David Chaston details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the tenuous control engineers had over the nuclear power plant in Japan may be unraveling. Helicopter dousing of the main fire has been abandoned, and there are now real fears a main vessel has ruptured and that a large-scale release of radiation may be imminent.
This has sent stock markets sharply lower. The Dow is at 11,655, down over 2.5% and falling quite fast.
The euro is taking a hammering. Our dollar is also lower and now under 73 US cents. The Aussie dollar is falling faster than ours on repatriation concerns.
Oil is down sharply again, as is the gold price. Most other commodities are down as well. Copper is at its lowest level of the year, down 12% from its peak just a few weeks ago. And as we reported yesterday, dairy prices are also tumbling.
Even before these global reactions, New Zealand consumer confidence was weak. The latest ANZ RoyMorgan survey shows its index fell to 101.4, its lowest level since April 2009.
Our tourism industry, especially, faces major challenges.
Also facing challenges are those European economies. Overnight, the Finnish president called for the “good girls” of Europe to stop paying the bills of the bad boys. This came as Moody’s downgraded Portuguese debt by another two notches, to A3. The PIIGS governments are now paying eye-watering rates for their new bond issues, and it clearly cannot continue. Portugal’s 10 yr bonds are yielding over 7%, Ireland over 9%, Greece over 12%. A major financial earthquake in Europe is almost certain to happen and fairly soon.
And finally, back here, mortgage approvals were up slightly in the latest week, one where we had fixed-rate falls and the OCR cut.
And the OECD released an interesting observation about how we work our GST system. New Zealand’s system collects more than 98% of what it is supposed to, the most efficient in the world. Compare that with some others – the German, French and UK systems collect less than 60%, Spain less than 40%. Canada’s system is a little better at 70%. Our government is an efficient tax collector.
No chart with that title exists.
109 Comments
FCM- absolutely. I had a discussion recently about that - at the Otago Uni Staff Club as it happens (I'm not staff, nor Uni). I raised the point that what I call "Interdisciplinary Genuflection" is a structure quite cable of producing wrong appraisals. Which is polite-speak for 'lies'.
Physics is what happened to Chch, what happened to Japan, and what is happening to those reactors.
Money doesn't come into it (unless it be as a measure of the cutting of safety corners) - yet the money-Profs get equal weight with the physics-Profs.
And the theology-Profs get equal weighting with the zoology-Profs.
Universities need to priorities with the physical sciences - read: the realities - prioritised over the faiths - read: constructs. We're actually going the other way - 'business models' are the way they're going, Profs are forced to tout their wares, it's getting a long way from knowledge for knowledge's sake.
Actually the physics, zooology and engineering profs actually have less say/weight IMHO....in the real world I think us engineers/scientists give answers the political/manager type of ppl dont want to hear because its based on hard fact, maths or physics and involves real costs and/or a path that cant really be altered its kind of black and white....theology etc isnt its any shade of grey you want. So if its an answer they dont want, they avoid asking someone who is likely to give that. Hence why I left engineering a decade ago....you can only argue so much beforeclients etc ignore you, and if you need to eat well thats kind of hard....of course when it goes wrong they sue you.....
A good example of that is the comment that the emergency response centre was only designed to take a 7.0 earthquake....now frankly when I heard that I was gob smacked....no good engineer I know of would have designed for only 7.0 in that place...for that critical a service....min design would have been 8 or 8.5.....they commented that when generators arrived they had the wrong plugs.....when I designed stuff like that I kept such plugs on site.....and apart from that a mechanical plug is just an easy way to connect....worse case you wire into the systems BUS....with some bolts.....when its that desperate its that simple....
I could see that coming so went into IT....funny but ppl pay for IT when they wont pay for engineering.....or they use dto....Im seeing more and more the bad things happening in engineering happening in IT.
regards
Steven - indeed. It becomes a self-perpetuating myth; you only fund research that will pay a dividend, pull the funding that won't, and you end up validating your ignorance.
Much the same as Torquenada investigating the combustibility of those who didn't share his particular conviction.
But hasn't the Christchurch situation clearly shown that just looking the Richter scale of numbers isn't enough. The second earthquake showed the position of its centre and the depth are equally if not more important .That is , saying a design is based on the risk of an X ( put in the no.) earthquake should not tell the whole story.
Having said that I'm not sure how engineers would take those other factors into account--- I presume it comes down to energy equations and the direction the energy is disapated.
I think its down to we know the energy we have to absorb for a specific earthquake number at a certain distance from it.....pretty sure thats reasonably well understood....
So you either say I have so much $ what can I get for my money, or It has to resist this at this distance, how much? looks like the former is how they did it....
Though the nasty one is the tsunami....the plant didnt do to badly until the water arrived....So I guess you build surrounding walls for a specific height of wave with a roof and a backup of....and say length of time submerged to a certain depth....so without O2/air the generators wont run....but you have batteries, once the water receeds the generators can then run....
From what I can see it looks like someone(s) gambled it would never happen bigger then the amount they had to spend....
regards
What stands out to me Steven is how easy it could have been to locate the backup generators at height on a cheap steel structure. Could be left as a bare frame apart from a roof, that way as long as it was tall enough, the water would pass around the columns.
The cost to do that would have been a pittance in relation to the total project.
Not sure if they have a setup where the generators backup the main power supply, or if they have pumps connected directly to engines. But the later would seem like a prudent move also.
One of the problems is that science is compromised - it, for example, gave us nuclear energy - it, for example, gave us cloning - it, for example gave us genertic engineering. The usefulness/appropriateness of the pursuit of this knowledge to humanity is an ethical/values question - one which, umless we have a philosophical grounding in ethics/values and human endeavour, means that we (academics) and politicians simply do not have these ethical conversations in a thoughtful and unemotive manner with the general public.
The scientific community has been seen to decry such societal concerns regarding the direction of much of its research. Although not publically available - for those with acces to the journal, this by Al Leshner of the AAAS is typical;
Leshner, A.I. (2005). Where Science Meets Society (Editorial). Science,307(5711), 815.
This summary (by a social scientist) of the problem is however is publically available;
http://www.nature.com/embor/journal/v3/n8/full/embor093.html
I teach values/ethics within the undergraduate science curriculum, and it is material I believe (from feedback) hasn't been a part of the student's wider education in the past. I believe philosophy/ethics is the subject most ignored in our present educational curriculum (but then I'm definitely biased!) and the subject should be learned from primary school onwards.
"Mortgage approvals are up"...hahahahaaaaaa.....just before rates are set to shoot higher...do these borrowers never pay attention to the macro....
The piigs are in the poo again and the great game of hide the debts is coming to an end...who will get sucked down into the black hole!
Kiwi$ falling and guess what's coming to the gas station near you. Thank Bollard for some of that.
The housing bubble across the ditch making a hissssing sound
Over on this side the RBNZ rushing to shore up the defences with the OBR regs so that depositors and bank shareholders get screwed and not taxpayers...a wise move for once but hey what does it tell you about the view through Bolly's scope!
I warned about the copper bubble a ways back...the signals were screaming that all was not well....
The game now is all about creating public confidence...no not Bolly with his ocr tricks...we are talking about the world markets and the liars in the media...watch as the manipulation develops aimed at soothing investors fears and downplaying the dangers from a domino Tsunami of problems due to you know what....
nuclear meltdown imminent, commodities down, stocks plunging - sounds like its all turning to custard. But NO! (drum roll....) PPT to the rescue:
http://www.fundmymutualfund.com/2009/05/daniel-shaffer-notices-invisible-hand.html
oops meant to link to
http://hken.ibtimes.com/articles/123547/20110317/the-not-so-invisible-hand-reappears.htm
Course it wasn't me pussy....!.....and yes the Japanese golf players and wedding parties might not be so keen on the South Island right now but....the really wealthy will be looking way into the future and one spot they will have on their looksee list is on and near the Millbrook Golf Course near Arrowtown....and the agents don't get a nose in that door mate.
Gold is not down this morning,it's up, all is quiet at the Fukishima reactor and measured radation levels there are not much higher than a standard x-ray at the moment.
Uranium is a definite buy as fearmongering plunges the stock when in reality only about 3% of the worlds usage is in the USA and France...the rest is taken up by those who couldn't care a less ,like india , russia, brazil etc and who will plug on with nuclear stations irregardless.
even Presiden Obama came out this morning endorsing the future of nuclear power in America as the sensible option.
those nuclear stations in Japan were of the General Electric first model built in 1971 and have always been consider unsafe.
Cut back on the emotionalism...but yes, the Pigs are again in trouble !
It's when you see this ....concern turns to fear...courtesy NHK World.....
Gov't ups permissible radiation level
The Japanese government has revised upward the permissible level of radiation exposure for workers at the troubled Fukushima Daiichi nuclear power plant.
The health and labor ministry says that it raised the limit by a factor of 2.5, to 250 millisieverts, in cases of emergency.
The measure was adopted to secure enough time for workers at the power plant to engage in operations such as cooling down of the reactors.
Radiation above 250 millisieverts is said to cause health problems such as a temporary reduction in the number of white blood cells.
The health and labor ministry says it reached the decision after consulting with experts on the possible effects on workers.
The ministry explains that the measure was necessary to prevent a nuclear disaster. It says the international radiation limit is set at 500 millisieverts. It adds that medical experts have no clear knowledge about whether radiation of 250 millisieverts or lower will cause health damage.
The question ......is there a body of water beneath the reactors or is it rock all the way down to the hot soft gooee stuff...what happens now depends on what's beneath the super hot blobs of fuel making their way through the substructure of the containment vessels.....if this reaches a water table....'all bets are off'
Underneath the second containmnet is a third (at least I assume the japs build them like this) a large concrete saucer / plate shapped pad ie shallow dip in the middle.....so anything that flows out should spread out and get so "thinned" that it cools, thats the theory. Unless that cracked in the earthquake of course....Cherlobyl it just melted into a stalagtite after eating its way through the bottom of the vessel (but its so radio-active you cant go anywhere near it).....this stuff doesnt flow unless its very very hot so once its starts to spreadout it solidifies........so its not going to far....
regards
Actually steven, the Soviets tunnelled beneath and bust a gut to cool the blob from beneath...not possible in Japan and the reactors are early models mate...and the blob reaches temps that will melt through whatever is down there...until it reaches water!...kaaaboooom.
Then you gotta factor in the MOX fuel...a tad more dangerous.
Please supply a link to the tunnel info...the docs ive read said they threw materials in from the top plus water and later videos shows the basement and the "lava"....given the lethality of the lava, tunneling wouldnt be safe I would think....
So the link would be interesting........
regards
Mortgage rates are at there lowest point, do not fix as the banks want you to, float your mortgage and pay as much as you possibly can. yes even if that means you go without.
Better to pay now while rates are low, get your bike tyres pumped up you may need a bike, the situation in the middle east is very volatile if Iran becomes involved it will all turn to soup.
The world is changing the greedy people at the top must share their wealth or have it taken from them by the people.
It seems two things rule the world, money and guns. long ago I invested in Internet based businesses eg I own online shops selling telecommunication equipment.
The world has 3 major needs, food health and communication, business is not as fast as I would like, but I have gone in the right direction.
Newzealandrestaurants is my baby + many more New Zealand based websites, I do feel for the people of the world, unfortunately we need to make the best of what we have.
online marketing experts is what we do, working from a flash home based office, as business costs rise less bricks and mortar business will survive.
Working from a home base saves fuel costs, rent, rates and much more
Some outsiders do wonder whether Japan’s government can afford additional spending. They need not do so: Japan can and unquestionably will pay these relatively modest sums. The Japanese private sector runs a financial surplus large enough to cover the government’s deficit and export substantial capital abroad. Japan as a whole is the world’s largest creditor, with net external assets equal to 60 per cent of GDP. In short, the assets of Japan’s private sector vastly exceed the liabilities of its public sector.
The government’s debt is a way for the Japanese to owe money to themselves. At some point, no doubt, that debt will turn into taxation, either overt or covert (the latter via inflation and reductions in the value of Japanese government debt). Since total government receipts are still only 33 per cent of GDP, raising taxes should really not be so hard. The idea that the government confronts an imminent fiscal crisis strikes me as quite bizarre....so look all that up in your Funk and Wagnall!
Meanwhile over in ( don't mention the war ) Germany ..
http://www.world-nuclear-news.org/C_Billion-euro_nuclear_shutdown_in_Germany_1603111.html
http://english.aljazeera.net/news/asia/2011/03/201131683257256642.html
This is an interesting story that is below the radar at the moment. Stratfor.com did a piece on this a few weeks back, but now the guy has been charged. There are much deeper issues involved that might not be immediately apparent.
Actually Wolly, contrary to the story, the number of loan approvals is still trending downwards on virtually any measure you could think of. Yuo can check this out on the C16 series on the RBNZ website.
The aggregate value of approvals is interesting, though. The trend here is not so clear, and it looks liker fewer borrowers are taking out larger loans.
To follow up your comet point, the problem isnt grounding the comets and indeed concorde that was done until the fix is found or getting rid of them.....the problem is not grounding them and in fact extending their life knowing full well their safety standards are at best marginal....throw in that they then "improved" the safety by installing safety items that would probably fail in an earthquake as they were not eratchqyuake proof enough so wouldnt be available, that smacks of politcial interference or accountants getting in the way of engineering....
Japan was unlucky is some respects, the nuclear reactors in the old soviet union are actually really dangerous....but still being used....
regards
The reality is that the world over there are many, many aging nuclear power plants which are awaiting decommissioning. And the issue is another of those classic contemporary responses which in many cases simply pass the responsibility to future generations.
See here for example in the UK (the previous programme planned these decommissions over a 125 year period! No idea where that work now sits post the GFC);
http://news.bbc.co.uk/2/hi/uk_news/4140636.stm
And Wiki provide a nice list from around the world of the "work" to be done in decommissioning these legacies;
http://en.wikipedia.org/wiki/Nuclear_decommissioning
In many cases the timeframe to decommission is longer than the life of the plant.
Madness really.
Kate,
If decommissioning consisted of simply leaving them sealed up for the next 100 or so years as they should - be there would be no problems.
Too many people think you can " get rid " of the radiation by somehow pulling the plant apart.
That's not how nuclear physics works.
Just leave it where it is - all sealed up. No problem.
Decommissioning is driven by the political inputs from individuals who have little or apparently no knowledge of nuclear processes.
This is the main deterent to nuclear economics and it's driven by pure ignorant politics - not nuclear engineers.
Just my point - you can't "get rid" of the hazard, economically or environmentally speaking. So the question really needs to be - why do we need all this electricity given the human cost? What is actually essential to provide our needs at the base of Maslow's hierarchy? Since a very young age when standing in Time Square or visiting Las Vegas, all I could think of was what a waste. I was brought up with an ethic to conserve energy.
And why have manufacturers been allowed to design so many household devices that remain on standby - think of the energy reduction in Tokyo alone if such devices were never allowed to be designed this way.
The issue is not one of nuclear economics - it's one of values/ethics, which we have so totally lost sight of in our consumerist orientated world.
Actually, no to several of your points.....lots of nasty crap in the UK nuclear processing plants has to be inspected and contained to make sure it isnt a nasty waiting to happen.....its been badly dumped and its possibly not safe....and not stored in containment thats long term safe.
Some stuff can certianly be sealed etc....but you cant simply fill a containment vessel and walk away........... in terms of $s, nuclear economics doesnt work, simple....
regards
Fears the euro may unravel in coming years are "utterly wrong", says European Commissioner for Trade Karel De Gucht. Speaking in Sydney alongside the Trade Minister Craig Emerson, Mr De Gucht said he wanted to stress that the euro is a "viable and vibrant single economy".
Viable and vibrant...get the message....buy the euro...be a hero
Its a salesman confidence thing, "of course this is a great car, best model ever.....full service history, great buy".
Her well paid, great pension entitlement job is dependent on the EU$ and EU surviving....no EU and she's doing what?
Maybe get a job with REINZ?
Buy the Euro and get a haircut.....
regards
scarfie go to...http://www3.nhk.or.jp/daily/english/society.html very up to the hour status.
Great thanks. I have been looking for a good source, if there is such a thing. The good lady has Japanese friends in Tokyo. Starting to really look like they should bail, but I imagine enormous resouces are being thrown at it.
Wally is right above when he talks about steam explosions. Saw some results of that on an induction course for Tiwai Pt. Nasty and it is high risk for anyone working there.
For those convinced interest will or should have risen.....at least up until now they have not its because of being in a liquidity trap....
"I don’t know what more evidence you could ask for. After all, interest rates are what the liquidity trap is all about."
http://krugman.blogs.nytimes.com/2011/03/16/yes-were-in-a-liquidity-tra…
So will interest rates rise? unless there is a total loss of confidence I cant see how, ie in extrimis I suppose anything is possible....
As PK says,
"In fact, quite a few people did predict just that — and in some cases lost a lot of money for their investors."
On the other hand following PK in this case saved me a few thou.....your call.
regards
Steven....
I don't agree with Krugman.... I much prefer Richard Duncans' view.....
http://www.richardduncaneconomics.com/2011/03/09/why-wont-bernanke-come-clean-on-glut/
It is not a "savings glut"... It is a world awash with money as a result of "money printing".
From this perspective... will interest rates rise..????.... oh yes
Will inflation become an issue.... oh yes.
Will the writings of Milton Friedman come back into fashion.... oh yes
Not in the short term... but in the medium to longer term.
Govt deficit spending is like petrol to a fire... when it comes to inflation.
at some point people will wake up and realize that the CPI does not really measure the increases in what it really costs to live.... does not measure the effects of rampant money supply growth.
I saw The comment about... " u can't eat an ipad".... Just shows that economists, intellectually, live on another planet...
http://www.reuters.com/article/2011/03/11/usa-fed-dudley-ipad-idUSN1124415220110311
Shows a complete lack of common sense... in my view..... and these guys are running the show.
Well fair enough....time will tell who is right....I guess it might be time scale....for teh next 2 years I cant see it....
We have had 30 years of Milton F, though like Keynesian before it, it got corrupted....
So have interest rates risen? in the last two years? no they dont look to rise in the next two either.....though maybe seperate out OCR and the rate we pay.....personally I think the OCR is going to stay more or less where it is for 2 years maybe longer.
Will interest rise? maybe moderately, unless there is a huge financial crisis aka greece
Will inflation become an issue? no, not that I can see.....we are going ino deflation and shrinking GDP as lack of cheap oil forces our economies to contract.
This for me is the kicker on why you are so wrong,
"Govt deficit spending is like petrol to a fire... when it comes to inflation"
You confuse historic attempts to stop un-employemnt rising using keynes theory by increasing public spending while private spending is robust or growing....sure thats infaltionary....wages were sprialing upwards...today they are not doing that.....
What you miss today is private spending has collapsed by many times what Govn's are putting in, in some cases by a factor of ten.....Also where in the case of the US the Federal govn spend, this was matched by the states not spending, let along private spending not happening....result huge deflationary pressures....
In terms of medium and long term, if you ignore the fact that peak oil will kill the global economy for 30 years....and we will never recover.....well yes I guess we might see some inflation one day....
Finally though Govn's will have to balance the books...simple economics.........eventually.
regards
Kate, its a frightening thought thats being ignored by our leaders. Meanwhile in the States things are just crazy
http://cnsnews.com/news/article/debt-jumped-72-billion-same-day-house-vo
If Congress were to cut $6 billion every three weeks for the next 36 weeks, it would manage to save between now and late November as much money as the Treasury added to the nation’s net debt during just the business hours of Tuesday, March 15.
With both the Christchurch and Japanese disasters, I have been sobered by the fact that neither government has focused their efforts on evacuation of people from striken localities. In this regard, much like the food one, we seem totally void of any such planning. At least in NZ, Air NZ stepped up to the mark to get people out. I think it boardering on delinquent that instead we provide advice or 'means' for people to stay put and live without proper sanitation and safe drinking water. If what we are witnessing in wealthy nations with significant technology and resources is 'the best' in disaster preparedness, well....
Wow and I thought I was black!
Provided society in NZ holds together no i think ppl will be thinner sure....but not for 5 maybe 10 years....looking at what cuba went through they survived...so i think NZ will....other parts of the world, yes starvation looks a huge threat....but we need to get to 2 billion or so....so to do that its birth control or the not so nice alternatives and no one is handing out condoms en mass so its not nice....
regards
I admit to reading too much on zerohedge lately!
Like this;
http://www.zerohedge.com/article/and-meantime-food-prices-jump-most-1974
And this;
http://www.zerohedge.com/article/day-yen-carry-trade-died
And this;http://www.zerohedge.com/article/guest-post-alert-nuclear-and-economic-meltdown-progress
I find zerohedge t0o kooky and blinkered for my taste....but they are worth reading for the grain of insite they can sometimes open for me.....I think they are too much in the neo-classical economics mold for me which I regrads as broken.
I suspect that Japan will impact the world economy out of scale of the actual event....it might just be what starts off the domino effect...and we fall into a horrendious depression, however if that forces the price of oil down, ppl may not starve quite so soon.......
Im kind of, yeah what ever get it over with pls.....
regards
Steven....
I don't agree with Krugman.... I much prefer Richard Duncans' view.....
http://www.richardduncaneconomics.com/2011/03/09/why-wont-bernanke-come-clean-on-glut/
It is not a "savings glut"... It is a world awash with money as a result of "money printing".
From this perspective... will interest rates rise..????.... oh yes
Will inflation become an issue.... oh yes.
Will the writings of Milton Friedman come back into fashion.... oh yes
Not in the short term... but in the medium to longer term.
Govt deficit spending is like petrol to a fire... when it comes to inflation.
at some point people will wake up and realize that the CPI does not really measure the increases in what it really costs to live.... does not measure the effects of rampant money supply growth.
I saw The comment about... " u can't eat an ipad".... Just shows that economists, intellectually, live on another planet...
http://www.reuters.com/article/2011/03/11/usa-fed-dudley-ipad-idUSN1124415220110311
Shows a complete lack of common sense... in my view..... and these guys are running the show.
Roelof I don't see in Richard Duncans piece mention of the velocity of money, which as I understand it is as important as the quantity of money.
Print as much as you like but if everyone is avoiding spending it then you have a liquidity trap, not matter how much you deter saving/encourage spending via low interest rates.
Scarfie....
The velocity of money can come later.... U can have inflation in a recession ( stagflation )... where velocity of money is low.
Central bankers use a term.... "unmooring" of inflation. This is where the velocity of money accelerates because the "market" has a psychological shift towards inflationary expectations.
This won't happen for a while.... there are still many people out there who see deflation coming... :)
People don't need to be borrowing and spending more.... Govts have stepped in to keep the game going.... The keynsian model that stimulates aggregate demand thru lower interest rates..... is a broken model... the so called liquidity trap is just a nice way of them saying... it doesn't work anymore.. people can't borrow anymore to spend... It is a bankrupt model.
AND... more importantly... As Richard Duncan points out , chronic imbalances in Global trade has lead to Massive increases in money supply... This has already happened.. the money is already out there.... plenty enuf to fuel rising prices. ( Bernard posted a link to a report that shows that the Chinese Yuan is up to 70% undervalued)... What will happen when they finally revalue..???... what will happen to prices..??
I smell rising prices coming.... I see all sorts of forces emerging that will amplify the effects of loose monetary policy..... which will manifest as generally rising prices.
I see commodity prices... and food.... in a secular bull market... with lots of volatility.
I feel sorry for people in third world countries who spend most of their income just on food. The promise of Globilization and the WTO ... has not eventuated for them
Having said all that... these are just my views on things.
Well I think we all agree on one thing, the imbalances now are of mammoth proportions and are squeezing out the seams in all sorts of unanticpated places.
I could argue, and I what the hell I will, that the rising commodity prices are a perverse sort of saving or investment, so are thus withdrawing money from circulation rather than adding to it. For instance I have read that Gold is a good form of investment in a low interest rate environment. The the commodity bubble could be seen as contracting the money supply.
I think we are probably up for a new theory for the territory we are entering. Excess debt, fractional reserve banking, peak oil, rah de rah.
What I do wonder though in all these economic models, is how people will pay inflated prices for things when they are paying off debt. Add in a high unemployed scenario on top of this, and where is the money going to come from? 33% unemployed in the last depression. I see that it will be impossible for prices to rise because people have spent on credit, as you say, but will be stressed because of paying it down. They will sell the things they bought on credit, at much reduced prices because everyone else is doing the same thing, which I don't know if you can call expansion or contraction. There was serious malnutrition in England during the 30's.
Here is a good question. What happens if your fractioanl reserve banking system unrolls? 90% contraction?
Still thinking.Hmmm.
The economic definition for savings is...."deferred consumption"
Savings do not expand the money supply.
The classis definition of inflation is..... "the effects of increases in the money supply" which usually manifest as "generalized rising prices
The modern definition of inflation is ... "changes in the CPI ".
HUGE difference..... in fact there is a profound difference.
I accept the first definition.... and I look for how the effects of massive increases in money supply manifest in the world...
People who look at inflation as simply being movements in the CPI... have a completely different world view.
Freidman was right when he said that inflation is..... "always and everywhere.. a monetary phenomena".
This may sound like u and I are splitting hairs... but it leads us to having quite different investment outlooks.
As to your last point... about fractional banking unravelling.... well .. that pretty much happened in 2008 with the GFC... As we saw, Central banks and Govts. will do whatever they have to to stop this from happening.... The financial sector seems to have all the "power"... in a political sense.... as well as economic. Michael Hudson uses the term ..Financialization of western economies.
Cheers Roelof
meh - immature comment and lacks detail.
you have to justify a smear.
For the record, everything a Council does - and 'does' is a physical thing - requires energy bought at perhaps 4x the relative price of a decade ago.
And - every Authority fudges 'allowance for physical depreciation', just as most folk don't put aside a few dollars each year for the 10-year house-paint. You can 'wing-it' for a while, but sooner or later the stitch is needed, and more so with time.
Local Authority rates will get seriously more expensive, in terms of relativity to incomes, but then, that is going to be true of everything.
My bad. Agree it lacks detail but note the "or". It was off the cuff and was intended to provoke a different angle instead of just being directly linked to inflation. I don't understand how that is immature.
Details then. Year on year rates increases seem to be more than inflation and that's after the spin that the increase was less than initial forecasts.
In my local suburb I regularly see the same stretches of road being repeatedly resealed while others that actually need it are left to deteriorate further. Is this because it wasn't done properly in the first place or the old mentality that the budget must be spent or my department won't get the same allocation again? Either way that's wasteful spending IMHO. I've seen road layouts drastically altered by some idiotic design that only creates more problems and safety issues. Wasteful spending IMHO.
And now we have the wonderful supercity replacing 8 councils with 21 local boards, plus the Maori board, the Pacific peoples advisory panel, the Ethnic peoples advisory panel together with the CCO's, which IMHO requires a lot more "middle management" and all governed by some sadomasochistic nutter. I see advertisements for economists and numerous policy analysts and planners - a lot of thinkers and not many doers. Add to this the cost of denying any accountability or responsibilty for the leaky building fiasco and I see wasteful spending.
Wolly, but did BE say core inflation or CPI?
Wgtn rates are similar, btw 4.6 or 4.9%....
I keep telling you there is a huge difference between core inflation per annum and CPI.....but you refuse to listen, based on that one fallacy your outlook is wrong IMHO....
For me its simple you cannot take singular items such as say rates or food or even cherry pick the ones going up in any one week and say "there its looking like 6% or 10% per annum"....For there to be inflation more things have to increase and by a bigger amount than things that dont increase or even drop....this is where we are at right now. We have to buy electrical power, rates and food...if we still only have $100 then something has to give....so moving to a cheaper rental property becomes compulsory....or getting rid of the second car , or mobile phone goes etc....some other business looses out....hence only 2% core inflation, and at that rate the OCR looks like its staying very low....
regards
Stuff core....it's the cpi numbers that matter to the voters...a quick look at the govt site and a fiddle with their calculator shows cpi up 4% 09 to 010.......what do you think it is now steven....
and that's their numbers...which I do not believe are an accurate account.
You can also determine the loss in value of the Kiwi$...a great help but again, is it accurate!
John's ball game in November will depend on a small % of voters who pay close attention to what they have left of their pay and not a jot to "core" anything.
Wally, I just dont buy food....
Examples...
In the last year I bought a laptop and got $500 off, a 15% discount....the new model out this month which while it is more powerful its the same in $s as the old....so best case if you ignore its "better" is in that time the inflation for that item has been 0%.
I bought an alternative 6 months ago, it was <$700 and 2 years ago its was $900+ a 22% discount.....in 18months....so 14% per annum...
If the voters want to only look at CPI, well thats shallow and dumb IMHO....the importnat things is over a year how far does your annual salary go....if you only need 2% to break even when all spending is considered....then that is what matters.
regards
Let Them Eat Hamburger
Up until the Boskin/Greenspan agendum surfaced, the CPI was measured using the costs of a fixed basket of goods, a fairly simple and straightforward concept. The identical basket of goods would be priced at prevailing market costs for each period, and the period-to-period change in the cost of that market basket represented the rate of inflation in terms of maintaining a constant standard of living.
The Boskin/Greenspan argument was that when steak got too expensive, the consumer would substitute hamburger for the steak, and that the inflation measure should reflect the costs tied to buying hamburger versus steak, instead of steak versus steak. Of course, replacing hamburger for steak in the calculations would reduce the inflation rate, but it represented the rate of inflation in terms of maintaining a declining standard of living. Cost of living was being replaced by the cost of survival. The old system told you how much you had to increase your income in order to keep buying steak. The new system promised you hamburger, and then dog food, perhaps, after that. http://www.shadowstats.com/article/consumer_price_index
Wolly -
Consumer price inflation is 4,6% per the March 2011 year according to the Treasuries monthly economic indicators per February 2011
http://treasury.govt.nz/economy/mei/archive/pdfs/mei-feb11.pdf
scroll down to page 4
Im hoping the media are way out on this call. Japan nuclear plant: Just 48 hours to avoid 'another Chernobyl' http://www.telegraph.co.uk/news/worldnews/asia/japan/8387051/Japan-nucl…
I keep an eye on
But other than that I dont know if anyone really knows whats going on except for a few taking great risks trying to stop a catastrophe.
Andrew, I’m concerned about the massive “Nuke Lobby”, represented by so called experts telling the world (incl. the media) pack of lies over many years.
The current shutting down of many nuclear power station in several countries is a good testimonial for that.
We cannot control nuclear power stations at all, not knowing where, how strong and with what consequences earthquakes occur.
the range of opinions being expressed by experts is quite staggering.
I'm totally confused as to what the truth is
we have those who say its not an issue, that at worst it will be very localised, through to those who are saying it will be worse than Chernobyl!!!!!!
the French are very gloomy about it (Elley?)
I can't understand why there is such divergence of opinion - surely there is a straightforward engineering answer?
I think what is certain is that my wife's family in Nagoya will be OK. I think Tokyo will PROBABLY be OK too
From a confused MIA
Yep, reading so many different opinions from "experts" and the fact that the acceptable level of radiation has been increased isn't exactly reassuring. Seeing reports of countries having shut down their own power plants also shows the actual level of confidence people have in their equipment.
I've had a brief look at the French papers in the last few days. Looks like the Greens have come out in force to protest against nuclear power plants and most of the articles are definitely gloomy (saying that this disaster will probably turn out to be worse than Chernobyl). On the other hand, Mr Sarkozy doesn't seem to intend to review France's policies regarding being "independant in terms of its energy needs" and goes on about the "excellence of the safety system of French power plants". Yeah right. Just as well France isn't lying on a fault line.
I hope your wife's family will be OK. Personnally, I'd have been on a plane out of there asap if it was possible. Not brave enough to wait and see what my fate would be.
if history is any guide one would have to err on the positive--there have been 63 deaths in nuke plant accidents since 1961-worldwide-note accident,s--- not radiation event,s--these have possibly accounted for 300000 over the same period--to put this in perspective 23000 people have died on the worlds road,s in the last 7 day,s---1.2 million per year!
http://en.wikipedia.org/wiki/Nuclear_and_radiation_accidents
http://www.nghealthcareeurope.com/media/media-news/infographics/091126-HealthEU-RoadAccidents.png
To put this into prospektive 15% more of none smockers died in 2011 on heart attack worldwide, by telling BS, in compirison to swimmers or snowborders attacked by sharcks or bears in Austarlia unilt February 2012 - and vulcano also 500'000 in 2002 - tomorrof in Gore in Fiordlander tirty water's - cocodile shapold said in parliment in Welingtown near Tawa on Tvone crime watch.
http://www.teara.govt.nz/en/southland-region/7/5
A Rentier in Jemen just broke worlrecord going 200km/ h
Yes - people believ most everything
And from the daily reckoning.....
"There will be plenty of people who will point to Japan’s earthquake and tsunami as the reason for the recent share market collapse. And superficially, they’d be right. But the collapse came because the recovery was built on a house of cards.
A rally built on liquidity and the false promise of a free lunch will disappear at the first sign on an ‘exogenous’ shock. And this is one major exogenous shock. We’re thinking it will change the financial landscape for a very long time.
So, why is it such a big deal?
Well, according to the latest figures from Japan’s Ministry of Finance (2009) Japan has a positive net international investment position of US$2.9 trillion. That means it owns more in foreign assets than foreigners own in Japanese assets.
Japan has accumulated this massive savings pool by living within its means for decades. Put simply, it has produced more than it consumed. Japan’s private sector savings have funded a succession of brain-dead Keynesian government for years, as well as providing a huge amount of global liquidity via the famed yen ‘carry trade’.
Now, the Japanese are bringing these funds home…and the currency markets are reeling."
I just love the on going attempts at taring "keynesian" is getting from the "other side"....somehow it reaks of desperation....Japan from the little ive read has unsuccessfully tried to keep its zombie banks going for 2 decades, the result has been at best stagflation...and the US is doing the same thing........
regards
Hey guys, the Republicans held a job creation forum today.
Wonder if they'll come up with anything as good as a cycle way? It'll help solve that obesity epidemic they've got there too.
Wonder if a US cycle way would create more than, what is it, 400 jobs?
what a joke that cycleway was
Rod Oram gave the Nats performance on the economy a slam in the Sunday Star Times. Fair enough too. Although I think he unfairly downplayed Labour's role in this mess. Basically he argued that National can no longer blame Labour for the mess we are still in. I didn't really agree with that - it will take a lot longer than a couple of years to undo the damage they did.
But at the same time, I find National underwhelming
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