Opinion: It's not all doom and gloom despite the earthquake and SCF collapse

Opinion: It's not all doom and gloom despite the earthquake and SCF collapse

By Bernard Hickey

New Zealand has just suffered its biggest corporate collapse since 1989 and its biggest natural disaster since 1931. Both events have the potential to destabilise the economic recovery, but they won't.

There are 10 reasons to be cheerful after two weeks of gloom. They are also an antidote for those who say I am a permanent harbinger of doom.

1. We are lucky to be next to the luckiest country

New Zealand is lucky to have the luckiest country on the planet as its largest trading partner and nearest neighbour. Australia's economy just created another 53,100 jobs in August and it continues to benefit from China's apparently insatiable appetite for raw materials. We have our own lucky attributes. Our water-rich land, fisheries and mineral resources are a real asset married to our stable political and legal systems.

2. We are in the Asian hemisphere

New Zealand also has plenty of its own strong connections with an economy that is set to overtake America and become the world's largest by 2030. China is now our second largest trading partner and wants more of our knowledge, resources and clean, green attributes. There are challenges that come with that demand, but it's better to be wanted than not.

3. Our economy is underwritten by Australian taxpayers

Whisper it quietly when you're next visiting the relatives in Australia, but we are lucky that our banking system is owned by Australian shareholders and backed by its government. The core of any economy is its banking system and it is the element most vulnerable in any crisis. Australia's taxpayers and savers proved they would underwrite our banks in October 2008 when they provided a guarantee and pumped in A$20 billion worth of fresh cash.

4. We are learning our lessons

New Zealanders have pulled their heads in after the excesses of the naughty noughties (2000s) and are saving again. A Treasury paper out this week showed household debt to disposable income is falling and consumers are being a lot more careful through this recovery to repay debt or save more before spending more.

5. The government is reforming our tax system

However slow and limited the reforms are, our government is trying to restructure the economy away from consumption and housing and towards production and exports. The increase in the GST rate, the removal of some of the property tax breaks and the reduction in income taxes from October 1 will start to tilt the economy.

6. The hot money has dried up

The Global Financial Crisis and the introduction by the Reserve Bank of its Core Funding Ratio (CFR) have combined to force our banks to find their funding from local Mums and Dads rather than on 'hot' wholesale money markets overseas. All this is helping to stop our foreign debts growing and keep a lid on the housing market. It has also kept our currency remarkably stable in the last year.

7. Many of our best are staying

Ambitious and talented technology entrepreneurs such as Sam Morgan and Rod Drury remain here in New Zealand, reinvesting their wealth to build great new businesses such as Xero and the Pacific Fibre cable. They will connect us to the global 'computing cloud' and allow services exporters to overcome the tyranny of distance.

8. We are a resourceful, creative and resilient bunch

The earthquake and our reaction since the Global Financial Crisis has been to pull together and to get on with rebuilding with a minimum of social strife and disruption. Not every country has that ability.

9. The rest of the world loves us

Many New Zealanders underestimate how popular and loved we are elsewhere. We're small enough not to be threatening. We seen as innovative, creative, open and friendly. We shouldn't be complacent, but we can grow and trade and collaborate on the strength of that good vibe.

10. Summer is coming.

*This article appeared in the Herald on Sunday.

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?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

39 Comments

Comment Filter

Highlight new comments in the last hr(s).

Thanks for a dose of good news Bernard - much appreciated.

Pinch me, something to read here that's not depressing, is it actually possible :) Seriously, that's much appreciated.

Point 1,2 & 3 are 'because  of where we are...". So it's not 'us' then..... Point 4,5, & 6 are " we will be better off if we stop spending". Sound rather drab to me!....7 & 8, are small, but good....9, & 10, well everyone likes to be warm and liked, I guess.

Despite the crisis that we have right now in the conomy,we should not lose hope but rather we should be cheerful and trust that every thing will be fine.We should do something better for the sake of our countrymen.Employers are leveraging a weak job market to cut back their medical care costs. Employees are being forced to pay a greater portion of total health care costs according to a study out this week. Personnel rates for health benefits are rising dramatically. At the exact same time, employers are paying less as medical care expenses rise. Economists have said that the migration of the health care problem to employees is part of business plans in a sluggish economy. The moribund marketplace puts employees in a difficult position where they cannot demand a better deal.

sacre bleu.

un riposte.

1.  so they're sending away their finite resources, makes them only temporarily lucky. See - exponential growth.

2. "by 2030". Bernard, you don't seem to get peak energy. By 2030 isn't going to happen, even "by 2016" is problematical. And Nigeria is wanted.

3. See 1.

4. So is everybody, which begs the Emperor/Clothes question

5. See 4. Everyone wil now export. To?

6. Mums and Dads had a lot of hot money too - levered off overvalued RE.

7. True, I'm still here.

8. Indeed.

9. Until the wolves own the chicken-houses.

10 I'll believe it when I see it.

The floggings will continue, especially if morale improves.

1. So who's next for the rape? does NZ have anything worth ie in quantity taking? Africa seems a next/last possibility, [far] South America?....except uh for the lack of cheap energy to do so....

2. So he joins the esteemed ranks of " oh no one saw that coming"  excuse merchants. Asia has more chances of being resiliant, personally I expect the USA to nose dive rather than asia pass it. Asia has money to buy oil, the USA just sells debt....once it dawns on ppl that energy supply is becoming critical well I'd expect ppl to be buying native oil currencies and not USD...

5. Indeed its laughable, the only one with more/good exports is Germany and it was in good shape relatively already.  As for Greece it has nothing to export at all....and its rates are back around 10%....the only thing not making that higher is the lenders gambling the EU will bail them out again and again...oh how they must be laughing...

9. See 1. Jerry Brownlee chortles (or is that drools?) about what happens to NZ if we find a lot of oil but that I mean 60~200+ billion barrels (fat chance), maybe 5....maybe. How long does the cretin think we'd last before becoming the next Iraq if that was the case?  better to have enough for us and too little for anyone else to bother coming this far for IMHO. 

10. Oh the buds are out and its feeling warmer here in WGTN. Flowering is actually very early for some stuff....AGW is confusing the plants it seems.

regards

Ten reasons to be very careful!

  • 1. This economy remains a property ponzi scheme.
  • 2. Labour's progressive socialists are ready to buy power with pork offerings which are likely to gain ground as memories of Queen Helen fade and you will be taxed more to pay for the pork. Look for a Labour win in 2017 and a steady decline thereafter!
  • 3. Bill English is borrowing a billion a month from foreign savers just to pay the bills!
  • 4. You are going to be paying the cost on that debt...for a bloody long time.
  • 5. The current debt mountain is about 180 ooo ooo ooo dollars high and the cost of servicing that mountain is set to increase if there is any sign of any real growth in the usa and the uk. What will a rise in the cost of credit do to the Noddy economy!
  • 6. The unemployment rate is said to be 6.8% but in truth it is far higher than that. All good news to Labour!
  • 7. Rural land is price bloated thanks to the bubble of madness and many farmers are themselves being farmed by their bank and milked by their local council.
  • 8. Growth in aus due to minerals will suck the skilled and mobile out of NZ.
  • 9. Potential immigrants wanting to hop skip and jump the Tasman from NZ are now facing tighter aussie rules and are likely to give Noddy a miss. That's good for getting off the ponzi scheme but points to more losses on property gambling.
  • 10. The real value of the NZ currency is being destroyed at the rate of 30% every ten years. 3% pa. Saving needs to bring you at least 5% just to hang on to the value of your investment once tax is stolen off the top and the value decline deducted.

Shoulder to shoulder Wolly.

Godzone uber alles

I think our modern societies don’t really know the meaning of happiness anymore, but hopefully we are learning.  

http://www.youtube.com/watch?v=lqT_dPApj9U

You would sooner have everything else on that list than have number 2.

LOL it didn't take long for the negative Nancies and Woeful Wollies to come and bring everyone down a peg did it? I ahve this question for Wolly and his like - if this is such an awful palce to live, why don't you move? Well, we know why Wolly wont move - because every thoguh this country is nothing but a heartless Ponzi scheme, he relies unreservedly on the pension paid to him week after week. Thank god the tax paying citizens of NZ are here to prop up your lifestyle Wolly, no matter how modest it may be.

I'd be off in a shot tomorrow, Chris, if I could. But I'm  too old ( comes with deafer; blinder; weaker; soggy brained etc) to find work (58) ~ but too young to retire ( and too 'rich' to get any handout). New Zealand is going to be full of residual people like me. Those that want to go, but can't afford to go. So we have to stay here, and hope that it gets better until it's pension time~whenever that is..

Dude : I am meeting alotta expatriats here in Thailand much older than you ..........And they are having a grand time . Stop placing limits on yourself  ; stop with the excuses  . 

 Charge out the front door , grab life by the short & curlies , and squeeze out some fun for yourself !

We have here a rare moment , a tiny shard of light  , where Chicken-Little Hickey has shone a glimmer of positivity into our day ............. Don't waste it !

Where there's a will, there's a way... (not that I'd want to leave myself).

   Being old deaf and blind need only be a faze that your going through ,NZ.soils are really deficient, in so many trace elements. Its a wonder they call a Cabbage a Cabbage.Twenty years ago it required one orange to give you your vit C for the day..now it takes eight. In Okanawa they live well into their healthy hundreds. Its not genetic.You are starved,because the plants you eat are starved, then they require sprays to reach term.....and when the Organism gets stressed it gets depressed. Have a look at this non profit website "truehealth.org" and compare the cancer and disease rates for different countries.Then look at their eating  habbits.Then can work out the rest.

Blow it out your ear Chris...I have a ways to go to get to 65 but I will be pleased to collect the pension and know YOU are paying for it. Just because NZ is a nice place to live for some, does not mean we should not expect quality govt. Nice to read that you agree, we have us a heartless ponzi scheme for an economy. Take away the property gambling and what do we have...declining govt revenue..growing economic problems.

Time for you to accept this country would be better and could be better if govts stopped the stupid property porking madness that has gone on for so long. Or are you one of those who looks forward to seeing 10 million 'Kiwi' fighting for accomodation and resources!

 

I see 10% of NZer's are on anti depressants. I think a few more from this blog need scripts.

Wrong way round.....the PIs are obviously already on them and have been long term.

regards

Other reasons to be joyful:

Our homes are still holding value (not dropped by 30%)

Our mortgage floating rate is still 6.15%  (not 9%)

Australia is still an option if we want to earn another 20k on our salaries ...(& have 9 - 17% plugged into Super) (& we can cashup our kiwisaver after 1 year)

Is it true that in Australia you can earn $40 an hour just for holding the STOP/GO signs ?

Reason # 11 why it's not all doom & gloom : the multitude of " anonymous's " appear to have left " interest.co.nz " ..................Praise be for registration !

#11 Has got to be the discovery of money tree seeds by Wolly. Has the Reserve Bank  factored this breakthrough into the economy going forward?? Put that fact in your pipes and smoke it, doom and gloomers

I'm having lunch reading about my happiness.....tra la la la.....I'm full now.....and people I don't even know  love me............trala la la la....who posted the anti-depressants percentage thingy...?.....maybe that's why reality comprehension is at all time lows.....tra la la la la......well I'm off........BERNARD...........Bernard ...can you .....see ....me....

"There are 10 reasons to be cheerful after two weeks of gloom. They are also an antidote for those who say I am a permanent harbinger of doom"

Well went impending market crashed are on th cards because of fundimentals....that not doomsayer, its as much doomsayer as if technology had advanced enough to say "There is going to be a big earthquake in Ch Ch next week...100% positive about it"

The fundamentals back then...regardles which one was used was 100% +ve

Anyone goggled God Zone?  considering we lost a few toes in CH Ch...NZ has to be God Zone..add to that the points BH mentions above, plus we have not been hit as hard as most  around the world.....Sure Aussie maybe better off...even then what if Aussie wasnt just across the pond and say in the middle of the Alantic....would we be loosing skills ?

Would our unemployment be as low as it is?

'Every cloud has a silver lining' and we need to be 'counting our blessings far more often'

If one wants to see WHO the doom stayers really are. its not BH or interest.co.nz  but a great proportion of the posters here who accuse others of being so.

There is no place on earth like God Zone that I would rather be or have my family

Steps

 

I agree with a number of your points Bernard and I think NZ has a number of things going for it in the "new world".

However, if NZ'ers do not address our structural problems and focus on creating productive industries and stop borrowing from foriegners to maintain a destructive welfare system, NZ will be controlled by either the Australian taxpayers in (3) who are underwriting us or by  the new masters of the Asian sphere mentioned in (2).

GG - I have written here dozens of articles, how productivity could be improved. In general unfortunately this seems not to be an issue among Kiwis..

Whatever it is that Bernard's smoking.....I want some too!

Why is it always "doomers", or 'optimists', or whatever.

Why can't folk just appraise facts, and take it from there?

The facts I've been appraising say the planet is in trouble.

And of all the places to wear that as it works itself out, NZ has to be one of the best.

"1. We are lucky to be next to the luckiest country"
That quote you based this point on was actually meant to be an insult! It referred to Aussie as being 'lucky' it had mining resources etc cause the country lacks brains. Of course NZ is well on par with Aussie on that one

"2. We are in the Asian hemisphere" Didn't know they owned it quite yet!

"3. Our economy is underwritten by Australian taxpayers" If that was true our taxes would not be going up!

"4. We are learning our lessons" Like f... we are!

"5. The government is reforming our tax system Too late I'm afraid

"6. The hot money has dried up" Not for our borrowing through the nose Government to keep WFF's going

"7. Many of our best are staying" Many of us are leaving

"8. We are a resourceful, creative and resilient bunch" Maybe in Rugby but going by saturdays performance I seriously doubt it

"9. The rest of the world loves us" Because we sell our souls for peanuts and think we are rich!

"10. Summer is coming." LOL, is that it? is this really the no:10?

#10..Summer is coming..?  summer is coming...! well that's not gonna work for me...!.she'll

make me go play outside......this is not gonna work at all.... no sir... i'll go  check out the long

range weather gloom ...there ought to be some good news on that front.

I shared a table with an Auckland taxi driver during lunch. After some talk about the earthquake, we inevitably chatted about the economy. He said he notice less people taking taxis these days and only short  $10 - $20 trips unlike last time.  The economy is not as rosy as the government wants us to believe.

"The economy is not as rosy as the government wants us to believe."

This is a lot of the problem , people hear but dont listen to what is being said...

The Gov is not saying the economy is Rosy, quite different actually, they are saying this recession is serious, it is not over yet, it is going to be quite a while before things bounce up, and in the mean time its important to put it into a position of trade, infrastructure etc so when things do pick up we have a good foundation to build on.

To me thats not even close to "Rosy"

Bernard sniffs the warmer breezes that gently began blowing a few months ago - here and there, just  a little, displaced by violently stormy fronts this week but puzzlingly that same  slight tickle of warm air back on his cheek again, the next. He reviews his torrent of dark predictions, consults his erudite colleagues Neville and Wolly, goes forth fortified with fresh visions of darkness and renews his predictions of the end of life as we knew it . But there it is again, that damned scent of nascent life wafting ever so slightly on the breeze.

Hmm, better tone down the rhetroic, issue some feel good stuff. You know  ........ just in case.     

Bernard do you have bipolar disorder ?

No. Seasonal affective disorder.

All I needed was a big light bulb over my head and now I feel fine. ;)

 

cheers

Bernard

So illuminating......

another incandescent persona streaking across the filament.

You just gotta work out what the fella meant.

Your access to our unique content is free - always has been. But ad revenues are diving so we need your direct support.

Become a supporter

Thanks, I'm already a supporter.