Charismatic

Is anyone else a little worried that New Zealands major economic activities are:
1. Selling houses to each other.
2. Trade me.
3. Starting coffee shops.
4. Dairy products.

None of these are conducive to high value exports, the situation is aptly described by Warren Buffett:


What do you think?

jennifer45

Nope.
Not one iota!
That's why the roof isn't falling in on NZ and the floor isn't collapsing and the walls aren't imploding like the rest of the greedy ,grabbing, materialistic countries in this so called civilised world!
The day people began to live beyond their means [HIRE PURCHASE was really the beginning of what we are suffering now] the boring responsible ones were doomed!
What really pi**es me off, is that those that lived within their means, made do, made ends meet etc etc etc- are now suffering the results of the "want it now' 'buy now pay later' ' Sod it - money is for spending" brigade!
I don't need a 'cartoon' to explain basic economics .
Dickens did it clearly enough a century ago!
Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.

Hokey-pokey

Yes Im extremely concerned. Others are worried too - take a look at Bernard Hickeys blog http://www.interest.co.nz/ratesblog/ . I would be very interested in knowing what you think of it. Thanks.

Charismatic

Seems a little alarmist .

But we do have this problem that taxation punishes investors who invest in businesses rather than property so when an asset bubble starts to collapse (as now for instance) we get hit hard not just because we have a lot of leveraged capital tied up in property but also because many businesses find it difficult to raise capital due to an illiquid NZX. It's not an over night problem but has been around since the late 80's and will be very difficult to change as many MPs have investments in the property market.

Except perhaps for the minumum wage increases the government has done well by increasing spending on infrastructure, they may not be "glam" projects but in 50-100 years time you'll still be getting and economic benefit from roading projects etc. which is lucky as it's contributing to our budget deficit. As a country it looks like we'll keep our good credit rating which will help us fund future budget deficits at a low(ish) rate .

We also have quite a few undeveloped oppertunities for exports that could be undertaken such as exporting lignite coal from central Otago which we could sell to the Chinese or burn here to reduce energy prices . Maybe even depleting our fishstocks in the short term to generate some jobs and economic output could be an option.

As long as we open up some new markets and improve our business environment (in terms of red tape, infrastructure and low taxation) we should be at least able to maintain a low level of economic growth.

So sure it won't be easy but our real problems with meeting financial obligations lie twenty years away.

jennifer45

From today's Independent:

New Zealand

This economy has always been fairly steady, neither booming nor busting. “New Zealand has not escaped the effects of the credit crisis, but it has been hit less hard than many European and North American nations,” says Mark Bodega of the currency trader HiFX. com. “And the newly elected National Party’s concentration on the economy is expected to keep it on a even keel.” Research from Statistics New Zealand puts the unemployment rate at 4.2 per cent, with only 94,000 unemployed, up just 0.3 percentage points in three months. UK unemployment was 6.3 per cent for the quarter to December 2008, up 0.4 percentage points over the previous quarter.

But the economic position has brought a change in “immigration focus” from filling skill-shortage positions to protection of jobs for New Zealanders. That could mean that immigrants bringing in plenty of ready cash may be more likely to be granted residency.

http://www.independent.co.uk/money/i...s-1628041.html

NakiMan

I totally agree with Jennifer45 when she says -

"What really pi**es me off, is that those that lived within their means, made do, made ends meet etc etc etc- are now suffering the results of the "want it now' 'buy now pay later' ' Sod it - money is for spending" brigade!"


As someone who has spent my whole working life living within my means and saving for a comfortable retirement, what do I find?

My modest investment income has all but halved in the last couple of months, the value of my shareholdings has fallen through the floor and I'm facing a bleak future.

At the same time those who have mortgaged themselves up to the hilt have seen rate cuts that have saved them huge amounts. And if they want to borrow some more, well rates are really low now, aren't they !!!

And all as a result of the Crap lending policies of the major Banks

Its just not fair.

jennifer45

but we'll make it-NM- because we've no option!
Just don't ask me to feel sorry for any of you that have lived well above your income!
The frugality we lived with during and after the war years was a good training- but future generations have been spoilt in an effort to make up for what their parents didn't have.
The constant competition for the latest this or that is quite pitiful, showing such a lack of contentment or a desire for the important things in life.
I'm rambling and it's not 'happy hour' yet!

Cape Blue

Nothing wrong with a little optimism, however NZ is going to suffer along with the rest of the world - inflated property boom together with the countries that buy NZ products in recession and people who normally supply tourist dollars staying at home.

http://www.telegraph.co.uk/finance/f...n-deepens.html

jennifer45

Some people are never happy unless they can stir up unrest and exaggerate the problems, foretelling dire consequences for all.
The British Press has had a field day doing just that!
The biggest problem the economies are suffering at the moment is 'lack of confidence' and whilst ever we have the media causing fear and panic and other commentators acting as messengers of bad tidings and doom, people will fear for the future and be reluctant to spend anything! A downward spiral!
Now I'm not advocating a reckless spending spree , I'm just trying to point out things are not as bad in NZ as some would have us believe.
The telegraph article had far worse to say about the economical problems in the UK, Europe, Asia and USA than NZ which went through a recession in 96/97 and came out stronger!
There is nothing wrong with a little optimism.
I have followed the UK news avidly since June! I cried! I worried -it didn't help!
Today I was reminded of an article in the NZ news- I laughed and yes it did help!
http://www.telegraph.co.uk/news/worl...lamp-post.html

R0b

Without sounding too negative, does anyone know the availability of unemployment benefit in NZ? I've read that its not available for two years unless you are in "hardship".
Fairly confident that my job is safe but it would be nice to know there's something to fall back on in-between jobs.

Charismatic

Actually the problem was there was massive overconfidence in houses as investments and the government kept money supply loose to finance the asset bubble.

What we are seeing now is peoples expectations falling towards a more reasonable level, though we still have some distance to go.

Still I'm confident our children will live better than us and our children will live better than they did . It's just been a shaping up to be a really shitty decade (longer in fact) for business investors as they've been absolutly raped. If you invested in an no-fees index fund in mid 1996 you'd still not have made any money on your initial investment except for dividents .