web analytics

Hickey on debt

Written By: - Date published: 10:33 am, October 16th, 2016 - 30 comments
Categories: capitalism, debt / deficit, economy - Tags: , ,

Interesting reading from Bernard Hickey in The Herald on Sunday:

Bernard Hickey: Shopping our way into debt

…Treasury published a paper on the rise in New Zealand’s household debt to record high levels relative to income. …

It showed household debt fell relative to incomes for a couple of years after the Global Financial Crisis of 2008 as we pulled our heads in and saved after a shock – but we got back on the spending horse in earnest from 2014 onwards.

Our household debt to income ratio of 165 per cent is now about 5 per cent above those previous highs of 2008 and rising quickly as debt rises around twice as fast as incomes.

That speed of growing indebtedness is not much worse than the bad old days of 2002-07 when New Zealand went on its biggest ever debt-funded spending spree. …

Another crash is coming.

30 comments on “Hickey on debt”

  1. Barfly 1

    “Ouch”

  2. johnm 2

    Most of this debt will be on madly overpriced wooden living boxes on sections in this speculators’ paradise of capital gain.

    Meanwhile the real people who make a country good can’t buy one of these wooden palaces for their family and must rent from same speculators. Our birthright sold for a bowl of porridge. Oh Yeh do read the FIRE economy.

    • Draco T Bastard 2.1

      +111

      Exactly.

      What we’re seeing here is the decimation of the nation just to enrich the bankers.

    • Adrian Thornton 2.2

      +++ Exactly right, both NZ political parties have encouraged the destruction of the very fabric of our communities by allowing this obscene unfettered speculation on the family home, and the tsunami of cheap slave made consumer products, which has hollowed out local manufacturing.
      Now we are being forced by record low interest rates at the banks to become gamblers instead of savers.
      How about this for a political platform, you are allowed to go to work for 40 hours and earn a good wage for that decent weeks work, you can save some of that money at a fair interest rate, then with the rest of your time you enjoy time with your family, friends hobbies or other interests…..and no Sunday trading.
      Turn Labour Left.

      • Lara 2.2.1

        “Now we are being forced by record low interest rates at the banks to become gamblers instead of savers”

        I absolutely disagree.

        No one is being forced into debt. If you can’t afford it, don’t bloody well buy it.

        That includes owning a home. You’ll have to keep renting.

        And for those who already have their name on the title of an overpriced crappy wooden box in NZ, they’re taking on more debt. No one’s forcing them to put in a new kitchen, or a new bathroom. No one’s forcing them to take an overseas holiday or buy a new BMW with debt on the house.

  3. Paul 3

    Hickey understates the point that debt has wracked up since the 80s because workers wages have flatlined while costs have risen.
    He also understates the role of the media in acting as pimps for companies selling their consumerist garbage.

  4. mosa 4

    When the interest rate climbs and it has to at some point the screams of pain and anguish will be hard to ignore.
    The debt burden of New Zealand puts us as nation at serious risk with high levels domestic and external debt.
    Its been easy so far except those who caught in the cycle of poverty who rely on finance loans charged out at over 20 % with no hope of ever paying down the principle.

    Its one of the many traps of the neo lib economy that while keeping wage and salaries down and costs increasing you make credit easy and interest cheap with the idea the economy is a rockstar and the future is bright so you dont have to worry and more importantly you dont pay off the principle of the debt.

    Its buy now and worry about paying it back in 2019, 2024 or never.

    The banks are in the box seat making millions and when it goes to hell they will simply foreclose on the debt, throwing people out on to the street and that does no faze them one bit just look at America in 2007-2008.

    Its going to be ugly and it could have been preventable given the lessons not learned from the GFC.

    • The New Student 4.1

      The completely unnecessary and preventable NZFC is going to be hella embarrassing

    • Tamati Tautuhi 4.2

      Labour left the country in a good financial position post GFC.

      • David C 4.2.1

        LOL You are just trolling bait there!

        In recession is a good financial position?

        • The recession wasn’t caused by labour, it was a global recession.

          And Bill English admitted the same thing after National took over, that Cullen had left the government in a good fiscal position to tackle the recession.

      • Nic the NZer 4.2.2

        Maybe you should look at the same household debt Hicky is talking about here, pay close attention to the period of the 5th Labour government, 1999 – 2008.
        http://www.rbnz.govt.nz/statistics/key-graphs/key-graph-household-debt

        Note, running a government budget surplus has the consequence that for every doller of surplus, the non-government sector loses exactly a doller of spending power or savings. Looking at the chart above you can probably see where a lot of those dollers funding the surplus came from. De-regulation of the financial sector (the finance company sector was pretty well un-regulated until the GFC) probably also had some impact, but by itself running a surplus starved the non-government sector of sufficient income to compete in the housing market without taking on increasing debt ratios. At the same time the housing market became a contest in the incentives ‘who can take on the largest mortgage’, and ‘get on the ladder before the market gets away’.

        • UncookedSelachimorpha 4.2.2.1

          Keeping in mind the “non-government sector” is not one amorphous thing. The surplus could be extracted from the very rich, or from beneficiaries and the working poor. The impacts and benefits in society will be very different.

          • Nic the NZer 4.2.2.1.1

            I will assume that you are infering Labour do better at fairly extracting the surplus from the economy than National. But considering that the left office with the finance company sector in collapse and rampant property inflation and income inequality. On that basis it doesn’t seem to help much overall.

  5. infused 5

    Oh well. Humans are stupid. We’ve spent these good years paying off debt. Will be debt free by xmas.

    Oh you will say, the poor. Well it’s not just the poor who are racking up debt. Heaps of friends, on good wages are ticking everything up under the sun. It doesn’t make any sense.

  6. Tamati Tautuhi 6

    ..but we are now in surplus after some fine economic management of the economy by John Key and Bill English $1.8 Billion in surplus, doubt whether any other party could have achieved these results after the Global Financial Crisis we have been through.

  7. esoteric pineapples 7

    At the very least, consumer spending on non-essentials is going to decrease. When you have a $300,000 – $500,000 mortgage you are not going to have much spare cash. When so many people have this level of debt this must lead eventually to a recession, which may be being staved off for now with more borrowing.

  8. DRUM 8

    I fully acknowledge I’m a financial illiterate…can any one explain…especially you TT…how a government can claim to be in surplus when the external debt of this country is north of $100B?

    • b waghorn 8.1

      it’s the same as your day to day account being in the black while you have a small $700 k mortgage for your affordable home, you would be in surplus

    • Tamati Tautuhi 8.2

      The current account is in surplus $1.8 billion, which is like your day to day cheque/transaction account analysis at year end, the long term deficit borrowings has gone from $15 billion to $120 billion in the last 8 years, this is like your mortgage going from $150,000 to $1,200,000 over an 8 year period. I was actually being sarcastic but did get the bites I expected?

  9. Tarquin 9

    Seen it all before. In 1997 a mate of mine was offered $300K for his house on the north shore. Ended up selling it 6 months later for $180K. For a couple of years there were people with $300K mortgages living in homes of half that value, it’s called greed and it appears to be cyclical. Nobody is forcing people to borrow money. Hickey has been predicting the sky will fall for years now. He moved to Wellington a couple of years ago because the Auckland market was about to crash, so I’m not to sure his financial advice is that sound, at the very least his timing is well out the window.

    • jcuknz 9.1

      THAT’S RIGHT! Shoot the messenger because you don’t like the message.

      The situation simply shows how irresponsible we are as a nation, lacking in discipline to not follow the consumer offerings…. trouble is if we do not buy our workplace goes bung for lack of customers. This also ignores the high rents needed to pay interest, let alone principle, on the huge loans the banks happily provide.

      • Tarquin 9.1.1

        Pointing out facts is not shooting the messenger.

        • Colonial Viper 9.1.1.1

          Well, timing the market is always problematic, and in this frothy bubbly market that’s why its called a game of pretend and extend.

    • dv 9.2

      I am working on a sophisticated finical modelling to predict collapse.

      Nearly got it.

      I have called it hindsight.

  10. Greg 10

    The banks have to take some of the blame they pushed debt like a crack dealer.
    It’s going to be painful for a lot of people

  11. Greg 11

    It’s not just the debtors who get hurt it the effect on the wider econemy as consumption crashes it effects jobs savers to allow New Zealand to get to this point is irresponsible we all a hard attitude but that isn’t going to jhelp those loose there homes are going to have to be helped on sounder footing .the current debt driven road Nz will end there is nothing anyone can do to stop a collapse

  12. AsleepWhileWalking 12

Links to post

Recent Comments

Recent Posts

  • Wairarapa Moana seeks international recognition as vital wetland
    The Minister of Conservation Eugenie Sage is celebrating World Environment Day with an announcement of a major step towards Wairarapa Moana being recognised as an internationally significant wetland. “Wairarapa Moana is an ecosystem of 10,000 hectares of wetland and open water that provides a home for indigenous fish, birds and ...
    BeehiveBy beehive.govt.nz
    2 hours ago
  • First Police wing to complete training post lockdown
    A new-look Police graduation ceremony to take account of COVID19 health rules has marked the completion of training for 57 new constables. Police Minister Stuart Nash attended this afternoon's ceremony, where officers of Recruit Wing 337 were formally sworn in at the Royal New Zealand Police College without the normal support of ...
    BeehiveBy beehive.govt.nz
    19 hours ago
  • Government makes further inroads on predatory lenders
    Mobile traders and truck shops must adhere to responsible lending requirements Interest rate cap on high-cost loans Lenders prohibited from offering further credit to an applicant who has taken two high-cost loans in the past 90 days The Minister of Commerce and Consumer Affairs, Kris Faafoi, has signalled an end ...
    BeehiveBy beehive.govt.nz
    21 hours ago
  • New survey shows wage subsidy a “lifeline” for businesses, saved jobs
    94% of firms say wage subsidy had positive impact on cashflow 62% of firms say support helped to manage non-wage costs like rent A survey of business that have received the Government’s wage subsidy show it has played a significant role in saving jobs, and freed up cash flow to ...
    BeehiveBy beehive.govt.nz
    22 hours ago
  • Tax changes support economic recovery
    New legislation introduced to Parliament today will support growth and assist businesses on the road to economic recovery, said Revenue Minister Stuart Nash. “The Taxation (Annual Rates for 2020-21, Feasibility Expenditure, and Remedial Matters) Bill proposes that businesses can get tax deductions for ‘feasibility expenditure’ on new investments,” said Mr ...
    BeehiveBy beehive.govt.nz
    24 hours ago
  • $4.6 million financial relief for professional sports
    Sport and Recreation Minister Grant Robertson has welcomed the first release of funds from the $265 million Sport Recovery Package announced as part of Budget 2020. Sport NZ has announced that $4.6 million in funding will go to the Wellington Phoenix, NZ Warriors, Super Rugby teams and the ANZ Premiership ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Critical support for strategic tourism assets
    An iconic New Zealand tourism attraction and the country’s 31 Regional Tourism Organisations are the first recipients of support from the $400 million Tourism Sector Recovery Plan, to help position the sector for recovery from COVID-19, Tourism Minister Kelvin Davis announced today. The plan includes a Strategic Tourism Assets Protection ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Supporting Kiwi businesses to resolve commercial rent disputes
    The Government will legislate to ensure businesses that suffered as a result of the COVID-19 response will get help to resolve disputes over commercial rent issues, Justice Minister Andrew Little announced today. A temporary amendment to the Property Law Act will insert a clause in commercial leases requiring a fair ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Prompt payments to SMEs even more urgent
    The Minister for Small Business says new data from Xero highlights the urgency of prompt payment practices to small and medium enterprises as we move into economic recovery. Last month Government ministers wrote to significant private enterprises and the banking industry to request they join efforts by government agencies to ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Free period products in schools to combat poverty
    Young people in Waikato will be the first to have free access to period products in schools in another step to support children and young people in poverty,” Prime Minister Jacinda Ardern said.  During term 3, the Ministry of Education will begin providing free period products to schools following the ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Response to charges in New Plymouth
    The Minister of Police Stuart Nash has issued the following statement in response to charges filed against three Police officers this morning in the New Plymouth District Court. “Any incident involving a loss of life in Police custody is taken very seriously. The charges today reflect the gravity of the ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Govt boosts innovation, R&D for economic rebuild
    $196 million for Crown Research Institutes $150 million for R&D loan scheme $33 million for Māori research and development opportunities $12 million for the Nationally Significant Collections and Databases $10 million to help maintain in-house capability at Callaghan Innovation New Zealand’s entrepreneurs, innovators and crown researchers will benefit from a ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Temporary changes to NCEA and University Entrance this year
    Further temporary changes to NCEA and University Entrance (UE) will support senior secondary school students whose teaching and learning have been disrupted by COVID-19. “The wellbeing of students and teachers is a priority. As we are all aware, COVID-19 has created massive disruption to the school system, and the Government ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Extended terms for the directors of the Racing Industry Transition Agency
    Minister for Racing Winston Peters today announced that the terms for the directors of the Racing Industry Transition Agency (RITA) have been extended to 30 June 2021. Due to the COVID-19 crisis the transition period has been extended to ensure that the Racing Industry Bill can complete its progress through ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Healthy Homes Standards statement of compliance deadline extended
    The deadline for landlords to include detailed information in their tenancy agreements about how their property meets the Healthy Homes Standards, so tenants can see the home they are renting is compliant, has been extended from 1 July 2020 to 1 December 2020.  The Healthy Homes Standards became law on 1 July 2019. The Standards are ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Criminal Cases Review Commission board appointments announced
    Justice Minister Andrew Little today announced details of further appointments to the Criminal Cases Review Commission. “I am pleased to announce Paula Rose QSO OStJ as Deputy Chief Commissioner for a term of five years commencing on 15 June 2020,” said Andrew Little. “I am also pleased to announce the ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Release of initial list of supported training to aid COVID-19 recovery
    The Targeted Training and Apprenticeships Fund (TTAF) will pay costs of learners of all ages to undertake vocational education and training The fund will target support for areas of study and training that will give learners better employment prospects as New Zealand recovers from COVID-19 Apprentices working in all industries ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Emission trading reforms another step to meeting climate targets
    The Emissions Trading Scheme (ETS) will finally start to cut New Zealand’s greenhouse gas pollution as it was originally intended to, because of changes announced today by the Minister for Climate Change, James Shaw. The changes include a limit on the total emissions allowed within the ETS, rules to ensure ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Queen’s Birthday Honours highlights Pacific leadership capability in Aotearoa
    Minister for Pacific Peoples Aupito William Sio says the Queen’s Birthday 2020 Honours List provides an abundance of examples that Pacific people’s leadership capability is unquestionable in Aotearoa. “The work and the individuals we acknowledge this year highlights the kind of visionary examples and dedicated community leadership that we need ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Govt backing horticulture to succeed
    The Government is backing a new $27 million project aimed at boosting sustainable horticulture production and New Zealand’s COVID-19 recovery efforts, says Agriculture Minister Damien O’Connor. “Our horticulture sector has long been one of New Zealand’s export star performers, contributing around $6 billion a year to our economy. During and ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Applications open for forestry scholarships
    Applications have opened for 2021 Ngā Karahipi Uru Rākau – Forestry Scholarships, which will support more Māori and women to pursue careers in forestry science, says Forestry Minister Shane Jones. “I’m delighted Te Uru Rākau is offering Ngā Karahipi Uru Rākau – Forestry Scholarships for the third year running. These ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Excellent service to nature recognised
    The Queen’s Birthday 2020 Honours List once again highlights the dedication by many to looking after our native plants and wildlife, including incredible work to restore the populations of critically endangered birds says Minister of Conservation Eugenie Sage. Anne Richardson of Hororata has been made an Officer of the New ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Wetlands and waterways gain from 1BT funding
    The Government will invest $10 million from the One Billion Trees Fund for large-scale planting to provide jobs in communities and improve the environment, Agriculture Minister Damien O’Connor and Forestry Minister Shane Jones have announced. New, more flexible funding criteria for applications will help up to 10 catchment groups plant ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • New fund for women now open
    Organisations that support women are invited to apply to a new $1,000,000 fund as part of the Government’s COVID-19 response. “We know women, and organisations that support women, have been affected by COVID-19. This new money will ensure funding for groups that support women and women’s rights,” said Minister for ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Govt supports King Country farmers to lift freshwater quality
    Healthier waterways are front and centre in a new project involving more than 300 King Country sheep, beef and dairy farmers. The Government is investing $844,000 in King Country River Care, a group that helps farmers to lift freshwater quality and farming practice, Agriculture Minister Damien O’Connor announced today. “Yesterday ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Libraries to help with jobs and community recovery
    A major funding package for libraries will allow them to play a far greater role in supporting their communities and people seeking jobs as part of the economic recovery from COVID-19. “Budget 2020 contains over $60 million of funding to protect library services and to protect jobs,” says Internal Affairs ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Support for arts and music sector recovery
    A jobseekers programme for the creative sector and four new funds have been set up by the Government to help our arts and music industry recover from the blow of COVID-19. Thousands of jobs will be supported through today’s $175 million package in a crucial economic boost to support the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Legislative changes to support the wellbeing of veterans and their families
    Minister for Veterans Ron Mark has welcomed the First Reading of a Bill that will make legislative changes to further improve the veterans’ support system.  The Veterans’ Support Amendment Bill No 2, which will amend the Veterans’ Support Act 2014, passed First Reading today. The bill addresses a number of ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Christ Church Cathedral – Order in Council
    Views sought on Order in Council to help fast track the reinstatement of the Christ Church Cathedral  The Associate Minister for Greater Christchurch Regeneration, Hon Poto Williams, will be seeking public written comment, following Cabinet approving the drafting of an Order in Council aimed at fast-tracking the reinstatement of the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Zealanders’ human rights better protected in new Bill
    The law setting out New Zealanders’ basic civil and human rights is today one step towards being strengthened following the first reading of a Bill that requires Parliament to take action if a court says a statute undermines those rights. At present, a senior court can issue a ‘declaration of ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Deep concern at Hong Kong national security legislation
    Foreign Affairs Minister Winston Peters today reiterated the deep concern of the New Zealand Government following confirmation by China’s National People’s Congress of national security legislation relating to Hong Kong. “New Zealand shares the international community’s significant and long-standing stake in Hong Kong’s prosperity and stability,” Mr Peters said. “New Zealand ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Government invests in New Zealand’s cultural recovery
    Thousands of artists and creatives at hundreds of cultural and heritage organisations have been given much-needed support to recover from the impact of COVID-19, Prime Minister and Minister for Arts, Culture and Heritage Jacinda Ardern announced today. “The cultural sector was amongst the worst hit by the global pandemic,” Jacinda ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Better protection for New Zealand assets during COVID-19 crisis
    Key New Zealand assets will be better protected from being sold to overseas owners in a way contrary to the national interest, with the passage of the Overseas Investment (Urgent Measures) Bill. The Bill, which passed its third reading in Parliament today, also cuts unnecessary red tape to help attract ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Cleaning up our rivers and lakes
    Setting higher health standards at swimming spots Requiring urban waterways to be cleaned up and new protections for urban streams Putting controls on higher-risk farm practices such as winter grazing and feed lots Setting stricter controls on nitrogen pollution and new bottom lines on other measures of waterway health Ensuring ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Record year for diversity on Govt boards
    The Government is on the verge of reaching its target of state sector boards and committees made up of at least 50 percent women, says Minister for Women Julie Anne Genter and Minister for Ethnic Communities Jenny Salesa. For the first time, the Government stocktake measures the number of Māori, ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New appointments to the Commerce Commission
    The Commerce and Consumer Affairs Minister and Broadcasting, Communications and Digital Media Minister, Kris Faafoi, has today announced the appointment of Tristan Gilbertson as the new Telecommunications Commissioner and member of the Commerce Commission. “Mr Gilbertson has considerable experience in the telecommunications industry and a strong reputation amongst his peers,” ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Historic pay equity settlement imminent for teacher aides
    The Ministry of Education and NZEI Te Riu Roa have agreed to settle the pay equity claim for teacher aides, Education Minister Chris Hipkins announced today. This will see more than 22,000 teacher aides, mostly women, being valued and paid fairly for the work they do. “Teacher aides are frontline ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Govt delivers security for construction subcontractors
    Subcontractors will have greater certainty, more cashflow support and job security with new changes to retention payments under the Construction Contracts Act says Minister for Building and Construction, Jenny Salesa. A recent review of the retentions money regime showed that most of the building and construction sector is complying with ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Zealand and Singapore reaffirm ties
    Prime Minister Jacinda Ardern and Singapore Prime Minister Lee Hsien Loong have marked the first anniversary of the New Zealand-Singapore Enhanced Partnership with a virtual Leaders’ Meeting today. The Enhanced Partnership, signed on 17 May 2019, provides the framework for cooperation across the four main areas of trade, defence and ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • JOINT STATEMENT BY THE PRIME MINISTERS OF NEW ZEALAND AND THE REPUBLIC OF SINGAPORE ON THE FIRST AN...
    On 17 May 2019, New Zealand and Singapore established an Enhanced Partnership to elevate our relations. The Enhanced Partnership – based on the four pillars of trade and economics, security and defence, science, technology and innovation, and people-to-people links – has seen the long-standing relationship between our countries strengthen over the ...
    BeehiveBy beehive.govt.nz
    1 week ago