National, The Economy, and coming Speed Wobbles – March Update

By   /   March 16, 2014  /   63 Comments

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National remains utterly vulnerable during this year’s election.

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The Nationalmobile

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On 1 March, in a previous blogpost, I raised the following issues;

1. The Reserve Bank has indicated that  it will begin to increase the OCR (Official Cash Rate) this year. Most economists  are expecting the OCR to rise a quarter of a percentage point on March 13.

Confirmed. True to it’s word and as clearly signalled, on 13 March the Reserve Bank  raised the Official Cash Rate (OCR) from 2.5% to 2.75%.

2. An increase in the OCR will inevitably flow through to mortgage rates, increasing repayments.  As mortgaged home owners pay more in repayments, this will impact on discretionary spending; reducing consumer activity, and flow through to lower business turn-over.

Confirmed. The ANZ Bank  has already  announced it will increase its floating and flexible home loan rates .25 percentage points to 5.99% on 17 March. Expect other banks to follow suit. Other bank rate rises will be signalled here.

This will inevitably dampen consumer spending and reduce economic activity.

3. An increase in the OCR will inevitably also mean a higher dollar, as currency speculators rush to buy the Kiwi. Whilst this may be good for importers – it is not so good for exporters.

Confirmed, as the NZ Herald reported;

The New Zealand dollar jumped to a five-month high after the Reserve Bank raised the benchmark interest rate as expected and signalled further hikes are on the way.

The kiwi rose as high as 85.26 US cents, from 84.73 cents immediately before the Reserve Bank’s 9am statement. The local currency recently traded at 85.20 cents.”

And in another Herald story,

By raising rates, the Reserve Bank aims to tame both inflationary pressures and house price increases but also runs the risk of elevating an exchange rate it already considers too high, making exports less competitive.”

For a nation that bases it’s economy on exporting, a rising Kiwi Dollar will bring inevitable problems of higher debt and greater trade imbalance. It means we are not paying our way in the world and inevitably there will be a “Crunch Day” of tragi-Greek proportions.

On that day, the public will blame politicians.

Politicians will blame each other.

And the Left will shake it’s head in exasperation – it’s admonitions that this was all predictable as a natural consequence of unconstrained consumerism coupled with rampant capitalism –  lost in the shrill clamour of pointless blame-gaming.

As BERL economist, Ganesh Nana, said on The Nation on 15 March, we’ve been down this road before and not learned a single lesson  from these experiences.

4. As economic activity and consumer demand falls, expect businesses not to hire more staff and for fresh  redundancies to add to the unemployment rate. Unemployment will either stay steady later this year, or even increase.

On-going…

5. As interest rates rise, in tandem with the Reserve Bank’s policy on restricting low-home deposits, expect home ownership to fall even further. This will increase demand for rentals, which, in turn will push up rents. Higher rents will also dampen consumer spending.

Confirmed. The Reserve Bank  has reported that there has “been some moderation in the housing market. Restrictions on high loan-to-value ratio mortgage lending are starting to ease pressure, and rising interest rates will have a further moderating influence...”

Expect home ownership levels to fall even further as interest rates rise further; rents increase (thereby making it harder for low income families to save); and mortgagee sales to rise as well.

Interestingly, when in Opposition, National Party leader, John Key lambasted the Labour Government for a high OCR leading to high interest rates. In a desk-thumping speech, on 29 January 2008, he railed,

Why, after eight years of Labour, are we paying the second-highest interest rates in the developed world?

[…]

Why can’t our hardworking kids afford to buy their own house?…

[…]

Mortgage rates are rocketing upwards…

[…]

We know Kiwis are suffocating under the burden of rising mortgage payments and interest rates…”

It seems that Mr Key should now begin to be answering his own questions.

6. As the global economy picks up and demand for oil increases, expect petrol prices to increase. This will have a flow-through effect within our local economy; higher fuel prices will lead to higher prices for consumer goods and services. This, in turn, will force the Reserve Bank to ratchet up interest rates (the OCR) even further.

Whilst fuel prices remained steady during the worst of the GFC, they have begun edging upward again as the global economy improves and demand for energy grows.

Our high Kiwi Dollar will mitigate the worst of rising crude-oil prices – but only temporarily. Once other Central Banks begin to rise their OCRs, expect the value of the Kiwi Dollar to fall as speculators sell the Kiwi in preference to harder currencies.

This will be good for exporters.

But will be a negative impact on imports – such as oil. Prices will rise as the Kiwi Dollar falls. Count on it.

7. As businesses face ongoing pressures (described above), there will be continuing  pressure to dampen down wage increases (except for a minority of job skills, in the Christchurch area). For many businesses, the choice they offer their staff will be stark; pay rise or redundancies?

Data suggests that wages are not keeping pace with GDP Growth;

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Wages

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NZ average hourly wages 2012 - 2014

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GDP

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NZ GDP Growth Rate 2012 - 2014

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8. Expect one or more credit rating agencies (Fitch, Moodies, Standard and Poors) to put New Zealand on a negative credit watch.

On-going…

9. According to a recent (21 February) Roy Morgan poll, 42%  of respondents still considered the economy their main priority of concern. 21% considered social issues as their main concern.This should serve as a stark warning to National that people will “vote with their hip wallets or purses” and if a significant number of voters believe that they are not benefitting from any supposed economic recovery, they will be grumpy voters that walk into the ballot booth.

There is no reason to think otherwise on this issue. Voters who are spending more on mortgage or rent are less inclined to be happy consumers.Especially as mortgage rates are expected to rise even further, according to Bernard Hickey’s assessment of Governor Graeme Wheeler’s statement,

Wheeler said in early December he expected to raise the OCR by 2.25% by early 2016, which would lift variable mortgage rates to around 8% by then. The bank forecast interest rate rises of around 1% this year and a similar amount next year.”

Home owners paying 7% to 8% on their mortgage will not be happy-chappies and chapettes. They will be grumpy. The 2009 and 2010 tax cuts will be a dim memory and any attempt by Key to remind voters of those cuts will not be warmly received. Especially as any minute gain for workers was more than swallowed up by the rise in GST, ACC, government user-pays charges, and now their mortgages and rents.

If only a small percentage of grumpy voters change their voting away from National (or stay home) – that will mean a critical drop in support for a right-wing bloc. One or two percentage points is all that is required to change the government.

10. National has predicated its reputation as a “prudent fiscal manager”  on returning the government’s books to surplus by 2014/15. As Bill English stated  just late last year,

We remain on track to surplus in 2014/15, although it will still be a challenge to actually reach surplus in that financial year.”

[…]

On top of which is the $61 billion dollar Elephant in the room; the government debt racked up by National since taking office in 2008. As Brian Fallow wrote in the Herald in 2011,

The concern about government debt is not so much about its level, but the pace at which it is increasing. In June 2008 net government debt was $10 billion, or 5.6 per cent of GDP, and gross debt $31 billon, or 17.2 per cent of GDP.”

A lower tax-take, reported by Treasury on 11 March puts serious doubt on National’s ability to return to “remain on track to surplus in 2014/15″;

  • Total unconsolidated tax receipts for the seven months ended January 2014,  $143 million (0.4%) below the 2013 Half Year Economic and Fiscal Update (2013 HYEFU) forecast…
  • Total unconsolidated tax revenue for the seven months ended January 2014,  $459 million (1.1%) below the 2013 Half Year Economic and Fiscal Update (2013 HYEFU) forecast…
  • GST $250 million below forecast,
  • Net individuals’ taxes $191 million below forecast,
  • Customs and excise duties $156 million below forecast

The March Treasury report follows from a February report showing a similar “smaller than forecast tax take across the board“,

The Crown’s operating balance before gains and losses (obegal) was a deficit of $1.79 billion in the six months ended December 31, $380 million wider than forecast in its Dec. 17 half-year economic and fiscal update, and down from a shortfall of $3.19 billion a year earlier. Core tax revenue was $602 million below forecast at $29.18 billion.

[…]

The smaller tax take was across the board, with GST 2.3 per cent below forecast at $7.5 billion, source deductions for personal income tax 1.2 per cent below forecast at $11.71 billion, and total corporate tax 4.9 per cent below expectations at $3.56 billion.

As I wrote on 1 March, should National fail in that single-minded obsession, the public will not take kindly to any excuses from Key, English, et al. Not when tax payer’s money has been sprayed around with largesse by way of corporate welfarism. Throwing millions at Rio Tinto, Warner Bros, China Southern Airlines, Canterbury Finance, etc, will be hard to justify when National has to borrow further to balance the books.

Any economic “recovery” is fragile; dependent on overseas factors; and will bring new problems. Little wonder that Key brought the election date forward by two months. Mortgage rates by the end of the year will be nudging 7%.

Not much of a Christmas present for New Zealanders.

As such, Labour must begin to attack Key’s government in this area. This will be a grand opportunity for the Left to finally drive a stake through the “heart” of National’s undeserved reputation as  being a “responsible economic manager”.

National remains utterly vulnerable during this year’s election.

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References

Interest.co.nz:  Bernard Hickey looks at what the Reserve Bank’s OCR decision means for mortgage rates and house prices

Radio NZ: Reserve Bank warns of more interest rate rises

Interest.co.nz: Mortgages

NZ Herald: Dollar jumps on OCR hike + video

NZ Herald: New Zealand raises interest rate to 2.75 percent

Reserve Bank: Reserve Bank raises OCR to 2.75 percent

John Key: SPEECH: 2008: A Fresh Start for New Zealand

Interest.co.nz: Oil and Petrol

tradingeconomics.com: Wages

tradingeconomics.com: GDP

Roy Morgan: Economic Issues down but still easily the most important problems facing New Zealand (42%) and facing the World (36%) according to New Zealanders

NBR: Govt sees wider deficit in 2014 on ACC levy cut, lower SOE profits

Fairfax media: Public debt climbs by $27m a day

NZ Herald: Govt debt – it’s the trend that’s the worry

NZ Treasury: Tax Outturn Data

NZ Herald: Govt deficit bigger than expected as tax trickles in

Previous related blogposts

TV3 Polling and some crystal-ball gazing

National, The Economy, and coming Speed Wobbles

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http://fmacskasy.files.wordpress.com/2014/02/the-cost-of-living1.jpg

Above image acknowledgment: Francis Owen

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63 Comments

  1. sdm says:

    Frank, I fundamentally agree with you except for timing. If you have a mortgage coming up in the next 4 to 6 months, you probably have moved already to refix. I myself did so with a portion of my debt, and got a pretty good 3 year rate. Where people will be hurt is if they have debt coming off in Q4 or 2015. After the election. Thats when rates will be above 7 and the government will take a hit. But I think its after Sept 20. Perhaps thats why Key went early, as you suggest?

    • Fair point, SDM. Some folk may well have been lucky enough to fix on a good deal. Others – not so lucky.

      Fixed rates are ramping up, as the Interest.co.nz page (http://www.interest.co.nz/borrowing) shows. Two year fixed rates are currently 5.8% (SBS and HBS banks) and upward, with a special Kiwibank deal for Christchurch re-builds.

      These rates will no doubt rise each time the RBNZ increases it’s OCR.

      • sdm says:

        You can negotiate on those rates. I got 6.1 on three years a week ago. The point is, I think 7 is a tipping point (even though thats an average rate, historically). Are we going to see 2 or 3 year rates above 7 before the election? 50/50. But if that is going to affect you, you are probably refixing now. So the pain wont be felt before the election.

  2. Wayne McIndoe says:

    Very typical mantra from the government, the reality is that only the very very few will benefit from Nationals economic policies, we will continue to see the gap widen between the haves and have nots. National kept telling us to belt tighten, cut spending etc during the GFC, reminding us all that the goodtimes would come, we would all benefit from this “Rockstar” economy – now look whats happened – interest rates have gone up, the dollar value is continually even more overvalued, and we will all be paying more for our electricty with winter approaching – National are full of bull

    • Wayne – this may well be the “winter of our discontent”…

      • Gosman says:

        Even you acknowledge that the impact of the interest rate rises won’t impact till later on in the year. Regardless if the economy did tank as you think it might during the year the Reserve bank would not raise interest rates as much as indicated.

        • As usual, Gosman, you’ve missed the point entirely… *shakes head*

          • Gosman says:

            Not really Frank. Your point is the economy will not perform as well as people are predicting and this will cause problems for National come the election. The trouble with your analysis is economic cycles don’t tend to be as quick acting as you make out. Investment decisions made today will be having an impact for several months out. If investment was contracting now then you may very well have a case to make. The only way you will get a seriously negative impact on economic performance in the short term is a shock to the economy that causes consumption to collapse. Unless you are predicting that it is very unlikely the economy will be in any shape that will benefit the opposition come September.

            • The trouble with your analysis is economic cycles don’t tend to be as quick acting as you make out. Investment decisions made today will be having an impact for several months out.

              Rubbish.

              The ANZ announced a rise in interest rates immediatly after the RBNZ announced an OCR increase. Other banks indicated they would soon follow.

              The Kiwi Dollar shot up within minutes.

              These have an impact on our economy that, in an age of the Internet and “hot money” is measured in hours, days, and weeks – not months.

              Your understanding of the rapidity of economic activity is sadly lacking.

              • Gosman says:

                I have worked in banking most of my working career. I think I have a reasonable understanding of finance and the economy thanks.

                • Banking?!

                  You told us you work in IT?

                  Make up your mind, Gosman.

                  And besides which, after the GFC and collapse of finance companies and banks around the world, Gosman, I’d keep quiet about being involved in that sector. Right now it ranks slightly above politicians and well below used-car salespeople.

                  • Gosman says:

                    You can work in both Frank. Most trading desks employ tech geeks called Quants. Not that I’m implying I’m at that level mind you.

  3. Mooloo magic says:

    My concern with Labour is their inability to score hits on the government even Grant Robertson success in exposing Judith Collins was a result of her own stupidity( an own goal)
    Labour still appear to be a weak disjointed disconnected disloyal opposition and certainly do not look like a government in waiting.
    The Key government should be toast this election but I fear they will be re-elected even with a greater majority as their party vote may increase based on current polling. There seems no way Labour can win back the 2 Hamilton seats, New Plymouth, Napier this election. Even marginal seats like Auckland Central Waimakariri and Christchurch Central will almost certainly remain with National
    Key’s popularity seems to show no sign of faltering and despite Collins histrionics and disingenuous apology this scandal well not hurt Key and his government.
    Frank your well researched blogs provides so many reasons why Key and his government should be dog tucker this election but unfortunately too many Kiwis remain ignorant and ill-informed and probably close to a million Kiwis will not bother to vote this election.
    I despair this country can ill afford another three years of these nasty neo-liberal ideologues and the oligarchy that New Zealand is becoming.
    I may appear to pessimistic and gloomy but I fear the Left parties have not captured the hearts and minds of New Zealanders and six months before the next election we will see little change in polling. I hope I’m wrong .

  4. Wayne McIndoe says:

    National told us all to belt tighten, government funding got slashed in the public service area, and adult education as examples – with the promise that ALL kiwis would reap the benefits once the economy got back on track. Now we have a ‘rockstar economy”, kiwis are paying more for their mortgages, rentals will rise accordingly, the dollar is still overvalued with bad news for our exporters, and not to mention our rising electricity prices – Labour need to take advantage of this and Frank your point about the government throwing taxpayers money to Rio Tinto, Skycity, Warner Bros et al is well made, and as an aside I see nothing from the Taxpayers Union on that front

    • Gosman says:

      If government spending was slashed why was their a large budget deficit?

      • Amongst other things, to make up for billions lost through two unsustainable tax cuts.

        The unaffordability of those tax cuts in 2009 and 2010 was such that a third round – scheduled for 2011 – was scrapped.

        • Gosman says:

          Government spending as a proportion of GDP has not moved much in the past 6 to 8 years. Where is this slashing taking place?

        • Intrinsicvalue says:

          The tax cuts were not ‘unsustainable’ Frank. If they were the internal deficit would not be turning into a surplus. The tax cuts were an important element of rebalancing the economy after Labour’s hiking of the top rates to fund it’s election bribes.

          • Intrinsicvalue says:

            Alos, we’ve had the debate about the 2010 tax cuts before Frank at (https://thedailyblog.co.nz/2014/02/05/how-on-earth-can-key-claim-the-asset-sale-program-is-a-success/#comment-186249). You are wrong on this, as on many other things.

          • Intrinsicvalue says:
            March 18, 2014 at 9:18 am

            The tax cuts were not ‘unsustainable’ Frank. If they were the internal deficit would not be turning into a surplus. The tax cuts were an important element of rebalancing the economy after Labour’s hiking of the top rates to fund it’s election bribes.

            More of your fantasy, voodoo economics, IV?

            Quite simply, no Finance Minister with half a brain “rebalances the economy” by borrowing $380 million a week, to fund those tax cuts.

            Govt borrowing $380m a week

            No wonder we are billions in debt. Again.

            Elect a National government – and end up in deficit. Elect a Labour Government – to pay of that debt.

            History, repeats.

            And then watch RWNJs like you justify massive borrowings to fund tax cuts for the rich.

            Muldoonism at it’s best!

            • Intrinsicvalue says:

              Why is the Govt borrowing Frank? Not to pay for tax cuts. It’s to pay for Christchurch, and to ride out the recession, in large part the responsibility of Labour. Oh and you fail to mention one important thing. GDP is growing faster than debt. Although with your limited economic nous you may not get that part.

      • YogiBare says:

        Gosman tells us,”I have worked in banking most of my working career.”… perhaps as a janitor (no disrespect to real janitors intended) as I find it hard to believe a banker doesn’t know the difference between their jobs over there at the bank!
        “If government spending was slashed why was their [sic] a large budget deficit?

        • Gosman says:

          This is an blog not an English test.

          • English failed his tests a long time ago.

          • YogiBare says:

            Their, there, Glossy, I don’t care if you use pidgin English on this blog, however, I do wish you would stop using Bill English bull speak. I was only making the point that it was unlikely for someone who didn’t know the different between their over there to have risen to the higher echelons of the banking profession.

  5. Marc says:

    Many people have not geen given the wage rises that English told them to get from their employers not long ago. And now, once the economy, based on GDP figures, is supposed to “pick up” a bit, the people are also told that interest rates must go down, to “contain” inflation risks.

    Hell, the only significant inflation I have seen is house prices, rent and a few other things. Yes, electricity and water costs come into that category too. But apart from that inflation is not quite a worry yet, compared to earlier years way back.

    Not long ago National told the public, be patient, good times lie ahead, and you will all be better off. Now these supposed “better times” of a so-called “rock star economy” are meant to be here, and people owing money are told to tighten their belts again.

    This will not go down very well, I am sure, certainly not in a few months, when new rises will happen.

    But apart from all this, few talk about the risk of the bursting credit bubble in Mainland China, where debt has grown immensely in the provinces, and where also much lending has happened in a secondary, inofficial lending market. Wait a while and see what may come upon us from there soon.

    And yet another aspect has been left out of the projections, that is of a worsening crisis in Ukraine. That country is already in an economic mess. The ethnic Russian majority in the Crimea will vote for accession to Russia today, some other Russian nationalists are stirring up tensions in the Dnjepr and a few other Eastern regions, and in Kiev and some other Ukrainian cities the new transitional government, made up of some nationalists and a mix of other, mostly right leaning groups, they are anxious to get the US and EU involved to “save” their agenda.

    In reality, it is developing into a powder-keg there, where bot opposing poles in the more extreme political landscape can only have an interest to drag their outside support forces into conflict, that is the US and Russia. There has already been a massive withdrawal of investments from EU and US banks by Russian and Chinese bond holders, and other measures are being taken.

    The US also has sent at least one warship into the Black Sea, and other movements are likely to happen, but will of course be kept secret at this stage. Massive troop movements are reported on the Russian and Ukrainian borders, and I fear, we could see a major war start very shortly.

    That will seriously upset the global economy and the whole financial sectors, even reaching into much of Asia and here. So if this eventuates, all political debate here will be affected, and this may sadly favour John Key again, like the Christchurch earthquakes seemed to have. It seems that somehow fate has seen to it, that he got these “gifts” of disasters, that he tends to be able to use, to present himself as the “leader” that leads NZ through difficult times.

    Maybe that is stuff to ponder on also?!

    • Marc says:

      “Stuffed up” comment yet again, as “edit” function did not respond!

      Of course, in the first paragraph of my above comment, it is meant to say, that interest rates must go up, not “down”.

      As for the investments being pulled out by Russian and Chinese banks from western banks in Europe and the US, these are US and other “western” bonds they hold, and which they have been getting rid off.

      This kind of stuff happens, when there is fear of war, which will have serious economic and financial consequences (high risks).

      And I forgot to mention, while the Crimean Peninsula will go to Russia, that alone will not suffice Putin and his military and other underlings, as the peninsula is not very self sufficient, and they really will want to also ensure better land access, as supplies by sea or a newly built bridge to land under Russian control will be too costly.

      One must expect that some form of further invasion of Russian forces and support brigades will happen, while the new transitional, not accepted Ukraine government is weak and ill-prepared.

      So perhaps prepare for the worst to happen there, the extremists on both sides in Ukraine will do all to pull in the Russians, the EU and US into the conflict, as that is their only chance to “win” whatever they want to achieve.

      There is heaps at stake, both for the US and the Russian leadership, and the mentioned players.

      Much can happen until 20 September.

  6. Intrinsicvalue says:

    Frank if you weren’t so sad you’d be funny. The economy is in the best shape it’s been in for decades, and even if interest rates go the highest levels predicted, they’ll still be considerably less than when Labour were kicked out in 2008. The countries inflation rate is low, unemployment is dropping, real wages are rising faster than inflation and housing is more affordable. Labour are a divided rabble, with a caucus who can’t help themselves in undermining a leader they didn’t want. The 2014 election is a done deal, and the 2017 election is not even looking likely for the left.

    • Keep talking it up, IV. You may even convince yourself.

      But the rest of us will understand what the loud approaching sound is; the roar of increasing interest rates.

      By the way, I note you’ve resorted to pro-National rhetoric about ” The economy is in the best shape it’s been in for decades.”

      With high government debt; high private debt; high unemployment; etc, this is another of your flagrant pro-National rubbish.

      You are so partisan in your support of National that you make the most misleading statements without realising what you’re doing. You are actually deluding yourself.

      By the way, “and even if interest rates go the highest levels predicted, they’ll still be considerably less than when Labour were kicked out in 2008”. Is that right?

      Why was that, IV? Hmmm?

      • Gosman says:

        Why was that then?

      • Intrinsicvalue says:

        “Why was that, IV?”

        Simple. Govt. spending and inflation were spiralling out of control.

        The fact is mortgage interest rates were around 11% in 2008. They won’t go anywhere near that in this economic cycle because we have a fiscally prudent Govt.

        “With high government debt; high private debt; high unemployment; ”

        We don’t have high unemployment for an economy coming out of recession, or by global standards. And our Current Account as % of GDP, and Household Debt as % of disposable income, are both still lower than in 2008.

        The economy is in very good hands, and in very good shape.

        Which is why business and consumer confidence are at highs.

        • blue leopard says:

          Ooo look! It has been brainwashed; it simply repeats the incessant mantras this government puts out.

          • @ Blue Leopard – IV is a good little party-line parroting member of National/ACT… (And like most of National/ACT’s propaganda, most of what he re-posts ad nauseum is mis-information and/or outright lies.)

        • IV, at least one financial expert has stated that high interest rates signal a growing economy. If interest rates were that high, as you claim (but haven’t proved), then that expert would seem to be correct.

          (Need to find the link, dammit.)

          • Gosman says:

            Yet you try and then argue that high interest rates have a damaging impact on economic activity???

            Even if your new position is correct New Zealand’s growth in 2008 was falling massively so why were interest rates high given this situation?

            • Yet you try and then argue that high interest rates have a damaging impact on economic activity???

              Even if your new position is correct

              ?!

              I don’t believe I’ve said any such thing. In your haste to undermine me, you didn’t read my 8.26 post correctly.

              Try it again.

              And I’d like IV to respond, since he raised the point.

          • Intrinsicvalue says:

            1. The economy was going into recession by 2008, so that blows that excuse.

            2. Here’s the data on interest rates. http://www.rbnz.govt.nz/statistics/key_graphs/mortgage_rates/

            • Intrinsicvalue says:

              Labour achieved a quite remarkable feat. An economy in decline before the effects of the GFC, and high interest rates to boot. That takes a very special form of incompetence.

              • That is intrinsically utter rubbish, IV. But you know that already. You’re simply repeating ad nauseum the same lies on every blogpost on this website.

                The facts of Labour’s economic track record are outlined here; https://thedailyblog.co.nz/2014/03/05/a-tale-of-two-track-records-labour-vs-national-1-new-zealand-gdp/

                They paint a a reality at complete variance with your National/ACT propaganda.

                In effect you’re indulging in repetitive mis-information, though god knows why. It’s not like the majority of readers aren’t familiar with your propensity to mis-use information; cherry-pick quotes; and resort to outright lying.

                When supporters of this government – that’s you, IV – have to resort to mis-truths, then it’s fairly clear that you’ve got nothing substantial to offer in defense of your Party.

                Members of the public clicking on the link I provided will gain a better understanding of Labour’s performance 2000-2008, and a realisation that National/ACT supporters are not to be trusted.

                Your assistance in this matter is duly acknowledged.

                • Intrinsicvalue says:

                  1. Determine the tend in GDP.
                  Go to this website…http://www.tradingeconomics.com/new-zealand/gdp-growth.
                  Change the first year to 2005.
                  Watch the trend line from 2005 go DOWN.
                  2. Find out when the GFC began.
                  Go to …http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308
                  “The active phase of the crisis, which manifested as a liquidity crisis, can be dated from August 9, 2007, when BNP Paribas terminated withdrawals from three hedge funds citing “a complete evaporation of liquidity”.[4]”
                  3. Reach a conclusion
                  The NZ GDP was collapsing from 2005. The impact of the GFC did not begin until late in 2007, at the earliest. Labour had the economy going into recession BEFORE the GFC. Remarkable, even for Labour.

                  • The NZ GDP was collapsing from 2005….

                    Oh you really are indulging in outright lies now, aren’t you?

                    Are you that desperate to support your party (National) that you’ve inventing stuff? How many times do we have to counter your bullshit ‘spin’ about Labour?!

                    How many times to repeat that the economy quite nicely under Labour;

                    Between 2000 and 2007, the New Zealand economy expanded by an average of 3.5% each year as private consumption and residential investment grew strongly. Annual inflation averaged 2.6%, inside the Reserve Bank of New Zealand’s 1% to 3% target range, while the current account deficit averaged 5.5% of GDP over this period.

                    The New Zealand economy entered recession in early 2008, before the effects of the global financial crisis set in later in the year. A drought over the 2007/08 summer led to lower production of dairy products in the first half of 2008. Domestic activity slowed sharply over 2008 as high fuel and food prices dampened domestic consumption, while high interest rates and falling house prices drove a rapid decline in residential investment.

                    “Recent Economic Performance and Outlook”
                    http://www.treasury.govt.nz/economy/overview/2012/09.htm

                    You are either moronically incapable of absorbing this information or – more likely – you’re just an outright lying, anonymous Tory toady who spends his (her?) spare waking moments attempting to cast lies to make your own Party look good. Tragic.

                    So, let me repeat, in case you’re slower than usual, IV;

                    Between 2000 and 2007, the New Zealand economy expanded by an average of 3.5% each year as private consumption and residential investment grew strongly. Annual inflation averaged 2.6%, inside the Reserve Bank of New Zealand’s 1% to 3% target range, while the current account deficit averaged 5.5% of GDP over this period.

                    Oh well, at least you now understand that the GFC started much earlier than 2008. It only took a few months to beat that simple truth into your thick Tory skull. 😀

                    God, you’re pathetic.

                    Meanwhile, the Nats cut taxes in 2009 and 2010 and borrowed billions from offshore to pay for those cuts;

                    Govt borrowing $380m a week

                    The Government is borrowing $380 million a week and next week’s budget will carry a record deficit of about $16 billion, Parliament was told today.

                    Finance Minister Bill English said the Government’s financial position had deteriorated “significantly” since late 2008.

                    “The pre-election update in 2008 forecast that the deficit for this year would be $2.4 billion,” he said.

                    “It’s much more likely to be around $15b or $16b.”

                    I look forward to beating you further around the Daily Blog blogposts, to share more info on Labour’s responsible fiscal management vs the Nats gross incompetance.

                    • Intrinsicvalue says:

                      “Oh well, at least you now understand that the GFC started much earlier than 2008. It only took a few months to beat that simple truth into your thick Tory skull.”

                      Huh? As previously cited: http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308.

                      “The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a downturn in economic activity leading to the 2008–2012 global recession and contributing to the European sovereign-debt crisis.[2][3] The active phase of the crisis, which manifested as a liquidity crisis, can be dated from August 9, 2007, when BNP Paribas terminated withdrawals from three hedge funds citing “a complete evaporation of liquidity”.”

                      I’ve posted that several times before Frank. Your education continues.

                  • Priss says:

                    You can’t get away with spouting your lies anymore IntrinsicTory. Franks has trashed your dogma at every point.

                    You’ll have to change your username and start from scratch LOL!!

              • And by the way, I notice that this is the second time you’ve failed to address this point I raised; at least one financial expert has stated that high interest rates signal a growing economy. If interest rates were that high, as you claim (but haven’t proved), then that expert would seem to be correct.

                Shall we go for a third round?

                • Intrinsicvalue says:

                  Answered at 9.27am today…see above.

                  • Nope. You didn’t answer. You evaded and deflected.

                    It’s a fairly simple, straight forward question; is high interest rates supposedly an indicator of a strong, growing economy.

                    Just answer, yes or no.

                    • Gosman says:

                      No.

                    • Intrinsicvalue says:

                      No. It can be, but the evidence is very clear it wasn’t in 2008. The NZ economy began to tank in 2006, before the GFC, yet interest rates and inflation remained stubbornly high. Why? Simple. Excessive Govt spending, and high inflation.

                      Labour really were incompetent.

            • Intrinsicvalue says:
              March 19, 2014 at 9:27 am

              1. The economy was going into recession by 2008, so that blows that excuse.

              2. Here’s the data on interest rates. http://www.rbnz.govt.nz/statistics/key_graphs/mortgage_rates/

              Mis-using data again, IV?

              That Reserve Bank page shows interest rates going down because the GFC/recession was already impacting on New Zealand.

              I’m not sure what your point was in your post, oither than to deliberately mis-lead. Again.

              But you’re still avoiding my question about high interest rates supposedly indicating a strong, growing economy.

              True or not?

              • Intrinsicvalue says:

                Now your just being plain dishonest. Or you don;t know how to read a graph. Look again Frank.

              • Intrinsicvalue says:

                “But you’re still avoiding my question about high interest rates supposedly indicating a strong, growing economy.
                True or not?”

                Frank you are responding to the answer I gave to that question! In other words you have read my answer, replied to that, and then said I haven’t answered!!!

  7. JC says:

    All very interesting but meaningless until Labour becomes an effective opposition.