Oram – seven warning signs for the economy

Written By: - Date published: 10:07 am, July 24th, 2016 - 23 comments
Categories: economy, national, useless - Tags: , , ,

wile e coyoteRod Oram’s Sunday Star-Times, reprinted on Facebook here, has a useful roundup of the recent chorous of economic warnings:

Our Road Runner economy is zooming towards the cliff-edge

When the Road Runner zooms out over a cliff, looks down and sees the gaping chasm beneath, it loses momentum and plummets.

That would be Wile E Coyote you’re thinking of, but we won’t hold it against you!

Perhaps the cartoon character is telling us something about the New Zealand economy. Seven news items this week give us a glimpse into the void.

1. Auckland house prices and the NZ dollar are “overcooked,” says David Hisco, chief executive of ANZ in New Zealand. “The ending is pretty much the same – sometimes a little plot twist, but usually messy.”

2. Global dairy prices are struggling to recover, says the OECD-FAO in their annual world agricultural outlook. To break even, the average NZ farmer needs a price of US$2,650 per tonne of whole milk powder. But it won’t reach that level until 2019. …

3. Inflation is moribund. It was 0.4 per cent in the year to June, and equally weak or dipping into deflation in many other countries. …

4. The NZ dollar is far too strong. …

5. The global economy is slowing. In April, the IMF reduced its forecasts for global growth, with only China among large economies edging a tad higher. Since then the IMF has highlighted Brexit and other factors that have made the outlook more uncertain.

6. Global income is stagnating for many people. Two-thirds of households in 25 advanced economies suffered flat or falling real incomes between 2005 and 2014, according to analysis just released by the McKinsey Global Institute. Some 540 million people are affected, says the report available at nz2050.com/McKinseyInequality.

7. Voter fury is spreading. The vindictive, mob mentality of US Republicans at their convention this week is but one example of the global malaise. Donald Trump, their agitator-in-chief, believes this tide of outrage will sweep him into the White House. …

We are utterly exposed to all these local and global conditions. Yet, our government deludes itself, and tries to sucker us too, into believing the high dollar, house prices, immigration and tourism are all signs of success.

We’re not at the cliff-edge yet. But only strong-eyed realism will save us in time.

We have the wrong government for “strong-eyed realism”. National specialises more in lies, denial, and electoral expedience. Bummer.

23 comments on “Oram – seven warning signs for the economy”

  1. dave 1

    But only strong-eyed realism will save us in time

    no they cant see past there house prices because far to many have used there homes as ATM machines realism reality will come with a bang. then the squealing will begin.

    • Richardrawshark 1.1

      69k mortgage this morning , left to pay that is…i havn’t used my ridiculously increasing house value to borrow for a tv etc, car what have you.

      If you did, well I really have not any sympathy and when Keys bubble bursts, you , and that’s those who voted National due to there borrowing, deserve a whole hearted boo hoo and well tough.

      Maybe they will crawl back to where they came from and life will return to a more normal path.

      • dave 1.1.1

        i fear they will take the prudent responsible citizens down with them. i have no problem with the irresponsible greedy and foolish crash and burning .my concern is damage they will do to society on the way down. do you think the increasing amounts of homeless is tip of a huge wedge thats already over the cliff and waiting for the fall?thats what iam taking from the article

  2. Pat 2

    “We’re not at the cliff-edge yet. But only strong-eyed realism will save us in time.”

    Think R.Oram is suggesting that we have passed the cliff edge and just haven’t looked down and realized it.

    • Pat 2.1

      edit…I see he is not, though IMO he possibly should (its a good analogy, Wile.E.Coyote) for what strong eyed realistic actions can prevent the fall?

  3. Guerilla Surgeon 3

    Voter fury is spreading with good damned reason. Working class people find it difficult to define anyone to vote for who has their interests at heart. The US situation is complicated by religion and guns, but even so people are voting for demagogues because they make promises about improving working people’s lives. With a liberal use of scapegoats. It’s going to be interesting when they find out these promises can’t be kept.

    • Paul 3.1

      Why I’m Ashamed I Voted Remain

      The E.U. had suddenly acquired an almost religious power. The fact is that for towns like Oldham, Boston and Merthyr Tydfil, large-scale immigration and globalisation does not mean multicultural community groups, Portuguese cafes and discussing cultural differences with your student friends from Sweden and Belgium. To these people, who have struggled with the decline of their industrial jobs, it means constant flux, it means change they did not ask for, it means losing things, and it means more people to compete with for the jobs that were already thin on the ground. But no one since the referendum wants to confront this. Indeed, as Ben Goldacre suggested, these are the ‘losers’; the people who are mocked routinely by clever-clever Oxbridge comedians on panel shows and sitcoms, the people who have to put up with their towns being the butt of jokes, the people who have been systematically ignored as the sophisticates turn a blind eye and refuse to look up from their iPads in the local Starbucks to see the suffering that may be necessary to provide us with these vapid pleasures.

      The inequality gap has grown so wide that there are students in London who genuinely cannot fathom why a poor young person living in Rochdale might not see the benefits of a gap year travelling around Eastern Europe. And why should they be able to understand the poor? They have absolutely zero reference points they can consult to understand the plight of the working class in Britain. They are more likely to empathise with a Brooklyn hipster than they are with a Burnley plumber………

      ….So what is it going to be? Do we want democracy or do we want the self-selecting intelligent vanguard deciding for the rest? Are we going to drift further into some sort of social apartheid where poor people get driven farther and farther out of cities and become secluded in ghost towns with the lines of communication between them and the educated middle-class cutoff? Or are we going to speak to each other? There is no easy answer to the multitude of problems we face now. However, I do believe we should be opening ourselves to some difficult questions that lead us outside our comfortable bubbles. We have to understand why people are angry about immigration and we have to fix our fractured communities.

      What certainly will not help is demonising large sections of the population who already feel like they are being attacked from all angles. If you push people far enough, they will have no choice but to push back. Let’s talk. Let’s listen to the other point of view. Let’s try to understand where they are coming from. Let’s admit it is possible that we might be wrong about some things, that we might be recycling what we hear from our own biassed sources. If we do not liberate ourselves from our comfortable groups, then there is a hard rain that is a-gonna fall. The bubble will burst. And you (yes you, Fat White Family and your ilk) will have a lot more than visa applications to worry about.

      https://off-guardian.org/2016/07/23/why-im-ashamed-i-voted-remain/

      • miravox 3.1.1

        I think the UK government has more to do with enabling the conditions the writer is rightly concerned about. Wait until Theresa May gets rid of the EU human rights legislation, workers rights protection, environment protection and climate initiatives and they may find the remain vote was not such a bad thing after all

    • Richard Christie 3.2

      It’s going to be interesting when they find out these promises can’t won’t be kept.

      fify.

      ( c’mon, without that change we may as well all just give up and resign ourselves to no change. 🙂 )

      • blacksand 3.2.1

        Yes, it will be. Some will be sooner, some will be later – like Muldoon’s promises that it’ll be all fine cashing in the superfund, the Government will look after you.

        Of course the ones who took the punt were the same ones that Winston Peters had enormous appeal for. Just like the current superfund – someone else is going to get good mileage when a future government is struggling to make ends meet.

  4. Paul 4

    And other article, connected to Oram’s warnings about a future crash.

    Budget Buster: How safe are banks, really?

    http://www.stuff.co.nz/business/money/82354985/budget-buster-how-safe-are-banks-really

    • Draco T Bastard 4.1

      Despite what most people assume, the Government isn’t protecting you either. It bailed out the BNZ in 1989, but there’s no guarantee that’ll happen again.

      And it really actually something that the government shouldn’t do. It’s not the governments’ job to protect people from the risks that they take in their investments.

      This means it’s a good idea to take an interest in your bank’s financial health. The most useful metric is the credit rating, found in its quarterly disclosure statements or on the Reserve Bank website.

      LOL

      Here’s a list of all the banks that collapsed/got bailed out during the GFC. Most, if not all of them, had AAA credit ratings.

    • peterlepaysan 4.2

      Banks are safe because governments are afraid of them.

  5. joe90 5

    Meanwhile, on the 9th floor….

  6. Chooky 6

    +100 Rod Oram is always worth listening to

    One could also add to that list corporate entertwining and knitting in State affairs eg Goldman Sachs..Has this happened also in New Zealand?…Yes?

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11262662

    http://www.interest.co.nz/bonds/63293/treasury-hires-goldman-sachs-prepare-report-kiwibanks-future-capital-needs

    Episode 943

    https://www.rt.com/shows/keiser-report/352425-wall-street-gas-oil/

    In this special episode of the 2016 Summer Solutions series of the Keiser Report, Max and Stacy talk first to former banker, now author, Nomi Prins, about a solution to the revolving door between Wall Street and DC. They discuss whether or not Hillary Clinton’s highly paid speeches to Goldman Sachs matter and whether or not Wall Street expects anything in return for its contributions to her campaign.

    In the second half, Max and Stacy talk to UK activist Tina Rothery about fracking being forced upon the people of North Yorkshire, who have overwhelmingly expressed their resistance to the ‘controversial’ natural gas and oil extraction method. They ask what the solution is going forward when elected officials choose corporations over populations.

  7. Keith 7

    Related to the lies and general poor performance of this government is this article here from NZ Farmer.co; http://www.stuff.co.nz/business/farming/82400784/PMs-department-warned-of-Chinese-trade-threats-but-didn-t-brief-him.

    In short regarding Chinese trade embargoes against NZ, the “Department of the PM and Cabinet did not brief the Prime Minister, or his office at this time as MFAT was following up to assess the veracity of the claims made – specifically around whether there had been any industry consultation and whether China was planning any trade measures against New Zealand.”

    Apparently the PM was “blindsided” by his own department, which failed to tell him about Chinese threats against dairy, kiwifruit and wool exports.

    But what becomes clear is trade minister Todd McClay and John Key were in denial about any issues with trade and China, only for McClay to backtrack the following week. Recall him and John making an absolute pigs arse of their “recollections” over Keys lawyer and the Panama papers? God that was awful.

    You see we dumb fucks are supposed to believe the PM of NZ and his ministers were blissfully unaware of such a potentially and massively threatening problem with our largest trading partner. We were supposed to believe that these big firms who are directly affected by such trade embargoes and who ultimately make sizable “donations” to the National Party to buy influence would have sat quietly by without ever using their speed dial to get hold of their favourite Nat minister to tell them. We were supposed to believe that you don’t tell the PM anything because he is either a simpleton who can’t handle this kind of news or a very sensitive man who is too busy to be trouble about such trifling nothings as trade embargoes. Well until they were uncovered lying that is.

    So plan B was launched, pretend John Key knew nothing. And it is as lame as it is laughable! Of course this has been used before when we were supposed to believe John Key knew nothing of a character assassination department operating out of his office, THE PM’s office, Dirty Politics ring a bell? But who cares if he lied, again, its as everyday as a bear shitting in the woods. Nat voters couldn’t give a shit how dishonest Key is, ever!

    The truth is the PM and his relevant ministers were well aware of this problem sometime ago but buried it, probably safe in the knowledge that it’s many media pimps in Mediaworks, NZME, TVNZ etc would never say anything anyhow. But somehow it slipped out, possibly through RNZ? Question is with this latest bungled cover up is why National were so keen to hide this?

    Could the answer be that the National Party have something to hide? Has some Nat pissed the Chinese government off somehow. One would have thought spying on them for the US would have hurt. Even siding with the US and kissing their arse on a constant basis would be good cause but that is so 2014. So what is the reason they hid this and then lied about it? I’d love to know!

    • One Anonymous Bloke 7.1

      It’s his “department” now, not his office. As in “that’s not my department”.

  8. Glenn 8

    RadioNZ,

    23 July, 2016

    An important indicator of the health of the British economy has found there has been a steep decline in economic activity since the country voted to leave the European Union.

    The Markit Purchasing managers index (PMI) – which measures the mood in the manufacturing and services sectors – has fallen at its sharpest rate since 2009.
    The survey, which is done every month and is widely watched by economists and financial markets, found that both output and new orders fell in July for the first time since 2012.
    Optimism among service industry companies was at its lowest in seven and a half years.

    The survey report suggested uncertainty following the UK vote was a major concern.
    The IMF’s managing director Christine LaGarde has called for clarity about the country’s relationship with the global economy.

    ‘Record slump’
    Chris Williamson, chief economist at IHS Markit, said the downturn had been “most commonly attributed in one way or another to ‘Brexit’.”
    He added that the economy could contract by 0.4 percent in the third quarter of this year, but that would depend on whether the current slump continued.
    “The only other times we have seen this index fall to these low levels, was the global financial crisis in 2008/9, the bursting of the dot com bubble, and the 1998 Asian financial crisis,” Mr Williamson said.

    “The difference this time is that it is entirely home-grown, which suggest the impact could be greater on the UK economy than before.

    “This is exactly what most economists were saying would happen.”

    A subset of the PMI figures, shows that service companies, such as insurance or advertising, are feeling less positive about the future than at any time since the height of the recession.

    – BBC

  9. righty right 9

    what do you want john key to do he has to lie to keep the economy moving what would happen if investors lost confidence john lies for the greater good.john key lies for new zealand

  10. Graham Townsend 10

    “Voter fury” is indeed spreading, as more people realise that the richest 1% are creaming it while the rest are subject to austerity. However there is a back-story here that is rarely discussed – one that neither the left nor the right have faced up to. Up till now we’ve been able to fantasise about endless economic growth – the physical resources upon which that growth is based (strategic minerals, fish stocks, arable land, potable water, cheap energy and a benign climate) seemed unlimited and were taken for granted. So we’ve built our economy on that assumption. We’ve borrowed a lot of money (personally and nationally) from the merchant bankers, in the attempt to create the glossy-magazine lifestyle for all, including the citizens of developing nations. But a few people are starting to realise that, given finite global resources, the global economy is basically a massive ponzi scheme based on the cargo-cult of everlasting growth; and that even if we rein in the tax dodgers and other parasites, the future lies in a smaller economy with less disposable income for many of us.

  11. jcuknz 11

    GT 8.21
    I think quite a few folk know that we live on a finite planet with nowhere to go but it is simply not PC, except for twits like myself, to publicly say so.
    Fingers crossed that is changing and action takes place to curb the business community in their rape of the earth.
    There has to be a better way than the current system.

  12. papa tuanuku 12

    Will the the under 30s understand the road runner analogy?

    I saw a Labour reference to Hogan’s Heroes recently. Great for the over 40s, but to get the majority vote, think universal and / or current analogies. Its an important way of connecting, in the way that incessant Herald ‘John Key’s son’ stories enhance the Key brand which sucks but is probably working for Nats.

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