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IMF calls for 'significant increases' to the OCR, more targeted govt spending than fuel tax cuts, a lower corporate tax rate and introduction of a capital gains tax

Public Policy / news
IMF calls for 'significant increases' to the OCR, more targeted govt spending than fuel tax cuts, a lower corporate tax rate and introduction of a capital gains tax

The International Monetary Fund (IMF) warns the government and Reserve Bank (RBNZ) need to be careful removing emergency support from the economy.

It suggests the government continues to ensure fiscal policy is targeted. Meanwhile it maintains the RBNZ needs to make “significant increases” to the Official Cash Rate (OCR) in the near-term to get on top of inflation.

The Washington-based organisation included these recommendations in an annual review it did of the state of the New Zealand economy, following consultation with government authorities.

It said the RBNZ had to undertake “swift policy normalisation” to signal that addressing inflation is a priority.

The IMF said fiscal policy should “remain agile”. It credited the government for targeting support to businesses struggling due to Covid-19 by providing temporary support payments. It noted the importance of helping those who need it, without adding to demand pressures in this inflationary environment.

However, the IMF said the Government should not provide fuel excise duty and user charger cuts beyond the three months already committed to. Finance Minister Grant Robertson has kept the door open to extending the $350 million dollar policy beyond three months, should petrol prices remain high.  

Rather, the IMF recommended introducing measures to better target vulnerable households struggling in the face of rising living costs.

It said public debt levels are sustainable and there is “substantial fiscal space” available to address downside risks.

The organisation said “downside risks dominate in the near and medium term”.

“The most immediate risks are further outbreaks of Covid-19 variants, either globally or within New Zealand, and further intensification of geopolitical tensions, which could adversely affect economic activity and inflation in New Zealand through weaker external demand and higher commodity prices,” the IMF said.

“Extended global supply chain disruptions could impact growth and inflation. Slower growth in China could have a significant impact on New Zealand’s economy given China’s importance as a trading partner.

“Apart from Covid-19, domestic risks are centered around financial stability and growth implications of developments in the housing market due to high household debt, borrowers’ vulnerability to rising interest rates, and banks’ high exposure to housing.”

The IMF was supportive of moves the government and Reserve Bank have made to date, which have directly or indirectly cooled the housing market.

However, it said providing local councils and iwi with financial incentives to step up the provision of basic infrastructure for new developments would be helpful.

Tax was another area the organisation saw room for improvement in.

“Transitioning from relatively high corporate income tax to other sources, such as capital gains and possibly land taxes, would improve efficiency without reducing aggregate revenues,” it said.

Finally, New Zealand’s response to climate change was inadequate in the IMF’s eyes.

“The recent rise in carbon prices is welcome, although addressing agricultural emissions - the largest single emissions source - will require the successful implementation of planned agricultural emissions pricing,” the organisation said.

“The forthcoming Emissions Reduction Plan is an opportunity to strengthen the price-based system, which would incentivize the adoption of new technologies and methods needed to achieve the targeted reductions.

“Parts of the proceeds of higher emissions prices should be used to further mitigate adverse social consequences.

“Complementary policies to address emissions, including through stepping up public investment and encouraging innovation, can help accelerate the transition to a low-emission economy.”

Beyond this, the IMF was generally happy with the management of the economy, including New Zealand’s Covid-19 response.

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111 Comments

Racing towards a -30 Crash in home prices by December this year !

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25

That will only need a 24% crash in nominal terms, if inflation is running at 6%.

Now is a great time for potential home buyers to sit and wait.     The difficulty is finding a place to invest their deposit that is low risk & still beats inflation.

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30% decrease in home values is close to 50% loss in gains. So many hidden numbers, please don't mention agent fees, TAX fees, lawyer fees, accountant fees, its starting to give me the Heebie Jeebies.

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Fitzgerald

Just keeping a balance in comments. :)

Yes, decrease of 6% in house real values due to inflation is also a 6% decrease in real value of mortgages.

Recent FHB will be happy - that $700k mortgage will have decreased in real value by $42k. Us lucky boomers who lived through the 80s well know how mortgages can deflate away. :)

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This might be the case if your income goes up.

It seems like we have a situation where costs are going up but incomes are flaccid. Quite different from the 80s.

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While I don't think increases to incomes will necessarily match inflation, I hear there are a lot of people (especially at the less well off end of town) who are demanding pay increases and getting them. Unions are seeing larbour shortages due to Covid as an ideal time for industrial action (see the CHEP worker strike).

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For some and not limited to pay bands. I managed to get 15% increase in my contract day rate from 1 year back. Though that's about all its gone up in 4 years. And on the back of more experience. I'm also in a high demand skill set. 

But that's Not even close to matching house price inflation over the same period.

The disconnection between our wages and the cost of housing is still completely out of sync... and will be until house.. Prices.. Fall! 

All the cpi inflation will do is eat further away at disposable incomes.

Also, you wait for the new migrants to start flooding in next year and then try asking your boss for a pay rise. See how that turns out ;) 

 

 

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Brock

Real value drop in housing is also relevant only if your income rises. 
Sorry son, much as one would like, one can’t argue just the drop in real value of housing without conceding real drop in mortgages.

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Don't bother P8, you'll get nowhere. Also it's dangerous and draining dealing with negative people, you try to help them but they're more powerful at bringing you down.  Just focus your time on your own business would be my advice

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Yvil, you're sounding more bitter and twisted with each passing day!

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Kapai Yvil, I tried to place a wager with 2022 but crickets..... doesn't have the minerals as Turkish would say.

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hence the expression, as greedy as a pig

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are you referring to this comment ?

by Te Kooti | 23rd Mar 22, 12:32pm

I'll have some of that, how much do you want to do??

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that's the one son. 30% fall by December wasn't it?

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Yeah, still reading through all the fine print on your terms and conditions, might need a lawyer in case I missed something.

I notice your comments seem to have a common theme of being Whining and Moaning, according to others. ( Maybe even racist ).

So I see you feel threatened by the increasing narrative the property market is Tanking.  Biggest Bubble in the world is now heading for the Biggest Economic Crash ever recorded in the World.  Simple stuff really. Im not sure why people find this so hard to cope with.

So how can I help you there Kook ?

 

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And your posts have a common theme of poor grammar and hyperbole, but I promised to be more respectful so I'll leave it there,

We didn't get to terms and conditions so sense you really aren't prepared to back your mouth. My bets are always to charity by the way.

NZ median house price from March to December ok for you?

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Obviously from the Peak to December. November 2021 to December 2022. 

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Hi Yves,

Making a basic point about the current situation being more akin to stagflation rather than the inflationary environment of the 1980s is not being a "negative person". 

But you are welcome to take your own advice and mind your own business at your slum motel or poncy apartment until you figure out how to be less conceited and condescending.

Have a nice day.

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Just to clarify the point being made, mortgages are paid off from income.  Everything else getting more expensive while your income stagnates does not reduce the burden of your mortgage. In fact, it increases it because there is even less money left over after other essential expenses.

It's not the 1980s redux.

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Incomes are not increasing anywhere near as fast as inflation. Real incomes are going backwards.

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Well said Brock👍

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If inflation is at 2% and your income raises by 1% you are in fact still 1% worse off (?)

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Not really, in the eighties it was the same problem, rising costs no wage increases

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I thought mortgage rates peaked in the early 1980's then started falling substantially throughout that decade? So not really like the 1980's at all because rates are going up now not down right?

Wouldn't the current period be more like the late 1970's with exploding mortgage rates.....but the only difference is is that we've got insane levels of debts against the housing market which we never had in the 1970's. And house prices fell quite considerably in real terms in the 1970's.

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and the music was better

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Are you even sure what you're saying 

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RBNZ will just do whatever IMF is suggesting.The OCR is still at emergency levels it should be around 4% if RBNZ does not do its job you will see NZD tumble and keep tumbling till it does what it’s told, this will make inflation go sky high and no coming back from there.

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P8 also the house will only be worth 490k at best deposit gone and in negative equity not much to cheer about just should of waited a couple of years could of up graded to five bedrooms rather than two.

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I'm in that position and am largely sitting on cash after reducing equity exposure since the end of last year. I'm ok to take a 7% or so percent loss on inflation at this time.

Central banks are behind the curve and are about to ramp up their inflation fighting pressure. People say markets go well during rate increases but I think that's too simple and that we've had an unusual amount of monetary support leading to unusual gains in asset prices. Slow and measured increases are easy for markets to handle but not so much fast and unexpected increases and the fed is also about to start selling back their bonds reducing liquidity in the system.

As long as there is inflation, the central banks aren't saving the day like in 2008 and 2020 yet I don't think most people recognise this difference and think that any house price fall will be limited, because it was in the past. It may well be limited, and if it is there still probably won't be gains for quite some time. Anyway based on my view of the probability of outcomes, cash isn't a bad place to be right now i think.

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Yip, the reason markets often go well during tightening cycles is that the tightening is necessary to tame a strong economy.  This time, the underlying economy is fragile and already showing signs of turning over.  

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Philosophically speaking.  If house prices aren't included in CPI can or should they be considered in nominal terms.   I don't know

 

Thoughts??

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Meanwhile Wellington has next to no suburbs under One Million Bucks. There is Gold in those hills.

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The gold rush comes from the city's largest employers always being flush with cash, even in these difficult times.

Inflation is good for Wellington's economy - hiring is up across town for more workers to sit around meeting tables and discuss how to spend extra revenue from GST and PAYE.

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Robertson and Adern risking looking like greater fools if they consider reintroducing the fuel taxes if oil prices are even higher in three months time than they are now.

It won't go down at all well from a political perspective....so it might be hard to ever reintroduce them back to where they were...but who carries the loss long term? The government/tax payer? Or do we just run even higher deficits that risk even higher inflation, with reduced expenditure on roading infrastructure?

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I think Labours on the back foot, they've made quite a few mistakes and they are coming home to roost now... wouldn't be surprised to see them lose next year due to the damage they've created

Convoluted covid rules which have damaged many businesses and livelihoods which are now being reversed at a time when covid deaths have been never been higher

Creating divisions in society with mandates

Ignoring protestors who were protesting the exact issues they are now reversing

Borrowing billions and spending on non productive wasteful spending which has now created record inflation and increasing the cost of living dramatically for everyone

Ignoring the bill of rights for local and overseas kiwis, who have massive uncertainty about whether the rules will change and if they can enjoy their normal rights as citizens or even come back home again (which is also a human right in NZ)

I think in general they have made life harder for most New Zealanders

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Covid deaths have never been higher. 

 

You realize that if you died in a car crash and had covid 4 weeks ago you would still test positive on a pcr and therefore count as a covid related death

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When the govt clarified on the three different death stats I knew they'd lost the plot in communicating with a lot of the population. By the looks of it many people like yourself can't get their heads around it... 

Even worse trying to get people to understand likelihoods and risk.

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Deceased - Includes all cases that died who died within 28 days of being reported as a COVID-19 case. In some of these cases, the underlying cause of death may have been unrelated to COVID-19

 

That's the definition according to moh. Studies have estimated that up to 75% of deaths reported are unrelated to covid.

 

But the fear should be real aye.

 

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They have 3 stats, which they've made very clear in multiple briefings. The 28 day one is the most live and lowest delay version they can use due to all of the delays involved with coronial inquests etc. This is standard practice worldwide to aid in modelling impact on the health system, its purpose isn't to show the number of underlying covid causes of death.

The underlying cause of death stats are there to see for anyone who wants to... It's not like they're hiding it. They just are very delayed, and backdated all the time. Far beyond what is useful for trying to deal with a pandemic in real time. 

But yes it's all a big conspiracy to scare people... big govt out to get ya and make you stay at home and spend less money and make less tax revenue... oh. Well the power though, they want the power so that they can... make you stay at home and... spend less money. Hmm.

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The thing is, I think our policy wonks are actually smart enough to see that we see their BS.  It's a lovely moment to see the cringe in the press gallery at these times, - what to ask that avoids the no clothes situation.  Given they are all on the payroll it is delightful to see them squirm.

The government has clearly walked away from the situation now and for me this is a real shame.  I think they are unwinding all the good they did themselves in the first couple of years.

Of course who knows how bad COVID is in the country, perhaps we can do the ol' excess deaths analysis, what we do know for cast iron surety is that the official information flow is fake news.

 

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nah, the IMF referred to "sound management" from this govt...your comments sound like the Republicans and NRA...the right to mess other people up...

and looking at the deaths without the "convoluted covid rules" we'd be seeing 25x the deaths(unvaxed making up roughly the same  deaths of vaxed from 4% of the population)....and ignoring 4% of the people grandstanding is a no brainer...otherwise we'd have to listen to any old 4% mob...even 49% dont get to change the cannabis rules..

covid made life harder, same as every other country except our harder is nowhere near as hard as most, theres been no manual for this drama, and aside from a few glitches its been steady , communicated and based on best advice from people who know what theyre talking about.

It may yet crash and burn but a national right wing govt would have screwed us from the start..at least now we have a fighting chance

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Well said, I don't know where this idea that the pandemic was mishandled here is coming from. I have family in Spain and UK, and friends in Oz, US (few different cities), Netherlands, Germany, Italy and India.  When I've spoken to them during the pandemic and heard what they were facing compared to our situation I felt guilty about how good we've had it compared to them. Has it been easy? No. Has it been pleasant? No. But it has been miles ahead of any other response. 

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Out of interest what would you have done differently over the last 2 years.  Personally I'm not a fan of mandates but overall as a country we seem to have managed this reasonably well 

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reduced expenditure on roading infrastructure

But it is broader than roading infrastructure. It was announced in Budget 2021 that non-roading projects will also receive funding from the National Land Transport Fund (NLTF).

Robertson will likely use his strong public balance sheet argument to justify borrowing more to build new assets. That is of course if the Treasury can capitalise the hundreds of millions to be spent on the public consultation process for new large-scale projects.

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Well they would say that, wouldn’t they?

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To be fair they might actually have a point (even if they have other outcomes targeted).  If we do not keep our OCR in-line with the other nations we trade with we will be discounting our trade with them.  I am all for being a good global citizen but surely we should be able to make out when fortune favours our commodity trade?

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Aren't these the same people who supported QE for years?

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Orr: hits the BIG RED BUTTON

 

 

(...of 25bps increase)

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Significant OCR change needed asap. The average man/woman getting fried without it, Banks are profiting while waiting for it, and now the IMF requests it. All the while NZ economy is burning down under the heat of inflation.

What the "bleep" is Mr Orr doing...?

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Pretty hard to use the words "remain agile" and "Orr" in the same sentence. The word "T-orr-toise" comes to mind.

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Mr Orr is doing what he has been visibly doing for years - taking orders as outlined in this article from the likes of the IMF. Central banks are not as independent as people may believe. 

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Orr is a joke. The OCR should already have been raised to 4% by now. The longer Orr waits to acknowledge reality, the higher he will be forced to go with the OCR later on. That he still does not get it is beyond belief, it would be comic if it was not potentially tragic.  

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The reserve bank is often accused of being too late to the party and then staying too long (they put the rates up too late and then by too much).  Orr has already made the first mistake, I guess he needs to make sure he doesn't make the second. 

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Yes, recall that saying just prior the 2008 GFC when Dr Bollard was frantically, but belatedly, racking up interest rates to quell the then so called housing price surge. Pretty minor in comparison to the recent few years. Yep arrives at the party, too late, stays too long, does too much. As someone quipped here something like, somebody turned off the lights too.

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IMF appear to have a better grip on NZ economic environment than our highly paid specialists, always amazed at the direction-less mumbo jumbo that comes out of them.

Tax was another area the organisation saw room for improvement in.

“Transitioning from relatively high corporate income tax to other sources, such as capital gains and possibly land taxes, would improve efficiency without reducing aggregate revenues,” it said.

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Why does noone have this as a policy, would it be politically impossible even if it's tax neutral?

Increasing incentives to start business, and reducing incentives to bank land is exactly what this country needs.

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Yeah. Feels like 'left' wing parties would crush you by saying you're making everyday homeowning kiwis pay for corporate greed and 'right' wing parties would crush you by saying you're punishing hard working kiwis who lifted themselves up by their bootstraps and bought houses when they were cheap.

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They do, the party is called TOP.  Their tax policy for the last 5 years is tax neutral and redirects investment into productive enterprises with a land or capital gains tax.  It also does away with all the over calculation of what benefits everyone should get by just having a UBI and it's still tax neutral. Add in a 35b boost to infrastructure and R&D. 

They are the only ones talking about a fundamental change to our tax system as well as our welfare system.

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No thanks

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Indeed and I voted for them last time, however I think their tax policy as it relates to assets such as peoples houses is whacked and so bad as to make voting for them again a non-starter.

The last time I looked they still wanted people to pay a tax on a "paper gain" in the value of their houses.  It's all a bit... special.

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Why? When everyone is using that paper gain as leverage, it has a real effect on financial systems and investment classes. Namely that it encourages investment in further unproductive speculative markets.

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It can't be politically impossible but it appears quite complex to get right.  Just throwing a tax on asset growth is one thing, but taxing the growth in the value of businesses that are creating value and employing people is a disincentive.  I think a capital gains tax on assets that are only creating revenue through rental income might be a useful distinction?

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The IMF have been saying this for years and years and yet it always gets ignored.

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Pretty easy to come up with good policy when you don’t have to convince voters. The fuel tax decrease is a good example: I highly doubt labour wanted to implement it, but it is a vote winner unfortunately. 

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The fuel tax is stupid. We should be removing barriers to evs not ice cars. 

Provide tax rebates on electricity or something for evs, same effect, but would also encourage faster adoption much needed green tech.

 

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"the RBNZ needs to make “significant increases” to the Official Cash Rate (OCR) in the near-term to get on top of inflation"

Yes, we need to take the medicine now and raise the OCR agressively now otherwise we will end up like Argentina etc

They had inflation at less than 10% in the 2000s... against a backdrop of low inflation globally.

 

 

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You would be penalising the middle class all over again. Lets get some new ideas (BUT who has got them without self vested interests

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How about the IMF can just bugger off and let us sort our own shit out.

 

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Because in case you have not noticed, its up to our necks and nobody is doing anything. New Zealand is at the point of a new type of "Deep Dive" and its not going to be pretty.

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I knew someone would say this, the arrogance here is beyond comprehension...

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With Orr still at the helm of the RBNZ, an OCR still at the ridiculously low level of 1%, and the RBNZ so behind the curve that it is not even funny, we really need all the help we can get. 

 

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1% is ridiculous. I’d say there is almost 100% chance of a .5% increase or more at the next review. A 0.25% increase would be bordering on negligence. 

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Thankfully we have 200 years of history on interest rates, - just check google - those who think we wont reverse to mean, past it and back to mean again are deluded. 

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Yes indeed... the previous governor gave a speech on this very point when he introduced LVRs probably at least seven years ago now.

 

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The "mean" depends on the timeframe used.
If you want to look at 200 years of data then you'll see there's a clear downwards trend with some temporary spikes up.

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Because we're not sorting our own shit out, and ultimately that leads to countries asking the IMF for a bailout. So it should only be fair for them to raise red flags prior to that point.

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The global energy supply is more concentrated than it was pre-Covid. Look no further than the US shale belt where the 2020 oil glut forced scores of independent players to sell their assets and operations to the cashed up global supermajors.

The world believes large corporations and petrostates will come to the party and drill more, when clearly the shared interests of these parties are for energy prices to remain higher for longer.

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Inflation is definitely a huge issue. Give it 12 months and it will look very different, for the better I mean. Sadly house prices won't crash (long term) the wait for prices to crash advice will the be same as it has been for the last 50 years And tomorrow the sun will come up. We will still have online banking professionals that are the same professionals that could do open heart surgery because they have read some stuff on Google. Labour will get rolled next election, (God willing) and this news feed will still be a laugh a minute. Labour's mistakes are all finally coming to the surface , they can't hide behind covid any longer. 

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House prices won't crash because..... blind faith.

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House prices won't crash because.....   Luke83 is overleveraged, trapped in a buyers market while prices are tanking, greed controls him and cannot lower his price to meet the market. Insecure, afraid, arrogant, sensitive and just overall narcissistic.    Just Saying !

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We could say something equally ridiculous about you in the upside. Why do you feel the need to make inane and nonsensical comments

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The cheeky "long term" out thrown in there. Anything is possible "long term", comment void.

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I dont think the NZ housing market is ready for a reality check and would prefer to continue believing these really are townhouse developments and not a lot of boxes nailed together and squeezed into what should be a section for one family home.

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The IMF are neoliberal ghouls who only serve the interest of capital. So, of course they think that the OCR should increase - rich people need real positive return on their capital or they lose wealth.    

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It is exactly the opposite - with increases to interest rates almost all asset classes valuations fall - it is basic economics. This hits what you call "rich people" the most. 

Social inequality increases with an ultra-loose monetary policy, and social inequality increases with rising inflation, which typically affects most lower economic status sections of the population. Just look at the redistribution of wealth from workers and the real economy to parasitic housing specufestors that we have seen in NZ as a result of the dumb ultra-loose monetary policy of the RBZ in the last few years. 

And I can guarantee you that the fight to get back inflation under control will see the lower economic status sections of the population suffer quite a bit. There is no free lunch, and now it is time to pay the piper and to wake up from the delusion of unlimited, dirt cheap money.    

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Sorry, let me be more precise. 

When I talk about 'rich people' - I am talking about the top 1% - where the real money and power is.

Rich people scream for interest rate rises because they want to see inflation squished very quickly. Why? Because inflation favours debtors and punishes creditors. Guess what? Rich people tend to be creditors amnd poor people have debts.

What you see during inflationary periods therefore is an increase in the slice of the wealth pie owned by everyday people, and a reduction in the slice of the pie held by the 1%. You can see this really clearly here. Look at the 1940s and 1970s. Historically (and mathematically), moderate-to-high inflation tends to reduce wealth concentration amongst the 1%. They don't like it.

Hyperflation in failed states is obviously a different issue - that screws everyone.

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Who do you define as 'rich people'?

The usual definition includes asset owners and discounting future cash flows at higher rates results in lower asset prices.

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nice.

but I prefer this:

poor => got less than what he needs

rich => got more than what he needs

sociopath => got more than what 100 people need

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See above. Super rich people own other peoples debts - they are creditors. Inflationary episodes are good for debtors and bad for creditors.  

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Nice article - thanks for sharing. Some good inputs from Shiller and Dalio :-)

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100% standard neoliberal drivel from the IMF. How will rapid hikes to the OCR speed up the ships, stop the war in Ukraine, or conjure inventories out of nothing? Utter drivel.

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This was all foreseeable I don't know why some are surprised. Flooding economy cheap money which feed into the housing system to over inflate one asset type, nothing productive came from the billions. Reality for a lot of new builds are they be be worth 10-20 percent less on open market than they just paid. Building collapse by Year end inflation on building costs aren't under control.

 

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Naughty of the IMF to suggest, yet again, that New Zealand introduce a capital gains tax, because they know that would require Jacinda Ardern's departure from politics.

But a national tax on the unimproved value of all land, yes. As long as it's called a 'rate' or a 'levy', it is the one asset tax not yet ruled out by the Labour Government. And it is the perfect tax:

1. Easy to implement, because it is just another line added to the existing local-body bill for city and regional rates.

2. Nicely focused, because it would temper the craze for real estate and help to divert investment to productive areas.

3. Fair, because it would affect every person and business resident in New Zealand, either directly as owners or indirectly as renters.

4. Just, because it would also force non-resident foreign investors to pay tax on their land holdings.

A national land tax should be used to finance a nontaxable universal basic income (UBI) that would more than recompense the poor for the cost of increased rates or rent, but not compensate those over-invested in land not used productively.

 

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Too fair, too logical. Won't happen.

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Think of the property investors, won't somebody think of the investors?!!

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The poor mom&pop landlords and their nest eggs!

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You can’t lose on property though mate, Ashley told me. 

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It's both shocking and unsurprising that the IMF, sitting in Washington, can make better policy recommendations than anybody in Wellington. Particularly the points on monetary policy: the fact that the RBNZ has not taken meaningful action in the face of strong inflation indicates that the central bank is wilfully ignorant of its mandate. I question why Adrian Orr still has a job.

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Not shocking at all. Orr is incompetent. Predicting a 20% fall and then unleashing policy that created a 40% rise.. How much more evidence do people need. ' We didn't predict' and 'Couldn't foresee' are unacceptable excuses when the job is steering the economy based on prediction and foresight. Get rid of him.. stop giving him my taxpayers money for screwing things up. He IS the problem.

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I think the system is the problem, not the man. Large ship, lots of momentum, and he’s a very small Orr to steer it. 

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You're won't believe who is in charge of regulating the stability of this system. How many 'stable' systems do you know that have massive swings from one period to the next? 

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They talk.  We thinking of saying this....what do you think?  Tweak it like this.  It will give the market more notice and time to adjust.  I'll just get my speech ready.

if the IMF is as effective as WHO in the early stages of a pandemic then its gonna be too late anyway....

 

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More good news for spruikers 

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Sadly, our pathetic Poli's will only see what they want to see & hear what they want to hear. Nothing changes. It would be good if our RB did have some semblance of neutrality from the M of F but once again, Robertson's at the wheel & it would probably be a similar story if the Nats were in power. The mistakes, however, have been far & wide. The Fed rate is only at 0.25-0.50% when their inflation is 6.9%. Every civilised central bank worth its salt is currently way under their inflation line by 75% or more. They still see inflation as not lasting that long - is the only thing I can think of for them to continue to do this. Perhaps they'll be right this time? We can hope.

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Oops all those who have put in their savings in a house, now facing a loss in value.

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... has Covid-19 addled the brains of the IMF ...  they're calling for a CGT when we effectively already have one , the 10 year brightline test ...

Plus ... property prices are drifting down ... there's precious little " gains " to be made here for 5 years or more...

 ... had they called for a comprehensive land tax , they'd have my attention 100 % ... and my respect ... tax the value of the land , annually .... 

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Agreed. Simple, captures all the missallocated capital, very low implementation costs, and all but impossible to avoid.

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I've been warning people about this for years but my friends and family called me chicken little. Well here it is people, the storm has arrived.

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I recently fixed for 5 years @ 4.95% as we're going to single income (having a baby). Whilst coming off a 2.29% rate means I'm paying more than double in interest, it still seems a solid bet alongside certainty

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