Biggest bank jumps first after hotter-than-expected CPI data; hikes fixed mortgage rates by around 45 basis points and deposit rates by around 30 basis points
The post-pandemic supply chain disarray coupled with Putin's war and energy- and climate-driven shocks to food production are picture perfect cover for the endgame prescription of disaster capitalism. The mantra is Never Let a Crisis Go To Waste and we are watching the textbook case study unfold in real time.
Decades of light-touch neoliberal deregulation, cosy revolving-door relationships between governments and globalised fnance, and aggressive climate denial and obstruction are going to make the world unlivable before most people even realise what happened.
Working in industries where we have had to lift salaries substantially, pay increased transport and shipping costs, get weekly price increases from suppliers and have difficulties operating due to labour shortages impacting our ability to make basic products, I do not understand why everybody is so 'surprised' about ongoing inflation.
Since the failed 'transitory inflation' claims were soundly debunked, central banks and economists have been so far removed from reality, one has to question whether they actually have any understanding of the current market dynamics.
Expecting government to help was also proven to be farcical over the past 2 years, they were no help in the Auckland Port issue, shipping crisis and costs, and actually increased bureaucracy at the same time.
Thanks for highlighting the impact excess profiteering has on inflation. I do wonder what can be done about it though? Having the reserve bank being able to levy some sort of windfall tax on profits to combat inflation in addition to interest rates maybe? But man that is a minefield.
One thing is certain though it is clearly not fair for workers to pay both in higher prices and in lower pay just so many companies can continue to make mega profits during times of high inflation.
Wages have stagnated for decades, how will we ever restore those lost living standards if the whole system keeps workers pay artificially low to support itself?
I think we (the world) collectively have been under-pricing things and this is a bit of a catch up to the reality that everything we do and consume has a cost. For too long there has been a constant capital injection (usually coming from money printing somewhere) to subsidize the costs. It reads just like our housing market where residential tenancies have been a very poor investment decision based on the fundamentals but people still piled on in because of the capital benefits.
You have touched on this before Bernard, the RBNZ Funding for Lending program is certainly increasing bank NIM! Term Deposits are at lower rates as the banks don't need to attract the capital. The RBNZ gives it to them cheaply. It should have been stopped ages a go!
Not much change from $2K to get to Syd and back this week, crazy dollars vs 'the good old days' but possibly reflective of what it should be given the carbon footprint etc.?
On the note of social investment, it is interesting to have this conversation again. The social investment approach is a valuable one, but I see limitations in how National want to use it to drive all decisions. Nicola Willis talked about the 'ramping up' of initiatives when they look to be successful. However, this makes assumptions that a successful intervention, as demonstrated through data, would produce the same, or similar results, in other contexts. It also doesn't account for multiplier effects of waiting to introduce an intervention into the wider population, when the issue may have actually gotten far worse as a result of delaying the intervention to the wider population.
A good approach would be to make sure we also lean on our researchers and evaluators when making decisions on interventions, along with the social investment approach. These professionals can talk to people, and understand their contexts, to help understand the nuances of an intervention, and whether it could be scaled up.
Also, sometimes we don't need to wait to see the data. For example, I'm sure most could agree lunches for children in schools was bound to produce better outcomes for society.
Pretty worried about Nicola Willis' latest proposal to make public-services more privately-profitable... I get the sense that there'll be plenty more Libertarian nonsense drooling out of National between now and the election.
I don't think its particularly helpful to highlight that profit has risen in our current situation. It's reasonably basic economic theory that:
a) prices should increase when there is too much demand chasing too few goods in order to equate supply and demand; and
b) prices in a market economy are, for the most part, set by what the market is willing to bear rather than on a cost basis.
When we discuss house price inflation we don't put the majority of the blame on price-gouging homeowners - we understand that house prices increase because demand outstrips supply (and the discussions on appropriate immigration, infrastructure, zoning etc follow).
The post-pandemic supply chain disarray coupled with Putin's war and energy- and climate-driven shocks to food production are picture perfect cover for the endgame prescription of disaster capitalism. The mantra is Never Let a Crisis Go To Waste and we are watching the textbook case study unfold in real time.
Decades of light-touch neoliberal deregulation, cosy revolving-door relationships between governments and globalised fnance, and aggressive climate denial and obstruction are going to make the world unlivable before most people even realise what happened.
Working in industries where we have had to lift salaries substantially, pay increased transport and shipping costs, get weekly price increases from suppliers and have difficulties operating due to labour shortages impacting our ability to make basic products, I do not understand why everybody is so 'surprised' about ongoing inflation.
Since the failed 'transitory inflation' claims were soundly debunked, central banks and economists have been so far removed from reality, one has to question whether they actually have any understanding of the current market dynamics.
Expecting government to help was also proven to be farcical over the past 2 years, they were no help in the Auckland Port issue, shipping crisis and costs, and actually increased bureaucracy at the same time.
Thanks for highlighting the impact excess profiteering has on inflation. I do wonder what can be done about it though? Having the reserve bank being able to levy some sort of windfall tax on profits to combat inflation in addition to interest rates maybe? But man that is a minefield.
One thing is certain though it is clearly not fair for workers to pay both in higher prices and in lower pay just so many companies can continue to make mega profits during times of high inflation.
Wages have stagnated for decades, how will we ever restore those lost living standards if the whole system keeps workers pay artificially low to support itself?
I think we (the world) collectively have been under-pricing things and this is a bit of a catch up to the reality that everything we do and consume has a cost. For too long there has been a constant capital injection (usually coming from money printing somewhere) to subsidize the costs. It reads just like our housing market where residential tenancies have been a very poor investment decision based on the fundamentals but people still piled on in because of the capital benefits.
The externalities have finally caught up to us.
You have touched on this before Bernard, the RBNZ Funding for Lending program is certainly increasing bank NIM! Term Deposits are at lower rates as the banks don't need to attract the capital. The RBNZ gives it to them cheaply. It should have been stopped ages a go!
Not much change from $2K to get to Syd and back this week, crazy dollars vs 'the good old days' but possibly reflective of what it should be given the carbon footprint etc.?
On the note of social investment, it is interesting to have this conversation again. The social investment approach is a valuable one, but I see limitations in how National want to use it to drive all decisions. Nicola Willis talked about the 'ramping up' of initiatives when they look to be successful. However, this makes assumptions that a successful intervention, as demonstrated through data, would produce the same, or similar results, in other contexts. It also doesn't account for multiplier effects of waiting to introduce an intervention into the wider population, when the issue may have actually gotten far worse as a result of delaying the intervention to the wider population.
A good approach would be to make sure we also lean on our researchers and evaluators when making decisions on interventions, along with the social investment approach. These professionals can talk to people, and understand their contexts, to help understand the nuances of an intervention, and whether it could be scaled up.
Also, sometimes we don't need to wait to see the data. For example, I'm sure most could agree lunches for children in schools was bound to produce better outcomes for society.
Pretty worried about Nicola Willis' latest proposal to make public-services more privately-profitable... I get the sense that there'll be plenty more Libertarian nonsense drooling out of National between now and the election.
I don't think its particularly helpful to highlight that profit has risen in our current situation. It's reasonably basic economic theory that:
a) prices should increase when there is too much demand chasing too few goods in order to equate supply and demand; and
b) prices in a market economy are, for the most part, set by what the market is willing to bear rather than on a cost basis.
When we discuss house price inflation we don't put the majority of the blame on price-gouging homeowners - we understand that house prices increase because demand outstrips supply (and the discussions on appropriate immigration, infrastructure, zoning etc follow).
Thanks Bernard,
Can we open up today’s post to the public please?
Bernard are you still ‘team transitory??
Wayne Brown's comment absolutely baffles me.
ITV News at 10 presented by Tom Bradby on Wednesday 19th October 2022
https://www.youtube.com/watch?v=e-AgqBHjhA8
What happens if the OCR hikes will not bring down inflation? What will they do then after creating unemployment and ruining people's lives?