web analytics

None so blind

Written By: - Date published: 12:01 pm, July 17th, 2009 - 19 comments
Categories: economy - Tags:

I read Reserve Bank Governor Alan Bollard’s speech on Tuesday with great interest. It’s an informative, if very mainstream review of the recession thus far and the outlook. He points out “The international financial crisis actually played little role in the early part of New Zealand’s economic recession. Rather, it was drought, falling house prices and high petrol prices that dragged New Zealand GDP growth negative over the first three quarters of 2008”.

Bollard says we have avoided another Great Depression. That’s thanks to the proactive and coordinated response from the major economies, who were willing to spend the money when it was needed to avoid a downward spiral getting out of control (NZ has been a free-rider on this). Bollard, like the banks, sees growth resuming in the fourth quarter of this year but says it will be weak. Things will get better as long as we avoid another housing bubble (which I think we will do because the demographics underlying the bubbles here and overseas have changed).

OK. That all sounds reassuring. Key has been jump on the ‘no worries folks, problem solved’ bandwagon. The problem is, it’s the view through rose-tinted glasses:

  • – no mention that the number of jobs will continue to fall
  • – no mention of swine flu, which the Reserve Bank says will cost 0.6% of GDP this year
  • – no mention of falling dairy prices
  • – no mention of the rising dollar
  • – no mention of the risk of another oil spike, as predicted by the IEA
  • – no mention that the baby-boomers start retiring next year. The boomers were behind the housing bubble, when they look to cash up it could result in a much deeper price crash, hurting the construction industry
  • – no mention that Treasury predicts total workers’ remuneration, the main determinent of consumer demand, will fall for the next two years and not be back to current levels by 2013. Funny thing, a recovery where employment and ordinary Kiwi families’ incomes keep falling. Wonder whose getting the growth?
  • – no apparent concern that the financial/housing mess in the US has still not fully unwound and there may bemore shocks to come

Will we have weak growth in the December Quarter this year? Probably. Recession technically over? Yes, for now. We all live happily ever after? No, I’m afraid not.

The risk is that in this very premptive euphoria that the recession is over (we won’t know until next March for sure) we will lose the will to deal with the fundamental economic problems we face.

alex

19 comments on “None so blind ”

  1. Bright Red 1

    It’s kind of funny to think that it takes so long to confirm that a recession is over but I guess you have to have a quarter of positive growth, and that growth has to be reported, and it take nearly four months for a quarter’s GDP to be reported

    so, like you say, even if there’s growth in the December quarter (I don’t see it somehow, not while so many people are losing their jobs still) and that means the recession is over, we won’t know until the end of March 2010.

  2. randal 2

    its all a question of mind over matter.
    they dont mind and we dont matter.
    easy.
    problem solved.
    now how a bout a nice little war?

  3. So Bored 3

    Few more not mentioned:
    * international oil price volatility if industrial demand picks up. that will wreck any recovery.
    * massive debt from bail outs could become highly inflationary.
    * toxic loans from last bubble sucking the life out of any recovery..

    I could go on, but on your point of None So Blind have to agree, myopia rules.

  4. Ianmac 4

    Thanks Marty. But do those risks mean that Key/Bollard are not being truthful, or that they are just bound to talk up the optimism to forstall a business bail-out? Who do we little people believe?

  5. Tom Semmens 5

    It all begs the question, who does Bollard think the economy is for? If unemployment is climbing and wages and conditions are suffering, can you EVER say you are “recovering” from the recession?

    • So Bored 5.1

      Like Randall says, they dont mind and we dont matter. Apart from that all you need to know is that the economy belongs to those who own everything that makes / attracts money (and by implication own you and I). Economists are their high priests, their role is to justify and spread the faith (so we dont challenge it)…..

      • Zaphod Beeblebrox 5.1.1

        Sounds like the Roman Catholic Church in the middle ages. The Priests pass down edicts from God about how we are to live and the get the authorities to pass laws accordingly. This is all of course for our benefit. If we complain, we are told that it is all inevitable.
        Miraculously those handling down the rules seem to always profit.

        • stormspiral 5.1.1.1

          An alternative description is feudalism.

        • BLiP 5.1.1.2

          Good point – previously I had thought of scientists as the new preisthood but, you’re right, the bankers are now the messengers of God. Makes me sick.

          • stormspiral 5.1.1.2.1

            Who funds the scientists? There’s a lot of bad science out there, including econometrics and the so-called ‘models’, which seem to me to be examples of outdated and poor maths.

  6. George.com 6

    Some people I spoke with yesterday were thrilled to be told by Misters Key & Bollard that the recession was nearly over. They didn’t believe it at first, but were happy to know the current misery in the real economy was simply a figment of their imagination. I wonder what cloud Key bounced on to to find this ‘good news’. I remain far less optimistic that all will soon be over.

  7. stormspiral 7

    It will never be over for too many people in our society. The philosphy is totally wrong. Why do we take note of discreted so-called ‘ratings agencies’? They are part of the problem.

    …not that it’s easy to ignore even the most ridiculous gnomes, but we do have to start looking at the philosiphical underpinnings of the present version of the capatilist system. When does an ideology become a religion?

    And at the very least we MUST reduce that tragic and increasing gap between rich and poor, knowing as we do that unemployment is a personal tragedy for ALL people who have become jobless–not just the middle classes.

    Case in point. NatRad’s Jim Mora said yesterday that the middle classes who are made redundant for the first time, suffer MORE than people who have been in and out of employment, as they’ve had plenty of practice, so it doesn’t hurt them as hard as middleclass unemployiod people–effectively placing the sick, the disabled, single parents, young people, the unskilled and others in a category of their own ie worth less than him and his likeminded mates. This is the result of people demeaning these people (yes they are people) over a long long time.

    And while we’re at it, even when we had ‘full employment’ before the crash, there were still approx 5% of the workforce who were unemployed. They are the poorest of all, and they receive the worst hammering, while Key and Co, and Goff and Co, and some minor parties, spout on about ‘improvements’. Maybe they are real improvements, but my point is that they will not reach those in our country who can’t cope now, let alone when the big stick comes down on them once again.

    And finally, what’s this about ‘the lower paid; the lower socialogical classes?’

    The unpalatability of referring to people as ‘poor’ rather than using a lot of euphemisms is a disservice to the poor. and to everyone else. because it implies two things:

    1) The poor are ‘lower’ in the minds of the speakers. (they must be because theyre not like us)

    2) It’s not happening to me, and I’m ok, so everything must be ok, but let’s jail them anyway.

    …for people who are out of work it never does get easier; it seeps into the mind an soul of each unemployed person

    • Draco T Bastard 7.1

      When does an ideology become a religion?

      When the basic assumptions of that religion are provably wrong but the practitioners still blindly follow them. Yes, this does seem to be true of neo-liberal economics and capitalism.

      • So Bored 7.1.1

        To be fair Draco, the same could be said about the big “isms” of the last century (Communism, Fascism etc). The problem is faith as opposed to informed scepticism and doubt.

        That said, get into those unthinking neo lib b*****ds.

  8. BLiP 8

    Thoughtful comment, Spiral, thanks.

    The failure of current economic thinking with its concomitant reduction of society down to the status of a business is criminal. It seems a real shame to me that at a time of economic depression New Zealand has decided to put its future (for the time being) into the grubby hands of a money changer. There are, however, “green shoots” for solace in that the leading economic thinkers have realised the harm they have caused and are taking steps to reshape their models. I note:

    In the last of his Lionel Robbins lectures at the LSE on June 10th, Mr Krugman feared that most macroeconomics of the past 30 years was “spectacularly useless at best, and positively harmful at worst’.

    . . . and this from The Economist! Fingers crossed the fuckers learn their lesson.

    • stormspiral 8.1

      Yes, and others are also stirring

      See also The BBC Reith Lectures 2009, given by Michael Sandel at various top universities around the world. Listen especially to number 4 in which he ‘considers the expansion and moral limits of markets’.

      http://www.bbc.co.uk/programmes/b00729d9

      I think there’s going to be a bit of a fight. It reminds me somewhat of the fights that were going on many many years ago when I was a very junior reporter on The Standard newspaper. That wheel really does need to be reinvented..

      • BLiP 8.1.1

        Excellent link! Again, my thanks.

        Have you come across the “Rolling Stone” piece about Goldman Sachs? It’s the best primer about the current depression I’ve read and provides an indication of the sorts of forces rallied against implementing the changes that have to be made. Its going to be a real struggle.

  9. SPC 9

    The recession occured because of the high OCR pushing up mortgage costs (also raising the dollar to diminish exporter income). It was created by the RB to end the housing bubble – which could have been prevented from occuring in the first place and should have been countered better by a more selective response (requiring larger deposits for those investing in existing property to rent it out and also placing a surcharge on such mortgages).

    I doubt that baby boomers caused this asset bubble anymore than other investors with access to cheap finance or that they will cause any property value decline later either. Boomers will live into their 80’s and stay in their family homes – thus occupying so much of this sort of property that any upsurge in migration will soon cause housing shortages.

    The trick will be how to realise new property building while diminshing speculation in existing property assets.

    PS While boomers may divest themselves of their rental property, under current policy settings others investors will buy them up.

  10. SPC 10

    Ways of encouraging new rental home building include exempting them from any capital gains tax applying on rental property – and not applying any of the restraints that could be imposed on existing property for rent (such as minimum deposit criteria and surcharge on such mortgages).

Recent Comments

Recent Posts

  • New Zealand boosts support to Fiji for COVID-19 impact
    Aotearoa New Zealand is providing additional support to Fiji to mitigate the effects of the current COVID-19 outbreak on vulnerable households, Foreign Minister Hon Nanaia Mahuta announced today. “Recognising the increasingly challenging situation in Fiji, Aotearoa will provide an additional package of assistance to support the Government of Fiji and ...
    BeehiveBy beehive.govt.nz
    4 hours ago
  • Round 2 of successful energy education fund now open
    $1.65 million available in Support for Energy Education in Communities funding round two Insights from SEEC to inform future energy hardship programmes Community organisations that can deliver energy education to households in need are being invited to apply for the second funding round of the Support for Energy Education in ...
    BeehiveBy beehive.govt.nz
    4 hours ago
  • New Ngarimu scholarships to target vocational training
    Associate Education Minister Kelvin Davis today announced three new scholarships for students in vocational education and training (VET) are to be added to the suite of prestigious Ngarimu scholarships. “VET learners have less access to study support than university students and this is a way to tautoko their learning dreams ...
    BeehiveBy beehive.govt.nz
    5 hours ago
  • Recognising the volunteers who support our health system
    Nominations have opened today for the 2021 Minister of Health Volunteer Awards, as part of National Volunteer Week. “We know that New Zealanders donate at least 159 million hours of volunteer labour every year,” Minister of Health Andrew Little said in launching this year’s awards in Wellington. “These people play ...
    BeehiveBy beehive.govt.nz
    9 hours ago
  • Drug Free Sport supported to deal with new doping challenges
    Drug Free Sport New Zealand will receive a funding boost to respond to some of the emerging doping challenges across international sport. The additional $4.3 million over three years comes from the Sport Recovery Fund announced last year. It will help DFSNZ improve athletes’ understanding of the risks of doping, ...
    BeehiveBy beehive.govt.nz
    9 hours ago
  • Government support for South Auckland community hit by tornado
    The Government is contributing $100,000 to a Mayoral Relief Fund to support Auckland communities impacted by the Papatoetoe tornado, Acting Minister for Emergency Management Kris Faafoi says. “My heart goes out to the family and friends who have lost a loved one, and to those who have been injured. I ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Celebrating World Refugee Day
    World Refugee Day today is an opportunity to celebrate the proud record New Zealanders have supporting and protecting refugees and acknowledge the contribution these new New Zealanders make to our country, the Minister of Immigration Kris Faafoi said. “World Refugee Day is also a chance to think about the journey ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • 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
    2 days 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
    3 days 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
    3 days 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
    4 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
    4 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
    4 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
    4 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
    4 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
    4 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
    5 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
    5 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
    5 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
    5 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
    5 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
    5 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
    5 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
    5 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
    6 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
    6 days ago
  • First period products delivered to schools
    The first period products funded as part of the Government’s nationwide rollout are being delivered to schools and kura this week, as part of wider efforts to combat child poverty, help increase school attendance, and make a positive impact on children’s wellbeing. “We know that nearly 95,000 9-to-18 year olds ...
    BeehiveBy beehive.govt.nz
    6 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
    6 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
    6 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
    6 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
    6 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
    1 week 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
    1 week 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
    1 week 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
    1 week 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
    1 week 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
    1 week 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
    1 week 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