Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the Local Authority Protection Programme, an insurance plan owned by local councils, has run out of cash and has asked for a central government backstop.
In what would the second bailout of an insurer since the February 22 earthquake, Civic Assurance, which is owned by 59 councils, has asked for the central government to assume 100% of the risk of insuring local government owned sewerage and water systems until June 30, Patrick Smellie reported at Stuff.
The government would then assume 90% of the risk until mid 2012 or 2013 as Civic Assurance cannot get reinsurance.
Meanwhile, inflation figures due at 10.45 am today are expected to show prices rose around 4.6% in the March quarter from the same quarter a year ago. Inflation in the quarter was expected to be around 1%. The GST increase, higher petrol prices and higher food prices are factors. Prime Minister John Key downplayed the figures. See Alex Tarrant's article here.
The government also announced plans for a crackdown on overseas ex-students who owe NZ$2 billion on their student loans. Tertiary Education Minister Stephen Joyce said debt collectors would be used and the 3 year repayment holiday could be cut. See Joyce's full comments here.
Meanwhile, China has lifted its Reserve Asset Ratio for its banks for the 4th time this year as it struggles to cool down an overheating economy. See more here at Reuters.
This followed higher than expected inflation and growth figures late on Friday. Inflation in China in March was 5.4% from a year ago, higher than economists' forecasts for inflation of 5.2%.
Chinese GDP growth in the first quarter was 9.7% from a year ago, also stronger than economists' forecasts of 9.5%.
The New Zealand dollar almost touched 80 USc over the weekend. See my opinion piece on the currency here.
No chart with that title exists.
11 Comments
"A new layer of silt brought up by liquefaction also covered large parts of Bexley and surrounding areas" herald
Clear as mud....Gerry and Co need to pull finger and get with a new subdivision west of Chch and stop messing about with 'experts' and pipedreams of fixing the ground up!
Face facts Gerry....it's over...finished...stuffed....so go west and do it now.
North west of Yaldhurst Gerry.....hurry along.
Here's where the moving suburbs thing gets expensive ( hill houses are generally worth a lot). From the Herald this morning:
"Many hillside homes in Christchurch will have to be abandoned because of a risk of rockfalls causing more damage or deaths, a geologist advising Civil Defence has claimed """'
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10720154
A government with a strategy..
….costing taxpayers billions we don’t have.
Government policy is more students, because there aren’t enough jobs in the production sector - youth unemployment is soaring. After university they are going to be lawyers, civil servants, sharemilkers, real estate agents or they export them selves overseas.
Well - how can we make money - educating youngsters for the servicing industry and exporting brain power ?
I've seen a few recent articles stating that the US economy could head in the same direction as Japan's "Lost Decades", formed from a monetary perspective with reference to GDP and economic growth, and caused by government policies at the time re fiscal stimulus, bank bailouts.
Just came across this article and it makes interesting reading - The Myth of Japan's Economic Depression Lost Decades - http://www.marketoracle.co.uk/Article27579.html.
I have no idea if NZ will head in the same direction (we haven't had the crash part) but the article provides a different view of economic growth and discusses rising currency and lending/credit growth as well as CPI/inflation (or lack of) and shows that the lost decades weren't really lost.
I think it shows areas where NZ needs to restructure - additional export markets, fixation on GDP growth, money supply, internal production/manufacturing rather than imports. It seems like most central governments don't want to emulate Japan's "Lost decades", but would it be so bad if looked at from a different angle?
Thanks, will have to read in more detail it looks interesting.....some Qs I will want answering....the biggest is, their economy has staggerd along but has done so because the Japanese govn has been able to borrow from japanese savers very large amounts at fractions of a % interest...in effect its kicked the can down the road on tax rises and re-payments....its QE spread over decades keeping them from going into a depression....the US with QEx is doing or attempting to do the same....Second their interest rate is just about zero, thats the only thing that has allowed this zombie economy to continue.....what happens if its starts to rise?
The US doesnt have the huge savings base that Japan has or did have when you allow for BBs retiring.....they will want their money back off teh Govn....when that happens teh Govn will have to borrow from abroad.....so the USA does a Japan, cant see it...
regards
I was looking more at the differences in how the NZ economy and officials have reacted to what was a similar build up in both Japan and the US - both markets had a boom caused by easy credit/liquidity and investment/speculation in financial markets (NZ had the same but our export market didn't perform as strongly as Japan's during the boom). Both also followed boom/bust fundamentals and corrected (NZ did not). The timing of govt intervention and methods seems to be the main difference between the US and Japan though.
I wonder after reading the above article whether our central bank reacted too soon in slashing the OCR at the beginning of the financial crisis (preventing the crash) and what would've been the problem in allowing a correction to happen. We are now seeing issues with inflation, discussion around our high currency and IMO an issue with our money supply that the RBNZ doesn't seem to want to control. Japan hasn't had the same levels of GDP $ as they did in the 80's but it doesn't look like their economy really suffered at least until they were hit by the latest unforseen natural disasters. There seems to be relevant information that our officials could at least look at rather than just continuing with existing monetary/fiscal policies.
http://en.wikipedia.org/wiki/Lost_Decade_(Japan)
http://www.npr.org/templates/story/story.php?storyId=101066132
Living in Japan is great, prices do not go up much. Wages do. Every year you are a little better off. It's quite easy to save money and have a comfortable life.
One comment above about property is true but housing during the boom was just at stupid levels. It is still expensive here to buy, even today. Renting on the other hand as a proportion of wages is quite reasonable.
Life without inflation is actually very good. You are not playing catch up all the time and you actually feel more in control of your life and more relaxed about money and financial things.
Japan is not lost at all.
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