TLDR & TLDL: The govt is barrelling towards a Nov 29 decision to open up Auckland to the rest of the country for summer, regardless of whether is Auckland is under control. House prices kept accelerating in Oct, regardless of the various levers pulled to stop them, and the govt continues to deliver slower and stingier help to those on low incomes than to those with assets running businesses.
I cover these issues and the big events globally every Friday at 4pm with Peter Bale in a zoom webinar ‘hoon’ (plural for Kākā) for paid subscribers, including 15 mins for Q&A at the end. Peter does an excellent free weekly world news bulletin email here. I also do an Ask Me Anything thread at midday for an hour on Fridays for paid subscribers. I’ve opened up last Friday’s for everyone to give those on the free list a chance to see what we do in the community of paid subscribers.
(This is the weekly ‘sampler’ email and podcast for both free and paid subscribers. The links to this week’s articles go to the paywalled versions. But I’d love the free subscribers reading the detail and analysis below to subscribe fully to make my version of accountability and explanatory journalism about affordable housing, climate change policies and child poverty financially viable.)
Five things that mattered in the last week
1. Summer is Coming. And so is Covid.
The govt made clear it is leaning towards opening up Auckland and the rest of the country sooner, rather than later, as Auckland’s tiredness and frustration grows as fast as Labour’s popularity is waning (fyi Andrew Chen’s polling summary chart below and here). One option is moving everyone to the ‘traffic lights’ soon after the big Nov 29 cabinet decision to avoid Auckland border snarlups.
2. Housing getting hotter. Not cooler
REINZ’s House Price Index rose 3.3% in October from September, meaning annual inflation was 29.9%. This monthly inflation rate was up from 2.0% the previous month and defies expectations of a slowdown because of higher mortgage rates, lending restrictions and the govt’s removal of tax deductibility for landlords’ interest payments.
So far, expectations are house prices will keep rising 7-10% per year ad-infinitum, which is fuelling FOMO behaviour from buyers and sellers. This is unlikely to change unless expectations are broken. Nudging them isn’t working.
3. US inflation’s 30-year high
Annual CPI inflation rose to a 30-year high of 6.2% in the United States in Oct, which was faster than markets expected and bedded in expectations the US Federal Reserve will raise its short term interest rates from 0% to around 0.5% later next year, although the Fed still sees the inflationary as transitory because of Covid. A key thing to watch will be whether current (Trump-nominated) Fed Chair Jay Powell is renominated by Biden.
There’s talk Powell may be replaced by the more dovish Lael Brainard. The key number to watch (always) is what the US 10 year Treasury bond is doing. So far, it’s not going totally nuts about inflation.
4. ‘They are not us’
There were angry and loud marches by thousands of anti-vaxx and/or anti-mandate protesters in Wellington on Wednesday and Christchurch. The PM said they weren’t representative of the vast majority of the population, but the divisions within our society between the poor and rich, the disinformed and the rest, and between Māori and the rest were on full display in the marches.
Apart from a couple of weeks in March last year, we have not been a ‘Team of 5m’. But there is now definitely a couple of hundred thousand people not on board with the national drive for vaccination, in part because of an increasing volume and speed of disinformation spreading on various social media networks. This Covid-19 map of vaccination rates by suburb gives a more granular view.
5. Deliberately widening inequality
The govt announced a $68m/year boost in tax credits for low-income families, starting from next April, but increased the income claw-back rate for Working For Families, which creates a marginal tax rate of 57% for those earning over $48k.
Meanwhile, the govt has given $20b in cash to businesses in the form of wage subsidies and resurgence payments. Cash stored in business and household bank accounts rose over the last 18 months by $49b to $320b.
A fun thing
Ka kite ano
Bernard
PS: My apologies for the publication on Monday morning. Needed a weekend break. Aiming to get these out early Saturday morning in future.
The week that was for the week's end