Top 10 charts for 2010: Overseas debt

Top 10 charts for 2010 with BNZ: Why our gross foreign debt is rising back over 130% of GDP again

27th Dec 10, 2:48pm by Bernard Hickey

Bernard Hickey details the top 10 charts for 2010 in association with Bank of New Zealand, including this one attached below showing New Zealand's gross foreign debt is rising again after a year of falling.

New Zealand's gross foreign debt rose in the June and September quarters to over 130%, having fallen from a record high 137.9% in March 2009.

New Zealanders stopped increasing their borrowing from overseas through their banks when the global financial crisis hit in late 2008, having risen from under 100% of GDP in 1999.

But the gross foreign debt has started rising again as the government borrows heavily offshore to fund its budget deficit, which is running at more than 6% of GDP.

The chart below shows the two components of gross foreign debt, including government debt and corporate debt.

Check out the two tabs to see the different types of debt moving.

New Zealand is lucky in that its foreign debt is mostly corporate debt held through the major banks, which are in turn backed by Australian pension funds and the Australian government.

New Zealand's public or government debt is relatively low, which makes us different from the likes of Greece and Ireland, who have public debt approaching or near the 'danger' mark of 100% of GDP.

The problem becomes if government debt continues to rise sharply or the big banks come under pressure through any sort of economic slowdown in China or Australia, or both.

See here the key Balance of Payments ratios, which shows our net international investment position has kept improving from minus 90.3% of GDP in March 2009 to 85.2% in the September quarter.

The value of New Zealand's assets held offshore increased in the September quarter, partly due to the weaker New Zealand dollar against the Australian dollar.

Overseas debt

Select chart tabs

Source: RBNZ

Source:

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84 Comments

by amalgam | 27th Dec 10, 3:26pm 1293416762

http://www.businessweek.com/news/2010-12-23/why-businesses-can-t-stand-…

by Wolly | 27th Dec 10, 4:14pm 1293419664

Govt debt and corporate debt......err what about household debt and rural debt....oh silly me...I shall never learn...that which we never mention just does not exist...can't hurt us...causes no harm....bit like the Zulu believing away the bullets...thud...........bugger.

by Bernard Hickey | 28th Dec 10, 4:14pm 1293506093

Household and rural debt are covered by the corporate foreign debt as it's usually the banks that have borrowed overseas on our behalf.

cheers

Bernard

by muzza | 27th Dec 10, 5:42pm 1293424947

NZ is doing pretty good actually, fortunate to have a beneficial spin-off from Australia and China. And those who reckon China is going to blow up don't seem to realise that much of the 'property bubble' there is from people's own savings, not borrowed money. 2011 should see China and Australia continuing with good economic growth with desirable consequences for us in NZ. Our traditional big overseas earners such as agricultural products and tourism will do well in the coming year.

by LOL | 27th Dec 10, 6:55pm 1293429315

Do you seriously believe you can just wish things to be okay and they will be? That you can ignore reality and the facts and then we can all go back to the grand old days of the bubble?

LOL is LOL at you. So is everyone else most probably!

by Kakapo | 27th Dec 10, 7:18pm 1293430738

These shrivelled bulbs will be worth 40,000 guelders again, when the market comes back up. Be patient.

by Gummy Bear Hero | 27th Dec 10, 7:51pm 1293432711

LOL & Kakapo : How's about you telling us , what you see for the financial year 2011 ?

And give us the benefit of your investment strategies , currently .

....If you're open to a rollicking discussion , bring it on .

......... ....[ Nothing personal , just my desire to debate and to learn .]

by goldenfox | 28th Dec 10, 1:10am 1293451831

GBH - I would be interested to know your thoughts.

My picks for 2011 -

Largely Equity focused and ones protected from inflation eating at them.

Cockatoo Coal - Australian's know how to extact coal on a major scale, the world needs coal, port issues still loom however.

New Zealand Oil & Gas - Completely oversold, oil is a strong solid assets, although senior management are a risk.

Marengo Mining - PNG Copper company, backed by George Soros

Restaurant Brands - I got in ages ago but look at the EBITDA/EV and Div Yield awesome!

Skyline Enterprises - No Debt, Conservative Management, Chch Casino, Gondala Monopoly. Told Skycity to get lost but look for Skycity to come back and completely overpay - go Bazza Thomas

Woodside Petroleum - Solid underlying asset and far too cheap.

Hold some cash for opportunities as they appear, no interest in investment property.

by Gummy Bear Hero | 28th Dec 10, 3:56am 1293461793

Good strategy , GF . Agree NZO is well oversold , and due for a rebound , particularly if oil stays up . I'm thinking that commodities have some way to run yet . But not so confident on gold .

George Soros is one of the good guys . Hope you do well with Marengo .

They tell me that the annual shareholders' meeting of Skyline Enterprises are worth owning the shares for . Their gondolas in Singapore seem to be making good revenue for them , too . They are the epitome of the " quiet achiever " , getting the job done in a no fuss way , and rewarding stockholders with an increasing dividend , every year .

Walmart ( NYSE : WMT ) has range traded for 10 years , yet has more than doubled it's revenue , EPS , and share equity in that time . Their expansion into the BRIC countries is gaining pace , and success . So a new leg up seem imminent soon .

I'm sticking with my Oz mining service companies ( RCR Tomlinson , AJ Lucas , et al ) .

But shifting funds from Oz financials , into US small caps , particularly tech and healthcare . They gotta have a low debt balance sheet , and low P/S and P/Cashflow ratios .

As a wildcard , I have plonked a bit into Thai stocks . The PE's are low , and the divvies are generous . My visit to the Kingdom convinced me that they're a good long term investment .

by Rob of the North | 28th Dec 10, 11:17am 1293488228

Monadelphous on the ASX

by powerdownkiwi | 28th Dec 10, 8:13pm 1293520410

GBH - I put all my investment into future-proofing myself.

If the cost/availability is going to go up/down, what better?

No debt is first.

If I had free cash to gamble with, I'd put it into energy. Buy a site where you could do small hydro (it's more reliable than wind, and the tech is cheap - I do it here in micro-form and run the house 24/7- it's not rocket science. Second would be a windy site out of sight with no neighbours. If I was in a sunny spot, I'd be looking at a solar reflector/steam boiler/turbine/generator, and working out a smart way to use the condenser heat.

You have to believe that fiscal systems can survive though - and I wouldn't be putting money on that!!!!!

Food is the second essential - but there your investment is at the behest of the energy supply. Best control the source, methinks.

by Matt in Auck | 27th Dec 10, 9:24pm 1293438248

actually we are not doing very good, we may already be back into recession...and thats even with the backdrop of Aus and China being strong

yes commodity prices are strong, but that means bugger all to most kiwis on the street. In fact it does mean something negative - higher supermarket prices for milk, meat etc.

Tourism will actually have another rough year, apart from a little boost during the world cup

Most domestic economic drivers -retail, construction etc - will remain weak.

Sorry Muzza I can't quite fit on the rose tinted spectacles. But I do think things will be just a little better than this year (thats not saying much!)

what puzzles me is how the govt is remaining so popular after all of this. I mean, thats a good thing, because frankly NZ needs this period of deleveraging, and there really isn't much National can do anyway, its an economic cycle that we need to ride out. But usually the masses don't appreicate that - they are being very patient this time.

Mind you, maybe it is explained more by Labour's incompetence

by michael | 28th Dec 10, 5:09am 1293466159

Muzza, the chinese proprty bubble is because the government is the last bidder in every property auction, inflating the prices beyond bubble levels... super bubble.

by David George | 28th Dec 10, 8:11am 1293477096

Muzza "those who reckon China is going to blow up don't seem to realise that much of the 'property bubble' there is from people's own savings, not borrowed money. "

I've heard this stated before Muzza, I don't believe it. The Chinese money supply (a proxy for debt) has been increasing at around 25%/year and has gone up from about 25 trillion to 70 trillion since '04

It seems odd that, given the wage structure and the high cost of apartments, their purchase could be funded from "savings". Under our money system, savings can't exist except as someone else's debt. There may be some black market loan money involved or the statistics are wrong, whatever, something doesn't add up.

Chinese money stats: http://www.alsosprachanalyst.com/economy/charts-why-china-has-such-a-high-inflationary-pressure.html

by Basel Brush III | 27th Dec 10, 8:10pm 1293433828

by muzza | 27 Dec 10, 5:42pm NZ is doing pretty good

NZ is doing pretty good actually, fortunate to have a beneficial spin-off from Australia and China.( A very subjective comment -OK so far but... )

And those who reckon China is going to blow up don't seem to realise that much of the 'property bubble' there is from people's own savings, not borrowed money.(Their people will still panic with their own money -and borrowings if the banks stomp on liquidity)

2011 should see China and Australia continuing with good economic growth (yeah right )with desirable consequences for us in NZ.

Our traditional big overseas earners such as agricultural products and tourism will do well in the coming year. (Here I agree especially if a lowered dollar helped by failings in the above assumptions do occur) (her I can agree especially if the failings of the aforementioned H

I am not going to knock the statement but just think there are too many potential thorns in there to accept them being fulfilled even in part

by Basel Brush III | 27th Dec 10, 8:12pm 1293433920

Sorry the site editing will not allow me to correct the duplication

by Roelof | 28th Dec 10, 9:04am 1293480286

If the Govt is borrowing at a level that is 8% of GDP..... and GDP is negative in this last quarter.... then one would have to say that either they are spending that money very badly or the private sector economy is in very bad shape.... and the debt levels are at a point where ,rather than contributing to GDP growth ( ironic ).... they may limit the ability to grow.

Surely.... An injection of money that is 8% of GDP, should generate at least 2% of GDP growth..??????

Does not look good ... at all.

As Bernards chart shows..... we are 3 yrs on from the Global crisis... and we are as vulnerable and have the same problems as before.

The GOVT has yet to address any of the so called "structural imbalances"

Maybe this yr..?????

by ex agent | 28th Dec 10, 9:57am 1293483421

Roelof you have hit the nail on the head. The private sector is in very bad shape. Last night I went to an 80th birthday party for a father of one of my best friends who runs a major construction company in the Bay. We got talking about the economy and I told him my friends in retail had never done it so hard and they thought a lot of their competitors would be closing down next year. He said construction is in the same position and that his staffing is currrently well off its high of 110 workers.

One interesting point he made was that one could calculate accurately the health of a nations economy by looking at the general health of the construction and retail economies.If they are not going well then the economy is not in good shape. He thought that 2011 was going to be a tough year for his business as all he could see ahead was trying to win tenders that would keep his business in survival mode but not making any profits.He also said that it was a good time to build as pricing was very competitive. My question is who is employing all the people who have been laid off from construction and retail. Can the country afford to give them benefits which are coming from funds being borrowed by John Key and his mates.

Incredibly there are people out there who are refusing to accept the fact that our economy is in a very precarious state. We have to be in a technical state of recession again. People are dreaming if they think that suddenly next year New Zealanders are going to be in a financial position to start paying 2007/2008 values for property in NZ. Our cost of living is going to keep going up and wages and salaries are not going to keep up with inflation. Companies and businesses will not be making profits and the government will have to keep proping up the economy as there will not be enough in the way of tax and gst receipts to keep it all going. Interest rates will eventually rise as inflation gets out of hand. If you are in a position where you need to sell something now sell it now as you will never see that price being offered again as this is going to take years to play out. Having just a house with some cash and shares is looking better by the day.

by Roelof | 28th Dec 10, 11:01am 1293487272

Ex agent... Yes.!

the shame is that there are good things that can be done to make a difference.

Take the construction sector ...and real estate in general.

This sector normally contributes a large % of GDP.

There is a real shortage of affordable housing, particularly in Auckland... Part of the reason that real estate has not declined much... but the construction sector has been hit really hard.. is because of the supply/demand dynamic. Because of Councils "Monopoly" control on the zoning and subdivision of sections , section prices are really high... Throw on top of that , the way councils generate income thru the whole consent and building process. ( ie. price gouging.. thru a monopoly position )

The Govt could have a complete overhaul of the way Councils control the zoning of land and the way they use the whole building process as a means to generate Council income.

Just imagine what could happen if the Govt consulted with the likes of Hugh Pavletich http://www.performanceurbanplanning.org/welcome-story.html

They could :

1/ Make housing more affordable

2/ Without any distortions thru fiscal policy, they could help alter peoples preference for housing as an investment.

3/ Bring the construction sector out of recession.

AND.. they could have done all this yesterday....

(We were living in a house in Epsom where the section had a Council Valuation of $800,000.. for a 450 sq mtr section ... that equals $17 million dollars per hectare. Farmland sells for $40,000 per hectare.)

It is ironic that Rodney Hide ..who seems to be a libertarian type of person... has pushed thru this super city.. and has helped to simply entrench the status quo... Councils have lost the plot... Forever increasing rates... Just watch... they will never tighten their own belts... If they can't increase rates, they will borrow... Rodney should have been fighting to make councils smaller and less powerful .. ( I wonder what his agenda was )

by Wolly | 28th Dec 10, 10:32am 1293485559

"...one could calculate accurately the health of a nations economy by looking at the general health of the construction and retail economies"

This is a myth ExA....the construction and retail sectors are suffering because the bubbles have stopped....the economic prosperity was in fact no more than a credit balloon being blown by the banks and happily supported by inaction from the Labour govt.

Take away the easy credit..the splurging madness that sickened the place..and what do you have left....nothing but debt.

The way to accurately calculate the health of a nation would be to look at whether borrowing or savings are propping up consumption because most building activity is consumption. Otherwise I agree with you, although the rate of inflation is likely a bloody sight higher than we are given to believe.

The govt is trying to buy the election with the borrowing. Staying in power was always more important than ending the benefit bonanza. Only by cutting state spending will the fiscal hole be filled. Given the MPs have just had another bloody pay rise...and the fatcat beaurocrats will also get a rise...and the higher salaries idiots will likely get one themselves because they are doing such an important job..........you can kiss goodbye to seeing "recovery" in your lifetime.

Overseeing the debarcle that is the NZ economy we have the parasitic banks determined to suck the wealth from the families for decades to come and knowing full well just how stupid Kiwi people are, they gamble on selling cheap but bloated mortgages with the full support of the RB and the govt....It is a ponzi scheme through and through...an utter farce of an economy. The bubbles are the death of this place. Long live the banks.

by Roelof | 28th Dec 10, 11:34am 1293489276

Wolly,

Apart from the fact that we borrow far too much.

One of the big problems in the Western World is that emerging economies, with their very low wage rates, have been a real force for wage rates in western economies lagging.

If u look at a graph of money supply growth, property price growth, Non tradeable sector growth and average Wage growth.... u would see that they all trend closely together EXCEPT average wage growth.

Wage growth has lagged very..very badly.

(AND with the principles of exponential growth.. If wages grow at 3% per yr but rates growth at 7% per yrs... if is only after quite a period of time that one notices the impact these rates increases.)...

(If non tradeable sector grows at 6% per yr and wages at %3 ... Govt should percieve this as a serious issue. )

we are like boxers in round 15... we just don't have the financial strength to bounce back.

A big difference between now and the 1970s' is that wages in the 70s' were growing year after year.

Looking back, NZ was and still is , completely unprepared to play in a Global economy.

( laissez faire and free trade , are myths... on the global level )

The dogma we bought into, still drives our decision making today.... Sad to say, apart from Gareths Morgans "big Kahuna", I have seen nothing new or original come out of Govt or any of the think tanks.... that even really percieve the issues let alone give any solutions.

Even today, after all that has happened, NZ economists still don't really account for the impact that "Credit" has on an economy... To them any kind of growth id good.... The irony is that NZ actually needs a number of years of -ve growth while we pay off debt.. OR peoples wages need to be growing.

Wolly ... one disturbing trend is that "Statism", is growing.. At a Govt level and a council level.

by ex agent | 28th Dec 10, 11:24am 1293488655

Wolly we need vibrant construction and retail sectors as they employ so many New Zealanders. Where else are people going to get jobs. Take New Plymouth for example. A very vibrant and go ahead city. Builders and associated companies such as aluminium product suppliers are laying off several staff at a time. Retailers are laying off staff. A major oil drilling company is on the verge of closing down as no one is searching for oil onshore. Major layoffs will follow. Who is going to employ all these people. We do not need more pressure on benefits as the government is borrowing that money. We need more taxes being paid from companies making profits. It is all very well pontificating about how it was all pumped up by debt. People do need to be employed. The economy as a whole has to keep growing otherwise those paying tax will be supporting far too many people who are unemployed.

by Nicholas Arrand | 28th Dec 10, 11:40am 1293489600

Easy answer, ex agent. If an employer is going to have to lay, say, 20% of their staff off ~ just cut all staff wages by 20 % instead, and keep 100% of the workforce. We will all have to share 'the pain' sooner or later ( see Phil Heatley's view on the leaky homes that 'we will all have to pay for'), so let's keep unemployment down and get it over with! That will give us lower export prices to compete internationally, and return us to prosperity sooner rather than later. Sure, property prices will fall ( they are going to anyhow, and is that a bad thing? given that they are historically unaffordable at the moment). This is nothing new, and only what SPC, for example, did in Aussie a few years back. They all took a pay cut to keep the business together, and reaped the rewards of permanent, better paid jobs subsequently when business picked up.

Oh: an some in our community have already taken a massive income cut oiver the last couple of years ~ those who rely on fixed income/interest, by seeing interest rates artificially lowered to get the rest of the debtor nation through. Isn't it 'the others' turn now?

by Roelof | 28th Dec 10, 11:55am 1293490500

Yeah.... and if Govt and Councils could show leadership by way of example ( ie. wage cuts).. that would be a wonderful thing..!!!!!

Nicholas... One thing I would argue is that artificially low interest rates are a good thing.

As u say it kills the savers BUT delays the inevitable.

One of the most interesting graphs I've seen was of USA interest rates over the last 20 yrs.

With each recession the FED had to lower the interest rates progressively lower and lower to get the same stimulus... and thus growth.

This is akin to the heroin addict needing a stronger and stronger "fix" to get the same high.

AND this only delays the inevitable.

(Also, In the Global world , NZ is profoundly impacted by the Monetary policies of the big players. )

by Wolly | 28th Dec 10, 11:46am 1293489988

It's not the answer if it's a vibrant scam ExA....that's what you have when the whole stinking ponzi scheme is propped up with debt that is balanced on more debt that came from earlier debt.

by ex agent | 28th Dec 10, 11:46am 1293489971

NA that kite is not going to fly. How many employees can afford to agree to a 20% reduction in wages. With increasing food,power,rates,petrol and insurance costs on such pathetic wages in NZ how can they agree to that happening. I have not mentioned their rental and mortgage costs. Are banks and landlords going to reduce their tarrifs by 20%. John and Bill need to get back from their holidays fast and give the nation some direction. Every day lost is costing NZ big time.

by Nicholas Arrand | 28th Dec 10, 11:54am 1293490484

It is going to happen, ex agent, whether we like it or not. Our dollar is going to be crushed if we get a significant downgrade, and imported goods are going to be come even more unaffordable, not to mention petrol. So we need to spread the pain out ~ and fast. Yes; every day is costing us, and there is nowhere to go in a Western World with similar or worse problems. Unless we get our products onto oveseas shelves ( what we have left of them!), and stop buying the produce of others that is discressionary, we will join the ranks of the economically broken nations of the globe. The commonsense answer of "Well ,debt to GDP doesn't have to be paid back in s single years" has failed us. The last 40 years has seen us try that delayed recovery process. And where are we? Exactly...here.....

by Rob of the North | 28th Dec 10, 1:08pm 1293494896

my understanding is that NZ's debt to GDP is quite low compared with countries.. like Japan who are over 100%..so don't we have a ways to go before we panic,Mary?

by Gummy Bear Hero | 28th Dec 10, 1:27pm 1293496060

Japan's debt is funded from internal savings .............. The Japanese were prodigious savers back in the 1980's when the Yanks were panicking about the level of the yen ,and unfair Nipponse trading practises , and who just bought the Rockefeller Centre ........... America thought that the whole world was turning Japanese .

NZ's debt is predominately borrowed from offshore ........ Chikako

by Rob of the North | 28th Dec 10, 1:57pm 1293497876

so looking at the becalmed economy that is Japan; doesn't that mean we're smarter for having external debt...or is it damned either way?

by Gummy Bear Hero | 28th Dec 10, 2:03pm 1293498215

Japan is a classic case of " too big to fail " , proving that Schumpeter was right , we need to allow for creative destruction in capital markets . And 2 decades of failing to grasp this lesson , is still utterly lost on them .

by ex agent | 28th Dec 10, 12:00pm 1293490802

NA and Wolly where is your compassion for the people being laid off from the private sector. It is not their fault that people are spending less in NZ. How would you like to live on a benefit with the current rising cost of living in NZ. More people unemployed just puts more pressure on beneifts,social welfare systems and relationships. You both keep talking about the need for the economy to pull back. Have you got any idea of what that will cost the country and individuals if that happens. We have to actually increase spending and keep it going. Not stupid spending but sensible spending aligned with some saving. People are not disposable items. They have children who need feeding and looking after. As I said how would you like to be on a benefit. A lot of people are staring down at that as their only income and they have not had any part in causing what is currently happening in NZ.

by Nicholas Arrand | 28th Dec 10, 12:07pm 1293491274

Yes I do have compasion. But I also know that what we have is unsustainable. It's time has come and gone, and like any mistaken policy, it has to be corrected. Otherwise not only do those you mention suffer. But everyone~ but a small minority~ will. Compasion comes from keeping empolyers, employing. They can't do that if their wages structure is not competative. We can't keep spending going, unless as a country, we borrow. And that policy has, as I have said, failed us. We have to bite the bullet. There is no more time left to 'be kind'.

by Roelof | 28th Dec 10, 1:08pm 1293494898

NA... It is not possible for our wages to be competitive. ... As a first world country with all the compliance costs that we have ( eg ETS ) we will never compete on price.

Our only hope is to get innovative.. in all areas.

People talk about the "Economy" as if it were this thing or entity... Its' NOT.

The economy is made of different levels... like a pyramid. AND just like a pyramid if it is not of the right proportions then there are serious problems.

The base ...and biggest, and most important component,,... is the "everyday market economy".. This is the economic level where people transact in the marketplace too live, work, eat, sleep, and be clothed. It is the true marketplace economy where "free trade" functions in its true spirit..... it is the level where people live.

Right at the top of the pyramid ... and the smallest component.. should be the financial economy.

The trouble is .... its' not... In the western world the "financial economy" is now far bigger than any other level of the pyramid.... There is a new term.. "Financialization of the western World"

A good book is "the structures of everday life" http://www.amazon.com/Civilization-Capitalism-15th-18th-Century-Vol/dp/…

i hear what Ex agent is saying.... If the GOVT can focus on policy that gets the velocity of money moving at the level of the "everyday market economy" then I think this would be the least painful way to readjust... I say least painful..

Call it the trickle up theory.

I would make the ist $20,000 of income tax free. (I would seriously consider the principles of G Morgans "Big Kahuna")

I would address the size of Govt and Local Govt.

I would deregulate and allow the "everyday market economy" to function on free market principles.

I would percieve Global Trade within the context of how it impacts on the "everyday market economy ".

eg. what is the real cost of a local manufacturer shifting his manufacturing to China and becoming an importer..??

I would regulate .. progressively stronger.. as we moved up the pyramid.... (and tax )

eg. the impact global Capital flows can have on NZ.... No longer allow Interest payments as a tax deductable expense..etc

Banking is a highly privilaged industry... I would tax their profits at higher rates.

I would see that Govt and Local Govt are actually "costs" ... and I would restructure them so that their impact on the everyday market economy is limited.

At the moment the GOVT is wasting $300 million each week ... to just keep the status quo.

To sum up... in case u think I'm rambling.

I do believe there are ways to address our problems that minimizes the pain felt at the "everyday life" level,... but still allow, and embrace, the change and hardship that is necessary.

...Just my own views...

by Wolly | 28th Dec 10, 12:10pm 1293491403

Why are people spending less ExA?

by Gummy Bear Hero | 28th Dec 10, 1:00pm 1293494438

They've finally got bored with spending , and are now in a park , kicking a ball with the kids ; or are reading an improving book ( One Up on Wall Street , Peter Lynch ) ; or they're mowing their neighbour's lawn ................ ??????

by ex agent | 28th Dec 10, 12:29pm 1293492571

Wolly people are spending less because wages in NZ are already pathetic and with the amazing increase in the cost of living in the six months or so the budgets of the average NZ household are getting increasingly stretched. In saying that I know a lot of people who have money and they are even restricting their spending. People have lost their confidence in their general financial well being. The economy is currently grinding to a halt and if it continues we all will be hit hard. People who can need to start spending sensibly and keep us going otherwise it will be last one here please turn off the lights. That is if there is any power running in the system.

by Nicholas Arrand | 28th Dec 10, 12:37pm 1293493056

Where has that spending power come from up until the last couple of years, ex agent? Property equity release had a lot to do with much of it. The 'wealth' that came from rising property prices got recylced into spending...and more debt. That's why even those you know who are wealthy have stopped spending as well. There's two types of financially wealthy, as you know; those who have it ~ and those who borrowed it. And New Zealand is primarily composed of the latter. They can't borrow-and-spend any longer, and those that 'have it', know that, and are pulling back in anticipation of what is to come ( you have alluded to it yourself). From your writings, I gather you have diposable wealth. Are you doing your spend-and-stimulate bit? I'm not.

by Wolly | 28th Dec 10, 1:34pm 1293496460

You're taking the piss.... right ExA!.......Bolly gets $500ooo a year plus and that's not the top civil service paypack!....some prick at a bank is getting 5 million....blah blah blah and you say wages are pathetic...feck me.

Stop the blubbering ExA....life is a bitch for all of us at sometime and if in it weren't we would not be what we is see....suck it in man.

Them what's got money by an large have it cos they were not bloody morons between 03 and 07 when Clarks idiocy was mismanaging the ponzi scheme....so why would they go and splurge now...stands to reason they are gonna tighten their belts the last notch.

Now you sit back and watch as the current fools in the Beehive blow past the ratings debt barrier and then bugger orf leaving NZ to the IMF to sort out.....hello to rates at 20%! Man that's set to be one hell of a depression.

by ex agent | 28th Dec 10, 1:46pm 1293497178

Jeepers Wolly only a very small percentage of NZers earn six figures plus. The majority earn way less than $100k. Wages are pathetic here and that is why so many people have moved overseas. They did not go just for the sun. Life is better here than Aussie but the average wage is crap. Last summer my daughter who had just finished uni was wiping bottoms in a rest home and getting less than $13 an hour. In Aussie they get $20 plus to work in a shop. Wages need to get higher here and people need to keep spending otherwise it will get worse for many than it is right now. We cannot afford a large number of businesses to close down in the new year. John come home from Hawaii and inspire us with your wisdom.

by Wolly | 28th Dec 10, 3:23pm 1293503009

"earn"...BS ExA...they collect it...they do not earn it.....Wages are crap so how come property is seriously unaffordable!....keep spending what?.....how can you ask for that having just pointed out wages are crap.....

The real problem are the parasites and the way in which they have been able to manage and manipulate the stupid govts and useless RB. If you expect Key to boot the banks in the bum, forget it. That is why the future depends on each person being prudent and saving.........

The fact this is taking place is good. Yes it will bring a deeper stage of recession. That will reinforce the move to thrift and the shift away from banks.

This is a war between those who believe in a debt based society of serfs working to fatten banks...and those who want to be free of debt and prefer to save for what they need.

by Gummy Bear Hero | 28th Dec 10, 1:56pm 1293497760

Oooooooooh , Wolly , you're getting me all excited at the thought of another NZ Inc. meltdown , a'la the end of the Muldoon years . And there were some eerie similarities between the manners and ineptitude of Muldoon/Birch , and Clark/Cullen .

I'll be bringing home a small bag of Philippine pesos , and " buying back the farm ."

We had our annual baranguay festival last night , and the Gummster was on top table next to General Flores ............. Cooooooool !

We're gonna organize a national telethon to raise munny for youse poor buggers in Kiwi-land .

by Grant A | 28th Dec 10, 12:43pm 1293493435

Wolly - Although I expected a little more from you, I appreciate that there is always good mileage on blogs (or any where for that matter) in blaming the banks for everything, but perhaps we should be looking a little closer to home at the uneducated bunch that we typically are, that can not think for themselves, have no financial acumen at all, and will simple do what feels good at the time. Banks are in the business of lending money, and they suffer the consequences when they get it wrong (unless of course you're a US or european bank)

Perhaps you're best to look at the NZ education system that provides ZERO, I repeat ZERO, financial education for its young people.

by Gummy Bear Hero | 28th Dec 10, 12:54pm 1293494054

Oh dearie me ! Grant A , what are you thinking , to suggest that Kiwis ought to stop being financially illiterate , and to start taking personal responsibility for their decisions ?

Madness ! Pure madness . This is New Zealand , buddy ! The cradle-to-grave egalitarian all-frills no-pay government-guaranteed welfare state .

Nip along to Australia , Grant A , where all radical Kiwi thinkers must go .... Away with you .

Tch tch , where do these commonsense guys spring from ............. must be an immi-Grant !

by Wolly | 28th Dec 10, 1:42pm 1293496961

"...we should be looking a little closer to home at the uneducated bunch that we typically are, that can not think for themselves, have no financial acumen at all, and will simple do what feels good at the time"....you are quite right GrantA....my thoughts from day one....somehow we have to sort out the useless and stupid who occupy Parliament.

by Rob of the North | 28th Dec 10, 2:36pm 1293500170

Confucious say " Never expect too much from a Wolly otherwise you will always be disappointed"...

by ex agent | 28th Dec 10, 12:50pm 1293493833

NA a lot of people have made money fjrom their businesses such as dairy farmers and professionals. You all go on about spending needing to be reduced. I do not think you realise what that is going to do to us a nation if that continues for much longer. There are a lot of people who have substantial savings. What is the point of just looking at it in the bank. We are all going to die after all. And the kids will blow it so those who earnt it should enjoy spending it. I for one have continued spending. I am off now to a cafe to have lunch with my wife and son. Bugger the thought of a surcharge as the staff and owners are not on holiday. They deserve to be paid properly.

by Nicholas Arrand | 28th Dec 10, 12:57pm 1293494278

(double post )

by Nicholas Arrand | 28th Dec 10, 1:02pm 1293494536

I'm not saying 'look at it in the bank till you die!'. My philosophy is that I want to spend the last cents I have on the nails for my coffin. But how have all those people you mention made, and kept, their wealth? By looking at market conditions and trading accordingly. Go off and spend your savings if you wish. I don't decry you. But that's not for me; right here, right now. I hope to be a survivor from the wreck that is coming, and even I will be wounded, as most probably, will you. But at least I will have the means to regroup and replenish the means to buy those last few nails. Because if those like you, me and Wolly etc. don't survive, then there will be no business devlopment capital left to employ those who will need a job.

by MnM | 28th Dec 10, 1:10pm 1293495055

NZers are still spending more than they earn, which implies that things are likely to get worse. One of the solutions to NZ's woes is to devalue the NZ dollar through capital controls and restricting of credit to productive areas of the economy. It has to be done otherwise we continue to languish in this dire state. The weaker dollar is essentially a pay cut for all NZers and it needs to stay low for a prolonged period of time to fix the structural damage endured by our export industry when the Labour government was in office. The prolonged period is also required for investments, research & development to take hold and build competitive advantages so that the working class in NZ won't have to compete with third world countries in the race to the bottom.

Low government debt won't provide much comfort for long. The recent increase is evidence of private sector debt being socialised and once government debt is perceived to be too high, then true reality will hit NZ and it won't be pretty. Local and regional government need to be more productive, this doesn't necessarily mean wage cuts (it does meaner few but higher paid staff). By properly tendering and negotiating contracts you can save more money than you can by wage cuts. Wage cuts in the public sector are generally counterproductive, you lose the best and brightest while the private companies who provide consulting and contracting work (holding all the knowledge - and therefore power) milks the public sector.

Our export industries are getting hammered, you only need to look at our FX rates against GBP, EUR & USD. NZers collectively have alot more room to cut spending, you only need to look at the pickup in spending on international flights and KFCs.

by Nicholas Arrand | 28th Dec 10, 2:23pm 1293499397

How do you devalue the kiwi through capital controls without exchange rate controls as well? In which case, what do you tfix the kiwi to? Capital control ( I assume you mean' restrtictions') will drive interest rates through the roof; as who will lend to us to roll-over our foreign based debt if it can't be readily repatriated without exchange control approval, or there is some form of withholding tax applied to foreign fund inflows? It's all been done before; and where did we end up? A floating exchange rate and a controlled interest rate environment. There are no easy monetary solutions. The answer is fiscal restraint; public and private.

by muzza | 28th Dec 10, 2:41pm 1293500511

Basel, Matt, Michael, Kiwidave, Lol, good on you for your rebutals. If you want to solely take a focus on the negative factors, then you will certainly have a dim view of where we are at /heading in NZ. If others solely take a focus on the positive factors, then they have a rosy view of where we are at /heading. Now that is my point- if you take a more balanced perspective accepting that there are a mixture(good and bad) of factors then things are not as bad as you predict , or as good as some might suggest. So, I'll leave at that and sign off now, will come back in a years time and see how things are . In the meanwhile, all the best.

by ex agent | 28th Dec 10, 2:53pm 1293501182

Muzza please tell me what positives you can see in the NZ economy. I can only see the following;

1. rising inflation affecting all households.

2. rising deficit.

3. deteriorating balance of payments.

4. negative gdp september quarter and very possibly in the december quarter.

5. retail/construction/serivce sectors suffering from lack of turnover and laying off staff.

6. a glut of residential farming and business properties on the market.

7.a dollar depreciating as overseas players realise our economy is in a weakening position.

8. businesses paying less tax as profits deteriorate and less gst being collected.

9. our biggest exporter having a very dry summer affecting milk production.

I could go on but basically we are in deep shite and no one including John and Bill who have to still have their extended christmas break know what to do. But it is not their money. It is the nations and life will go on for them with their gold plated super voted in overnight some years ago while we were all asleep. I hope they enjoyed their flights paid for by us left here in NZ.

by Grant A | 28th Dec 10, 3:42pm 1293504157

ex agent - I'll answer some of that - some is short-term, some is long-term. You make many assumptions that things won't /can't change - I'll paint the positive ones that are either happening now and/or are likely to

- Record NZ commodity prices

- record terms of trade

- manageable exchange rate (refer the two items above)

- much improved trade deficit (admittedly cynlical)

- low interest rates into the second half of 2011 (many are deleveraging as a result)

- boost to construction industry in 2011/12/13 due to Canterbury earthquake reconstruction

- Rugby World Cup assistance to struggling retailers

- By current western global standards, low levels of public debt

- drought broken

We can always find the negatives, but to retain creditability, at times you have to recognise the positives when they exist.

by ex agent | 28th Dec 10, 4:15pm 1293506152

Good try GA. Drought broken but damage is done. Lost production and animals culled cannot be recovered. And we still have the normal drought months to come. Building in Canterbury will not help the rest of NZ. The RWC will benefit the hotels and bars but will not help the retailers and small businesses much. Maybe the odd transistor radio. Low interest rates are only a sign of how bad things are. Too many people cannot deleverage as they are just coping or not coping with the increased cost of living. I bet those councils have increasing rates arrears.Terry will not be the only defaulter there. If our dollar depreciates more watch those petrol prices which will increase the price of nearly everything. By the way I forgot to mention manufacturing is down. As if we can afford that to happen as we are pathetic in that regard as a nation. This coming year we are going to see falls in asset values like we have not seen for some years as people just give up and hand their farms,houses and commercial premises to their banks.

by ex agent | 28th Dec 10, 3:54pm 1293504844

Wolly you really are showing us today why you call yourself Wolly. They borrowed money and lots of it and therefore were able to buy their homes and rentals even though they earn crap wages. Seven times their wages rather than the traditional three times their wages. And you are showing signs of jealousy over those who earn good wages/salaries. Bollard earns his $500k. I suspect you have never earnt a decent salary. I recall you were a teacher once. Most of them deserve to be paid more. With the BS you put on this site I suspect your students did not show you much respect as do the commentators on this site. Teachers from my experience are often jeolous of people who earn more but teachers are unwilling to be accountable for their efforts and ability to teach and they guard those amazing holidays.

by Wolly | 28th Dec 10, 5:25pm 1293510322

Good for you ExA..don't you go after the issue when you can vent your spleen on me.

Won't do you any good though. Nor will sneaking past the seriously unaffordable property bomb.

Bollard receives more in US$ terms than Bernanke...figure that one out ExA....300 million plus Yanks and just 4 million Kiwi.....if you knew a little more about the pay packs handed out in wgtn it would stop you in your tracks.

The problem is property ExA and the role the banks have in the game.

by ex agent | 28th Dec 10, 5:38pm 1293511091

Well then Wolly Bernanke does not get paid enough. If you want monkeys pay peanuts. Why would anyone do Bollards job for less than what he is currently earning. School principals can earn well over $100k. A builder I know made $350k before tax in the 2007 year. He does not even have an apprentice let alone a worker. He just uses contractors for things he cannot or should not do such as plumbing. Some Insurance brokers in NZ earn more than Bollard. One person who is vastly underpaid is the Prime Minister although currently I do not think he is doing his job. He needs to smile less and talk more about what we need to do to get the economy kick started. Otherwise we will need to become part of Australia. God forbid.

by Number 6 | 28th Dec 10, 5:43pm 1293511410

Don't forget, Key, in effect is paid.....nothing. He donates his salary to charity ( although I'm sure there's a tax write off in there somewhewre!). So it's not the money that motivates him. It's the CV. He need "NZ PM" on it to move on to the next step.

by ex agent | 28th Dec 10, 5:56pm 1293512217

Number 6 that is not the point. John Key can chose to give all or part of his income as a PM away and good on him as he has worked hard. Not every PM will be in his position and I still say they are underpaid when you compare them to some sectors of society. In fact MP's are underpaid and that is why we do have monkeys on the whole. Anyone with half a brain and the ability to run their own business would not even consider being an MP. That is why Parliament is full of tired teachers,lawyers,academics and union leaders. Some would use the word failed but I would only use the word tired. What we need is people who have run successful businesses and lots of them. But we do not pay them enough. Less MP's and those who are there better paid.It would be good start. Goff has never taken a risk or done anything other than be in parliament for 30 years or so. He needed to get out in the real world of putting up ones capital and borrowing money to start a business and then get back into Parliament. Then he would have had something to offer. At the moment he is the best marketing manager National could get for free. John Key is not under pressure as long as Goff is there so the economy just lurches along and no one down there in Wellington seems to be showing any urgency. They will still get their perks and super while the rest of NZ struggle to make ends meet.

by A Gullible Prat | 28th Dec 10, 6:28pm 1293514089

I believe everything I'm told.

by A Gullible Prat | 28th Dec 10, 6:29pm 1293514190

Yes, I too believe that John Key donates his salary to charity.

by Grant A | 28th Dec 10, 4:49pm 1293508194

Ex agent - some of that I can't argue with, because you could be right, but its all about timing. A couple of points though - The last Fonterra numbers I saw a week or so ago had dairy production marginally ahead of last year. Yes it will go into negative territory, but if the weather forecasters are right, and we will have a wetter summer after Christmas (looking damn right today :-)), I don't think it will be down alot on the year.

The Christchurch reconstruction is dragging in builders from all over the South Island with many telling me that they are planned to be there into 2013 - I have no doubt that North Island builders will take people to Chch as well. This week's after shocks add to that.

I suspect you underestimate the impact of the RWC but we will have to wait and see. Yes low interest rates are a sign of a slow sluggish economy, but low interest rates are also part of the cure. Manufacturers struggling ? sure some into the US, but I know some into Australia who have been having a great time with a 75 cent cross rate.

I too can find a multitude of things to worry about for NZ; european debt crisis impact funding costs, peak oil, Australian housing market, a misjudged Chinese slow down etc, but the point of my post was some of the positives that do exist and can/will create some recovery, all other things being equal....when you bank everything on the downside, surprises can only come on the upside.

by Number 6 | 28th Dec 10, 5:13pm 1293509601

"(Retail) Spending figures absolute shocker". Say no more.....

http://nz.finance.yahoo.com/news/Spending-figures-absolute-irnnewstalk-1246588447.html?x=0

by ex agent | 28th Dec 10, 5:15pm 1293509744

But this cannot be true. Olly says everything is fine.

by Matt in Auck | 28th Dec 10, 6:31pm 1293514270

yet further evidence that NZ's economy is still one sick puppy.

Saw a mate today back from Aus for Xmas, he says the downturn there is starting to become quite noticeable, especially in retail

by Gertraud T. | 28th Dec 10, 8:56pm 1293522989

And in the UK:

http://www.telegraph.co.uk/finance/comment/liamhalligan/8224342/The-UK-…

by Nicholas Arrand | 28th Dec 10, 9:01pm 1293523271

"..My over-riding concern is that in recent years, the ( pick your favourite Western nation here) policy debate has been almost surreal, failing to recognise the obvious, pretending major issues don't exist. This cannot be right. We need a government, and senior economic policy-makers, who are honest with (ditto) citizens and tell us what is going on..."

Quite, Gertraud. And we in NZ are one of many.

by powerdownkiwi | 28th Dec 10, 9:30pm 1293525041

Gertraud - there goes a linear thinker - growth is a straight line for that one.

He goes close with oil prices, then only applies them to motorists - clearly another who doesn't get the fact that it underwrites the content and processing and transporting of everything.

The sooner that introductory physics is taught as a mandatory part of an economics degree, the better.

by Kunst | 28th Dec 10, 10:01pm 1293526913

I see, bloggers here going around a circle again.

Isn’t time for New Zealand to look into possible new strong sectors of industries ? As a consequence of Climate Change http://www.economist.com/node/17572735 agriculture and tourism as the two most important pillars of our economy, will see inconsistence results in the years to come – with rather negative outcomes. The Real Estate industry is hopeless, because it doesn’t make our nation wealthier.

Isn’t time to consider adding real, sustainable and long term value to our economy ? Isn’t time to add - our skilful, talented and educated NZpeople to our economy ?http://www.countercurrents.org/hartmann120210.htm

Small countries have to think small, but with great ideas - a "100%NZpure Economy"

by monteiths | 28th Dec 10, 10:43pm 1293529416

I like the sentiment on this site, lots of negative lots of positives and the truth is mired somewhere in the middle. I spend a lot of time reading from here as I like the fact that there is robust discussion happening, and one tends to learn new things from good discussion if one applies the right filter.

My wife is superkeen to buy a house, I am saying not till middle of next year, I hope there will be clarity by then. But I'd rather continue to rent than buy a overpriced place with a stupid mortgage.

I like what people are saying about wage reductions, but thats just not going to happen. If there is wage reductions there will be ... "deflation". However, before that there will be truckloads of people that say "get bent" and go overseas. And those people will be the ones who we can least afford to let go. Or there will be people that are pushed over the edge completely. 20% wage cut? You have to be dreaming unless its a mandated and enforced drop across the board.Or is this 20% drop just for the Working class?

My bet is that everyone will keep on grinding on until the wheels fall off everywhere at the same time and that way everyone is in the same boat. Or that the world grinds and groans and slowly starts to come right because everyone has the same amount of debt so everyone is still roughly equal. Traditional economics is dead.

Or we could do another daft NZ thing and become "innovate early" like we did with farm subsidies then instead of just forcing people off the land in efficiency drives we will run them out of the country. (at an increased rate) so we can sit worse off but smug.

Realistically NZ cutting its wages to become more competitive is illusionary. We are a small city at the end of the world. What we do here doesnt matter anywhere... even in Australia.

We have Dairy at the moment because we got a jumpstart on the rest of the world. Give us enough time to poison our water and land or for shipping costs to go up or for other countries to get in on the action and then we have sheep and beef again... o hang on that won't ever happen!...

What we do well here is exporting people. What we need to do is take advantage of that. Start bonding people instead of chraging the Uni Fees. Encourage them to leave. Go get good ideas and come home.

by ex agent | 28th Dec 10, 11:00pm 1293530411

Monteiths I share your thoughts that people will not accept 20% pay cuts. They just cannot afford to do that as the cost of living is getting higher by the week. They would all go to Australia unless they could get another job in NZ that pays them enough to keep body and soul together. I like your strategy to not buy a house now. They are going to get cheaper and you will be borrowing less than you will now. I just cannot understand why people are buying currently unless they are buying and selling in the same market and preferably upgrading as you get more bang for your buck in a bad market. People constantly come on this site and say they got a bargain. There is no such thing in a weakening market. All you do is set the benchmark for that type of house in that area and the agents and valuers will be using your so called bargain price for all future deals until the next similar house sells in the area and at a cheaper price. People currently buying for investment and especially with borrowed money must have concrete in their heads as the market is definitely on the way down. It beggars belief but New Zealanders have never been great investors and that is why we are such a poor nation. Aussies have a trillion dollars in superannuation schemes. We just borrow money and buy second hand dumps and hope the strangers we rent them to for a pathetic return appreciate our stupidity and look after them and pay the rent.

by Rob of the North | 29th Dec 10, 10:12am 1293570724

i liked his " Arts and Letters"....he was on the Radio NZ board for 7 years also.

by monteiths | 28th Dec 10, 11:12pm 1293531179

Teacher holidays. Guarding them... of course they do. Only an idiot wouldn't. What the hell do people want? To keep kids at school for 50 weeks of the year? To enslave them from Age 5 as well?

At the end of 10 weeks the kids are sick. They can't handle 50 weeks because they are kids. Its a part of the job. Teaching is like a pot of hot water. By the end of 10 weeks you have to take the lid off or the pot will explode.

The holidays are great for teachers, but they are part of the job. Its has to be there. To not pay them more because they get holidays just makes people leave teaching. Then we moan about how kids are so bad now.

I fail to see how teachers can be more accountable. Do you want to have someone standing behind them ticking a box off 100% of the time? 2 people in every classroom? Maybe a person ticking off the person ticking off the teacher? Most teachers are sick of all the paperwork constantly being lumped in because people spout off about how unnacountable they are "and that they have a mate who's a teacher that leaves at 3pm and blah blah" So the govt decides to put in more checks and balances.

Will you fix the problems and get better teachers by paying teachers more? NO 100% NO. Paying them more fixes nothing and really doesn't effect recruitment rates. But not paying them 4% to keep up with inmflation is saying that you are not valued. When people arent valued they leave.

When the education system fails here we are truly stuffed. We will expect our youth to leave school and work to support this country, yet we are rubbishing the engineers that develop those supports. 4% and some holidays.

Bitter twisted mass of selfish shortsighted plonkers.

by ex agent | 28th Dec 10, 11:22pm 1293531738

Monteiths are you a teacher as you have supported them with so much passion. I agree with your sentiments about them. They are some of the most important people in any society.

by Grant A | 28th Dec 10, 11:48pm 1293533323

There are thousand of occupations where the employees claim that they can not be effectively appaised - bollocks ! Monteiths is correct, good teachers are an extremely important part of society, note the "good". With some teachers you can spend a day in their class rooms and figure out how good or otherwise they are

Many just aren't up to it and are damaging our youngsters, yet they are paid as much as the good ones. And its very much like parliament, pay peanuts and you will get a good number poor quality individuals into that industry. Teachers are no different, appraise them, pay up for the good ones, and we'll attract more of that ilke that we badly need. Let the other find out what they're good at, but its not teaching

by Rob of the North | 29th Dec 10, 10:59am 1293573547

http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10696893

this is the elephant in the room for 2011

by Les Rudd | 30th Dec 10, 7:57am 1293649060

Nice charts. I think we need an inflation control mechanism that is, EFFECTIVELY, price of debt based, that way we'd not get the problem we've seen with private debt growth. If only we had such a mechanism? I think we need some way of, EFFECTIVELY, maintaining a linkage between price of debt and the onshore saving incentive, that way we'd not get the problem we've seen with offshore funded private debt growth. If only we had such a mechanism? I think we need a way of, EFFECTIVELY, maintaining a linkage between private debt growth and PRODUCTIVE ACTIVITY based returns to repay that debt, that way we'd not get the problem we've seen with public debt growth. If only we had such a mechanism? If only ..... then there'd be less problems like this: http://www.interest.co.nz/opinion/top-10-charts-2010-bnz-why-recovery-may-be-just-wrong-sort-recovery-light-investment and less questions like this: "So why are businesses so reluctant to invest? Are interest rates too high? Do they lack confidence in the future? Are exporters worried about investing long term because of the currency's strength and volatility? Are businesses being 'crowded out' by the growth in government spending? Can we achieve the step up in economic growth talked about by Prime Minister John Key without that investment? What can the Reserve Bank and the Government do to achieve that step up in growth?" Cheers, Les. www.mea.org.nz

by Kunst | 30th Dec 10, 8:37am 1293651449

Hi Les - My God you guys are so old fashion, table some new practical ideas – some most needed visions to make real production in this country a solid industry with a long term future.

How is your organisation politically involved to make sure the government allocates infrastructure needs (Telecommunication, Energy, Transport) to NZcompanies ?

by Les Rudd | 1st Jan 11, 8:55am 1293825337

Bernard - is it possible for you guys to plot, say, the 'weighted average effective mortgage rate' over time, where this is something like an averaged aggregate of mortgage rates across floating and all fixed rates and weighted by debt volume fractions. It'd be interesting to see how this curve moves compared to OCR. Plus there might be some interesting comparisons with private debt growth, tradeables and non-tradeables inflation, foreign and domestic funding, and NZD. How would these tracks look by comparison with each other? What will lag, what will lead, what will correlate? How does the OCR mechanism, actually, control inflation? What inflation? Do you think the OCR mechanism is meant to have an effect on private debt growth and influence savings rate? How effective is it in this regard? "world best practice" - what absolute 'effing bollocks. More like, "Best practice for the world, worst practice for New Zealand." Cheers, Les. www.mea.org.nz PS - Happy New Year! PPS - Walter - and you.

by Wolly | 1st Jan 11, 9:03am 1293825785

"The developers of the luxury Quayside apartment complex in Whakatane have left a debt of almost $15 million, according to receivers. Quayside Trustee's debts exceed $14.7 million - too much to be offset by the sale of unsold apartments which have been marked down substantially in a saturated property market. Twenty-nine of the 43 apartments in the George St complex remain unsold."harald.

Buy buy buy....property never goes down in value....get in before you miss out!

by I Am The Man | 1st Jan 11, 9:45am 1293828341

A saturated property market? But I was told there was a shortage! How very odd.

by Number 6 | 1st Jan 11, 11:58am 1293836286

It depends on what you are!

If your seller... "It''s saturated. You'll have trouble shifting this at your asking...". If your a buyer " There's a shortage. You'll have trouble getting that at your bidding...."

by Wolly | 1st Jan 11, 9:52am 1293828727

The Kiwi is clawing its way back up the Roo. Bolly keeping with the cheaper for longer gamble but growth isn't here.....now where will he go?

011 will see the bond market attack the borrowers with rising rates everywhere and the ocr will be seen as meaningless drivel in the face of banks scrambling to refi, to flog covered bonds and to grab all the deposit cash they can....expect deposit rates to rise for oncall and short term with mort rates rising on fixed and floating lifting off too. There is nowhere to hide anymore.

Take care the spin and BS from wgtn don't knock you over. Fiscal hole is to become a chasm.