Daily review 17/08/2022

8 comments on “Daily review 17/08/2022 ”

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1. Robert Guyton 1

   17 August 2022 at 7:14 pm

   Bloody rat-bags!

   "Fonterra's lawyers argue that the dairy giant has no legal obligation to anyone harmed by its coal emissions, because every person produces greenhouse gas. Instead, large and small emitters must transition together, they say."

   "https://www.stuff.co.nz/environment/climate-news/129599798/as-everyone-emits-common-law-cant-hold-big-polluters-responsible-fonterra-says"
2. Poission 2

   17 August 2022 at 7:29 pm

   RBNZ confirms expectations with .5 increase in OCR.

   https://twitter.com/ReserveBankofNZ/status/1559722690944339968?cxt=HHwWgMDU3cHhn6UrAAAA

   Confirms hawkish framing with bringing forward rates and higher level of 4.1%

   RBNZ gets lots of commentary as it is the pioneer central bank in targeted interest rates.What NZ does need is a monthly CPI (Australia gets monthly stats from Oct leaving NZ an outlier in developed 10)

   UK cpi hits 10.1% as UK government confuses noun type of democracy,with lame duck leadership.

   https://twitter.com/BloombergUK/status/1559784771504541696?cxt=HHwWgMC8-Yn_u6UrAAAA
   • Nic the NZer 2.1

     17 August 2022 at 7:51 pm

     Similar issues to those discussed here (about the RBA) also apply to be RBNZ.

     Obviously interest rate policy does nothing to address any of the causes of NZ inflation, including its imported components, sundry existing monopoly industry situations, the lack of fuel substitutes, supply chain issues related to Chinese production, supply chain issues related to Covid-19.

     While not addressing the issues however these rate hikes will result in those with the least savings paying the highest rates for their spending and for others going through unemployment or at minimum ongoing below inflation wage increases (e.g annual wage cuts). This will counteract any good fiscal policy implemented to help with the worst impacts of inflation.

     Overall this is just very socially destructive policy going forward.

     http://bilbo.economicoutlook.net/blog/?p=50300
     • Poission 2.1.1

       17 August 2022 at 8:26 pm

       Fiscal policy to constrain inflation are inflationary by definition (they constrain demand destruction eg fuel subsidy)

       In an overheated economy fiscal policy should be at the large macro level ( constraining costs in large civil construction and moving to maintenance ) bringing the scale of the industry to its sustainable level.

       There are two ways for central banks to act,higher cost for credit or less availability for credit ( money supply m2 ) The US simplification is that interest rates effect mainstreet and M2 Wallstreet.

       Here we have the large scale asset purchases (debt) from the government by the rbnz to allow for liquidity over the pandemic.There is also the funding for lending programme that lets banks borrow from the RBNZ at the OCR rate.

       https://www.rbnz.govt.nz/statistics/series/reserve-bank/our-balance-sheet

       https://www.rbnz.govt.nz/monetary-policy/monetary-policy-tools/funding-for-lending-programme

       Inflation is not a given on external factors look at Switzerland and Japan.
       • Nic the NZer 2.1.1.1

         17 August 2022 at 9:54 pm

         First off I didn't say fiscal policy to constrain inflation, I actually said "good fiscal policy to help with the worst impacts of inflation". This is because anything were actually going to do about inflation you would not recognise as economic policy anyway, this might for example include measures to end the Russia Ukraine conflict. I mean at this stage every man and his dog knows that the Russian invasion has disrupted fertiliser supply chains and that is (or will) impact on food costs, but for some reason we think the solution to that is interest rate hikes? This is manifestly incoherent.

         If, on the other hand, were not doing anything to mitigate those causes then the government fiscal policy should be employed to reduce some prices impacting a lot of people. These things include such items as PT subsidies, which is good use of fiscal policy.

         Having said that, your also incorrect to claim that these impacts are necessarily inflationary. In fact if you consider the impact of the half price PT fares scheme on the CPI it is a clear cut in a significant cost of transport. This is a completely normal part of CPI measurement across multiple jurisdictions with a significant volume of price fluctuations being the result of changes in govt subsidy of certain goods such as the cost of child care. Its also worth highlighting (since I understand your argument) that you will also claim GST increases are inherently deflationary. But actually GST increases directly increase the CPI measurements on implementation, and only don't get counted as inflationary because they are carefully netted out of the price changes at the time.

         Anyway, what we are dealing with is a range of supply side issues, which have or are reducing the capacity of the economy to produce certain goods and services. Cutting demand to try to adjust it down to levels which meet that capacity is going to be quite unfair as a policy choice. Its also going to cut down on our domestic capacity to produce longer term (which may well leave the NZ economy more susceptible to inflationary pressures and supply constraints longer term).

         What seems to be missing from the main understanding of inflation is that there exist non-monetary causes of inflation, and when they occur then the finance side has all of the flexibility required to allow spending to adjust to pay for the changes in costs. When that occurs then short term its possible to observe the increased spending flow, on the higher priced goods, showing up on a credit card and eventually a related increase in money. Longer term it looks exactly the same if the increased spending->raised prices->expanded money or the expanded money->increased prices->raised spending. This is the reason why any worthwhile studies of the links between inflation and monetary policy always significantly show credit preceding clearance funds rather than the other way around your projecting. This is also the only model compatible with actual known institutional arrangements and practices.
3. joe90 3

   17 August 2022 at 8:03 pm

   Oh joy. We'll be the terrestrial Milliways.

   Abstract

   Atmospheric soot loadings from nuclear weapon detonation would cause disruptions to the Earth’s climate, limiting terrestrial and aquatic food production. Here, we use climate, crop and fishery models to estimate the impacts arising from six scenarios of stratospheric soot injection, predicting the total food calories available in each nation post-war after stored food is consumed. In quantifying impacts away from target areas, we demonstrate that soot injections larger than 5 Tg would lead to mass food shortages, and livestock and aquatic food production would be unable to compensate for reduced crop output, in almost all countries. Adaptation measures such as food waste reduction would have limited impact on increasing available calories. We estimate more than 2 billion people could die from nuclear war between India and Pakistan, and more than 5 billion could die from a war between the United States and Russia—underlining the importance of global cooperation in preventing nuclear war.

   […]

   Under the 150 Tg scenario, most nations would have calorie intake lower than resting energy expenditure29. One exception is Australia. After we turn off international trade, wheat contributes almost 50% of the calorie intake in Australia, and production of rice, maize and soybean in Australia are less than 1% that of wheat23,24. Therefore, the wheat response to simulated nuclear wars largely determines calorie intake in Australia. Because spring wheat is used to represent wheat, and simulated spring wheat there shows increasing or small reductions under nuclear war scenarios in which more favourable temperatures occur for food production, the calorie intake in Australia is more than other nations. However, this analysis is limited by the FAO data, which are collected at national levels. Within each nation, particularly large ones, there may be large regional inequities driven by infrastructure limitations, economic structures and government policies. New Zealand would also experience smaller impacts than other countries. But if this scenario should actually take place, Australia and New Zealand would probably see an influx of refugees from Asia and other countries experiencing food insecurity.

   https://www.nature.com/articles/s43016-022-00573-0
4. joe90 4

   17 August 2022 at 9:25 pm

   Canada's version of QAnon turned up in Peterborough, Ontario with their sheriffs and to arrest local police.

   The Mayor told them how she really felt.

   https://twitter.com/DianeNTherrien/status/1559623988648763394

   https://www.vice.com/en/article/m7gb5y/queen-romana-didulo-citizen-arrest-qanon
   • Barfly 4.1

     18 August 2022 at 10:53 am

     

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