web analytics

Double dipping

Written By: - Date published: 8:59 am, August 11th, 2009 - 20 comments
Categories: economy - Tags:

No, not another post about Bludger Bill, this one’s about that thing that he and Key are meant to be taking care of. What’s it called again? No, not the cycle-way. No, not solving disputes over wills. Um, bear with me, it’ll come back to me.

Oh, right, it’s the economy.

That thing? But everything’s OK now isn’t it? The recession’s nearly over. There’s more job losses and wage cuts coming but they’re just a ‘lagging indicator’. Growth will be back soon and we can start to put all this unpleasantness behind us. Happily ever after.

Wait, not so fast. Now mainstream economists are saying what we’ve been warning for some time. The end of this recession may be a false dawn. Sure GDP will grow start growing again for a while but the fundamental problems that sent us into recession – oil supply, toxic financial assets, over-investment in housing – have not been addressed, they’ve only been temporarily alleviated by falling economic activity.

Yesterday, ANZ economists warned there is a danger of ‘double-dip’  or ‘W’ recession – growth at the end of this year turning into more contraction new year:

“the way commercial construction, the unemployment rate and dairy incomes are shaping up, there is a huge void to fill. The real message in our `W’ cycle is that we do not believe recent signs of recovery are of sufficient quality (that is, it’s the wrong growth mix) to be sustainable, given NZ’s external and balance sheet position.”

They think that if we’re lucky, we might avoid just a second recession next year. But I think that the risks are more to the downside. The ANZ analysis hasn’t looked at the possiblity of international shocks to our economy if other countries also double-dipping due to more financial shocks and/or oil shortages (which the IEA is warning could happen from next year).

sleepytimes - smallOur economy is still on shoddy foundations. The growth that is coming is being built, once more, on house prices rather than sustainable exports. That can only lead to the same result as the last housing bubble. It’s not a good outlook but we aren’t helpless. Once again, it’s the Government’s job to provide leadership by making the reforms that are needed and investing in the right areas (which we’ve discussed in depth in other posts). Instead, they seem to be in cruise control, assuming that everything is looking up and nothing needs to be done. The ANZ report should be a wake-up call, before it’s too late.

20 comments on “Double dipping ”

  1. lprent 1

    I wouldn’t hold out much hope of NACT doing much. They are not into being effective in anything apart from cheap PR and rotting taxpayers

  2. lprent 2

    Opps rorting taxpayers. The iPhone spell doesn’t know the word

    • Tigger 2.1

      I suspect we all will be ‘rotting’ come the Depression (I give it another six months before it hits). Note the capital D. It’s going to be nasty.

      Given their lack of ability to manage during a recession, NACT has no hope of guiding us through a Depression. Only good news is that it will limit them to one term.

  3. Ianmac 3

    I am sure that Gareth Morgan months ago warned that there would be a lightening of gloom but will be followed by further serious downturn. He said that it would be foolish act as though we were out of trouble which will extend well into 2010. Gloomy/pessimistic or realistic? (I know little about economics by the way.)

  4. Personally I think we’re stuffed until we end our oil-addiction. Until such a time that happens as soon as we get an economic recovery we’ll have another oil-spike, which will send us back into recession.

    Someone send that memo to Steven Joyce and his transport policies please.

    • Draco T Bastard 4.1

      Yep, we should begin phasing out personal vehicles about now and build electric rail. Not going to happen under NACT though who seem to look to the 15th to 19th centuries as if it was some golden time. Especially the bit about Absolutism.

  5. coolas 5

    The changes needed to re-structure the economy are out of this Government’s philosophy and ability.

    Labour would be struggling too but at least has some voices who recognise the most out of whack elements: Housing investment imbalance, exchange rate uncertainty, and household debt.

    Kiwi Saver is a mechanism to channel money into productive investment as well encouraging saving for retirement.

    Next step has to be a capital gains tax on investment residential property so to make that type of investment less attractive than shares etc. BUT this could be political suicide for any party given the Kiwi obsession with housing investment.

    Stabalising the $NZ by pegging, as China does, would bring certainty and with that more confidence for long term investment.

    Getting people to save, like the Japanese and Chinese, can be encouraged tax incentives and guarantees.

    Tinkering is all this Government has the will to do. They seem to be fiddling around impatiently waiting for things to improve so they can make their move on Assets and ACC.

    • Draco T Bastard 5.1

      Sometime I think they’re waiting around impatiently waiting for things to get worse so they can make their move on our assets.

    • Zaphod Beeblebrox 5.2

      Actually I think you are being a bit to kind to NACT. Their cost cutting in areas like R and D and all forms of education as well as their efforts to wipe out local government initiatives have set us apart from the rest of the world- who have been thinking up creative ways to protect their societies from the myriad of problems emerging, (which have been well described by many on this blog).

      The result- US, Europe and Australia are showing signs of their economies returning more to growth. NZ by contrast, had its highest quarterly unemployment increase for 21 years last week.

      Any chance NACT may invest in creative policies like ‘Cash for Clunkers’, urban public transport renewal, green energy or community development? Not while they’ve got their heads stuck in the Milton Friedmann textbook.

  6. corkscrew 6

    What worries me is the proliferation of ‘The happy day’s are back again’ articles that are coming out in the MSM. I’m thinking especially of thing’s like the Herald’s now two day attempt to paint a very modest year vs year uplift in July retail spending as the beginning of the recovery. I’m an economic dope but even I know if one year the month has four Fridays in it and the following year it has five you would expect retail spending to increase.
    While there is nothing wrong in being positive this goes beyond that, it’s poor reporting because either its unaware of the underlying issues or its deliberately fudging them.

    • jarbury 6.1

      The Herald earns a lot of its money from real estate advertising so is always looking for signs that the property boom is going to return.

      They seems convinced that the current situation is a blip in a long-term path. One could take the alternative view that any recovery is likely to be the blip.

  7. Pat 7

    How about the ANZ pay their tax bill. That would help.

  8. Draco T Bastard 8

    Our economy is still on shoddy foundations.

    It’s called capitalism and people have been saying for the last couple of centuries that it doesn’t actually work. It got as far as it did solely because of cheap oil and excess energy and now that that has run out the economy can no longer grow to pay the interest (Not that the interest was affordable in the first place).

    http://www.theoildrum.com/files/ccst20090515.png

  9. Bill 9

    I’m strangely drawn to L.

  10. vto 10

    My own theory from a few years ago was that the world was going to have another great depression. Couple of reasons – overdue, short memories, world of debt was a house of cards, etc. Part of my theory was that there would be a double-bottomed bottoming – reason, politicians would what they could to avert said downturn (on their watch) but that such interference (stimuli etc) would ultimately fail and the world would eventually find the level that it would have anyway without the political interference. I picked 2010-2015. Thought I had my timing out but maybe not.

    Don’t know what can be done to further avert…. maybe beam an SOS into outer space or hope for divine intervention..

  11. Adrian 11

    Here in Marlborough this week, good local top-class builders who have never been out of work are home doing the lawns with nothing on the drawing board. The bite has just started to go on.

  12. outofbed 12

    I know “stuff all about economics” but my son who has a masters with dist in the subject
    said something about a w shaped recession a couple of months ago.
    That sounded like he knew what he was on about so last night I asked him about about the increased retail spending and house price increases. He said “people obviously haven’t learnt the lesson yet, but they will”
    It was all to ominous and darkly foreboding so I quickly changed the subject to Dan Carter.
    That made us both feel much better

  13. Swampy 13

    Labour must be getting fairly desperate now. They are hoping that more people will lose their jobs, their livelihoods and their houses by the recession lasting as long as possible.

    See, this is a naysayer’s post. Never thought I would see someone advocating for the recession.

    Are you an economist? What qualifications do you have for your sweeping generalisations about the direction of our economy?

    • BLiP 13.1

      Are you an economist? What qualifications do you have for your sweeping generalisations about the direction of our economy?

      Believe me, Stumpy, economists are the last people you want to hear making sweeping generalisations about the direction of our economy. By the way, what qualifications do you have in this regard?

Recent Comments

Recent Posts

  • Protect seamounts and ban bottom trawling right now
    The Green Party is renewing its call for Minister for the Environment, David Parker to immediately ban bottom trawling on seamounts. ...
    18 hours ago
  • Building Auckland’s transport future
    We’re making sure Auckland has the infrastructure it needs for the future, so Aucklanders can get around safely and efficiently as our biggest city grows. The new, linked-up transport system we’re building will include partially tunnelled light rail between the CBD and the airport, as well as another Waitematā Harbour ...
    20 hours ago
  • Build Auckland light rail for benefit of everyone
    The Government’s decision on light rail in Auckland is the first step towards building the climate friendly, accessible city our communities deserve. ...
    20 hours ago
  • Put our most vulnerable first
    Don’t forget whānau and communities most at risk, says the Green Party, as the Government lays out its three-phase plan for Omicron. ...
    2 days ago
  • Boosting our immunity against Omicron
    With Omicron in the community, it’s vital we all do our bit to help to slow the spread, keep each other safe and protect our health system. One of the most important ways we can reduce the risk of Omicron is to get a booster dose as soon as we’re ...
    3 days ago
  • Equitable response to Omicron vital
    The Green Party supports the Government’s decision to move Aotearoa New Zealand to traffic light level Red at 11.59pm tonight, but says its success will depend on the support that is made available to the most vulnerable. ...
    6 days ago
  • How we’re preparing for Omicron
    As countries around the world experience Omicron outbreaks, we’re taking steps now to ensure we’re as prepared as possible and our communities are protected. ...
    1 week ago
  • What’s Labour achieved so far?
    Quite a bit! This Government was elected to take on the toughest issues facing Aotearoa – and that’s what we’re doing. Since the start of the pandemic, protecting lives and livelihoods has been a priority, but we’ve also made progress on long-term challenges, to deliver a future the next generation ...
    2 weeks ago
  • Tackling the big issues in 2022
    This year, keeping Kiwis safe from COVID will remain a key priority of the Government – but we’re also pushing ahead on some of New Zealand’s biggest long-term challenges. In 2022, we’re working to get more Kiwis into homes, reduce emissions, lift children out of poverty, and ensure people get ...
    2 weeks ago

  • Tupu Tai graduation-It’s time to step up
    Greetings: Kia orana, talofa lava, Noa’ia e mauri, malo e lelei, taloha ni, fakaalofa lahi atu, ni sa bula vinaka, talofa, kia ora, tena koutou katoa.  I would love to begin by acknowledging everyone here in attendance, especially the families and friends of the 2021/22 Tupu Tai cohort, and those ...
    BeehiveBy beehive.govt.nz
    17 hours ago
  • Building and shaping a city: Future-proofing Auckland transport infrastructure
    The Government is bringing Auckland’s transport infrastructure into the future by moving forward with an additional Waitematā Harbour crossing, progressing light rail from Auckland’s CBD to the airport, and creating a linked-up rapid transport network as part of a 30-year plan. Key decisions on additional Waitematā Harbour crossing to be ...
    BeehiveBy beehive.govt.nz
    18 hours ago
  • Penguin rehab and native forest restoration get helping hand
    A long-running penguin rehab facility which has been hard hit by the tourism downturn, and work to restore native forest habitats in the Catlins are being supported through Jobs for Nature funding, Conservation Minister Kiri Allan says. Otago’s Penguin Place and The Hokonui Rūnanga Catlins Biodiversity Project will receive combined ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Resilient economy reflected in Crown accounts
    The Government’s financial accounts continue to reflect a resilient economy that has performed better than expected and puts the country in a strong position to respond to Omicron, Grant Robertson said. The Crown Accounts for the five months to the end of November were more favourable than forecast in the ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Government announces three phase public health response to Omicron
    Reducing isolation period for cases and close contacts at Phase Two and Three to 10 and seven days Definition of close contact required to isolate changes to household or household like contacts at Phase Three Increased use of rapid antigen tests with test to return policy put in place for ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • New Ambassador to Thailand announced
    Foreign Affairs Minister Nanaia Mahuta today announced the appointment of Jonathan Kings as New Zealand’s next Ambassador to Thailand. “Aotearoa New Zealand has a long-standing relationship with Thailand, celebrating the 65th anniversary of diplomatic representation between our countries in 2021. We also share much in common at regional and multilateral levels ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Government’s Family Package continues to deliver for New Zealanders
    The Families Package helped around 330,000 families in its first year - more than half of all families with children in NZ These families received an estimated $55 per week more from Families Package payments in 2018/19 than in 2017/18, on average Families Package increases to the maximum possible Accommodation ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • New Zealand retains top spot in global anti-corruption rankings
    Justice Minister Kris Faafoi has welcomed news of New Zealand’s ongoing position as top in the world anti-corruption rankings. The 2021 Corruption Perceptions Index released by global anti-corruption organisation, Transparency International, ranks New Zealand first equal with Denmark and Finland, with a score of 88 out of 100. “This is an ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Testing improvements see New Zealand well prepared for Omicron
    New Zealand’s PCR testing capacity can be increased by nearly 20,000 tests per day to deal with a surge in cases as part of our wider COVID-19 testing strategy, Associate Minister of Health Dr Ayesha Verrall said. “We have continued to adapt our public health response to safeguard the health ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • 5,000 portable air cleaners for schools on their way
    As schools are preparing to return, Education Minister Chris Hipkins has announced 5,000 air cleaners have been ordered for New Zealand schools. “As we know, along with vaccination, testing, good hygiene and physical distancing, good ventilation is important in minimising the risk of airborne transmission of the virus that causes ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • New Zealand to move to Red from 11.59pm today
    All of New Zealand will move to the Red setting of the Covid Protection Framework (CPF) at 11:59pm today as Omicron is potentially now transmitting in the community, Prime Minister Jacinda Ardern says. “Nine COVID-19 cases reported yesterday in the Nelson/Marlborough region are now confirmed as Omicron, and a further ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Mandatory boosters for key workforces progressing well
    More than 5,785 (82%) border workers eligible for a booster vaccination at 6 months have received it so far, COVID-19 Response Minister Chris Hipkins says. “That’s a really strong uptake considering we announced the requirement the week before Christmas, but we need to continue this momentum,” Chris Hipkins said. “We ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • NZ to move to Red
    Nine COVID-19 cases reported yesterday in the Nelson/Marlborough region have now been confirmed as the Omicron variant, and a further case from the same household was confirmed late yesterday. These cases are in a single family that flew to Auckland on 13 January to attend a wedding and other events ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • New Zealand to provide further help for Tonga
    Aotearoa New Zealand is giving an additional $2 million in humanitarian funding for Tonga as the country recovers from a volcanic eruption and tsunami last weekend, Foreign Affairs Minister Nanaia Mahuta and Defence Minister Peeni Henare said today. This brings Aotearoa New Zealand’s contribution to $3 million. “This support will ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Quarterly benefit numbers show highest number of exits into work
    The Government’s strong focus on supporting more people into work is reflected in benefit figures released today which show a year-on-year fall of around 21,300 people receiving a main benefit in the December 2021 quarter, Minister for Social Development and Employment Carmel Sepuloni said. “Our response to COVID has helped ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Northland to move to Orange, NZ prepared for Omicron 
    Northland to move to Orange Rest of New Zealand stays at Orange in preparedness for Omicron All of New Zealand to move into Red in the event of Omicron community outbreak – no use of lockdowns Govt planning well advanced – new case management, close contact definition and testing rules ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • RNZAF C-130 Hercules flight departs for Tonga as Navy vessels draw nearer to Tongatapu
    A Royal New Zealand Air Force C-130 Hercules has departed Base Auckland Whenuapai for Tonga carrying aid supplies, as the New Zealand aid effort ramps up, Foreign Affairs Minister Nanaia Mahuta and Defence Minister Peeni Henare said today. “The aircraft is carrying humanitarian aid and disaster relief supplies, including water ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Zealand prepared to send support to Tonga
    New Zealand is ready to assist Tonga in its recovery from Saturday night’s undersea eruption and tsunami, Foreign Affairs Minister Nanaia Mahuta and Defence Minister Peeni Henare said today. “Following the successful surveillance and reconnaissance flight of a New Zealand P-3K2 Orion on Monday, imagery and details have been sent ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Aotearoa New Zealand stands ready to assist people of Tonga
    The thoughts of New Zealanders are with the people of Tonga following yesterday’s undersea volcanic eruption and subsequent tsunami waves, Foreign Affairs Minister Nanaia Mahuta says. “Damage assessments are under way and New Zealand has formally offered to provide assistance to Tonga,” said Nanaia Mahuta. New Zealand has made an ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Record high of new homes consented continues
    In the year ended November 2021, 48,522 new homes were consented, up 26 per cent from the November 2020 year. In November 2021, 4,688 new dwellings were consented. Auckland’s new homes consented numbers rose 25 per cent in the last year. Annual figures for the last nine months show more ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Report trumpets scope for ice cream exports
    Latest research into our premium ice cream industry suggests exporters could find new buyers in valuable overseas markets as consumers increasingly look for tip top quality in food. Economic Development Minister Stuart Nash has released a new report for the Food and Beverage Information Project. The project is run by ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Honouring the legacy of legendary kaumātua Muriwai Ihakara
    Associate Minister for Arts, Culture, and Heritage Kiri Allan expressed her great sadness and deepest condolences at the passing of esteemed kaumātua, Muriwai Ihakara. “Muriwai’s passing is not only a loss for the wider creative sector but for all of Aotearoa New Zealand. The country has lost a much beloved ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Have your say on proposed changes to make drinking water safer
    Associate Minister for the Environment Kiri Allan is urging all New Zealanders to give feedback on proposed changes aimed at making drinking water safer. “The current regulations are not fit for purpose and don’t offer enough protection, particularly for those whose water comes from smaller supplies,” Kiri Allan said. “This ...
    BeehiveBy beehive.govt.nz
    3 weeks ago