Featuring the podcast of our weekly Hoon live webinar, plus five things that mattered this week, including the latest big climate, transport, housing and political news in Aotearoa, and in geopolitics
Bernard perhaps you should be looking at our trade deficit - it has just taken a severe turn from bad to (very much) worse - it gets fudged by being presented as a percentage of GDP but that is smoke - it is meaningless as a measure of our relative wealth as our trade deficit bear no relationship to GDP - our exports are what makes us able to pay for our imports and we are importing tens of billions more than we are exporting. our current account deficit is $6000 per person THIS YEAR alone!!.
Most of our wealth is still generated by farming and the primary sector generally and our import expenditures are driven by urban lifestylers. Our major cities are not hotbeds of productivity they are black holes of consumption. Our farmers meanwhile are getting by an two thirds of the income they got last year - and if framers have a bad year then the rest of us need to trim our expectations accordingly - our dollar is presently overvalued by about $US0.30.
from Stats NZ ... At 30 September 2023, New Zealand’s international assets were $361.8 billion, $965 million more than at 30 June 2023. International liabilities were $553.8 billion, $760 million less than at 30 June 2023. This resulted in a net liability position of $191.9 billion, $1.7 billion narrower than at 30 June 2023." or we are in debt to foreign creditors to the tune of $40,000 per person or about $120,000 per household.
We need to forget GDP as a useful measure of our collective economic wellbeing - remember that recovery from damage caused by cyclones and earthquakes adds to our GDP but do not add to our wealth and adds substantially to our demand for imports to replace all of the assets destroyed.
we certainly can and that is exactly what Argentina has been doing - (and Grant Robertson did during covid shut down and the consequences of that are being sorted out now) and see where that has got them - our housing market has been effectively doing that too for the past three decades - our dollar is only as strong as it is because we have been borrowing off-shore and selling assets off-shore- neither of which are a pathway to a healthy/wealthy society. Printing money is no substitute for earning money - and we aren't earning enough and a large number of the "wealthy" people in NZ are wealthy through property price inflation not through productive activity the money they spend on imported luxuries is earned by selling dairy meat and fish and trees - none of which are produced in Auckland or Wellington.
But Ciaran running a Country like a shop is not very sensible. There are two aspects to running a country. One is selling our exports for foreign currency and the other is selling things internally with our own currency. When I was young, but that was before our currency was floated, parts were imported and assembled here. While we did export food it was mostly to England. Imports had tariffs imposed and so imported things were very very expensive. But everybody was employed. In fact there were so few unemployed the Government knew their name. 0nce we floated the currency all the tariffs and excise taxes were removed and imported things became much cheaper but the number of unemployed people rose. Now people overseas are clammering to lend money to New Zealand in exchange for our Government bonds because, despite what our silly PM says, we have such a good rating. And funnily enough they are happy to accept that bond in NZ$. So I think it is a lot more complicated than you are saying.
Good point on balance of payment conundrum. Currently it’s ironically vile that our government’s contribution to support the brutal Gazan genocide is also supporting our current account. The maritime blockade of the Red Sea in response to the genocide has indirectly contributed to a lift in milk price. I directly benefit from an increase in milk price, but more than anything want the genocide to end as well as the affront to humanity which is Israel’s 75 year occupation and disgusting oppression of Palestine. Therefore I don’t support our government contribution of armed forces to prolong the genocide at risk of decreasing milk price and our current account.
Being landed with a government of the right, my biggest post election fear was that they would tinker with my three most beloved government thingys: (1) KiwiSaver, (2) NZRail and (3)Three Waters. Looks like my fears were well founded, for haven't they already started tinkering around the edges of Kiwi-saver, while they've certainly dropped the ball on both the Cook Straight ferry and Three Waters. Re my KiwiSaver fear: I reckon it won't be long before they find a way to dig into KiwiSaver to pay for their tax relief plans. Watch this space??
Re NZR: ...what is it about the road transport lobby that controls the national party that cant see public value in a well run, well maintained national rail service. Re water: .I wonder why my belief in access to quality fresh water as the right of all Kiwis is such a pipe dream?
I dont think it as simple as you make it out to be Patricia - back then we had import controls/import licensing and you couldn't buy anything much overseas unless you had some foreign currency. We also had half the population that we have now. And running the country or a business or a household has some basic rules - you dont borrow more than you can afford to pay back. I do however agree with you that our current wide open economy is not the optimum model.
I agree Ciaran. I remember when to buy a new car you needed to have foreign currency but not for everything. You could buy imported things but they were very very expensive
Bernard, Robert Patman talks of ‘the invasion of Ukraine by Russia’ but he doesn’t talk about how in 1962 when the USSR put a military base in Cuba there was nearly a nuclear war until the US agreed to remove their nuclear weapons from Turkey and the USSR agreed to remove their base from Cuba. Now in my view that is no different from what Russia is doing now in Ukraine. Ukraine and the US wanted Ukraine to join NATO. Russia said no and the US said get stuffed. So what is the difference?
Interesting to compare the scenarios between Navalny and Assange. The hypocrisy of those that claim to be bastions of rules based order such as the US and fellow genocidaires is shameless in its nakedness.
Excellent Hoon; don't know if it was because I heard the the edited version on the website rather than YouTube (& that it had David Farrier as well, always a plus), but it was snappy, punchy, and still delivered the goods on detail. Peter Conway talking lots of sense - unfortunately he might be wrong on the Treasury orthodoxy having changed tho. P9 of the slide pack issued with the BIM reads "Our current recommendation is for a ceiling of net debt of 30% of GDP. This ceiling retains headroom for shocks."
If the economy is so fragile why are they persevering with tax cuts and reversing the landlords tax issue?
The key weakness in our economy is that it is more profitable to buy an old house and rent it out, than to invest in a job-creating business. The levers need to be changed.
because gratifying their greed is a higher priority for them than humaneness and morality.
the last Labour government enacted some good, moral, just and sensible legislation that dampened the raging inferno of increasing housing prices: except for new builds they extended the so-called brightline test to 10 years and removed the ability to deduct mortgage interest from income for residential rental properties.
one of the main problems in New Zealand is that the cost of residential property is extremely excessive relative to household incomes. the banks boards, shareholders and chief executives are making grossly excessive profits and are sucking billions of dollars out of New Zealand every year and consequently causing serious severe damage to New Zealand's economy and NZ society.
Haha bummed I missed being on the Hoon with my beloved David Farrier by one week!
Bernard perhaps you should be looking at our trade deficit - it has just taken a severe turn from bad to (very much) worse - it gets fudged by being presented as a percentage of GDP but that is smoke - it is meaningless as a measure of our relative wealth as our trade deficit bear no relationship to GDP - our exports are what makes us able to pay for our imports and we are importing tens of billions more than we are exporting. our current account deficit is $6000 per person THIS YEAR alone!!.
Most of our wealth is still generated by farming and the primary sector generally and our import expenditures are driven by urban lifestylers. Our major cities are not hotbeds of productivity they are black holes of consumption. Our farmers meanwhile are getting by an two thirds of the income they got last year - and if framers have a bad year then the rest of us need to trim our expectations accordingly - our dollar is presently overvalued by about $US0.30.
from Stats NZ ... At 30 September 2023, New Zealand’s international assets were $361.8 billion, $965 million more than at 30 June 2023. International liabilities were $553.8 billion, $760 million less than at 30 June 2023. This resulted in a net liability position of $191.9 billion, $1.7 billion narrower than at 30 June 2023." or we are in debt to foreign creditors to the tune of $40,000 per person or about $120,000 per household.
We need to forget GDP as a useful measure of our collective economic wellbeing - remember that recovery from damage caused by cyclones and earthquakes adds to our GDP but do not add to our wealth and adds substantially to our demand for imports to replace all of the assets destroyed.
But Ciaran as it is New Zealand dollars does that matter? We can issue the stuff.
we certainly can and that is exactly what Argentina has been doing - (and Grant Robertson did during covid shut down and the consequences of that are being sorted out now) and see where that has got them - our housing market has been effectively doing that too for the past three decades - our dollar is only as strong as it is because we have been borrowing off-shore and selling assets off-shore- neither of which are a pathway to a healthy/wealthy society. Printing money is no substitute for earning money - and we aren't earning enough and a large number of the "wealthy" people in NZ are wealthy through property price inflation not through productive activity the money they spend on imported luxuries is earned by selling dairy meat and fish and trees - none of which are produced in Auckland or Wellington.
But Ciaran running a Country like a shop is not very sensible. There are two aspects to running a country. One is selling our exports for foreign currency and the other is selling things internally with our own currency. When I was young, but that was before our currency was floated, parts were imported and assembled here. While we did export food it was mostly to England. Imports had tariffs imposed and so imported things were very very expensive. But everybody was employed. In fact there were so few unemployed the Government knew their name. 0nce we floated the currency all the tariffs and excise taxes were removed and imported things became much cheaper but the number of unemployed people rose. Now people overseas are clammering to lend money to New Zealand in exchange for our Government bonds because, despite what our silly PM says, we have such a good rating. And funnily enough they are happy to accept that bond in NZ$. So I think it is a lot more complicated than you are saying.
Good point on balance of payment conundrum. Currently it’s ironically vile that our government’s contribution to support the brutal Gazan genocide is also supporting our current account. The maritime blockade of the Red Sea in response to the genocide has indirectly contributed to a lift in milk price. I directly benefit from an increase in milk price, but more than anything want the genocide to end as well as the affront to humanity which is Israel’s 75 year occupation and disgusting oppression of Palestine. Therefore I don’t support our government contribution of armed forces to prolong the genocide at risk of decreasing milk price and our current account.
https://www.newstalkzb.co.nz/on-air/mike-hosking-breakfast/audio/miles-hurrell-fonterra-ceo-on-the-increase-in-dairy-export-demand-due-to-the-conflict-in-the-red-sea/?utm_source=share&utm_medium=apps
Being landed with a government of the right, my biggest post election fear was that they would tinker with my three most beloved government thingys: (1) KiwiSaver, (2) NZRail and (3)Three Waters. Looks like my fears were well founded, for haven't they already started tinkering around the edges of Kiwi-saver, while they've certainly dropped the ball on both the Cook Straight ferry and Three Waters. Re my KiwiSaver fear: I reckon it won't be long before they find a way to dig into KiwiSaver to pay for their tax relief plans. Watch this space??
Re NZR: ...what is it about the road transport lobby that controls the national party that cant see public value in a well run, well maintained national rail service. Re water: .I wonder why my belief in access to quality fresh water as the right of all Kiwis is such a pipe dream?
I dont think it as simple as you make it out to be Patricia - back then we had import controls/import licensing and you couldn't buy anything much overseas unless you had some foreign currency. We also had half the population that we have now. And running the country or a business or a household has some basic rules - you dont borrow more than you can afford to pay back. I do however agree with you that our current wide open economy is not the optimum model.
I agree Ciaran. I remember when to buy a new car you needed to have foreign currency but not for everything. You could buy imported things but they were very very expensive
Bernard, Robert Patman talks of ‘the invasion of Ukraine by Russia’ but he doesn’t talk about how in 1962 when the USSR put a military base in Cuba there was nearly a nuclear war until the US agreed to remove their nuclear weapons from Turkey and the USSR agreed to remove their base from Cuba. Now in my view that is no different from what Russia is doing now in Ukraine. Ukraine and the US wanted Ukraine to join NATO. Russia said no and the US said get stuffed. So what is the difference?
Interesting to compare the scenarios between Navalny and Assange. The hypocrisy of those that claim to be bastions of rules based order such as the US and fellow genocidaires is shameless in its nakedness.
Excellent Hoon; don't know if it was because I heard the the edited version on the website rather than YouTube (& that it had David Farrier as well, always a plus), but it was snappy, punchy, and still delivered the goods on detail. Peter Conway talking lots of sense - unfortunately he might be wrong on the Treasury orthodoxy having changed tho. P9 of the slide pack issued with the BIM reads "Our current recommendation is for a ceiling of net debt of 30% of GDP. This ceiling retains headroom for shocks."
https://www.treasury.govt.nz/sites/default/files/2024-02/bim-finance-slide-pack-2023.pdf
If the economy is so fragile why are they persevering with tax cuts and reversing the landlords tax issue?
The key weakness in our economy is that it is more profitable to buy an old house and rent it out, than to invest in a job-creating business. The levers need to be changed.
because gratifying their greed is a higher priority for them than humaneness and morality.
the last Labour government enacted some good, moral, just and sensible legislation that dampened the raging inferno of increasing housing prices: except for new builds they extended the so-called brightline test to 10 years and removed the ability to deduct mortgage interest from income for residential rental properties.
one of the main problems in New Zealand is that the cost of residential property is extremely excessive relative to household incomes. the banks boards, shareholders and chief executives are making grossly excessive profits and are sucking billions of dollars out of New Zealand every year and consequently causing serious severe damage to New Zealand's economy and NZ society.