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

  • Face to face meeting delivers significant progress on NZ-UK FTA
    New Zealand and the UK have committed to accelerating their free trade agreement negotiations with the aim of reaching an agreement in principle this August, Trade Minister Damien O’Connor announced. “We’ve held constructive and productive discussions towards the conclusion of a high-quality and comprehensive FTA that will support sustainable and inclusive trade, and ...
    BeehiveBy beehive.govt.nz
    10 hours ago
  • Government taking action to protect albatross
    New population figures for the critically endangered Antipodean albatross showing a 5 percent decline per year highlights the importance of reducing all threats to these very special birds, Acting Minister of Conservation Dr Ayesha Verrall says. The latest population modelling, carried out by Dragonfly Data Science, shows the Antipodean albatross ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Adoption laws under review
    New Zealand’s 66-year-old adoption laws are being reviewed, with public engagement beginning today.  Justice Minister Kris Faafoi said the Government is seeking views on options for change to our adoption laws and system. “The Adoption Act has remained largely the same since 1955. We need our adoption laws to reflect ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Wider roll-out of cameras on boats to support sustainability and protect marine life
    Up to 300 inshore commercial fishing vessels will be fitted with on-board cameras by 2024 as part of the Government’s commitment to protect the natural marine environment for future generations.  Minister for Oceans and Fisheries David Parker today announced the funding is now in place for the wider roll out ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Plan for vaccine rollout for general population announced
    New Zealanders over 60 will be offered a vaccination from July 28 and those over 55 from August 11, Prime Minister Jacinda Ardern announced today. The rollout of the vaccine to the general population will be done in age groups as is the approach commonly used overseas, with those over ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • New Zealand introduces Belarus travel bans
    New Zealand has imposed travel bans on selected individuals associated with the Lukashenko regime, following ongoing concerns about election fraud and human rights abuses after the 2020 Belarus elections, Foreign Affairs Minister Nanaia Mahuta has announced. The ban covers more than fifty individuals, including the President and key members of ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • NZ economy grows driven by households, construction and business investment
    The Government’s efforts to secure the recovery have been reflected in the robust rebound of GDP figures released today which show the economy remains resilient despite the ongoing impact of the COVID-19 pandemic, Grant Robertson said. GDP increased 1.6 percent in the first three months of 2021. The Treasury had ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Milestone 250th tower continues to improve rural connectivity
    The Government has welcomed the completion of the 250th 4G mobile tower, as part of its push for better rural connectivity. Waikato’s Wiltsdown, which is roughly 80 kilometres south of Hamilton, is home to the new tower, deployed by the Rural Connectivity Group to enable improved service to 70 homes ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Quarantine Free Travel pause with Victoria to lift on Tuesday
    Following a further public health assessment of the COVID-19 outbreak in greater Melbourne, New Zealand’s Quarantine Free Travel pause with Victoria has been extended to 11.59pm on Tuesday 22 June, COVID-19 Response Minister Chris Hipkins says. It has been determined that the risk to public health in New Zealand continues ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Prime Minister mourns passing of Dr Sir Ian Hassall
    Prime Minister Jacinda Ardern is mourning the passing of Dr Sir Ian Hassall, New Zealand’s first Children’s Commissioner and lifelong champion for children and children’s health. As a paediatrician Sir Ian contributed to a major world-first cot death study that has been directly credited with reducing cot deaths in New ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • APEC structural reform meeting a success
    APEC ministers have agreed working together will be crucial to ensure economies recover from the impact of COVID-19. Minister of Commerce and Consumer Affairs David Clark, chaired the virtual APEC Structural Reform Ministerial Meeting today which revolved around the overarching theme of promoting balanced, inclusive, sustainable, innovative and secure growth ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Digital hub to boost investment in forestry
    A new website has been launched at Fieldays to support the forestry sector find the information it needs to plant, grow and manage trees, and to encourage investment across the wider industry. Forestry Minister Stuart Nash says the new Canopy website is tailored for farmers, iwi and other forestry interests, ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Government continues support for rangatahi to get into employment, education and training
    Over 230 rangatahi are set to benefit from further funding through four new He Poutama Rangatahi programmes, Minister for Social Development and Employment Carmel Sepuloni announced today. “We’re continuing to secure our economic recovery from COVID by investing in opportunities for rangatahi to get into meaningful employment, education or training ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • NCEA subjects up for consultation
    The education sector, students, their parents, whānau and communities are invited to share their thoughts on a list of proposed NCEA subjects released today, Education Minister Chris Hipkins says. This is a significant part of the Government’s NCEA Change Programme that commenced in 2020 and will be largely implemented by ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Major investment in plantain forage programme aims to improve freshwater quality
    The Government is backing a major programme investigating plantain’s potential to help farmers protect waterways and improve freshwater quality, Acting Agriculture Minister Meka Whaitiri announced at Fieldays today. The Sustainable Food and Fibre Futures (SFFF) fund is contributing $8.98 million to the $22.23 million seven-year programme, which aims to deliver ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • America’s Cup decision
    The Minister responsible for the America’s Cup has confirmed the joint Crown-Auckland Council offer to host the next regatta has been declined by the Board of Team New Zealand. “The exclusive period of negotiation between the Crown, Auckland Council, and Team New Zealand ends tomorrow, 17 June,” said Stuart Nash. ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Food and fibres sector making significant strides towards New Zealand’s economic recovery
    The Government is backing the food and fibres sector to lead New Zealand's economic recovery from COVID-19 with targeted investments as part of its Fit for a Better World roadmap, Forestry Minister Stuart Nash said. “To drive New Zealand’s recovery, we launched the Fit for a Better World – Accelerating ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Speech to He Whenua Taurikura – New Zealand’s annual hui on countering terrorism and violent...
    Check against delivery Can I begin by acknowledging the 51 shuhada, their families and the Muslim community. It is because of the atrocious violent act that was done to them which has led ultimately to this, the start of a dialogue and a conversation about how we as a nation ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Cost of Government Southern Response proactive package released
    The Government has announced the proactive package for some Southern Response policyholders could cost $313 million if all those eligible apply. In December, the Minister Responsible for the Earthquake Commission, David Clark announced a proactive package for SRES claimants who settled their claims before October 2014. It trailed the judgment ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • New support to reduce emissions from public building and construction projects
    Government agencies are getting new support to reduce carbon emissions generated by construction of new buildings, with the release of practical guidance to shape decisions on public projects. The Ministers for Building and Construction and for Economic Development say a new Procurement Guide will help government agencies, private sector suppliers, ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • He Whenua Taurikura: New Zealand’s first Hui on Countering Terrorism and Violent Extremism
    The Prime Minister has opened New Zealand’s first hui on Countering Terrorism and Violent Extremism, which is being held in Christchurch over the next two days. The hui delivers on one of the recommendations from the report of the Royal Commission of Inquiry into the terrorist attack on Christchurch masjidain ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Speech to inaugural Countering Terrorism Hui
    E aku nui, e aku rahi, Te whaka-kanohi mai o rātou mā, Ru-ruku-tia i runga i te ngākau whakapono, Ru-ruku-tia i runga i te ngākau aroha, Waitaha, Ngāti Mamoe, Ngai Tahu, nāu rā te reo pohiri. Tena tātou katoa. Ki te kotahi te kakaho ka whati, ki te kapuia, e ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Campaign shines a light on elder abuse
    A new campaign is shining a spotlight on elder abuse, and urging people to protect older New Zealanders. Launched on World Elder Abuse Awareness Day, the Office for Seniors’ campaign encourages friends, whānau and neighbours to look for the signs of abuse, which is often hidden in plain sight. “Research suggests ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Farewelling sports administrator and philanthropist Sir Eion Edgar
    Sport and Recreation Minister Grant Robertson today expressed his sorrow at the passing of Sir Eion Edgar – a leading sports administrator and celebrated philanthropist who has made a significant impact both within and beyond the sport sector. “Sir Eion’s energy, drive and generosity has been truly immense. He leaves ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Government to apologise for Dawn Raids
    The Government will make a formal apology for the wrongs committed during the Dawn Raids of the 1970’s. Between 1974 and 1976, a series of rigorous immigration enforcement policies were carried out that resulted in targeted raids on the homes of Pacific families. The raids to find, convict and deport overstayers ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Humanitarian support for Bangladesh and Myanmar
    Foreign Affairs Minister Nanaia Mahuta today announced that New Zealand is providing NZ $8.25 million in humanitarian assistance to support refugees and their host populations in Bangladesh and to support humanitarian need of internally displaced and conflict affected people in Myanmar.  “Nearly four years after 900,000 Rohingya crossed the border ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Poroporoaki: Dame Georgina Kamiria Kirby
    E Te Kōkō Tangiwai, Te Tuhi Mareikura, Te Kākākura Pokai kua riro i a matou. He toka tū moana ākinga ā tai, ākinga ā hau, ākinga ā ngaru tūātea.  Haere atu rā ki te mūrau a te tini, ki te wenerau a te mano.  E tae koe ki ngā rire ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Feedback sought on future of housing and urban development
    New Zealanders are encouraged to have their say on a long-term vision for housing and urban development to guide future work, the Housing Minister Megan Woods has announced. Consultation starts today on a Government Policy Statement on Housing and Urban Development (GPS-HUD), which will support the long-term direction of Aotearoa ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Clean car package to drive down emissions
    New rebates for electric and plug-in hybrid vehicles start July 1 with up to $8,625 for new vehicles and $3,450 for used. Electric vehicle chargers now available every 75km along most state highways to give Kiwis confidence. Low Emission Transport Fund will have nearly four times the funding by 2023 ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Progress towards simpler process for changing sex on birth certificates
    The Government is taking the next step to support transgender, non-binary and intersex New Zealanders, by progressing the Births, Deaths, Marriages and Relationships Registration Bill, Minister of Internal Affairs, Jan Tinetti announced today. “This Government understands that self-identification is a significant issue for transgender, non-binary and intersex New Zealanders, and ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Crown speeds up engagement with takutai moana applicants
    The Crown is taking a new approach to takutai moana applications to give all applicants an opportunity to engage with the Crown and better support the Māori-Crown relationship, Treaty of Waitangi Negotiations Minister Andrew Little says. Following discussions with applicant groups, the Crown has reviewed the existing takutai moana application ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Alcohol and Other Drug Treatment (AODT) Court opens
    The Minister of Justice, Kris Faafoi, and the Minister for Courts, Aupito William Sio, have welcomed the opening of a new Alcohol and Other Drug Treatment (AODT) Court in Hamilton. The AODT Court (Te Whare Whakapiki Wairua) addresses situations where substance abuse and offending are intertwined. “New Zealanders have told ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • EU and UK FTAs top of list for first ministerial trip since COVID-19
    Trade and Export Growth Minister Damien O’Connor today announced details of his planned visit to the United Kingdom and European Union next week, where he will hold trade and agriculture discussions to further New Zealand’s economic recovery from COVID-19. The visit will add political weight to ongoing negotiations with both the EU ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Arihia Bennett to chair Royal Commission Ministerial Advisory Group
    Te Rūnanga o Ngāi Tahu chief executive Arihia Bennett MNZM has been appointed chair of the newly appointed Ministerial Advisory Group on the Government’s Response to the Royal Commission of Inquiry into the terrorist attack on Christchurch mosques. “Twenty-eight people from diverse backgrounds across Aotearoa have been selected for the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Speech to the New Zealand Medical Association General Practitioners' Conference, Rotorua
    Ki ngā pou maha o te whare hauora o Aotearoa, kei te mihiTo the pillars of our health system I acknowledge/thank you Ki te ope hapai hauora o roto o tēnei rūma, kei te mihi To our health force here in the room today, I acknowledge/thank you He taura tangata, ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Karangahape Road upgrades are streets ahead
    The upgrades to Karangahape Road makes the iconic street more pedestrian and cycle-friendly, attractive and environmentally sustainable, Transport Minister Michael Wood and Auckland Mayor Phil Goff said at the formal celebration of the completion of the Karangahape Road Enhancements project. The project included widening footpaths supporting a better outdoor dining ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Speech to APEC business event
    E ngā tumu herenga waka, ākina ā ngaru, ākina ā tai ka whakatere ngā waka ki te whakapapa pounamu, otirā, ki Tamaki o ngā waka Tena koutou katoa… To the great leaders assembled, who guided your waka through turbulent times, challenging waters and you continue to navigate your respective waka ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Pause on Quarantine Free Travel with Victoria extended
    Following an assessment of the COVID-19 outbreak in greater Melbourne, New Zealand’s Quarantine Free Travel pause with Victoria will continue for a further seven days, COVID-19 Response Minister Chris Hipkins says. There are now 93 cases associated with the outbreak in greater Melbourne, spread over four clusters. Contact tracing efforts ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Supplier Diversity Aotearoa Summit: Navigate 2021
    *** Check with delivery *** A mihi to all who have contributed to making today a success – starting with you! As you have explored and navigated government procurement today you will hopefully have reflected on the journey of our people so far – and how you can make a ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Pukemiro School to close
    Pukemiro Primary School near Huntly will close following years of declining roll numbers, Education Minister Chris Hipkins announced today. “I’ve consulted with the School Commissioner, and this decision acknowledges the fact that the few remaining students from last term are now settled at other nearby schools. “I want to thank ...
    BeehiveBy beehive.govt.nz
    1 week ago