A flurry of unexpectedly strong economic data and a raging hot house market are putting our central bank in a position it could not have envisaged being in a year ago

A flurry of unexpectedly strong economic data and a raging hot house market are putting our central bank in a position it could not have envisaged being in a year ago
HOTHOUSE CONDITIONS: Inevitably the pressure the Reserve Bank is now under is due in no small part to New Zealand's much-fixated-on housing market.

By David Hargreaves

Anybody suggesting just under a year ago that we might now be even talking about the prospect of interest rate rises in 2022 would likely have earned themselves an unplanned break in an, ahem, 'rehabilitation facility'.

To be less obtuse - you would have been considered barking mad.

As we plunged into Covid chaos in March last year, all roads seemed to lead downward. Guesstimates were flying around of: Price deflation, 10%+ unemployment, slumping house prices and an economy that would take years to get back to where it was. Have another painkiller and turn the lights out when it is all over.

Yet, here were are less than a year later:

  • With a GDP that's recovered to above pre-Covid levels on a quarterly basis after a record +14% surge in the September quarter.
  • With inflation sitting at 1.4% - okay, it is below the Reserve Bank's implicit target of 2%, but nevertheless in the 1%-3% target 'range'.
  • With employment at 4.9% compared with a buoyant pre-Covid 4.2% for the March quarter last year.
  • With the NZ dollar above US70c.
  • With banks reporting record levels of mortgage lending.
  • With house prices having risen over 17% in 2020.

And you can add in other things such as generally good export figures, surprisingly perky global dairy prices (which could give Fonterra farmers a higher farmgate milk price this season than the $7.14 per kilogram of milk solids they got last year), and retail figures that have generally defied all expectations as stay-in-NZ Kiwis have found other things to do with their money than spending it on overseas travel.

Between March and May last year the RBNZ and the Government threw the collective kitchen sink at the New Zealand economy, with the Government offering up cheap loans and generous wage subsidies, while the RBNZ slashed interest rates, allowed stressed home owners to take a mortgage 'holiday', removed the loan to value ratio (LVR) lending limits for banks, and unleashed a massive money printing programme (with a current limit of $100 billion).

I sincerely hope that people don't start suggesting, with the wonders of rearview vision, that the 'kitchen sink' treatment was not necessary. The trouble that particularly the Reserve Bank has now from a public relations perspective is that nobody can actually say what would have happened if the piles of stimulus had not been heaped on us. We don't know what sort of state we would have been in.

Rather, you have to believe that all the stimulus simply 'worked'. But it worked in such a way that was surely beyond anybody's expectations.

As for why it seems to have worked so well, I imagine it is down to the fact that we managed to turn back Covid. As unlikely as that seemed. I still pinch myself that we did.

Open for business

If you look at it, we had the super Draconian lockdown period from late March through to early May (if you include Level 3 in that), but then from early June (with the exception of Auckland's August hiccup) the country has been open for business. That's eight months now - while much of the rest of the world has been in and out of lockdowns and fighting widespread community transmission of the virus.

The Reserve Bank certainly didn't think NZ Inc was going to be open for business in a largely unrestrained manner in the way it has been, neither did the country's economists.

And it's not just that businesses have been open. People have been spending. And that's really surprised me. I do wonder (and I've mentioned this before) if perhaps somehow or other our official stats have in the past under-counted just how much money Kiwis normally spend on overseas travel in any given year. Or is it just that there's been an attitude of "this has been terrible, I'm going to spend to cheer myself up"? Or a combination of both perhaps.

But what also about the raging housing market? It's perhaps not particularly cool to be running around shouting: "Yippee, my house value went up another $2k last week!" And if you know anybody who does that, please give them a slap for me. But there's no doubt that, just quietly, homeowners are always going be cheered up a bit by news that their main asset is rising in value. We are a housing-conscious nation. And if the houses are doing well we are up emotionally. If they are down, we are down.

So, while nobody's going to say that 17% house price inflation last year was 'good' for New Zealand - the reality is it probably had a lot to do with the astonishingly buoyant economic conditions in the face of such global turmoil.

Crossroads

We are, however, now definitely at a crossroads. The Reserve Bank has its first major set piece announcement of the year on February 24 with the issue of its first Monetary Policy Statement since November.

The first thing I will be looking for in that document (and I won't be alone) will be whether the RBNZ reintroduces an Official Cash Rate 'track' for the next three years or so.

After the central bank slashed the OCR from 1% to 0.25% in March 2020 (promising to keep it at that level for a year) it removed any forward guidance on what the OCR might be from beyond March 2021. And you have to say, with things as they were at the height of the crisis last year, there was absolutely no point trying to forecast what might happen a day into the future, let alone three years.

Things are different now. With both the wholesale interest rate markets and some economists now suggesting rate rises as soon as next year, the RBNZ needs to step in and provide some guidance.

Which could be hard to do.

There's no question till fairly late last year the RBNZ was still leaning towards taking the OCR into negative territory, even as it continued with its money printing through the $100 billion Large Scale Asset Purchase Programme. Late in 2020 the RBNZ also introduced the Funding for Lending Programme (FLP), allowing banks up to perhaps $28 billion of cheap money priced at the OCR.

What can you believe?

What the RBNZ now has to decide is can it and does it believe what it is seeing with the New Zealand economy? Are we still in some sort of post-lockdown honeymoon period? Will the current consumer spending levels die away?

Those are valid questions. And that's before we tackle such imponderables as whether there will be another large scale Covid outbreak that necessitates another strict lockdown (and we have had OUTRAGEOUSLY good luck at times up to now). When will the vaccines get here? When can we start to open the borders again?

At the moment the RBNZ has incredibly stimulatory monetary settings in place. The money is just sloshing around.

If we look at some of the current economic data as presented higher up this article, and take that at face value, we would have to conclude that the RBNZ should actually be tightening conditions now. But there is that double-edged sword of whether we can wholly believe things are quite so good as the data would suggest and whether another severe kick to the economy could be around the corner.

Under Governor Adrian Orr this is clearly an RBNZ that would err on the side of letting things run hot rather than choking economic growth off through over-cautious monetary policy settings.

With the crisis that is Covid, this is a thoroughly understandable approach. But how long do you let things slide for if the economy does appear to be starting to run hot? That's the big question.

The RBNZ made a terrible mistake with its decision to remove the LVR restrictions as of May 2020 and appeared slow to react to the fact that the market was clearly ablaze at least as early as August. As a result the housing market got away, big time. And it will take some reining in again now.

In that regard it is concerning to see businesses reporting much higher costs in the latest ANZ Business Outlook. Now, yes, the expectation of economists at the moment is that the current wave of inflationary pressures will work its way through the system and fizzle out. But maybe not. And not if the housing market stays hot and people keep in the mood to spend.

Resurgent inflation?

I've always believed that globally we are likely to see a resurgence of inflation post-Covid. That would be a novelty for a lot of people. With inflation, if it happens, would come the necessity of higher interest rates. These would be a novelty for many people too. And not in a good way.

The barely existent interest rates we've had in recent years have allowed people to borrow ever-more eye-watering amounts of money to buy houses - and still be able to afford the interest costs.

A serious bit of inflation and the resultant need for higher interest rates would be a game-changer. And not in a good way. With the size of mortgages we see today the pain threshold could soon be reached and breached.

So, the RBNZ's got a lot of thinking to do before February 24. I don't envy the task.

My feeling is that for now the central bank will adopt a wait and see approach and remain 'dovish' of sentiment.

I'm not sure that would be the right approach.

Unless something cataclysmic happens between now and February 24, I actually think signalling the end of money printing and also wafting the suggestion of possible future rate rises into the either might be the most prudent course of action.

The risk of the economy freezing over appears to have receded. The risk that it might actually start to boil, in say 12 months from now, seems to be growing.

Decisions, decisions...

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69 Comments

Good article. We had a covid recovery stimulus and then no covid. The stimulus needs to be rolled back, perhaps leaving the government offering businesses cheap loans and LVRs will be reinstated. Anything harsher will see the spending come to a screeching halt.

No tourists and no international students either, and no real end in sight ... personally I would not want to be trying to keep a business in one of those sectors afloat

10
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Maybe tourist money is irrelevant if we go on holiday overseas. We have to thank agri business for keeping us in good position and blame government for overdoing it. Governments should do more on action reaction outcomes. Of course they wanna be kind. Would be nice if they could be smart.

38
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Orr was trying to pump the long housing market before covid came along. Interest rate rises won't be permitted because house prices aren't permitted to fall. Ever.

Terrible mistake is an understatement. It was catastrophic incompetence to remove LVRs and many of us said it at the time.

Orr should be fired with immediate effect.

The rationale at the time was that if existing loans went underwater, it'd freeze up new lending.

But that never made sense to me - just apply a special exemption for any loans drawn down before 1st April 2020 and keep the LVRs for new lending.

After all they applied a special exemption so delinquent loans weren't counted as such.

It's almost as if Orr wants to put the banks out of business..

A new independent decision-making body ( the committee under Mr Orr) at the Reserve Bank , on May 8 2019 , delivering their very first OCR statement cut the OCR by 25bps. The CPI at that time was 1.5 percent and the unemployment rate was around 4.0 percent. At the following August meeting they would reduce the OCR a further 50bps.
"The Government’s economic objective is to improve the wellbeing and
living standards of New Zealanders through a sustainable, productive
and inclusive economy. Our priority is to move towards a low carbon
economy, with a strong diversified export base, that delivers decent jobs
with higher wages and reduces inequality and poverty.

"Monetary policy plays an important role in supporting the Government’s
economic objective. The Reserve Bank of New Zealand Act 1989
(the Act) requires that monetary policy promote the prosperity and
wellbeing of New Zealanders, and contribute to a sustainable and
productive economy"
"At the time the committee noted their was some areas of housing softness "

14
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I needed some comedy today.

The dumbos in this government gave Orr the responsibility for maximum employment... he only has one tool (and that is not being flippant) of monetary policy to achieve it.

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I am gobsmacked wondering in what way an economy based on a Ponzii housing market is within the RBNZ's remit of contributing towards "a sustainable and productive economy" ?????

14
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It's official, the banks have filled thier boots and increased their debtor levels for years to come. Laurel, Hardy and Beetroot the hard work is over and can set housing market to cruise control and all is left to do is turn up the heat on interest rates to maximised profits. Until next time! *high fives*

If anyone is left in any doubt how well Kachingo did her job, see there was only one voice of dissent at Waitangi. Instead of undignified jostling and eggs thrown at her she served up bacon with a smile

12
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The short answer to where we now are?

We must rebuild the kitchen and replace the sink as fast as possible

(The problem? The Government and the RBNZ have neither the idea of how to do that, or if they do, the courage to do it)

I sincerely hope that people don't start suggesting, with the wonders of rearview vision, that the 'kitchen sink' treatment was not necessary.

It can be seen as having been necessary to the degree that without it, the Power that be feared that the housing market might have collapsed - taking the economy with it. The housing market is, sadly, viewed by them as 'the economy' for our country, such confidence they have in the rest of our activities. What a tragedy. But....
Nothing has changed, and in that regard we have squandered the classic 'never let a good crisis go to waste'.
I'll suggest that no such collapse was likely nor would it have happened simply because as economic activity ground to a halt, so would the housing market; everyone would have just remained sitting on what they had and would have done so until the health emergency impact became clearer. The housing market could have been addressed as an after effect and not as a primary concern.
It was wages and income that needed the 'kitchen sink' not the housing market. And, no. They are not the same thing.

No one knew a year ago 'what would happen' except for one thing - imprisoning a resident population within its borders; showering it with copious amount of cash and removing the barriers to rampant market speculation had an obvious outcome. It's the one we now have.
Now? We have the worst of all Worlds unless we immediately rebuild the kitchen and replace the sink!. The 'materials' to do that are already there, but in the wrong place - they have gone into the property market and should be retaken from there. Otherwise, what will we do next time, having thrown away the all-saving kitchen sink already?
I guess Adrian will look to The Fed for that answer - nothing but throw another phantom kitchen sink

4x LPG bottles.

Most overpaid Kitchen Maid Ham in the entire Country. I think it is around 700K per annum, =2K per day.

(Maybe 3K if Holidays taken into.....Account. Plus Totally Free Housing Rentals Compounded...Maybe a million or so Dollars...give or Take ........No Labour.......)....

How on earth did we ever afford her Crew and Security and Her Accomodation Suplements, I will never know...plus Holiday Treats and idle chit chat. Plus we have to grin and bear their smugness and Orr/Robertson's.

Double Dipping and no LVR...to speak of.......A TUI of monumental----proportions. Sadly.

PM salary is about $430k PA.

John Key gave himself tax cuts worth about $24k per year.

How much tax cut did Labour PM David Lange give himself after he dropped the top tax rate from 66 percent to 33 percent. Massive increase in take home pay but that isnt the point, twas the right thing to do. Same for Key after Clark put the rate back up to 39 percent ... high salaried PI were taking advantage of the bigger tax write offs on loss making rentals

twas the right thing to do. Same for Key

Tax cuts where the majority of the gains deliberately went to those in the top 5% of incomes, and everyone else got modest (or no) benefit due to GST increase were not "the right thing to do".

It was entirely possible to introduce a new 39% bracket at $150k or so, or rebalance the lower brackets to maximise the tax cuts for those on low incomes and reduce them for those on high incomes. John Key and National instead chose to give themselves and their mates big tax cuts.

high salaried PI were taking advantage of the bigger tax write offs on loss making rentals

It's still a loss. Increasing the size of your losses so you can get a bigger tax write off is self-defeating.

Even if we returned to 1987 mortgage interest rates of 21%, the housing market would keep roaring ahead.

16
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I doubt there are lot of people who could service a $600k loan at 21% - $126k a year in interest alone.

Agree- people are making some seriously silly statements and its not helping at all.

Even if interest rates dont increase (although they will- because not doing so will result in an overheated economy and a subsequent recession- the RBNZ might not like doing it but they will be between a rock and a hard place) the reality is housing markets will peak when people reach their maximum borrowing capacity which will be their ability to service their debts on their current income and to save for deposits. Without substantial wage increases most people will be at their maximum borrowing capacity now.

This is easily calculated- an average decrease of .25% in interest rates translates into an extra $25K able to be borrowed - interest rates fell 1.25% in the last 2 years = $125K. Market is up $120K year on year. Which would mean most borrowers have reached their maximum borrowing capacity. Further increases can only be fueled by a decrease in interest rates (not going to happen) or increases in income.

Or access to more wealthy buyers (see overseas) which I personally don’t think the FBB has captured in its entirety.

It was said some time ago that the equivalent rate of around 10-11% in years gone by would be around 6-7% in todays market due to the amount of debt. If the interest rates ever raise more than a couple percent, the wheels will start falling off.

15
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Its the failure of the majority to gather the necessary capital to participate in the residential property ownership casino, created by deliberate financialisation of society, that needs to be addressed.

We traded our jobs for debt, that's what free trade was about. China got the jobs, we got the debt.

Hence, a $5,000,000 deposit is required to save $10,000 per annum in receipt of the ANZ "Serious Saver" rate, currently set at 0.2% . What will the RBNZ do, more than the Fed, to stop it going to zero?

Furthermore, annual GDP growth is a long way from reaching what can only be described as a pitiful post GFC 2008 recovery path.

10
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A flurry of unexpectedly strong economic data and a raging hot house market are putting our central bank in a position it could not have envisaged being in a year ago

A knighthood for the Governor?

He'd probably rather have a rental property than a knighthood :)

How long will it take before life is back to how it was before? A life that didn't involve masks, social distancing, being told to sit down at pubs, and Zoom parties. Bloomberg has built the biggest database of Covid-19 vaccines given around the world and, by their calculations, it will take seven years.

https://tinyurl.com/f778d8em

I’m comfortable knowing that Labour or National will never let house prices fall ever. Buy up, leverage up and prosper

You credit them with more control than they have

Nope they have full control. They are the ones in the media spotlight and we as a nation are a bunch of sheep. The government spelt it out plain and simple for anyone to understand, the housing market was going to be protected and then FOMO took over so it didn't even need any sheepdogs to get the whole country moving in the same direction, or should I say the house prices moving in the same direction.

National nor Labour (or the RBNZ) have any control over US or Fed policy, or any of the international financial markets....the Bank of England, which has considerably more influence and firepower than the RBNZ conceded defeat on Black Wednesday.

Their ability to control is at the margins and they are one event away from complete lack of control

National nor Labour (or the RBNZ) have any control over US or Fed policy

Yes. But you know that NZ is a Swap country, right?

that doth butter no parsnips.....we are limited in our actions by what occurs in the wider world and that includes our control of interest rates, capital flows or even QE.

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It is important to separate out the fiscal policies from the monetary policies. The fiscal policy of wage subsidies kept money in the hands of ordinary working citizens. Without it, the wheels would have fallen off.
In contrast, the monetary policies skewed the economy very much in favour of those with debt-laden assets.
KeithW

100% correct, the only question is that with having boarders with restricted access for possibly years to come, can we sustain our current "Lifestyles" as we have come to expect ? Longer term it was never looking that flash anyway and Covid has just jumped us forward in time. I don't see us on these low interest rates forever. Sure Japan has been but can the whole world do the same ? I think not. Something has to kerb the rampant house price inflation.

I agree, that's why I thought a fiscal approach via helicopter money would have been far fairer, better option. But no, they chose the asset wealth effect via RBNZ monetary policy. In hindsight of those silly decisions, they now have an inequality mess to deal with.

the more poverty there is the more the free lunches and benefit crumbs are appreciated

Indeed, it's the Labour Voter Manufacturing Machine, hard at work. Dissent? We'll Cancel yer Benefits.....

Spot on. Although I would add that the the monetary policies + QE also drove money into shares. The big risk now is that Govt try and use near-impotent monetary policy to achieve the incompatible aims of cooling the housing market, managing inflation, and stimulating employment / growth. Govt needs to actually intervene - rent freeze and LTV *pending* increases in supply.

My preference at the time when wage subsidies were announced was to have subsidy via unemployment benefit with no standown period. Not sure how that would have panned out over time. Certainly less costly.

If only they could back in time and realise they were right... it would lead to problems

https://www.nzherald.co.nz/business/bernard-hickey-power-of-printing-mon...

Ok. So we got through 'this one'. What happens when the next one hits?
And it's not only another pandemic we have to worry about (it's only been 10 years since the last one for instance). This is New Zealand we are talking about. A land that can be affected by far more than a pandemic. Say:
(1) Wellington gets hit with a devastating earthquake that puts Christchurch's in the shade? Or it's Tokyo first - reconfiguring the Asian landscape, that leads to:
(2) China, our biggest trading partner, going on the offensive against Taiwan and trade sanctions flatten our export trade?
(3) Biden drops dead; the internal Democrat scramble for power sees the global stock markets collapse?

What do we do? Ramp up the property market; assume even more debt to save us, again? Or do we just ignore the risks and assume that we'll sort it out when and if something happens?

Sorry I did not mean to report your comment

15
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I suspect it would have been better for our society if we did have "price deflation, 10%+ unemployment, slumping house prices and an economy that would take years to get back to where it was". It could have made us stronger. I don't think we have learned how to be more resilient and we just ended up making multiple property owners richer and a harder future for our young people.
DISCLAIMER: I was in a good position to face this possibility because I prepared for a rainy day.

Zach I am in full agreement with you on this latest comment which could be a first. For at least the last 13 years or so we have had very weak politicians who have heavily contributed to the current position we are in. Rapidly rising house prices and rents and the associated rise in poverty. Political leaders who make decisions that keep the vast middle happy. Politicians who will sacrifice their principles to get and retain power. Did they ever have those principles? Or just a mere lust for power and willing to say anything to get their hands on the treasures benches.

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We have de-risked society in the name of 'progress'.
Risk has been removed from every aspect of our lives, and so we have become more at-risk of failure than we ever have been.

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More importantly we have decapitalised the middle class -
The Top 10% Is Doing Just Fine, The Middle Class Is Dying on the Vine

Good article. Can't see that trend turning around.

Great article.

What is a rainy day, though? In the world of property investment, there's no such thing. If you're a recent FHB, you've had to stretch so far to get in the door that there's not a lot of scope to save for a rainy day. Most contracts have a week - two weeks of redundancy provisions in them. And if you're at the point where you can't leave it any later to have kids (tick tock), you have to bite the bullet. So much of NZ society these days seems to be getting lumped with the bill because you were born in the wrong decade. To expect them to weather that kind of storm after coddling the boomers and Gen Xers for the last 25 years through untaxed capital gains and not means-testing Super (even paying it to people who keep working, for God's sake) is realistically too much of an ask. We need to think long and hard about who should take the pain - I'd start with the people who have caused it.

Gen X was not coddled. They graduated into the worst recession and unemployment conditions after paying full fees and interest on student loans. They didn't get the benefits of Kiwisaver till years later. They're also disproportionately paying for and looking after children and aging parents at the same time due to having to have children later due to the university costs and non interest- free student loans. That's why they're often referred to as the forgotten generation. Oh and they paid high house prices relative to wages and interest rates weren't low either. They're also likely to have super age increased on them if it's even available at all plus it'll probably be means and or income tested. So no, not coddled.

Student loans in NZ were only introduced in 1992. Gen Xers would have been hitting university in 1983 so a lot of them would have been and gone before the initial student loan scheme and well before the record fee increases of the 2000s; they also had access to 100% mortgages pre-GFC and were between 30 and 40 before the GFC hit, and those who were still paying down loans also benefited from the interest-free regime. University fees in the 2000s, however, were increasing at the capped fee-maxima levels and those who graduated after the GFC were doing so in a market where many graduate programmes were either suspended or permanently dropped. There is no way in hell Gen Xers are 'forgotten' - they may not have been as fortuitous as their predecessors, but they still got housing and education a damn sight cheaper than millennials and on wages that were more in-line with vastly cheaper living costs than young Kiwis face today. Hardly a 'forgotten generation' by any stretch of the imagination.

This comment deserves more than a thumbs up.

Hi Zachary, If NZ did reach that position, a lot of people would go to your house and “ask” you to share your saving with them. People would do anything to survive

If we keep propping up the bottom, all we do is deepen and extend it when it does finally catch up.

We can be sure that inflation won't be deemed excessive until it's a) massively overshooting in real terms at the checkouts and auction rooms to the point where it correctly registers as being at the upper-bounds or above the agreed threshold, and b) that the same blunt tools that got us into this mess will be called on to get us out.

There will be no targeting of property investors - owner-occupiers will have to bear the brunt of interest rate hikes as well, even if they just own one house and only ever have done. There will be no tax reform around property, because that's hard, but there will be enough Green malaise and boomer spite towards younger NZers to vote for an inheritance tax. And there almost certainly will be no reform of migration, which is expected to return to normal, with the same downwards pressure on middle-class and white collar jobs through long con that is the skills shortage list.

The RBNZ knows this. They're being dragged into a political mud-wrestle, and the Wellington paper-shufflers get paid no matter what. My one hope is that with house prices and living costs exploding in Wellington, this sort of thing is no longer an Auckland problem, or out of sight, out of mind. This is something they are going to have to show boldness on if they want to fix. If it takes them being personally affected by it for something to actually change, then so be it. At this point, I'll take it any way I can get it.

Thumbs up, but my guess about the end game is not leaders finally showing boldness, it's fiddling a bit while creating currency until it's almost not worth having. The deleveraging is then forced and automatic.

Sadly this is the most likely outcome. As long as you can add people who can afford to play, the fate of those born into the system locally becomes irrelevant.

Just one question: If RBNZ and government did not do anything to save New Zealand economy, Do we still have “ strong”economy data ?

The question has to be asked separately for fiscal and monetary policies, because the answers are different
KeithW

The housing market is not a Ponzi- the real Ponzi are zombie individuals.

The government takes from the productive sections of the society and hand it unconditionally to the unproductive zombies, only to tax both, and repeat the process. The entire process depends on how much they could milk from those who are productive in order to keep the wheel well oiled. As more productive individuals who are at the borderline of positive productivity gets incentivised to crossover to the zombie camp, the government needs to milk even more from those who are productive. This entire framework is the true Ponzi of this country at a national scale.

Consider 2.73M people are gainfully employed (Dec 2020) versus 389,500 (Dec 2020) just on main benefits; that's about $14.20 for every $100 of taxes the gainfully employed is paying to prop up zombie individuals.

In a normal environment, an economically unviable firm will have to declare bankruptcy and restructure; hopefully emerging stronger from it's past. Those that fail to do so will just have to dissolve and liquidate. Any attempt to inject more funding for unviable companies destined to fail are colloquially know as propping up zombie companies. If we so morally detest propping up zombie companies, why are we esteeming ourselves morally in propping up zombie individuals?

Instead of propping up and incentivise more zombies, the government should cut the benefits and redirect the funds to: education and training, business infrastructure and transport with the end goal of creating more jobs and better job prospects as well as incentivising business investments and individual labour participation.

New Zealand is far behind other developed economies in terms of quantitative measures and we don't see much whining from them. The reason? Read again.

https://ibb.co/0rgYzgn

Don't blame investors, look in the mirror- we have every right to describe our businesses and investments in any way we see.

RBNZ probably mistimed the crisis by applying monetary stimulus long before they had a read on the economy and consequently misunderstood the scale and nature. The lesson should probably be to react to data and not unquantifiable events. It seems reserve banks are always well prepared for the last crisis they faced, they thought this would be Financial Crisis 2.0

That said CPI is still well within target, they can easily wait 3 months to get a good read on that before making their next decision.

I still don't understand Orrs reasons for the 75 basis point drop in 19, especially the 50 point move in August. It really shows what his ideology is, regardless of the state of the economy at the time he must be a student of modern monetary policy. Covid may have been his dream crisis, to finally enact what the Yanks & EU leaders had been doing since 08. That's one theory anyhow

COVID controls the economy, house price keeps everyone in jobs

When Orr offers accounts to the general public with the RBNZ.. what's the point of banks existing? The regulator offering a product the banks offer? Surely not...

The propaganda just doesn’t reduce .. stop talking about Property prices, Realestate growth or Kiwi wealth ... It’s a debt mania

Where are these new smart tech NZ companies. Where is the investment in education and child poverty

"The RBNZ made a terrible mistake with its decision to remove the LVR restrictions as of May 2020 and appeared slow to react to the fact that the market was clearly ablaze at least as early as August"

As I noted and made a submission about that exact thing happening while they were consulting on it. The response I got was as feeble as the press release: https://www.rbnz.govt.nz/news/2020/04/reserve-bank-removes-lvr-restricti...

I hope you all submitted on this as it was a horrific decision, the RBNZ confused their mandates and their implementation - they thought removing stability would lead to the same level of loans being written (I mean seriously, WTF are they thinking) and that it would improve financial stability (the LVRs were bought in to IMPROVE financial stability, ergo removing them does what?).

Now we are further up s#%t creek and the SAME IDIOTS are in charge making the SAME IDIOT decisions. This isn't rear vision mirror stuff, exactly what they were warned about from many submitters came to pass and the opposite of what they claimed to want has occurred. We were all brushed off though by the "we know better" fools at the RBNZ.

Kiwi dirty little secret;
https://www.stuff.co.nz/business/opinion-analysis/300223000/property-inv...

OZ banks cartel reintro LVR, when rbnz still put it off. Now? all those cartels gave herd voices of increasing OCR. The real truth? all afraid of the end results of: negative OCR for start. Govt must assist rbnz in the negative OCR territory by removing the bright line test, cancel any ideas of DTI or CGT and tell OZ banks cartel their 'civic duties' towards NZ, remind them that CAR, TD guarantee & LVR are no longer there. The country F.I.RE economic flame must be maintain by dousing more petrol to it, the fuel already in form of ash.

If this is what recession looks like, the next boom is going to be crazy!