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Uncertainty doesn’t bother “the market” at all

Written By: - Date published: 7:02 am, October 3rd, 2017 - 57 comments
Categories: economy, election 2017, labour - Tags: , , , , ,

There is an awful lot of drivel written about “business confidence” and “the market”, most of it no better than reading tea leaves.

Take the current situation. There is no “strong and stable” government to “lead” us. Maximum uncertainty! No end in sight! According to received wisdom (and all those people in a self-interested rush to ordain the born-to-rule-party) the market should be panicking! In fact:

Sharemarket ‘cools off’ after strong week

“Last week the New Zealand market had its best week since the middle of June — we’re probably just cooling off slightly,” said Mark Lister, head of private wealth research at Craigs Investment Partners. …

Kiwi dollar slips back

The electoral stalemate was not hurting the dollar as “the market is starting to accept that the downside for the kiwi from the political situation is not really happening”, said Martin Rudings, a senior dealer at OMF. …

So not even a bit of panic then. Not a jot. Fancy that.

If the poor fragile market can withstand the ravages of the current uncertainty, I reckon it can withstand a period of negotiation that is as long as required to get the job done. It might even withstand the horror of a Labour led government too. After all, it wouldn’t be the first time…*


* Treasury: “the New Zealand economy experienced its longest sustained period of growth in three decades during the years from 1999 to 2008.”

57 comments on “Uncertainty doesn’t bother “the market” at all ”

  1. AB 1

    Why is “business news” even a thing, when so much of it is cheerleading or special pleading?

    • tc 1.1

      Quite, it could be written up like a student notice board with various rent seekers notes and others whining about the reality of existence being cruel to them.

    • Ed 1.2

      Business news on RNZ is simply a proclamation of faith.
      Notice how the views of bankers and corporates are never questioned?
      And how only their viewpoint is given.
      Neoliberalism – the religion of the 21st century.

      • Once was Tim 1.2.1

        It’s been a function of business news now for over a couple of decades.
        (And globally). You ask vested interests (“going forward”) for their market predictions. Always there’ll be something good or bad “ON THE BACK OF” something else good or bad (“going forward”).
        Years ago, a few of us who were charged with providing IT infrastructure to several of these Masters of the Universe. We used to keep track of some of their market predictions (as a form of amusement). Some of these people are now the market sages (such as Chief Economists and others) we’re supposed to somehow hold in high esteem.
        It doesn’t interest now me in the slightest, but sure as shit I hope their predictions and mutterings are a lot better than they used to be, because we found a bloody dart board more accurate. Such is the neo-liberal coolaid.
        Easier to just think of them as pathetic – as dangerous as they are.

      • cleangreen 1.2.2

        “Business news on RNZ is simply a proclamation of faith.”

        Yes while Steven Joyce had ring-fenced RNZ for his own National Party propaganda he has used the public funded media for his own benefit and must be jailed for “inapppropriate self-interested benefit using of public funds”.

        Jail him so he cannot use his self interest any further.

  2. Pat 2

    suspect it has more to do with a confidence that the negotiations are a formality…rightly or wrongly

    we may see signs of concern next week if things dont proceed as expected

  3. Ad 3

    IMHO also shows that the economy generally is functioning without any government leadership at all. Simply doesn’t need them.

    Government therefore needs to re-justify ftuture market interventions.

    • One Anonymous Bloke 3.1

      Has the market fixed homelessness and malnutrition in the last six weeks? No?

      There: intervention justified.

      • Ad 3.1.1

        Will be particularly interesting to see whether the housing market reacts strongly to a change of government, or with a National-led government it just gently declines while still not addressing homelessness.

      • Baba Yaga 3.1.2

        Where do you get the idea a market should be able to homelessness or malnutrition? The market delivers goods and services to willing buyers and sellers and sets a price for those transactions.
        And in a sense, Ad is correct. For example, a genuinely free market in Auckland would have enabled housing supply to meet demand, but artificial, government imposed impediments, prevented it from doing so. But notwithstanding that, even an oversupply of housing would not solve homelessness…that is a phenomena with more causes than just the cost of housing.

        • One Anonymous Bloke 3.1.2.1

          Where do you get the idea a market should be able to homelessness or malnutrition?

          I didn’t. I argued that the fact that it doesn’t provides ample justification for government intervention in the housing market.

          artificial, government imposed impediments

          Nope – we’ve already seen what the “free” “market” “solution” is – slavery, workhouses, charity, human trafficking, exploitation.

          Somalia.

          I take it you’re all in favour of government imposed impediments to squatting in empty buildings.

          • Baba Yaga 3.1.2.1.1

            “Nope – we’ve already seen what the “free” “market” “solution” is – slavery, workhouses, charity, human trafficking, exploitation. Somalia.”
            I can only assume you are joking. Somalia is an anarchist free market, and like all anarchies is a basket case.

            “I take it you’re all in favour of government imposed impediments to squatting in empty buildings.”
            Well I’m in favour of the protection of private property rights, yes. Aren’t you?

            • One Anonymous Bloke 3.1.2.1.1.1

              I’m in favour of government intervention to protect all the human rights listed in the UDoHR.

              However, the right to housing trumps property rights, especially in an emergency crisis situation such as the one we’re in right now.

              If the solution to get people off the streets is that empty residential properties may end up forfeit, well, it works for Londoners.

              Not even being able to consider such options strikes me as political correctness gone mad.

              • Baba Yaga

                “…well, it works for Londoners.”

                Not really. Unless you consider people trashing someone else’s property acceptable.

                “However, the right to housing trumps property rights, especially in an emergency crisis situation such as the one we’re in right now.”

                The ‘right’ to housing infers no ‘right’ to take over someone else’s property, crisis or no crisis.

                This paper https://www.parliament.nz/en/pb/research-papers/document/00PLEcoRP14021/homelessness-in-new-zealand identified the following causes of homelessness:

                Lack of affordable accommodation.
                Poverty and unemployment.
                Mental health issues.
                Alcohol, drug and gambling addictions.
                Emotional health and trauma. Traumatic life events include childhood abuse, family breakdowns or instability, foster care, frequent moving, institutional care and parental death.
                Convictions and imprisonment along with a lack of appropriate support following release.
                Discrimination by some landlords.

                We need to be addressing these issues, not condoning the illegal possession of someone else’s property.

                • One Anonymous Bloke

                  I think we should take the right wing approach to it: if we want to do something which is illegal, change the law to make it legal.

                  While we (the Left that is – National doesn’t give a shit, as the last nine years have reminded everyone) are busy mending the social fabric of the nation, there’ll still be people who need emergency housing right now; they don’t have time to wait for the National Party’s disgusting mess to be cleaned up first.

                  You know how cutting someone’s benefit incentivises them to find a job – that’s what you people tell one another over and over and over again. Think of it like that – an incentive.

                  I know you’ll support that because you vote for similar treatment for the most vulnerable members of society, whereas I’m just talking about people who leave residential property empty while there are homeless families on the streets.

                  • Baba Yaga

                    “I think we should take the right wing approach to it: if we want to do something which is illegal, change the law to make it legal.”
                    That’s not a ‘right wing’ approach, that’s the ‘cop-out’ approach. I don’t agree with making things legal just because we feel like it. I also don’t agree with people who purchase property and keep it empty, but I don’t want everything I disagree with criminalised. Private property rights are very important in a civilised society.

                    “You know how cutting someone’s benefit incentivises them to find a job – that’s what you people tell one another over and over and over again. Think of it like that – an incentive.”
                    For some people, that works. And there is evidence for that because the number of people on benefits has dropped.

                    “I know you’ll support that because you vote for similar treatment for the most vulnerable members of society, whereas I’m just talking about people who leave residential property empty while there are homeless families on the streets.”
                    The most vulnerable members of society most likely can’t work, so they would (or should) not be subject to that kind of incentive. If they are, I’ll join in marching with you.

                    • One Anonymous Bloke

                      there is evidence for that because the number of people on benefits has dropped

                      There is evidence that WINZ culture is a deliberate and active deterrent to people getting their legal entitlements. The number of people on benefits has nonetheless increased: from ~3% in 2007 to ~5% today.

                      That, and changes to definitions, leave precious little room for your deeply held belief.

                      Keep holding that candle though.

                    • One Anonymous Bloke

                      I don’t agree with making things legal just because we feel like it.

                      Is that why National is always passing legislation that’s already failed overseas?

                    • One Anonymous Bloke

                      I’ll join in marching with you

                      I think you’re lying.

                    • Baba Yaga

                      “The number of people on benefits has nonetheless increased: from ~3% in 2007 to ~5% today.”
                      That’s blatant cherry picking. We have had a GFC since 2007. Since June 2010 the numbers have been dropping consistently (http://www.msd.govt.nz/documents/about-msd-and-our-work/publications-resources/statistics/benefit/2017/quarterly-working-age-benefits-june-2017.pdf).

                      “Is that why National is always passing legislation that’s already failed overseas?”
                      Such as?

                    • One Anonymous Bloke

                      …blatant cherry picking. We have had a GFC…

                      *cough* Rockstar economy *cough*

                      Such as?

                      *cough* notional standardsbootcampstrickledownclimate denialbenefit sanctionsausterityelectricity marketsocial bonds*cough*

                    • Baba Yaga

                      “*cough* Rockstar economy *cough*”
                      I don’t know about your ‘cliché’, but the economy has reduced the number on a benefit since 2010. We’re doing well by international comparisons.
                      “notionalstandardsbootcampstrickledownclimatedenialbenefitsanctionsausterityelectricitymarketsocialbonds”
                      You’re making stuff up. I’ll happily engage with you, but not while you’re just being obtuse.

                    • One Anonymous Bloke

                      Obtuse it is then.

                • Foreign waka

                  Baba, you are insofar correct as private property should not be confiscated because someone else has not got what another person possesses. However, the amount of those said possessions in all its forms has to be validated. No one is worth 8 million pa or 140K per week. No one. It is the sanctioned greed and the perceived entitlement of siphoning wealth that leads to poverty.
                  As for trauma, mental health issues, life as it happens through illness, loss of parents etc. – if those with such insurmountable wealth would not amass it but contribute their fair share to a just and civilized society the issues at hand would be manageable.
                  I do not propose at any time that people who work hard should not be entitled to achieving material wealth – the question is at what point does the hoarder need to be stopped. One has to remember hat hoarding is a mental illness too.

                  • Baba Yaga

                    Thanks for that Waka. The problem with what you say is this…who draws the line? At what point does someone have or earn too much? When you say “No one is worth 8 million pa or 140K per week”, my question is – who says? Surely the only people who should be making that decision are the ones responsible for the results that person generates, or those directly affected by it? It really isn’t anyone else’s business, is it?

                    • One Anonymous Bloke

                      Yes, it is: the effects of inequality impact heavily on the health, law enforcement, education, social welfare and environment budgets. That’s on you and me and I’m not so sure about you.

                    • Baba Yaga

                      “…the effects of inequality impact heavily on the health, law enforcement, education, social welfare and environment budgets. ”

                      How does the fact that one person earns far more than you and I cause a problem for you or I? It is irrelevant. It doesn’t stop me working, earning, raising my family, accessing education and healthcare. It just sounds like envy to me.

                    • One Anonymous Bloke

                      You reckon “envy” then? Haven’t you got anything original to say, National’s parrot?

                    • Baba Yaga

                      “You reckon “envy” then?”

                      Well yes, that’s all it can be.

                    • One Anonymous Bloke

                      Argue the toss with the Treasury department: they take inequality seriously no matter how well you learned your lines.

                    • Baba Yaga

                      “…they take inequality seriously…”

                      There has always been inequality. It is part of any political and economic system. What matters is how well we look after the most vulnerable in society, not how much the highest earner makes.

                    • One Anonymous Bloke

                      That’s what you’ve learned to tell yourself. Not my problem.

            • One Anonymous Bloke 3.1.2.1.1.2

              Slavery, workhouses, exploitation, charity and human trafficking are all products of Capitalism, as a cursory glance down Gin Lane will show you.

  4. adam 4

    We don’t have a government at the moment,

    long may that continue!

  5. Allan Alach 5

    Isn’t it lovely and peaceful without a government? The hiatus also shows clearly how dependent the media is on politics for its news cycles, given their desperate attempts to make news out of the coalition negotiations. I suspect many of the rest of us wouldn’t mind if the negotiating takes a couple of months.

    • Ad 5.1

      The best thing about this interregnum moment is in reality how unimportant politics and politicians are to our daily lives.

      Agree fully. If they just formed a government some time over Christmas and started up again in the New Year, that would be a pretty welcome break.

      • McFlock 5.1.1

        Well, it’s like leadership or maintenance in general:

        if things fall apart immediately, the mechanic was a bit shit. But if you fire the chief engineer because they always seem to be having a cup of tea and never have anything to do at the time, slowly things will begin to fall apart and eventually become an avalanche of sparks and leaks as the preventive maintenance the engineer had kept on top of gradually packs up.

        Not just an analogy – a true story.

      • Phil 5.1.2

        The best thing about this interregnum moment is in reality how unimportant politics and politicians are to our daily lives.

        I wouldn’t be so hasty to jump to that conclusion.

        I think what this period really shows is just how important and fortunate it is that New Zealand has a strong and stable democracy. That our political and governmental institutions are able to continue functioning, servicing society and the economy with virtually no interruption, is not something we should ever take for granted.

  6. Michelle 6

    I agree with you Allan but I still expect our media to do their job which is to report the main issues for example the Auckland hospital offering voluntary redundancies to our Clinicians, now why would you do this when we have a shortage of Clinicians. Something is wrong here and people need to think why is this happening.

  7. Sparky 7

    If all the politicians were suddenly abducted by aliens things would go on and I’m guessing might even improve…..

  8. timeforacupoftea 8

    Westpac
    Article by Michael Gordon
    Published 8:22AM, 03 Oct 2017
    Headline confidence down, possibly on election uncertainty, but firms remain upbeat about their own prospects.

    NZ Quarterly Survey of Business Opinion, September quarter 2017

    The NZIER Quarterly Survey of Business Opinion showed a drop in overall business sentiment, with a net 7% of firms positive about the outlook compared to 17% in the June quarter. However, indicators of firms’ own activity held up quite well compared to last quarter. The survey was conducted over September, so general confidence may well have been affected by the uncertainty around the 23 September general election.

    A net 13% of firms reported growth in their own activity, compared to 17% in June. The decline is consistent with our view that GDP growth in the September quarter will be a little slower than the 0.8% rise recorded in June. In contrast, firms’ expectations for the coming quarter picked up to the highest level in a year. Expectations of hiring, investment in capital and profits were all similar to last quarter.

    The pricing measures were also similar to last quarter, both in terms of expected costs and price increases. Capacity utilisation fell slightly to 92.6%, and although finding workers was reported to be more difficult, fewer firms reported this as their biggest constraint on growth. These measures are broadly consistent with inflation nearing the RBNZ’s 2% target, but they don’t suggest a risk of inflation breaking higher.

    More details to follow in our Bulletin later today.

    Media contact:

    Michael Gordon, Senior Economist, P: [deleted]

    [lprent: No phone numbers or email addresses please. They encourage bots to repeatably read the 21,383 posts & 1.3 million comments of our site trying to harvest such data. If they don’t find any when they first look, then they usually only do it once because the site’s protection systems are designed to disrupt them as much as is possible. I prefer using teh bandwidth for humans. ]

  9. cleangreen 9

    National Party “trickledown” is not working after they promised us that we would benefit from it; – nine years ago.

    Move aside National-failure and we will set about to fix your fuck-ups.

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