As TDB has been pointing out since the beginning of the pandemic, the second wave of this tsunami is the economic carnage, we are now seeing that carnage.
Most analysts thought our last GDP numbers would be .1, the Reserve bank thought .7, we actually got a negative.2.
That is a fucking enormous gap between what the Reserve Bank thought growth would be +.7 and it coming in -.2.
Recession is coming.
With the Fed using their 75point bazooka this week, Orr must be considering the same if inflation is raging WHILE the economy is shrinking.
If you think things are hard economically now, you aren’t seeing what is about to hit us.
This is going to be another crisis and this Government with this Leader can stand up in moments of crisis.
I do not believe that you are ready for this jelly.
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Recession – try stagflation. Grunter and Beetroot – what a dynamic duo. I’ll let everyone guess who is Batman and who is Robin.
Along with Costa, Orr is one of the first to get the push when the new government takes over next year.
The man needs to remember what his day job is, and quit the Te Reo politicking.
They won’t it is extremely hard to get rid of Police Commissioners and Reserve Bank Governors before their term expires. The best you can hope for is the placement of a minister that makes life unbearable for the public figures.
Spoken like a true blue red neck Andrew
It’s true though covid. He’s turned a once respected organisation with a vital role in our economy and future into a laughing stock. Raving on about the god of the forest and turning the RBNZ lobby into a pagan shrine while their core responsibilities and competencies are increasingly dysfunctional. You don’t see the Norwegian reserve bank banging on about Thor or Odin, they have actual sane people running the show.
The wave of resignations will continue while their competent staff can still get a decent job elsewhere and until ‘RBNZ’ on your CV is a definite disqualifier.
DG we have had a .2% contraction when comparing Q1 of this year to Q4 2021. Norway had a 2.2% contract for 2020 versus 2019 so let’s not jump the gun with comparisons. You sound like one of the crowd from the banking industry that started all sorts of negative press about Orr when he insisted they strengthen their balance sheets.
Bring it on! This Labour government is great at Crisis management!
They just hide from it and then hope everyone does the same.
“As TDB has been pointing out since the beginning of the pandemic, the second wave of this tsunami is the economic carnage, we are now seeing that carnage.”
The carnage has nothing to do with the pandemic, it has to do with the Governments hysterical and incompetent response to the pandemic.
Yeah right jays. Falling export demand is all to do with our pandemic response. Lockdowns in China are all to do with our pandemic response. Of course the war in Ukraine is on us too.
Absolutely correct.
Bollocks
Jays Ummmm – ‘hysterical and incompetent’ government response. Others might say, basically timely and responsible.
How far apart those two views are. One must be about 75% right and the other the minor percentage. Don’t you think? Or do you like firing off verbal missiles?
Recession with high Inflation is called Stagflation – google it, it aint pretty!
Believe economists when they get their predictions within two standard deviations of their predictions. GDP is irrelevant to human welfare.
Are you saying that economists are deviants Paul? I confess I don’t understand the type or their language. Oh dear is that a putdown and is it somehow racist?
Unfortunate that Labour is dedicated to keeping us tied to the sinking American and Australian ships. God forbid we trade with any countries run by human beings.
Says Mr White, the man that is dedicated to keeping us economically tied to the dictatorship of Winnie the Poo.
GDP is but one measure of a healthy economy there is also employment rates, births and deaths, hospitalisations rates, building consents, immigration and migration, benefit levels, investment in infrastructure, events, cultural enhancement activities, diplomatic relations, social cohesion and much more. GDP is too narrow and blunt to measure overall wellness.
Jacinda, Orr and Robbo, printed to the extreme and slashed LVR’s just after introducing the healthy home rules so that prices would inflate 50% and their rich scumlord mates could offload their uninhabitable homes for enormous profit and the poor young FHB would be left with enormous debts on homes that needed lots of renovation to bring into a habitable standard. So many homes where selling “as is” for prices that the scumlords could only dream of. Add to this Jacindas denial of there being a problem with ghost homes and the whole thing seems to be one evil conspiracy by the elites to further exploit the poor. Labour and National need to get zero votes from this day forward, they are all complicit in increasing the wealth gap, inequality driven crime and poverty driven apartheid. Orr must be investigated for his part in all this. It seems like much more than just the biggest mistake ever made in NZ’s history.
we fraudulently include expected appreciation on house values as part of ‘GDP’ (NO ASSET HAS ANY VALUE UNTIL IT’S REALISED) house prices fall,’ GDP’ falls…it indicates nothing about the actual real economy outside your front door.
“include expected appreciation on house values as part of ‘GDP’”
No we don’t.
GDP is the sum of economic activity (including personal, business and government income and expenditure) total turnover in other words. Capital values don’t come into, rents, paid and received, do.
house price inflation is included in GDP..hence the ridiculous idea that rising house prices are a good thing for the country
Tell me about Gagarin. The concept of paper gains not being in the bag until they are realised seems lost on a lot of people. They are still stuck on Bernard Hickeys 1trillion transfer comment. In their world the property prices have not fallen at all since that comment ( and I assume shares have not moved) so obviously there is nothing to worry about at all.
Pretty major cock up from Orr being so far out on GDP prediction.
If we are honest, a trained monkey could do the Reserve Bank Governor role where they solemnly leave the cash rate unchanged or occasionally nudge it up or down, all on signals from overseas or locally which aren’t hard to see.
Martyn, or myself or most of the financially or politically literate would certainly do as good a job under normal circumstances.
But in times of crisis, we really see the caliber of our appointed expert bureaucrats.
And what do we see in this case?
https://www.nzherald.co.nz/business/reserve-bank-governor-adrian-orr-shares-maori-perspectives-with-central-bankers/2GTV3TJRMUIDRYGHAS7YFEE3CA/
“ The bank had adopted the legend of Tane Mahuta, the god of the forest and birds, as a framework to describe the purpose and interconnectedness of the banks work.”
“ “Our roots are our legislation, outlining our purpose and giving us strength (legality and operational rights) and wellbeing (resourcing).
“The money we print and circulate for New Zealand is the sap that flows through Te Putea Matua, ensuring New Zealanders have a means of exchange, a story of value, and a unit of account they can trust.””
Orr has disappeared down a woke rabbit hole and can’t even do his basic job.
Or rather in fairytale terms he might understand, Tane Mahuta has Kauri dieback disease when the head guardian thought there was nothing wrong.
We are a quarter away from recession and actual stagflation which is a train wreck situation easier prevented than reversed.
Please can we have the election soon and begin firing woke idiots.
Is he regularly tested for class A drugs?
No but he’s licking Labour’s butt. Hoping to hang on to his big paycheck.
Completely out of context of course KCC. Orr was asked to comment on the RB experience to an international group on this topic. The changes he is talking about happened like three years ago at least. It’s not something that was done lately.
You can criticise Orr for acting like any other central banker in the OECD but stop all the bs about it’s something to do with being woke that has given us the global economic conditions that exist now. Apart from cosmetic changes what is the bank doing that is so radically different from any other boring as bat shit governor from the past?
I have some sympathy for the Government but not much. You can’t borrow $74billion, and not expect the drug dealer to want to be paid. The Government had to borrow heavily to keep us from mass unemployment and business failure during Covid. Business got the money to pay wages and maintain some staffing, most likely the easiest way to distribute the funds, but the debt has to be paid and the average person who is not concerned where the money comes from is now wondering why we are facing big inflation and recession when they don’t think that life has been that great to begin with. I don’t believe The government had too many options here but it won’t matter. The people are hurting and the government will pay the price. The dozens of dopey decisions on how best to spend more borrowed money on agenda politics will confirm this governments demise.
If it were just covering lost wage’s we would be in a better place but it wasn’t. Dig into the detail and you’ll see a bunch of questionable spending made under the broad cover of COVID emergency fund plus Orr printing too much too fast then compounding this by not lifting rates harder an earlier.
We’re broke as a country and economically fucked. At least for four or five years.
I think it was Damien on the working group last Monday who raised the spectre of a depression a la the 1930’s. Let’s see what comes but even if it isn’t a depression, it’s going to be brutal for far too many.
The history of pandemics is that huge social change follows and the reality is that we’re effectively still in the pandemic stage, so what’s next? The last depression was followed by global war and after that the creation of the welfare state in NZ, the UK and other western countries.
I don’t think that model will survive as we simply can’t afford to meet the expectations that so many have come to believe they’re entitled to without putting anything back in – think boomers and pensions or ballooning healthcare costs as we all want to live forever.
What comes next is really the interesting question in my view.
I’m a boomer and can’t disagree with what you and BG are saying. I believe the initial response to the pandemic was fair enough. However like every thing else Labour touches it goes sour because of poor decision making that reflects what seems to be their thought process that money grows on trees. Dipping into Covid funds to extend borrowing is a prime example.
an interesting perspective here. thoughts?
https://www.ecosophia.net/the-twilight-of-empire/
Lively reading and haven’t finished yet but I think I can rely on the facts and the suppositions in it. On the advance of the USA empire for greater land mass did he/she mention Texas etc from Mexico in 1845? Prior to Hawaii in 1898. (A notable example of how if you are peace-loving some hawk will come along and foul your nest. Greywarbler birds experience that often.)
Annexing Texas (article) – Khan Academy https://www.khanacademy.org › … › The age of Jackson
Texas was annexed by the United States in 1845 and became the 28th state. Until 1836, Texas had been part of Mexico, but in that year a group of settlers from …
Recession is coming. At least you and Hosking agree on the same thing Martyn.
You should put the % in to make the numbers clearer.
So the treasury estimated .7% growth and instead we had -.2% decrease. Less than 1 difference between the two numbers. So what’s the big deal?
@cp. Well worth reading carefully. John Michael Greer wrote a prophetic novel called ‘Twilight’s Last Gleaming’ available from the Auckland Library.
A relief to read a such a well informed, well written and thorough article. I’m dizzy with amazement just now having found I had a heap of old ‘Encounter’ magazines from the sixties and actually discovering the English language. Like discovering proper food after having been half starved for years.
‘Encounter’ shut down when it was revealed that it had been the recipient of the CIA’s ‘Operation Mockingbird’ charity but like the ‘New Statesman’ it was first class in it’s heyday.
As Greer points out, stagflation is hovering. Time to get used to the Eurasian reality.
you can blame encounter etc and the CIA for postwar abstract expressionism…now if that isn’t a crime I don’t know what is.
Quick! Print more money! Run bigger deficits! Handouts! Tax cuts!
(…oh wait, those exact things led us to this place).
The Fed’s 75point rate hike at best was a blackeye to US inflation. Our OCR at 2% is still stimulatory.
Bridgewaters Ray Dalio know that there is something about to give.
A quick look at where we’re heading…Ray Dalio. The world’s economic history for dummies
He makes it so easy to understand that you can’t misunderstand what part of the cycle we are in.
https://youtu.be/xguam0TKMw8
“This is going to be another crisis and this Government with this Leader can stand up in moments of crisis ”
Well apart from Covid all the other crisis ( crisis the must over used word in the english language ) the structural free market real casualties remain with out any serious intervention by Sparkle or her friendly capitalist colleagues of the NZLP once the mystique of rising to their game in a pandemic slowly ebbs away when they don’t even give the most serious human problems the attention aside from what ” the market expects ” approach falls flat because the idiot hobbitts actually think they can fix the the effects of 40 years of unbridled capitalism with more of the same policies.
Too many people making money off consultants who are reluctant to start and finish projects due to it being more lucrative to talk about them or have them go wrong and then write reports about it .
More than two thirds of Auckland’s $59m light rail spend is on consultants
https://www.nzherald.co.nz/nz/more-than-two-thirds-of-aucklands-59m-light-rail-spend-is-on-consultants/5RKQQX4PHASBVADWDAXEJTTZX4/
People who actually do real work and are qualified to do the job whether construction, Health care or IT are leaving or have left NZ as it has become a country that can’t get anything real done anymore.
So many people in NZ are new to the job and only have a few months under their belt, thus another 2 years of sitting around can be achieved as they ‘get up to speed’ and get in consultants to write reports in the mean time.
While the borders were closed NZ GDP went up as people spent in NZ, once borders were opened people who don’t work in NZ anymore but often own the assets here, went off overseas. They is the equivalent of dead towns everywhere.
Another 165,000 people were granted residency in NZ (and their families) who did not have to speak English, be a certain age (aka could be a pensioner), have original paper work, prove they did not have recent health care needs, or be working, or have enough money in NZ, so thus signalled another wave of desperate people who will compete with other desperate people in NZ on the low end jobs and welfare dependancy. Funny enough migrant registered nurses and doctors did not qualify in many cases due to the amount of fuckwittery in NZ immigration from the woke but the health care system now have another 165,000 people + family members to look after. Likewise the growing business or community led charities who seem to be more in the business of increasing poverty and their cases loads, than solving it.
you have a point ‘money raising businesses’ exist to pay admin staff and feather bed executives…if a charity uses more than 20percent of income on admin—AVOID
the days of nice old ladies collecting for the local cats home are over..now it’s backpackers on a small commission rattling a bucket in your face.
Inflation is rising because of supply factors, not rising demand. Thus raising interest rates to reduce demand is no solution and will merely result in stagflation.
true spc
Is this capital-flight in action? Take GST off food and put it into overseas travel! We count on balancing that
spending, from income from Oz tourists, but should be having fewer tourists and keeping up investment on other ventures by NZs employing NZs. . Also seeking eco visitors from farther overseas destinations. Oz is just our next door kid with a bit of the rough and doesn’t appreciate our finer side!
https://www.rnz.co.nz/news/world/469365/new-zealanders-driving-tourism-bounce-back-on-gold-coast
Recession – covid meant 2 years of business losses, now on the other side its time to jack prices to cover those losses. Joe public hasnt had a pay rise and suddenly prices become unaffordable so stops spening, world goes into recession.