Friday's Top 10 with NZ Mint: Gold; Wool; Bank bills; Dairy prices; Petrol; Swap rates; Mortgage rates; Term deposit rates; Dilbert

Today we are revealing the Top 10 charts of 2012 in association with NZ Mint.

Our interactive charts were read 225,300 times in 2012, plus many were embedded into our stories and were read there another 350,600 times.

We have no idea how many static charts we made in 2012, nor the number of other people's charts we used.

As you can tell, we love charts because they give a powerful perspective to data.

In 2013 we will be adding sparklines to more of our data.

These are tiny charts designed to give you an accurate sense of how the data moved before today's datapoint.

You can see the first of these sparklines on the Government bond data on our bond page here »

Bernard is on his summer break and will be back in late January 2013, from Wellington.

As always, we welcome your suggestions in the comments below or via email to

See all previous Top 10s here.


#10. Precious metals
Gold, silver and platinum daily closing prices, in both US$ and NZ$ per troy ounce. US equities are down 1% today as it looks like America will in fact go over the cliff; partisanship is alive and well. Gold however is only up US$2 on the day, or +0.15%

#9. Wool prices
The wool trade is a tough old business these days. For about two years prices made a modest recovery. But things have slipped back to disasterous levels. All very discouraging for a natural, organic fibre. It is getting trounced by both man-made fibres and GM cotton. When was the last time you asked for something made of wool? (A question especially for those of us who think they are into sustainability, and green politics.)

#8. Bank bill rates
This is the story of lower-for-longer. The changes in the 90 day bank bill rate are now miniscule. However, this rate will be among the first to signal when an OCR change is coming.

#7. Dairy prices
A chart set that shows both the Fonterra globaldairytrade results, and the USDA Oceania price monitoring. And we have prices in both US$ and NZ$.

#6. Govt bond rates
There has been approaching a three-fold increase in Government securities on issue over the past four years, but interest rates on this 'risk-free' debt have declined markedly. 

#5. Oil and Petrol prices
The presumption was that petrol prices would just keep going up, but they haven't. For more than a year they have been pretty stable, and the main upward pressure has come from taxes. Holding them down has been a relatively high exchange rate, lower demand, and crude prices that aren't going anywhere. The cost of petrol no longer holds our economy to ransom. The positive effects of fuel efficiency are multiplying.

#4. Daily exchange rates
What is remarkable about our exchange rates over the past year is how stable they have been. Apart from four relatively brief periods, the NZ$ has hovered about US$0.82 - in fact that has been the rate May 2011. Our currency has been even more stable against the Chinese yuan.

A few traditional exporters still whine about it, but that stability has allowed most to adjust their business, and exporters with something international customers want to buy have learned to live with it. Importers also have probably appreciated the stability. And from a public policy viewpoint, it has helped keep costs stable and price rises modest.

#3. Mortgage rates
2012 has seen further falls in mortgage rates, especially fixed home loan rates. The most important thing for borrowers is to not assume they will stay this low. Low rates encourage borrowers to borrow more, and therein lies the trap. If rates should rise (and remember, RBNZ governor is reputed to be a hawk), highly leveraged borrowers will be quickly in trouble. Use our mortgage calculator to work out a safe place to be, repayments wise. And always remember, its not the rate you pay, its the rate you pay it back that is most important.

These charts show our mortgage rates are at or near record lows. But they are not as low as in the US - a 15 year fixed rate there averages only 2.65% ! (The difference is the difference between our respective OCRs.)

#2. Swap rates
These are the wholesale benchmarks that drive fixed mortgage rates. (There are other factors at work too, including risk spreads.) When you see these rates move, you can get a good indication that fixed mortgage rates could also move in sympathy. However, swap rates are not as important as they used to be, for two important reasons. Firstly, banks are very flush with cash, much of it term deposit cash, and lending opportunities are lower than in the past. And secondly, the Core Funding Ratio regulation means that a lesser proportion of mortgage funding is coming from offshore, wholesale sources. Intensive competition amnong banks for mortgage business has them holding pricing at competitive levels, sometimes ignoring swap rate cost pressures.

#1. Term deposit rates
This is where things get tough for savers. In fact lower-for-longer means 'financial repression' - and savers are bearing the cost of public efforts to get our economy back on its feet. Interest rates are pushed down to encourage lending, but the rise in credit has only been modest. As our savers age, the amout of funds flowing into bank TDs is enormous - about NZ$108 billion at present, and that inflow shows no sign of slowing. Banks are awash in cash.

About the only positive a Kiwi saver can take is that at least our TD rates are above inflation - just. And that won't seem much of a positive, especioally when most savers pay income tax on their interest earnings. But we are much better off than Japaneses or American savers - most of whom will be lucky to get 0.3% gross on a term deposit.

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?

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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.


Wool, NZ wool is a bit of a luxury, however this autumn I will be buying some...I will be asking for NZ wool as well or walking away...


I hear tell there is twice as much nz wool sold as there is produced thanks to Chinese IP pirates. I get mine second hand.

During my Xmas shopping , I was heartened to see a number of NZ manufactured goods available , and many from earthquake ravaged Christchurch : Ugg boots ! .... bicycle helmets .... car tow ropes and tie downs .... Sistema kitchen containers .....

.... the only thing I buy second hand now , is toilet paper ... well , it helps to recycle , doesn't it ...

5. DavidC maybe you should compare / consider the price of petrol v our non-recovery. ie whos presumption?  I think yes 5 years ago some ppl thought that oil could go to $500US a barrel. What they didnt think through was ppl and the economy couldnt afford to pay above $150USD...when asked to, the economy collapsed.

So what we see now is a high oil price at $110 causing a perma-recession, sort of a standoff...

Marginal new fields are $90~95...setting a lower limit on the price of if the oil price goes under that investment/drilling stops.....and we cant seem to afford over $120USD...

The Q should be asked/considered how do I run my business in such an environment....


Wow wish I could get 2.65% on 15 years...


"A question especially for those of us who think they are into sustainability, and green politics" why aint Norman and his deputy in the pinky greens both wearing coarse wool....we could then call them Itchy and Scratchy.

The "financial repression" involves unintended consequences.....maybe the most damaging being the murder of the savings ethic and the feeding of the debt monster.

Make no mistake here, our fools in the Beehive are kicking the can...expect the idiocy to take on an election flavour from the new year.

You can see the first of these sparklines on the Government bond data on our bond page here »


David, the semi-annual bond equivalent outright swap rate might be of more use to most interested parties since NZ Goverment Stock pays coupons on a bi-annual basis other than index linked issues.

Can anyone explain this huge discrepency: yesterday David posted up a story on NZ household wealth with a link to RBNZ stats.

Quite fascinating with detail going back to 1978

They state average household disposable (I presume that means after tax) income as about $130,000 PA . Stats. NZ give average household income as $1550/week or $80,600 PA and the median as  $67,800 - I think that's before tax.

So why the huge difference and what else is wrong with their stats?

Happy New Year,


The RBNZ #s are millions for the nation.

Re seasons greetings - same

Thanks for that Stephen, and for your great posts on this year. Keep'm coming.



Thank you David, I feel the same about your insights.

well, you can claim to be 'an expert in affordable housing' with no attempt to ascertain what underwrites incomes, whether they can continue, or indeed, what an 'affordable house' actually is.

Why knock folk for applying the same approach to law?

You sound a bit grumpy PDK? What is upsetting you?

Is HP housing affordability expert status really upsetting your Christmas?

Nup, just like to keep people - and their talents, if any - in perspective.

For those who live like me, 'holiday' is hard to differentiate from any other time. If you're interested, get in touch via Powerdownkiwi.wordpress and I'll send you some vid clips, you'll see what I mean.

Actually, just finishing building a food-grade solar dehydrator for a Central orchard, good cranial challenge. Better half is wiring up LED's to our somewhat unique design - I've left that to her as the mud-house red is nearly empty. Next project is an outdoor solar spa-pool.....

We're in for an interesting year - go well      :)

Just like Bishop tamamaki (or what ever his name is) appointing yourself a title "expert" when in fact all you are is at best a semi? retired developer doesnt make you an expert. And just like the Bishop's true believers it doesnt mean he's true or correct....just spouting what fellow libertarians/austrians wnat to hear.


Well remember to have a nice glass of red for new years  :)

More chart porn, did anyone else see the big blip in the usd vs gbp on our boxing day about 1130 to 12 noon? 160 pips. Hat tip Tyler @ Zerohedge.

Could alternately be called why daily charts are near useless when facing the might of algo's.


Algo's agree, hence why I thinkshare markets are a mug's game now.

In two ways,

a) you cant directly trade against these and brokers not unless your timeframe is substantially longer. Now if you intend to hold shares longer term in solid if boring stocks, yes until the big event.

b) When we see the big event ie like the 1929 crash, those blips should be telling you how fast and how far things will fall when their controllers pull the plug, it will be total and utter carnage...IMHO.  So many ppl's 401ks(?) will be worthless over-night...........

I bailed out of all my shares 2.5 years ago for the 2 above reasons, canon fodder I dont want to be.  The great thing/possibility is when the event happens I think the bottom will be a fraction of today's price as the fear and algos will cause a huge undershoot so for those with even a few thou I suspect we'll see some brave souls buying at a few %.

This is way better to watch than the likes of "coro"....I get to watch the likes of markets experts worry/comment about a meaningless shift in the exchange rate overnight or how all will be well once we can get back to growth.  5 years on nada, 2 years out? I cant see it...personally not even 20.  The likes of JK seems to think with all the financial stimulus we should be on 6% growth when its closer to 0.6%....and doesnt understand why not.

The inflationistas have been wrong for 5 years....again 2 or 3 out cant see any....

Lots of ppl with "conventional wisdom" ie fresh water acolytes seem to be getting it wrong and big time....when do ppl start asking why are they so wrong?

sorry bit of a ramble mess....


That " mugs game " as you call it , the NZX , rose 25 % in calendar 2012 ...

....F&P Appliance rose 260 % , Diligent soared 145 % , Ryman leapt a further 70 % , Abano 63 % , and even stodgy old Feltcher Building added 42 % .....

.... what did you invest in to beat that ?

Once again , the gloomsterisers have been proven utterly wrong , as capitalism leads us to prosperity .... as it always will. ....

As per normal GBH you only look at the gain. You dont consider the possibility of a 1929 stock market collapse being repeated. Also what the net or average gains are....sure the above did very well in 2012...will they do the same in 2013 or drop back?

The gains I made in the last 2~3 years have been about 6~7% per annum after tax, not stellar but risk free.


steven : If one looks at annual sharemarket returns , there are very few " average " years of 10 % growth , there are wild extremes from 180 % rises , to gut wrenching 1929 collapses ....

..... that just is the nature of the beast ....... and that explains why worldwide there is 3 or 4 times the weight of money in bonds than there is in shares .... volatility scares folks ...

The cauldron of capitalism creates and destroys .... the brave may be well rewarded , or they may be wiped out .... for my money , life is too short to faff around 'like a timorous scaredy cat ...

a) It was either Hugh Hendry or Graham (I forget his surname, doh) who said the money is made at swaping between asset classes at the right time....

b) Since the 1930s bonds have actually done better than shares.

c) Market manipulation has now gone to extremes, its a highly rigged game you swim with the sharks and make money....

d) Capitalism has always inherently needed a big profit margin and no account of using up one time resources and zero cost to environmetal pollution at ever fatser rates.

Capitalism doesnt create, it converts. Capitalism and humans are on an expotential growth path on a finite planet, it simply has to fail at some point its simple maths. The only Q is when, shortest point is, the debt or oil gets us next year, longest is 2020 when oil finally drops off the production plateau, though everything I see says no later then 2018 and pre-2015 is the way to bet...

Meanwhile you sing business as normal.


Steven - note the contradiction?

"as capitalism leads us to prosperity .... as it always will".


Then one post later, acknowledging that it's a gamble.

" gamble " ? ...... I'm sorry Spock , but this does not compute !

... you who exhort us to only be logical and unemotional , to count our atoms and gaussian curves , are now wantonly splashing around the highly charged term " gamble "  ....... when of course , the correct term " risk " ought to have been applied

"risk " is the back-bone of the capitalist system .. without it , computers , the internet , and your ability to get a 7 year old from the local primary school to help you blog , ...... would not exist ..... Perish the thought , a life without Mr PDK !

Gamble is actually a better word, in english,

"The possibility of suffering harm or loss; danger. 2. A factor, thing, element, or course involving uncertain danger; a hazard"


a. To bet on an uncertain outcome, as of a contest. b. To play a game of chance for stakes. 2. To take a risk in the hope of gaining an advantage or a benefit.

The thing is there is a difference between a known and quantified risk v a blind gamble. You seem determined to only look at the rewards, blindly ignoring any possibility of (huge) losses.

and then you reduce yet further, to insults.



Actually , " gamble " is a word best left to the race-track , or to those of a leftish bent  who deliberately seek to abuse the capitalist system .. .. if you were to cross a busy street , would you close your eyes , and gamble with your life that no vehicle hit you as you blindly crossed .....

.. .. or would you open your eyes , and cross , knowing that there existed a risk that even relying upon your senses , you still could be struck by a passing motorist ?


Problem is you are the one with your eyes closed....I dont intend to cross the road at all (ie shares, Ive sold them) I have another path.


At the micro level still seeing inflation, not sure what you are talking about, unless you hold onto the  fudged macro-stats.

No Im talking about real data...inflation is minimal....NZ inflation still dropping....5 years on...

Mortgages, 1 year fixed interest rate, 5.25%, 5 year 5.99%, pretty flat another 5 years of no where or down or so the banks think.

It gets better though,

"But maybe the killer is this: since when do the kinds of people who worry all the time about deficits believe that the Fed can monetize a substantial part of a large deficit, for four whole years, without any negative consequences? If you believed in the framework these people have, all that expansion of the monetary base should have produced runaway inflation by now, as many of them did in fact predict early in the game. It hasn’t — and no, don’t give me the bit about the government hiding the true rate of inflation. Independent estimates ( ) are not significantly different from the official gauge"

or NZ data,

and its counter check, un-employment which is rising...

Why do you think JK is going to be concentrating on it? as it rises do you really think inflation will kick off?

Just where do ppl earn the money to pay the bigger bills?

So sure you can sit and blindly expect inflation for 5 years only to watch it drop away and still wait praying for what you want to come true or conclude you are wrong and look for models that have been right.

For the last 5 years the liquidity trap model and especially minsky have been proving un-nervingly right. 

but congrats you are in the same great company as our RB lead acolyte.....


Lets explore un-employment and its impact on inflation.

We have gone from 4% to closing on 8% un-employment.

So 3%+ of ppl who's income is severly impacted, that alone has a big negative impact...a double one, a lot less to spend and more WINZ.

So very crude numbers, that income impact is say 60% down, so 2% with a multiplier of 1.7 (when in a zero bound trap) the impact on the economy is very roughly -3.5%.

So when you say the Govn is printing you ignore that the ppl dont see the money in their pockets.

First time in 4 years though?

So where is the money coming from for ppl to spend?

That 2% wage increase has for 3 of 4 years probably been behind...say 1% per year...that is 3%

3.5% plus 3% is a 6% (ish) drag on our economy.

Now you are sort of right in that manufacturers are hurting, their profit margins are decreasing as their materials costs rise, so they want to put up prices. When they do today of course they see a huge neg impact on sales.

In terms of recovery of course thats bad news as when we do see an aneamic recovery, price rises ie more for the same thing will see any more $s in ppls pockets taken away quickly.

btw I think you follow the Austrian school of economics?  your posts strongly suggest that.

For myself I look at what works, not how I'd like it to work.


The point I guess is with measuring core inflation you are meant to get an overall feel.  As you say some places are up, others like supermarkets are down...the thing is to determine just what is going on.

LOL, I get the fun job of holding the handbag and giving an opinion in women's fashion shops, to me they seem quieter and discounted. High end, indeed....what you are saying is those in the top 10% are doing fine thankyou very much, but the bottom 50%? I dont think so.

Mentioning soft drinks I saw "good quality" soft drinks discounted before xmas, not so much xmas fare on display either, ie stacks of chocolates....but I cant put a quantity on that so I maybe off bat on that one. What I did notice this xmas is I didnt see lots of trolleys packed to the gunnels.  Whiteware shops seemed empty before xmas and dead after....the shopping season data will tell all.

Happy new year, wish you well (and everyone else).



Where I work they have a private economic consulting division, i.e paid advice...their stats are based on what is called dispersion inflation, items that have a wide impact on family household income in simple terms, this and disposable income per market segment is what clients pay for. In NZ it has been a constant trend upwards on the inflation and constant reduction in disposable income. I know it doesn't agree with your pet theory Steven however it is what works and focuses on the main impact. Their behavioural and microecomic models work well. Most people in the industry know macro-economic models do not work well. No economic theory explains completly what is occuring, you do have to catch your bias to progress thou.

Let me place this in your mentioned earlier your income had not increased in 3 years... are you suggesting you disposable income has increased in that time?




thanks. Your comment seems to match what I am experiencing rather than what the bogus CPI figures indicate.



Gibber, going by your "experience" with something so complex is frankly dubious to say the least let alone its an individual thing and not a National thing.  Sure you notice price increases, do you notice the drops as much?   So my rates went up 6% this year, on the other hand I just bought a saw with $450 off, or a TV with $1k off.  My broadband costs have dropped to $1 for 1gb and next year half that is probable....

At least speckles is gathering real data, doing some real research and modeling in a very relevant area.

The interesting thing is looking at the "conventional way" and then at whats being done here.  So whats the real impact?  on what segment / income etc lots of Qs....cant see his data of course, or conclusions.

The conventional way is a high level take out the odd things sort of approach, which after peak oil may indeed be no longer appropriate.  Until we find a better set of models and have them proven then the conventional way is still the way.



re > Gibber, going by your "experience" with something so complex is frankly dubious to say the least


Have you considered the possibility that my "experience" might be like the "experience" of the little boy who said the emperor has no clothes? That is, I sense that the CPI is a bulldust measure which is set up to benefit governments. Governments want to  keep legislatively mandated CPI spending increases down. And what better way than to ensure the CPI does not capture the full impact of inflation. Also, if the reported CPI level is too high then the government is likely to get bad press.

Re > Sure you notice price increases, do you notice the drops as much? 

Yah. I notice the price increase in the things I spend on regularly. And price drops on the things I buy very rarely.


How often do you purchase TVs?


Re > Until we find a better set of models and have them proven then the conventional way is still the way.


And if the evidence I perceive through my life experience suggests that the conventional way is bulldust?


Re>The conventional way is a high level take out the odd things sort of approach

Most of your examples would be considered, by me, to be the odd things in my life. Almost never purchased any tools.  Last TV was about 10 years ago. 

I will grant you computers and phones and broadband.  Do you not have any cognitive dissonance between the reported CPI and the reality you face in life?  I find that bizarre.


Re > Until we find a better set of models and have them proven then the conventional way is still the way.

For you, the conventional way is still the way.  For me, I just think the conventional way is some dogma for the talking heads on TV to spout or the MSM to spoon feed to the masses.


As your perception of reality is different from mine, we are going to have to continue to agree to disagree.



We have either had this discusion before, or I have had the very same discusion with your "twin" ie mind set. (that isnt a put down btw).

"no clothes" yes indeed, very much so, hence why I pay so much attention to this aspect and what ppl say, especially the contarians to myself such as yourself.  I do actually read what is written and then go and check/research on it because its very important IMHO. Where I find my view is standing up is there is data/info to back it up, where I have a problem with your view is I cant really see data/info.  So I have no way to determine your correctness, where I do for my side of the discusion.

"Sense and CPI", now you start to give me info or your thoughts, so I start to see where you are coming from, I start to understand.....I may not agree mind.


CPI, I think it depends on how you use it.  For instance there is a problem with CPI in that it is seasonal, so tomatoes are $4 now but they have been $14.

Lets run with that for a second.  Until about 2004 oil was cheap...that means heating greenhouses or air freighting tomatoes in out of season was economical.  Today however oil is 3 times the cost.  Out of season now carries a far bigger price tag.

That suggests 2 things, CPI will be more volitile and as energy is a more expensve component will drive up the average price of a basket of food over the year.

So the statistic I like to look at is core inflation, its ment to give a better trend and the point of the trend is to set policy for instance, OCR.  The thing is  you wouldnt set the OCR on the price of tomatoes.

I could ramble all day.....LOL.

It might actually take quite a piece to write and Ive not sorted it in my head yet myself.

Price rises v drops, yes and that is my point. Where you see drops on say TVs means the vendors/shops are under huge stress because there is less money being spent on the stuff that is rising.  That stress is the thing that is the danger, that is deflationary, those shops etc provide jobs, GST is taken etc.  The indicator of that stress is the un-employment %

If we hasd a boomimg economy and hence "traditional" inflation then the conventional response is rise the OCR.   So are you suggesting we raise the OCR? If we did that the stress on the sectors already suffering would magnify, unemployment would rise, our economy would go further into recession.

Hence for me the right response is to drop the OCR....I admit I see side issues and complications, but the alternative  a severe recession or even a depression is worse.

TVs, these last 10 years?  So divide the savings by 120months, (ditto my new fridge both of which has also reduced our power use btw) thats a deflationary effect on my bills which counters the inflationary ones...

"cognitive dissonance" no i notice it, hence I want to make sure its real or not.

"tools" indeed you may not, but in the last 2 years Ive spent a lot on tools v you spending nil.  I have saved a lot, you have not....we might argue then that we cancel each other out the NET then is zero inflation.


In terms of disagreeing, the $1million Q is, what do you do about it?

by this I mean your point of view suggests that the Govn raises the OCR? because my point of view says it should drop it.

Which ofr me is the thing about watching this stuff, just what the response should be.

Govn stats, yes I can agree they are open t manipulation and its something to watch, however those stats are public info unlike speckles data, so one can be verified one cannot.

eg does its own basket of food and academia also does cross checks.


re I could ramble all day..


agree.  And when the posts are more than one screen worth and in need of an edit to aid understanding I believe you do your arguement less justice than you otherwise could.

Again with the Tools.  A VERY bad argument in my opinion. If you want to alter my though pattern then get a better argument.


re by this I mean your point of view suggests that the Govn raises the OCR


Nope. Never said that.


Lots of other tools.  LVR alterations. Modifying immigration to match emmigration.


One topic you are blind to is that of hot money from other countries that are either printing money hand over fist or are the recipient of that money.  But, If your only tool is the OCR then I guess that is why you assumed that I would suggest an OCR increase.  I woud look wider to how the money flows washing over the NZ borders are influencing prices in various sectors of our economy. 

Gibber: you are on the right track.

This year, for the first time ever, Glenn Stevens, the Governor of the Reserve Bank of Australia questioned the value of reducing the OCR as a monetary tool. He pointed out that a reduction in the OCR is an increase in disposable incomes for debtors, but a reduction in disposable incomes for savers. The point he was examining was the probability the net effect is neutral. But because the interest earned by savers is taxable, the tax-take goes down, while the benefit obtained by (the majority of) private borrowers (ie mortgagees) is non-taxable, therefore, on balance, the the total tax effect is a reduction in the overall tax-take. Not good for the economy, unless the mortgagees all go out and spend their increased disposable incomes. In effect, a reduction in the OCR is simply a reduced shift of spending from one group to another. As the retail banks are inclined to impose the full reduction on savers, but pass on only a part of the reduction to borrowers, the imbalance is amplified. The real effect is to maintain the circular flow of money through the banks.

The same guy who has looked for every opportunity to raise it in the last 4 years?  He kind of sounds like a stuck record.  I would like to see if he even has a model showing what he's saying is justified or not, otherwise its really just the same old same old.


Listen to the Chatter - annecdotal evidence of what's happening around the traps

Remember it is easier to get "hot money" into New Zealand than Australia. Look at the scale of it. This is only the stuff that requires FIRB approval, ie anything greater than $200 million. Anything less gets a free pass.

More than $170 billion worth of foreign investment in Australia in 2011-12, according to the annual report released by the Foreign Investment Review Board. The real estate sector has replaced mining as the magnet for foreign money for the first time in recent history. Treasury ticked off $59.1 billion worth of overseas investment into the property sector, with more than two-thirds of that going into commercial property. There has been an influx of foreign cash into commercial property led by Asian investors and offshore pension funds. Interest in the residential sector decreased slightly from $20.9 billion in 2010-11 to $19.7 billion in 2011-12. NSW is the favourite investment destination for overseas real estate investors, followed by Victoria and Queensland.

Carry trade, no I am aware of it...and is dangers....when the Fed starts to raise rates then "convention wisdom"  says the carry trade will run for cover and our rates will rocket....The only fly in the ointment is I cant see the Fed raising for 2 decades.

LVR I am a fan of, the RB isnt and indeed where its done in texas there are "work arounds" apparantly. 

"Tools" there are 2 things one they are showing very large discounts (1) suggesting no ones buying which suggests (2) DIY, and trade work is well down. Freinds who work at Bunnings say the last year has been very quiet, even quieter than 2011.  I will catch up in Feb, see how the silly season went.

Im glad you odnt want the OCR to rise, I cant see any reason for it at all...and lots against.


Gibber, in the end the economic analysis needs to explain what people are seeing. You are not alone in what you are seeing.

The economic analysis they are doing inhouse is a competely different level to what is available in the public domain. This has been convention in the US for the past 20 years and in teh NZ firm for the last 12. They are not the only player in the australian/nz market either.

Have a strategic alliance with one financial institution where they have the whole real time data of their mortage and business loan portfolio. Provide peer review and market profile in return. Another is a key FMCG industry player. 

They have data just not available in the public domain and a resource base on research/IP  via a JV with a US consultancy.


speckles: says "they" have a strategic alliance with one financial institution where "they" have "access to" real time data of the whole of their mortgage and business loan portfolio

That implies the one "financial institution" is one of the big 4 banks
They have a pipe straight in
Why am I not surprised.


Interesting supposition - Does the regulator (RBNZ) have the same? Is it not the case that some government wholesale bank borrowing guarantees have yet to expire and by right should have that type of access?

Sorry for the typos, still a bit seedy after a NYs in Queenstown. I can't say any more on the party, what is implied is implied, as I'm part of the firm although not my direct confidentiality agreements abound.

Listen to the Chatter. I wrote this 6 years ago. Not a prediction.

Globalisation is a reality. Once there were hundreds of small to medium sized auditing firms around the world. They merged to become known as the "big six". The SEC caught Arthur Anderson with its thumb in the pie, and they became 5. Now they are 4. With globalisation and electronic systems, broking is heading down the same road as the big-six. Each with 1/4th global market share. Monitoring the flow of orders flashing across their screens. Powerful stuff. Open to abuse, front run, tailgate, take the other side. Be hard to ignore. Large scale self-sanctioned spy-ware. Private traders cutting their own throats.

Consolidation is gathering pace. Macquarie Bank tried to take over the London Stock Exchange. Macquarie is already big on Toll Roads (distribution). An exchange, any exchange, is just another "toll road". Punch the ticket. Collect the toll, as traffic passes through. Add in TradingPlatform fees and it becomes a future dual carriageway. With two toll collectors.

What happens when a "participating broker", who is a market-maker, also owns the market (exchange) ?.

Macquarie Bank failed in its quest for an exchange
ANZ, CBA, WBC, NAB all own Brokerage Houses.

Yes, and the repurchase agreement/rehypothecation shadow banking gearing conduit seems to have arrived at BNZ.


Original ZH atrticle:  A Record $2 Trillion In Deposits Over Loans - The Fed's Indirect Market Propping Pathway Exposed


Ancilliary llinks:"Are The Brokers Broken" , FASB 140


Repurchase and reverse repurchase agreements

Securities sold under agreements to repurchase are classified in the investment or trading portfolios and accounted for accordingly. They are not derecognised from the balance sheet as the Bank retains substantially all the risks and rewards of ownership. The Bank’s obligation to repurchase is classified under Due to central banks and other institutions. The difference between the sale and repurchase prices represents interest expense and is recognised in the income statement over the term of the repurchase agreements.


Securities purchased under agreements to resell are recorded as Due from central banks and other institutions. The difference between the purchase and the resale prices are treated as interest and accrued over the life of the agreements using the effective interest method.


Where the Banking Group has accepted collateral arising from secured placements and reverse repurchase agreements, the Banking Group is obliged to return equivalent securities. Securities repledged by the Banking Group are strictly for the purposes of providing collateral for the counterparty. These transactions are conducted under terms that are usual for customary standard lending, and securities borrowing and lending activities.


Securities lent to counterparties are also disclosed in the financial statements.  Page 16, BNZ  DS 09-2012


AG51 The following examples illustrate the application of the derecognition principles

of this Standard.

(a) Repurchase agreements and securities lending. If a financial asset is sold

under an agreement to repurchase it at a fixed price or at the sale price

plus a lender’s return or if it is loaned under an agreement to return it to

the transferor, it is not derecognised because the transferor retains

substantially all the risks and rewards of ownership. If the transferee

obtains the right to sell or pledge the asset, the transferor reclassifies the

asset in its statement of financial position, for example, as a loaned asset

or repurchase receivable. Page 85, IAS 39


Note 9 Due from Central Banks and Other Institutions

Loans and advances due from central banks $303 million

Loans and advances due from other financial institutions $413 million

Securities purchased under agreements to resell with other financial institutions* $101 million

Securities purchased under agreements to resell with non-financial institutions* $1,237 millions


Total due from central banks and other institutions $2,054 millions


* Classified as cash and cash equivalents in cash flow statement.


The Banking Group has accepted collateral of New Zealand government securities with a fair value of $1,316 million as at 30 September 2012 arising from reverse repurchase agreements, which it is permitted to sell or repledge (30 September 2011: $1,180 million).


Government securities with a fair value of $443 million were repledged as at 30 September 2012 (30 September 2011:nil).

Securities were repledged for periods of less than three months. The Bank’s obligation to repurchase is classified under due to central banks and other financial institutions.


Included in due from central banks and other institutions as at 30 September 2012 was $707 million of collateral posted with counterparties to meet standard derivative trading obligations (30 September 2011: $526 million ).

Page 28, BNZ DS  09-2012

Stephen: my head started to hurt by the time I was 1/4 the way into that. Any chance you could distill it down to 1 small paragraph what it all means? or the implications?

Unfortunately there are no shortcuts - comprehension of the accounting practices underlying the repurchase and reverse repurchase agreement/rehypothecation chain is absolutely necessay to understand finance as it really is today. 


The beneficiaries of such arcane deviousness expect the general population to fall asleep with the boredom of incomprehension so they can carry on unfettered until it's too late.

To start with, not my pet theory as such but one I generally agree on as its consistant and its the trend using the same data set that is what interests me.  The problem is determing what policy is correct given what is happening in the economy, first of course is you need to know what is happening.

What you are doing is of interest to me as its a different slant. What would interest me is the difference between the CPI, core inflation and your numbers and determining why.  So for instance one possible issue with the problem with picking items that are impacting households ie inflating is when you get bubbles or speculation caused by cheap fed money spewwd about by banks is it will I suspect (I cant see how you derive your data and its output) show an undue rise and in due corse a drop.  In effect its the equiv of a sort of seasonal impact on CPI.

Drop is disposable income, no I am not.  Of course some items are inflating such as rates at 6% or train fares at 20%...with little or no pay increase then day to day disposable income has to decline even if slowly.  On the other hand TVs are cheaper, computers are cheaper, broadband is cheaper and with UFB next year 40~50% cheaper. Take that as an example, I expect to save $80~100 a month next year with UFB that will indeed significantly increase my disposable.

Or another mortgages....I only have a small mortgage, currently its $60 a month down on 2008.  That is only 40k of course, those with 400k mortgages will see a huge change.

Another is inequality that has been changing,

As has servicing ever increasing debt.  How does your model(s) allow/include compensate for that? 

So has my disposable income increased? yes because mainly I have spent 4 years a) clearingly debt and hence the interest payments b) reducing my costs/outgoings eg energy efficiency.

Many macro models are actually the so called fresh water school and as such bunk IMHO...but thats another story.


Thanks for the response. See above to see how debt is factored in under Gibber contribution. You seem very fond of the salt and fresh water school of economic thinking. There is a third not based in acadmic circles. They are in the economic consulting firms, have a look, problem is getting the details. Information asymmetry is the game and problem.

Chris Tremain has since resigned his directorship on being appointed to Cabinet in April. But he told the Herald on Sunday earlier this year that he still had an interest in the company, thought to be through a shareholding held in trust.

Quality Minister you have there John Key.....

However it is very much buyer beware in NZ.  I have to wonder how well the buyers looked at the property.  I have always gone over a prospective house purchase with a fine tooth comb.  Ive even looked at friends for them to get an initial feel then get them to get a professional to double check.  The dogs are usually pretty easy to spot, (both the house and the estate agent) if you look, many its seems get glazed eyes.  If you dont know what to look for, pay someone who does, which of course is often the sticking point for NZers....


Loved this comment in the Telegraph,

Lesson # 1:
* U.S. Tax revenue: $ 2,470,000,000,000
* Fed budget: $ 3,620,000,000,000
* New debt: $ 1,150,000,000,000
* National debt: $ 16,271,000,000,000
* Recent budget cuts: $ 38,500,000,000

Let’s now remove 8 zeros and pretend it’s a household budget:

* Annual family income: $ 24,700.00
* Money the family spent: $ 36,200.00
* New debt on the credit card: $ 11,500.00
* Outstanding balance on the credit card: $ 161,710.00
* Total budget cuts so far: $ 38.50

Lesson # 2:

Here’s another way to look at the Federal Debt Ceiling:

Let’s say, You come home from work and find there has been a sewer backup in

your neighborhood…. and your home has sewage all the way up to your ceiling.

What do you think you should do ……

Raise the ceiling, or remove the waste?

The obvious difference is the Governement (unlike family finances) can print money. Also unlike the family this action screws everyone elses purchasing power and therefore disposable income. 

This is why the producer nations are accumulating gold......QE will not end any time soon.


Which is a very Austrian comment/response, ie more money in circulation = inflation. 

The problem is that at the zero bound trap more money doesnt cause inflation, This is because families (and indeed companies) have stopped spending and the economy is overall contraction.  And that keynesian model is a model that explains the last 4~5 years non-inflation very well.

To follow austerity right now is one sure way to cause a recession/depression. It was shown to be the case in the 1930s and the UK etc doing austerity again shows the same neg effect at some point hopefully the numb skulls will learn that.


The Keynesian theory is only applicable in the zero bound and with excess capacity. Using it at any other time is voodoo economics and the UK Labour party for one tried it in the late 60s and 70s and proved it was a disaster.

So at that time we switched to Milton Friedman's outlook/economics, moneterism.  Again IMHO his theories were pretty sound except a different generation of pollies and later acolytes took it yet again to extremes and turned it into yet more voodoo economics and here today we have an even worse mess.

My third and by no means last great economics "hero" is I think going to be Minsky. So far via Steve Keen's work we have some real insight on debt and its proving very crystal ball like in is accuracy....scary.


not the same thing....anyone who promotes such a comparison is either mis-lead, or wishes to to sell an agenda that has no factual basis.

The proper answer to the last of course is unblock the pipe and maybe install a bigger one (raise taxes)

Considering the high quality of most of your posts Im rather surprised at this one.




"Hollande called on the “patriotism” of the country’s rich to do their part during Europe’s more than three-year-old financial crisis."

Laugh? - I spate blood. 



(Effective on the first day of the first applicable pay period

beginning after March 27, 2013)

Chief Justice of the United States . . . . . . . .USD223,500

Associate Justices of the Supreme Court. . .USD213,900

Circuit Judges . . . . . . . . . . . . . . . . . . . . . .USD184,500

District Judges. . . . . . . . . . . . . . . . . . . . . .USD174,000

Judges of the Court of International Trade . . .USD174,000



Schedule Salaries - NZ

Chief Justice.............................................. NZD460,000

Judge of the Supreme Court ………………. NZD431,500

President of the Court of Appeal……………NZD431,500

Judge of the Court of Appeal………………..NZD405,000

Chief High Court Judge……………………...NZD404,000

Judge of the High Court…………………….. NZD385,500

Associate Judge of the High Court…………NZD293,000

Chief District Court Judge…………………...NZD385,500

Principal Family Court Judge………………..NZD333,500

Principal Youth Court Judge………………...NZD314,500

Principal Environment Judge………………..NZD314,500

District Court Judge………………………….NZD293,500

Etc. –see NZ link above

$150k USD more for being chief justice of a seventieth of the population sounds like a sweetheart deal to me!

Not a sweetheart deal for the taxpayer or shall we loan for generation can pick up the tab.

Not a sweetheart deal for the taxpayer or shall we loan for generation can pick up the tab.

You should correct for the exchange rate though.  So a better comparison is $293k v $217k, not sure on the costs to live I'd suspect its lower in NZ....the difference is however still excessive I agree.


no you do not correct for the exchange rate, you index to the relative cost of living in each country and actually it is the funding costs issue raised noted below...

Steven ,I did. Speck's, your dead right.

@ Steven -You should correct for the exchange rate though.


What difference will that make to the respective funding costs applicable to the citizens of each country?

It is a known fact that the cost of living in NZ is exorbitant and out of control - the respective salaries of the judiciary in each country is an indicator - Kiwis specialise in self financial rape and wonder why all is not well - is it not the case that the recently prosposed NZ petrol tax hikes are as great as the total taxes imposed on gas users in CA?.

Ask Andrewj about everday costs to run his new home near SF compared to rural NZ. 

While I agree in principle or overview ie that some things are out of control I think you are not being fair.

Known fact?  show us the data, NZ CPI inflation is 0.8 to 0.9% and looks like its idea what core is....that might even be deflating.

Yes sure lets gather all the numbers....correcting for exchange rate is just one of them. Lets correct for a more average exchange rate, 0.75 now we get to 231k. So Judicary rate is no real indicator....though, yes they look over-paid....but then so are lawyers generally.

Or take out the bubble of housing 50% over-valued where california has already correctly quite a bit.

I mean whats your point? just to vent?

I mean use real data like the council rates are rising at 6% per annum and have been for 10 years or it has trebled in 15 years (my personal data). On top of that while they increase debt levels which as rate payers we are liable for so the true rate is that is out of control.  The Q is why....Im not seeing anyone really take such accounts apart and examine why, until thats done we dont really know.

The petrol tax hikes are nothing, consider that even in a recession the banks profits are up, a far bigger impact on us.

Petrol will get expensive, and I mean really expensive, so take the indicator as an inexorable trend and sort out how to use less.

and just what will the voter do? vote for the same twits or the other set who promise us growth will fix it.....


Im in the UK at the moment staying with family, in their house built in 1580, we are surrounded by sword marks from the civil war. We are in Cornwall, heading to Exmoor then London. If I take a wrong turn it takes me half an hour to get back to the kitchen. I found some wine from 1870 and port too, searching for a way back.

  In the USA when I left  Petrol was $3.13 a gallon.  My rates, rubbish, electricity and gas(heating) was $193.00 last month, its been cold with a lot of snow. Internet is $39 a month unlimited.  Its soo much cheaper, I think we are going to be living on 30k a year less than in NZ. My chilren are in the school ski team and thats when you realise just how much cheaper it is in California. Skiing is cheap.

Also power tools are very cheap, got some 12 ml ply for $16 ,taps etc so cheap you would find it hard to believe.

You guy's are getting screwed.

The petrol tax hikes are nothing, consider that even in a recession the banks profits are up, a far bigger impact on us.


Only because a segment of the population wishes to consume today that which they can only afford tomorrow. Fortunately the currency remains strong and the punishment is limited to those doing the paying.


Nonetheless, it's a blight the unencumbered have to endure - and they call it democracy.

SH, Actually our economy is dependent on the majority consuming today what they maybe just might be able to pay for tomorrow cf the works of Steven Keen.

Steven, prices go up therefore banks profits go up as people borrow to spend QED.

And it's not a democracy, that would imply represtation at least, it's a de-mock-arsey, or an intepocracy.

Decidedly to many Steve's in this post.

Stephen Hulme,

"Kiwis specialise in self financial rape and wonder why all is not well..."

Yes, by and large we're all going the way of Michael Hutchins.

Thank you VERY much AJ....such a treat for the new year.

See that massive Oak slab in the corner of the cellar behind the vintage's a trapdoor..waiting for you...heave the sod up and take a hike down into the dungeon. Let the door drop.

They already found a body in the wall, although he had been there a long time in a Priest hole, they managed to find out who he was and give him a proper burial. He was behind an old fire place.  

 Bloody hell its rained every day we have been here, no wonder so many people want to leave the place. Today its blowing ,raining and cold so a nice change.  

  Everyone wnats to come and live alongside Wally, they just have to find you. Although I think I could give them some pretty good directions, just follow the sun and look for lots of fish and deer.

 Up here on  Exmoor they released 1.5 million Pheasants, bloody things are everywhere, they charge about £30 -40 a bird so its good money but no one likes it a lot.  They are digging up the lawn. Also 8000 Badgers are about to get the chop ( Tb).

 Its so wet roads are blocked and water is everywhere, it is taking us ages to get about. The wettest season for ages, trees are falling over and everyone is a bit angry about it all.


Happy New Year AJ, always enjoy your posts.  Have you seen many ex-pat Mexicanos enjoying the Californian ski fields?