply today as it is clear demand is going to be very soft. It is now just over US$38/bbl in the US and down more than -US$1.50/bbl. The Brent price is just over US$40/bbl. American crude oil inventories have risen to record high levels.

The Kiwi dollar is lower after the RBNZ OCR review yesterday, down this morning to 64.1 USc which is almost a -1c drop. On the cross rates we are less affected at 93.3 AUc but against the euro we are down -½c at 56.9 euro cents. That means our TWI-5 is down at 69.1.

The bitcoin price has moved sharply lower today, now at its lowest level of the month and down -3.9% to US$9,291. The bitcoin rate is charted in the exchange rate set below.

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

Our currency charts are here.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Not to be morbid but the death rate and number has drastically reduced. Early april was over 9 percent of new infections 7 to 8k per day Currently now 2.5 percent 3 to 5k per day


Yeah but my suspicion here is that as the virus took off in more transparent/developed countries (European mostly and the US), they reported COVID deaths as COVID deaths. As less transparent/developed countries now are suffering the most (Brazil/India/Russia), they are reporting COVID deaths as "unknown" or something else. Partly because they don't see any use testing dead people, partly because they care less, partly because they don't want to show the true death rate and spark panic among their people.

I mean do we really believe that the UK has a 14% case fatality rate and yet India has a 3%, Russia has 1.4%, Brazil has 4.5%? Seems completely off to me... there is likely lots of different levels of reporting going on.

The global elite spreading fear and shock doctrine.


It's Bill Gates in cahoots with the Illuminati, they've also joined by UN, big pharma and telco providers - who are busy installing virus spreading particles via 5G and chem trails. This is so that the lizard people can take over the governments so they can finally prove once and for all that the earth is indeed flat. Mark my words...

A facebook post I saw linked Bill Gates to Paul Walker's death. Supposedly Bill Gates was trying to vaccinate all the people in the Phillippines, but Paul Walker and some members of the Fast and Furious team tried to stop him, so Gates ordered 3 of them to be executed with drones... and that's how Paul Walker died.
I'm not making this s*** up, this is what some people actually believe.

Well, I think I can beat that:

LOL. Brilliant. Absolutely brilliant comment. You made my day, Plutocracy. :-)

It just reflects the percentage of cases detected. Iceland had only about 0.5% of known infections die, Hong Kong 0.5%, Singapore 0.06%, Qatar 0.11%, Saudi Arabia 0.7%, UAE .07%, Kuwait 0.7%, Oman 0.5%, Bahrain 0.3%, Maldives 0.4%. Infection fatality rate for western populations (average age dependent) is somewhere in range 0.5-1%. Lower for younger populations (Africa, middle east) Multiply deaths by 100-200 to get something closer to true number of infections. UK = 4-8million, USA =12-24million.

Key thing is that your risk of death if infected was about same as 4-5months worth of your normal every day risk of death. That has just dropped to about 3 months with dexamethasone, and will no doubt drop further as we figure out better therapies (even in the absence of a vaccine). Balance that against the months we have all just lost to lockdowns.

Yes quite right.
But the scientists try to get round this problem by looking at an average death rate of 1.4% and the looking at how much a country deviates from that to show what % of pop is likely infected but not shown due to bad testing record. NZ death rate is 22 over 1510 = exactly 1.45%. To me, this indicates NZ has done exceedingly well. However, we now have job of all those wanting to come "back", who really should have come back when world infections, esp outside EU were a lot lower than now. How long are they to be given??

Mike, Here is Peak Prosperity guy working through the numbers

In answer to your question, as long as they like.
One for you: The Ark play works for how long?

This Ark takes 5.29 mins ;)

Geneva Convention. Can’t refuse re-entry to a national, if they arrive back here. It’s why the UK started cancelling passports of those ISIS members.

Except for the countries that decided to ignore that, e.g. some of the islands. I guess it's conceivable they didn't sign up, I haven't looked into it.

Ie. Basic human rights.

No gold star for Mikekirk today.

Human right indeed.
But so is asking questions that journos are not asking

Bobbles it is completely possible that the new death rate is lower. The health authorities have learnt more about the disease so there is better treatment. Now there are new drugs that reduce the number of deaths. And apart from that fact there are other factors that reduce the number and rate of deaths ... I cite the very low 1 percent death rates in nz and australia

propaganda they are not going to publish numbers that they feel will make them look bad,bali doesnt give out figures for dengue fever and leprosy.

Depends on where you are, the infection rate is still increasing in the US and Brazil. But yes the death rate may be reducing thanks to a cheap and widely available drug Dexamethasone that can help people that are seriously ill with the coronavirus (But it's still not a cure).

BBC Coronavirus: Dexamethasone proves first life-saving drug. "In the trial, led by a team from Oxford University, about 2,000 hospital patients were given dexamethasone and compared with more than 4,000 who were not. For patients on ventilators, it cut the risk of death from 40% to 28%.
For patients needing oxygen, it cut the risk of death from 25% to 20%."

Perhaps this works too.
Have a listen to this German doctor.
36 mins, but it's worth your time.

Andreas Kalcker Interview - CDS, the Pandemic and a Solution?

I think this is just a reflection of poor testing early days (still fairly poor overall). Areas which have done population antibody testing and other better information suggests the true case fatality rate is around 0.5%, depending on demographics and healthcare.

edit: as above - this 0.5% may be a little lower now with new treatments and better understanding.

Houseworks, you said that things were not too bad, result: despite being the first post (probably most read) not a single uptick! It is quite sad that most people will only uptick negative, criticising, cynical, sarcastic posts : (

Hi Yvil I just checked back in. In the last 3 and a half hours I have two upticks thanks, I feel much better about it. You are so right Yvil perhaps it represents the change in attitudes and the lack of backbone in our country.

You guys are both really nice, both I and my mum say so. Hope this helps.

Call you Rick, and raise you by three upticks.



Brainwash /influence to start from grassroot level. China strategy to peneterate countries, which may intially seem harmless.


The CCP formed the new China circa 1949. That means seventy year olds and younger, well in excess of a billion people, are totally subjugated, indoctrinated to the regime, know no difference. Brainwashing on an unimaginable scale in its own way methinks. Sort of can’t help thinking about such as all those Hitler youth movie extracts you see from the 1930’s.

On the 7th of December 1991, the Soviet Union was just 20 days short of the 69th anniversary of its creation. By the 8th of December 1991, it was gone forever. Age doesn't necessarily guarantee stability.

Why Deomcratic country should unite before is too late, if not already.


This bit stands out;

"Instrumentalizing the Chinese diaspora: The party identifies valuable diaspora members and groups in an effort to penetrate and co-opt Chinese diaspora communities."

So the Chinese Government (CCP) encourages a diaspora of Chinese migration to foreign countries to spread their influence. Sort of puts many of Xingmowang's comments in this forum into perspective doesn't it?

The young chap at UQ was a victim of this;

"Asserting narrative dominance: In the global conversation on China, the party manipulates and controls information to downplay and crowd out adversarial narratives and advance those that serve its interests."

John Key, Simon Bridges, Judith Collins and likely many more captured by this;

"Relying on elite intermediaries: The party relies on intermediaries abroad to shape foreign perceptions of China, often adopting many of the same ambiguous, opaque, and misleading methods that it utilizes to co-opt elites at home."

And we are becoming increasingly concerned about this:

"Embedding authoritarian control: The party’s way of doing business, and its efforts to demonstrate a viable alternative to liberal democracy, both strengthen authoritarian norms beyond China’s borders."


Murray, throws some retrospective light on those protests in Christchurch in 1999 (APEC) against Jiang Zemin. Protesters knew more than me for sure. Can’t say we weren’t warned

Tinfoil hat on: I think the likes of our very own xingmowang, the blatantly obvious and kinda simplistic CCP propaganda parrots are just here as bait. I expect a more sophisticated, more subtle counterpart to be operating on forums like this, building their reputation with more or less insightful comments, gently trying to steer our thinking towards wishing for a stronger, more authoritarian government.
Tinfoil hat off.

Why bother with the obvious version? Surely just fuels backlash.

To make the subtle version sound less outrageous. An innocent comment like "we need a stronger government" doesn't sound very radical when it follows something like "the one party system of China is the only way to have an effective government".
One can comment on the police brutality during the Hongkong protests, saying "it's the only way to deal with the destruction caused by these barbaric rioters", or say something like "the US has been doing the same thing to black lives matter protesters". The latter sounds kinda reasonable because the former comment sets the threshold so high.

could be right cj. his opposite subtle counterpart would then go by Gnawomginx?

While I appreciate the weight of your view CJ, the response to the UQ protest lacked any form of subtlety too, being bluntly and violently overt. Perhaps the lack of cultural understanding? Although I understand there is much subtlety and hidden meanings in many things the Chinese do, so these responses do surprise me somewhat. Possibly a case of smoke and mirrors? What is there that we are not seeing?

If you think about it, the KGB also has a similar duality. They're mostly subtle, but occasionally a person has to be thrown out a window, or fed some polonium. I'm trying hard not to turn into a conspiracy theorist, so I just suggest we occasionally sit back and reflect on some of the narratives we encounter while going through social media (including comment sections like this). In my opinion the best 'defense' against disinformation and foreign influence is to take 5 minutes at the end of the day to think about what we've read and how they relate to our own values.


Should be an eye opener for many experts to realize the damage done in guise of Rock Star Economy for personal vested and biased interest.

Many examples can be seen in NZ particularly under National government.


But, but, but, the FTA was a Labour success, of course. Times have changed, we all thought Communist China would become more like us, but we have become more like them. Oops.

We aren't allowed to point out that Labour is in bed with China as well. Tribalism says we must blame it on National. The whole of NZ was hurting and looking to find larger export markets, we all took a drink from that cup.
The big question is, do we continue to drink from it and turn a blind eye the bitter taste?
Morally we can not turn a blind eye to this anymore but on the flip side, we would be in for a world of pain to go against them. This reminds me of the NZ Nuke free dilemma and the States hanging us out to dry.

No, we should be holding ALL our politicians to account Kezza. Tribalism undermines all debate, and actually reinforces China's position.


Wouldn't it be funny, for all the rabid shouting going on regarding the current Government's perceived handling of Covid and pending economic destruction due to lock down, if New Zealand came out of this a lot better off than many other OECD countries.


Should remember that most media are National supporters. Just check breakfast show in newshub everymorning and labour will not need opposistion as they do their role.

NZ Herald everyone knows whom they support and promote.....


"most media are National supporters"

I just read another comment on here which said a Massey Uni study in 2014 showed that 5x more journalists were left leaning than right leaning.

I tend to agree with the Massey study instead of your statement.

Check newshub watched by many and NZ Hearld read by many as bow they try to influence besudes radio shows........

Agree or disagree but is a fact. Will see from now till election hiw systematically media tries to degrade Labour. It is a universal truth in NZ :)


Stuff news as socialist as they come.


alittle - you must listen/watch the media on a different planet!


DD, if you think the nw zlnd hirld is a left leaning paper you've come out with one of the craziest statements I've seen on an internet forum.

DD, Not surprised by your response.

alittle, do you not see a contradiction in your closing statement: "It is a universal truth in NZ"

The "greater good"...


its more which journalists are left or right and what time profile and platform they get, i.e compare mike hosking raging right wing against katie badford left wing, one has an audience of millions the others a couple of minutes a night
the whole of one zb is now right wing some subtle some over the top, and they get to put their articles in the granny herald.
i take what they say as to where they come from but some people still expect journalists to not show over the top or outright bias in their reporting.
take mark Richardson, to use his morning show to drum up support for national would be sailing close to the wind of a party political broadcast

With Hosking and Richardson on their side , no wonder they are polling badly.

I think they will poll lower with Muller's Mob. He, himself, has set the agenda with his Mob to date being Woodhouse. Bishop and Goldsmith. Others will join with the same philosophy. The way they are operating with negative politics they will poll lower than NZ First.

They were a maybe under Bridges and a massive no way under Muller for me.

Ye , I agree Muller is going to deteriorate more so than Bridges would have. Richardson has also bagged Muller. He didn't look that great on the box last night. He has moved away about not bagging the current government. I get the feeling its like the mafia. I suppose your could call National the Muller Mafia Mob at the moment. I am in his electorate but I wouldn't vote for him. The press are all going ballistic about Clark and Bloomfield. If it is negative lets go for it - they get a far better response rather a positive story. What a shame.

You need to be more nuanced than that; what part of Massey?

There's one part peddling what is essentially an untruth...

More accurate perhaps that media is "conformist " to the spectacle orientation. That is, sensationalism and lack of analysis and 1 second attention span, story telling and scientific and tech credulity (as in everything new and techie must be wonderful). Reporting is no longer I am afraid "investigative journalism". This is why we keep hearing about USA cases etc, because lots of coverage can be swapped from reporters there, whereas in Brazil and India, where virus is rampant and reporting is difficult, bugger all in given in terms of info. Yet, NZ returnees are now coming in large numbers, from India. Mostly news media are shallow and lazy, rather than political


Journalists are left-leaning, on average, for sure. Which is interesting in itself.
But who gets to write opinion pieces? That minority of journalists who are anti-Labour. Hosking, du Plessis-Allan, et cetera. You get an 'opinion' gig by being opinionated and rarking people up, not by being cautious and thoughtful. Read the Herald's letter pages - the likes of Hosking and HdP-A are an irresistable 'hate read' for many, and that's an 'engagement metric', so it doesn't really matter to the editors whether they're making sense or not. It's all eyeballs.

Hosking and du Plessis-Allan and Dickens and Russell are not journalists
They are stirrers. Trouble is the Govt gives them plenty of ammunition

Name any fair-and-balanced journos that aren't pushing an agenda

Tame, he’s pushing fame.

Jack Tame is best one out there.
Contrast Tova with her "2000 people went out without a test, all a threat" er - actually, more like about 5 of them might be a threat and it turns out we now know that 1250 of those were in fact tested.

Right leaning opinion writers, and commercial radio have more draw because they are more reflective of the NZ majority (which in last decade has been predominantly right of center, particularly in older age groups) But there are still far more opining for the left - and twitter is awash with them, they are just far less popular - the preferences of the audience can't be trumped by the forth estate's biases. You see the same in NZ political blogs, left wing blogs get a small fraction of the interest of right.

There was actually a study from Massey in 2012 about media coverage leading up to the election and it found media bias strongly towards National. Not much has changed.

The research by Massey University Associate Professor Claire Robinson finds that the Herald, Herald on Sunday, Dominion Post and Sunday Star-Times all exhibited substantial bias in their selection and use of images during the election campaign, most of it in favour of Prime Minister John Key.

It was so annoying seeing so many photos of the smiling assassin on the Herald website, I stopped downloading it.


I’ve been a journalist. In the main, media owners/executives are right wing, their staff much less so, with hierarchical implications of course. Radio shock jocks are a breed apart though.

What is to be made of facebook.
They regard themselves as progressive.

I see complaints on both sides about the media, so the mix must be about right!

Interestingly - i do wonder though how many of the people who complain about the media actually pay for its content?

Why would you pay for something you don't like?

The media in NZ seems incredibly lazy to me and fuelled little by a genuine political leaning, ethic or any passion at all. Often the media is nothing more than a regurgitation of press releases or re-prints from other media sources. Click bait titles and articles whose purpose is to encourage traffic and very superficial, quick reading . But investigative journalism that betrays some kind of passion, ethic or motivation on behalf of the journo? There is a paucity of that. The journos in NZ write whatever will attract volume and short attention spans.

The journos in NZ write whatever will attract volume and short attention spans.

That's the business model in the online world.

Yep the owners of AJ Hackett are giving them the big thumps up, popped a few champagne corks last night to wash down the caviar.


Wash that Beluga out of your mouth with some more Dom!
It takes 3-4 years to train someone to put a rope on a bridge-jumper, and they can't be lost to the employment market. Crucial to the long term economic survival of bank balances of the major shareholders who've made millions and millions out of the operation over several decades our Country.
(NB: Priorities. At a time like this, we need to support our farmers, road layers, ditch-diggers and manufacturers more than discretionary- spending- reliant workers. The latter CAN be replaced at any time. The former? Without them we are a dead country walking)

Nzdan. We've all work towards this. The point of doing the lock down was to come out better off. Yeah there are a few shock jocks out there spouting off but that is the norm, that is what they do.
The majority think it has been handled well but there are some serious on going holes in their management, which has been an on going issue for Labour from the election. The management issues need to be pointed out so they can improve or it will just continue.

As well it has lifted the curtain and revealed starkly, the divide between MOH Wellington hierarchy and the health sector functioning at the actual coal face. NZ was about 39th on the world list as far as pandemic preparation. The MOH sent out contradictory and confusing guidelines such as PPE and the rest homes. It is in a crisis like this that the highly paid fat cats in our bureaucracy should earn their spurs. Instead the military were required to intervene and try and sort it out. I think we can all now see what DHB’s, clinical staff and associates have been up against for a long long time.

the MOH and DHB were caught up in privacy concerns and rights of the individuals (being nice to people) , whereas the military don't worry about that BS and have brought structure and disciple, when I walked past jet park this morning all the staff where lined up getting checked over by the mobile medical unit ( it is always there) first time in weeks I have seen that

There it is.

Tough times call for tough measures. Do the job or get sacked.

Funny story from a DHB. I (I am an ex-RNZAF engineer) was Q&R manager and member of the ELT when the DHB decided to make the campus smokefree. They identified that the leadership would take an active role in encouraging staff, patients and visitors to not smoke on the campus. Three months in, at an ELT meeting, most of the members complained about the response they were getting from those they challenged. I commented that I was surprised, as I had spoken to more than a dozen patients and visitors (no staff) about smoking on the campus and universally got a positive response. I did suggest the type of approach may be telling. I was interested that with my military background I got a better response than others with a Health background were. This too got a couple of noses out of joint.

Don’t underrate the strength of the structure you have inherent. My father got to be an acting Group Captain, slid back down after 1945. One day driving along spotted this huge rough tough guy rotary mowing the lawn strip by the road. No catcher, and the flap at the back of the mower up. My father was not a big man, but stop he did and out he got. The big bloke was not receptive to advice, not at all. Then out came the strong, trained voice of command, a demonstration of how a stone would blind him and the big bloke shook his hand and almost saluted. People will always have confidence in people that are confident provided of course they are competent.


Woah, the stocks are down. Is that even allowed?! Quickly, more stimulus! /s

Just like a junkie needs another methadone fix

Hey Jerome, we’re going to need a few more trillion.

In case you missed the update, Fitch downgrades Canada's sovereign credit rating amid the nation's efforts to fight the oncoming economic downturn with debt.
Just like Ardern, Trudeau is under the impression that his government could simply borrow huge sums to keep lights on while the economy sorts itself out.

'Just like Ardern, Trudeau is under the impression that his government could simply borrow huge sums to keep lights on while the economy sorts itself out.'

It is just not one or two leaders but most leaders/countries in the world are in printing and borrowing mode.

NZ and US will do more till election time as leaders have to get back in power and this panademic has given golden opportunity/excuse to Labour so wait for the next installment which will be just before election.


What National doesn't seem to get, and i am still waiting for Labour to put substance to their words, is that for resilience NZ needs to reawaken its manufacturing sector. Recreate companies with centres of technological innovation excellence like Fisher & Paykel Appliances before it was sold to Haier, and FPH, and then prevent them from being sold overseas. We should also look to partner with international companies to set up manufacturing/assembly plants in NZ. Use companies like Scott Technology to set up efficient production lines and so on. Use NZ Railways workshops to design and build our own rail stock (warranty issues will be less hassle at least!).

While up front there will be some cost, likely large, the rewards will be huge down stream. no brainer really.


'Recreate companies' and all the massive supply chains that go with them? Manufacturers here today don't have the protectionist racket the old guard did, and wages here aren't high enough to sell consumer goods at a premium to recover higher costs. Even if you were making exportable products, plenty of other states will give far more generous incentives to set up facilities in the regions that have the markets you'd be exporting to.

It's not the 1970s anymore. It would be a better use of our time to imagine a future with no work at all and how to fund that than spend hundreds billions of dollars on a manufacturing throwback trip.

Human nature cannot handle 'no work'. We already have full prisons, and more and more people are turning to drugs irrespective of the harm to feel good about themselves. Yes there is an economic cost, but the rewards are much greater. Any Government should be looking at how to ensure that the population is constructively employed, if only to avoid the negative consequences. Producing stats that say 'full employment' only produces embarrassment when someone else points out that the prisons are full. And ALL employment should be at a wage that allows a reasonable living standard.

In a world where the Wuflu is increasing, transport costs are tripling, food supply issues etc. NZ could provide freeze dried meal packs. Cheap to trasport and no refrigeration needed.
The world is going to need this kind of thing increasingly over the next year or so as the numbers explode.
Not a time to reinvent the wheel, stick with what you know, innovate and fill a gap in the market. We have all the ingredients ready to go. If only Governments were that agile to act at speed.... hopefully private enterprise is out there working at speed on this.

So full socialism then? No thanks, that has never worked anywhere.

Better to reduce tax, red-tape and make New Zealand a better place to do business.

I am not advocating nor am a fan of full socialism. But the question is, how do we get from where we are now to where we need to be? Leaving it to private industry, as demonstrated by the last 30 - 40 years will most definitely not work. Thus we need strong government leadership and involvement. I don't see this as socialism but a drive back to the middle from where we have been to the right. If we want people off the dole, we need to give them jobs where it is worthwhile for them to get out of bed to go to work. This means decent jobs at a decent pay. If we want to develop national income, we need to develop the industry that produces stuff that can be exported. If we want (we actually need) resilience we need to make the stuff we are currently importing from somewhere else.

Up front the costs will be high. Downstream the rewards will be bigger.

This is a problem. When I started work it was usual for the boss to earn about half as much again as middle management. But the bosses have morphed into layers and layers of executives and outstripped the junior ranks by a country mile. The nation still needs just as much as any other time, road repairers, drain and ditch diggers, park street and mall cleaners, airport cleaners and on and on. But they are paid barely above subsistence. The minimum wage was lifted and there was an outcry from the right mostly one supposes, but honestly if an employer cannot afford to pay that, then they should do the task themselves.


With comments like this, I wouldn't want to be on end of any advice from you. It has clearly escaped your attention that countries all over the world are rapidly increasing their debt/GDP ratios. What made you single out Canada and NZ? Are you one of these 'highly qualified' financial advisors?


NZ is always going to come out of this drama better off than most countries. Our sharemarket is totally based on money coming in, with reasonably rational PEs, and reasonably rational finances for most of them. We make stuff, and seem to be able to sell it overseas at some sort of profit. If Queenstown tourism has shrunk as far as it will shrink, I'll take it. Our flights have dropped back to what they were 15 years ago. In those days we had good summers a quiet season, busy winters, and another quiet season. We all had 2 holidays a year. I was told to prepare for a financially bad winter every 3rd year, which never eventuated, due to astute marketing of Queenstown, and snowmaking. In those days Queenstown was mostly locally owned businesses, employing Kiwis. Now it is foreign owned businesses staffed by people on work visas. If we have to go back to the old days, a lot of people won't actually mind too much.

"We make stuff" Really? What, like manufactured goods?
Or do you take the pills that civil service categorisation spits out which categorise agrarian exports as "manufacturing"
NZ does tourism and and primary products. Take a look in Farmers etc to see where all other tat comes from

I suggest that NZ's recent manufacturing history has only been for items to export, and this includes the biggest part of our agriculture industry. There seems to be very little produced for the local market. I have heard, repeatedly, that the local market is "too small", but in my view that still provides a good beginning for getting products out there, tested and finalised and to make them competitive for export. But this does not seem to happen. Successive Governments have not seen local resilience as a priority, or even a preference. Political slogans about jobs, especially from the right turn into gibberish, and the jobs equate more to slavery than real work. Parts of the Left just ignore the 'jobs' issue while others talk but don't seem to know how to translate the talk into action

By making stuff, I meant our country, not just factories make stuff. This covers all primary produce, logs, etc. Possibly includes nature making all our pretty stuff, and selling the experience of hanging out in it to foreigners. Some people made some Bungies and sell the experience of it. Same goes for gondolas, steamships. The point is that we seem to be able to get quite a bit of money in any given year off foreigners, so as a country, I feel that we will be far better off in the next few years than most. With our borders closed, we are all visiting each other instead of the Gold Coast and Pacific Island resorts, so we don't lose that money either. In spite of a lot of differing opinions on the Covid-19 topic, I did notice that the whole country was totally united in being mean to the Health Ministry border staff and the 2 girls who Tiki Toured from Auckland to Wellington, and a few points in between. Hilariously entertaining.

I would totally agree with the thoughts on Queenstown. It does make me wonder how many of the reported job losses in these areas are actually NZ Citizens or Permanent residents. I would wonder maybe 50% at best?

BOE talking about raising interest rates in the future.

That will set the cat amongst the pigeons if both the FED and BOE raise rates. It would likely bomb real estate markets and probably share markets (margin lenders). But would be a welcome respite for savers...

"...the fact that he didn’t even mention negative interest rates indicates that the BOE is not seriously weighing them, after the Fed has already taken them off the table."
And yet Adrian persists with trying to 'frighten' the retail savings market into spending its reserves by suggesting NZ might 'go negative'.
Poor form. The RBNZ can and should be better than that.

Bluff and bullshit - there is absolutely no chance interest rates will rise in the immediate future to vindicate the decades long central bank belief that lower interest rates will at some point equate with inflationary growth.

What we are witnessing here is a desperate attempt to prepare the market for QT to avoid the cost of paying banks higher interest on the reserves they receive in exchange for the bonds they sell to the central bank as participants in the LSAP programmes, better known as QE.

This is what happens when the reserves become more than one third of GDP and still no inflationary growth - more always begets less, but the fear of paying banks failed state type interest rates frightens the government - the public would react badly.

Disclosure - the RBNZ currently pays 25bps (current OCR ) to the banks authorised to be in receipt of reserves for bonds tendered. If OCR was negative banks would pay the government - how would that work out if reserves were up around one third of GDP?- certainly higher banking costs.

Audaxes what is really going on here? You and others have provided multiple links to opinion pieces and research articles that prove that reducing interest rates do not stimulate economies. But Central Banks continue to persist in doing so, why? Surely small increases in interest rates do not have the adverse impacts you suggest they are afraid of? Is there something else underneath it all?

I view it as the type of economics that central bankers believe in. Princes of the Yen really gets into this in detail.

50 year out of date ideology still rules central banks - they equate base money (reserves) as cash, which it did a long time ago. And yes a dump of cash into each of the banks' reserve accounts at the central bank may have prompted lending, under the now moribund fractional reserve money multiplier model, but not today.
The Federal Reserve recently abandoned the reserve ratio which was set at a 10% a few months back.

There were two major evolutions in money and banking that seem to fall outside the orthodox narrative. The first was a shift of reserves and bank limitations from the liability side to the asset side. The second was the rise of interbank markets, ledger money, as a source of funding rather than required reserve balancing: replacing the old deposit/loan multiplier model. Courtesy of J. Snider from Alhambra

Read this: The Fed's Not Pegging Bond Yields, the Yields Have the Fed Pegged

All right, an interesting document if a little heavy reading. But how many generations does it take to change ideology? Friedman, who is cited several times int he article, did his research years ago. So the evidence has been available to economists for a long time. What are the universities teaching? Are they squashing study and opinions that go against the "conventional wisdom". What does it take for the results of research to infiltrate past the bulwarks to overcome entrenched dogma?

Surely small increases in interest rates do not have the adverse impacts you suggest they are afraid of?

Ex RBNZ economist, Michael Reddell thought it necessary to make this comment;

One of the incidential curiosities of the bond purchase programme is that at times like this you hear a great deal of talk about how it is a wonderful time to borrow and the government can lock in very cheap long-term funding. And yet what do really large scale central bank bond purchase programmes do? They transform the liabilities of the Crown from quite long-dated to increasingly quite short-dated, exposing the Crown (us as taxpayers) to really substantial interest rate risk. Perhaps at the end of all this the Reserve Bank will have $50 billion of government bonds, with a representative range of maturities. On the other side of its balance sheet, it will have a lot of very short-dated (repricing) liabilities – all that settlement cash (see above). Whether the Bank eventually sells the bonds back into the market – which hasn’t happened a lot in other countries – or holds them to maturity, the interest rate risk doesn’t go away. It isn’t obvious what public interest is being served by skewing the Crown’s (net) debt so short term. Perhaps interest rates will never rise again……but that won’t be the view many people will be taking, Link

Within my business experience, the continuation of this practice was called "escalation of commitment". Essentially throwing good money after bad. What will it take to stop it?

I am beyond expecting anything useful from central bankers.

Only rarely is there occasion for useful information.

One of those was August 2014. Stanley Fischer who was then Vice Chairman of the Federal Reserve found himself in Sweden. Because his audience was Swedish and not American or even English-speaking perhaps he felt a freer hand at being honest. Whatever the reason he told them what he would never say here.

"Year after year we have had to explain from mid-year on why the global growth rate has been lower than predicted as little as two quarters back. Indeed, research done by my colleagues at the Federal Reserve comparing previous cases of severe recessions suggests that, even conditional on the depth and duration of the Great Recession and its association with a banking and financial crisis, the recoveries in the advanced economies have been well below average."

In the aftermath of the Great “Recession” they never saw coming, the same worthless policymakers kept promising the world they’d make up for it by ensuring recovery. QE’s and whatnot, by and large populations around the globe were willing to lend officials that chance, extending a huge benefit of the doubt (given the severity of what had just happened) unearned by the crisis performance.

More than that, people stayed patient for years and that patience was repaid with overpromises and lack of transparency, indeed a controversial and thoroughly corrupt enterprise intended to hide the truth. There was no recovery; Economists had been wildly over-optimistic about the ability of “stimulus” to, well, stimulate. Link

Almost reads like they are identifying that the system is reaching bounded limits. The sort of thing PDK talks about. Recovery will always be constrained when these limits loom close. Denial, and obfuscation cannot prevent or avert a final reckoning. this also identifies that politics and ideology are the dominant forces, even in economics.

Almost reads like they are identifying that the system is reaching bounded limits
Graphic evidence from this link.

When that curve of the bottom line develops a sustained downward trend they will be in serious poo! Denial won't help them then.

Unfortunately, it's us not them enduring the less than promised outcomes.

Prior to September last year the Fed was cutting back the balance sheet by $50b per month. They combined it with interest rate increases which caved in badly. Now they have multiple programs running that are just money printing with the appearance that treasuries are being bought and then sold to the Fed at a profit. If they can maintain liquidity while running down the balance sheet they may undo the left over problems from the GFC.

Something will end a current madness and we'll either have deflation or inflation coming out of it.

Covid 19 testing now being throttled back.
Following news yesterday of swabs in short supply in Northland, and traffic ques at Auckland covid 19 test centres...

This is troubling.....
And the clinic still wanted people to turn up with sore throats, because of the risk of rheumatic fever, she said.

They are just following Trumps lead..

Don't be absurd.

Yes there have been testing demand issues in the past week as everyone freaked out about the border cases and rushed to get tested. And these need to be addressed. But equating it with intentional reduction is just silly.

I have no problem with that as long as when your doctor sends you for a test you can get one, we have had situations in the past when local doctors send people to the cbac for a test and the doctor at the cbac sent them away.
also they need to make sure they do surveillance at the airport, nobody gets tested there

The response to an increase in demand should be an increase in testing


Recession and redundancy and company liquidation are what Schumpter called "creative destruction"
But, in new shiny era, these are not allowed. Stock market and housing market must be kept above water, or "confidence" (as in trick) must be maintained. So borrow and not repay and pretend forever is order of the day.
This merely aggravates asset inflation at expense of poor, so inequality worsens. That reduces consumer demand, so we have to get them to borrow more in lieu of wages. Rinse and repeat until ....interest rates cannot be reduced further. As in, about 3m from now

Attached table from worlometer shows leading countries pop and GDP
I note that EU is most "productive" and China is a lot less so than often portrayed, in respect to GDP compared to pop

Infection numbers taking off and food supply issues.
NZ to the rescue, freeze dried food in mass. If you haven't tried the meals before they are surprisingly tasty, light and easy to use, add a cup of boiling water and wait a couple of minutes. A hell of a lot eaiser to sterilize, transport, store, distribute in mass.
Easy to market to high, middle and low incomes and in mass to Govt's / military etc.
Exactally the kind of thing I would like to invest in.

Those back country meals look good, are they worth the $$?

They are surprisingly good, worth the dollars?? All depends on what you are doing. If you are doing some serious miles in the bush and traveling light, yes they are. If you come back to camp cold and wet and can eat in 5 minutes, you can not beat them. I dont know where they get there serving quantities are light in my opinion. A 2 serve pack is still on the light side for me. A t'bone steak, caramelized onions, mashed spuds with a couple of eggs on followed by a Aunty Betty self sausing pudding and a couple of beers under the stars will never be beat by freeze dry.

That brought back wistful memory of that great Colman’s Spongy Pud TV ad. Great product. Bigger can too. Apparently though they were prone to explode. You know like similar puddings on the Goons shows.

And hopefully our idiotic politicians who believe the path to economic prosperity is to sell everything off to foreign ownership realise the importance of food security and NZ ownership of food production in the coming decades / century. None of ye olde "what does it matter who owns it as we can legislate over it" tripe that used to be the mantra on NBR commentary.

ICYMI: NZ unemployment might be over 10 percent already - study

so we don't need the 300 k on work permits then , time for employers to try a bit harder to find kiwis to work for them, our company has gone away from hiring crews of causal labour (made of all sorts of people) to now hiring FT employees so they have created 11 FT jobs

Problem being, many NZ business models couldn't afford to pay higher wages and would lead to even further closures. We've really painted ourselves into a corner on immigrant labour

Busy news day.
Nothing from the easter bunny or tooth fairy yet.
The government does not know how many foreigners have come into New Zealand under the essential worker exemption and says it would "not be a great use of officials' time" to find out.

Add it to
Twyford is now a long shot from the confident man you once saw in the House. The smell of failure surrounds him, with National practically whooping whenever he is entrusted with something. His own colleagues can be unkind.

Clark is already Labour's lowest-ranked Cabinet minister after Prime Minister Jacinda Ardern demoted him during the lockdown.

And HT is revving up for the next 3 months.



Happy to make the up date
Nothing yet from the easter bunny.

So world over wage subsidy is ending between July to September

Each unemployed in USA is receiving $378 + $600 =$978 per week so can imagine the money/liquidity in current economy. Many may be earning more being unemployed now that working and spending not realizing what lies ahead or expecting this subsides to continue.

Wuflu. US will get about 40k today. That is at least 15k per day extra than a couple of weeks ago.
What dose the global economy look like in two to three weeks when its knocking on 50k a day and climbing...

They may as well have done what Trump decreed. Back to normal by Easter. What they have done nationally is little better even after the clear warning signs in NY which now has recurring problems. Actual death toll is though not increasing relatively. That perhaps is because the elderly and vulnerable are staying out of harms way and the hospital care is more experienced and effective. But obviously like car crashes keeping a toll of deaths only touches on the associated destruction and costs. The current scenario the USA is now what a good number of contributors here were adamant NZ should aim for. As above, usual life activities elderly & vulnerable stay at home. How about that..

rate of infection will drop naturally over time as people with the most at-risk lifestyles get infected. And less dangerous asymptomatic variants of the virus are evolutionarily favored - they get more opportunity to spread. Expect IFR and new cases to drop off over time, even if nothing is done to make that happen.

Yeah that would be fair logic once it has passed through the 200 million level in the US alone and there is no mutations that create a second wave that kills more like most viruses tend to act. Yeah so only 198 million more infections at a slow rate that dosent overwhelm the hospitals....
Back to my point, what does that do to the economy, it isn't exactally encouraging and fitting with the expected 'V' shaped recovery.

If NZ goes for a controlled infection at such an early and unknown stage it could turn out to be disastrous.
I doubt that any party is willing to risk being pushed into the political wilderness never to return.


See St Johns laying off a lot of staff, Qantas (with NZ staff as well). Job losses coming thick and fast now as many here predicted. Just silence from Wellington...maybe they think closing your eyes and ears and saying it's not happening many times over will work?

Twyford and Clark have their eyes wide open, possum in the shooters headlights style. Kelvin is scanning multiple directions so we can't tell if his are open or shut. Little's are dully glazed as he repetitively chants 'pike recovery was never an actual recovery'.

It is OK our Health Minister DC will pop his head up....fix all ills.....and will blame someone else if he cannot.

This is exactly what happened with wage subsidy - Absolute Truth :

Many made decent money out of it.

Entering the Stock market today would be like bungee-jumping sans rope