Ouch. Eurozone inflation explodes…
Euro zone inflation soars past forecasts to new record high of 10.7 percent
Euro zone inflation surged past expectations yet again this month to hit a record high, pointing to further interest rate hikes from the European Central Bank as price pressures appear to be broadening.
Consumer price growth in the 19 countries sharing the euro accelerated to 10.7 percent in October from 9.9 percent a month earlier, beating expectations in a Reuters poll for 10.2 percent as inflation in Germany, Italy and France all rose more than forecast, data from Eurostat, showed on Monday.
…Adrian Orr has kindly explained that he needs to burn New Zealand to save New Zealand…
Adrian Orr: Beating inflation will mean higher unemployment
“Of critical importance to overall financial stability will be the robustness of the labour market.”
Orr warned that the interest rate hikes needed to beat inflation would mean higher unemployment.
“Returning to low inflation will, in the near-term, constrain employment growth and lead to a rise in unemployment,” he said.
“The actual extent of this trade-off remains unclear, however, given the significant labour shortages globally and the very different means of employment being adopted post-Covid.”
“Importantly, it is highly unlikely that we are at maximum sustainable employment if inflation is still high and variable,” he said.
…cough.
What if he’s wrong?
I don’t mean about needing to destroy jobs and raise unemployment rates by rapidly lifting the OCR, oh he’s going to do that, he’s clearly telling the well heeled part of town that he intends to keep raising the OCR and that he is openly accepting the collateral damage of job loses…
An independent economist has warned thousands of Kiwis will need to lose their jobs as part of an “economic trade-off” to get inflation under control.
Statistics NZ will release the latest Labour market statistics for the September quarter on Wednesday, with most economists expecting them to show an unemployment rate of 3.2 percent – compared with 3.3 percent in the June quarter.
Meanwhile, annual inflation is currently sitting at 7.2 percent 0 down slightly from its June peak of 7.3 percent but significantly higher than the Reserve Bank of New Zealand’s (RBNZ) 1 to 3 percent target.
…I mean what if he’s wrong about why inflation is going up and is giving the economy the wrong medicine?
The argument is that if the OCR rises, inflation will fall because jobs will be lost and those losing jobs stop spending while sapping disposable cash from mortgage holders, thus demand is allowed to ease which is supposed to lower prices.
So far, so Keynesian.
But what if this is a unique moment of crisis in Capitalism?
What if there is a price to pay for printing $25Trillion and artificially lowering the interest rate to the lowest rate in 5000 years?
What if that tsunami of inflation was distributed to the deepest, darkest most de-unionised supply chains in China and that Covid and geopolitical tensions have broken free market just-in-time supply chains to just-in-case supply chains which sharply import inflation?
What happens if job losses explode AND inflation continues to climb?
What happens if this is stagflation and not a transitory inflation spike?
What if the global supply chains that have kept the tsunami of hyper inflationary pressures away from the West have actually ruptured?
What if all the Keynesian macro economic advice is worthless because of the extreme global debt and sudden importing of inflation back to the West eradicates all that previous inflation suppression?
What if lowered demand still sees prices climb because there is a tectonic realignment in supply chains?
What if Orr’s medicine can’t cure the symptoms because he’s misreading the disease?
If unemployment starts going up while inflation also goes up, we are trapped in massive unstable speculative bubble that has all the potential of a 1929 crash followed by war.
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LOL. Yes – the very thing I warned about at the start of the covid cult. Economic stagflation is coming to a town near you.
The economic system has become bloated and inefficient. Having unnecessary bureaucracy and compliance; having diversity and change officers instead of another 2 bodies in the warehouse has a real effect on productivity and cost; Telling Johny and Josie to get tertiary qualifications for an office job that a trained chimp can perform; employees changing company for another 3% pay increase; “working from home” LOL – these all have a negative impact on the economy long term.
In order to fix the economy we have to get back to fundamentals. This will have to happen sometime in the next 20 years and for anyone under the age of 40 extremely fucking painful.
I’ll get the popcorn ready for the woke tears.
Agreed the woke don’t have resilience to stand what could be coming.
I have seen talk from some corners of this thing turning into a true economic depression. Did not believe them but reading this has me .
We are in for interesting times ahead.
Inflation in Germany, France, Holland, Belgium, UK etc etc etc is way higher then what we are too believe.
Also we have on average 3.2 % unemployment and we count people in these stats that are on benefits because they only work a few hours per week – but hey, it ain’t the ‘unemployment benefit’ it some ‘other fringe benefit’ and thus we massage the numbers so well, they are so relaxed they are a puddle of nothingness.. The correct measure to look at would be underemployment and that sits at around 10 – 11%.
But i get it, 3.2 % sounds successful. And we want to feel successful, right? Even when we know full well that we know more people struggling then doing well.
I remember reading articles that said unemployment at 3% was good as it kept inflation in check, when those numbers lower it creates inflationary pressure. If having 3% is good for the economy, why do people keep bashing beneficiaries?
They dont even want to mention under employment because thats bad for the economy.
Not really happy that National changed it so even zero hour contracts are classed as employed.
To get ACC clients off ACC requires them to work 30 hours a week, I think it used to be 30 hours per week to be classed as fully employed before then.
as i said, underemployment is the number to gauge the reality of the job market in nz.
tru dat bratty
So RB what does that all mean? If there are lots of qualified people in low wage jobs (I assume that’s likely with under employment) then where is all the excessive consumer demand coming from? Thats what we are being told is driving inflation (at least in some corners). Of course, we are also being told that everyone is leaving for greener pastures so somehow the people who are left are buying a shit load of cheese apparently. Oh. and while we want more unemployment, we want more foreign workers….
A lot of this is questionable.
It’s like Greg Foran the other day talking about high airfares. He didn’t reference costs he said demand was ‘just so high’! I am not sure lots of people wanting your seats automatically makes your ticket price go up. Don’t Air NZ control what they charge? Is it an auction? I think he meant to say, I am charging so much because well…. I can.
Is this hyperbole that nterest rates have been tracked over 5000 years…..
No. It is not.
https://www.marketwatch.com/story/interest-rates-havent-been-this-low-in-5-000-years-11627644496
Based on a book which looks like a long read, and I’ll admit I haven’t, but the authors point to this of their book – :Despite the paucity of data prior to the Industrial Revolution.”
The main stream economists are wrong alright, because of their narrow focus. Unemployment must rise for inflation to fall? No, no and no! What is the point of running an economy if not to serve the citizens.
“Trickledown” has been dead for a long time but you would not know it listening to these “experts” whose main task in life seems to be performing anilingus on 1ers%.
Many price rises are down to pure corporate profit gouging, as well as collapsed supply lines and COVID fall out. Even that radical Joe Biden has called out the fossil fuel companies recently on that score.
Still, in the short term, keep some cash and bottled water handy, and get one of those emergency radios with a crank handle!
Economists say that inflation is purely a monetary problem. Too much money chasing too few goods. The basis of Milton Friedman’s ideology. Economists wrong again. Commerce always uses the cheapest and easiest resources to exploit. That means that later on the resources cost more energy to extract, process, and sell. So there is a increasing real cost to obtain the goods. As the wealth trickles upwards to the already wealthy, the rest face the reality of increasing costs as inflation. The energy we obtain in food now costs 10 times the energy to supply. It will get worse before it gets better. Who says it will get better?
Meanwhile…
RNZ
“Why are banks making big bucks?”
https://www.rnz.co.nz/programmes/the-detail/story/2018864512/why-are-banks-making-big-bucks
While I’m no rocket surgeon… The fundamental problem within AO/NZ, where everything starts to go from awesome to oh fuck. Where five million people on a rich, fertile and beautiful AO/NZ suffer, fret, freakout and sometimes die in poverty lies with our politicians. It’s our politicians. They’re to blame. All of this, is on them. I loath the banks, I fucking hate what they’re just done. Again. But it was our politicians who sat back on their fat arse’s and watched cynically on as the banks set us up and are now reeling us in. Again. You want change? Make politicians work for YOU. Not the fucking banks.
We don’t need to worry about China, nor U$A, nor Europe, Japan or Korea. We need to urgently concern ourselves with the value for money we’re getting out of our politicians, which is currently appalling. And we must remember; our political infrastructure, right across the board, is one of enduring neoliberalism. Our politics is all and only about money and the banks are like sharks smelling the blood of it.
The corruptions that enable the greed and arrogance of the foreign owned banks is as institutionalised as it can get. Corruption is woven into the cloth of our country. The people who most benefit are mafia-like but for one exception. They don’t disappear people if they don’t pay. They merely destroy their lives with mounting debt and failing services. Politicians? Find them. Make them do better.
if we are going to use unemployment as an economic lever (as thatcher failed to-charmingly named ‘structural unemployment’) can the usual rightard lamebrains STFU about bennies….if unemployment is govt policy it’s clearly not the bennies fault is it?? they won’t button it though cos benny bashing goes well with peanuts and a lager down the pub.
No what if about it! Any politician or economist that said inflation was going to be a transitory of 2022 were very wrong. This call can already be made in late 2022. Inflation is not falling and is stubbornly averaging somewhere in the 7-9% pa region as I write. Robertson and Orr were staggeringly wrong with their predictions in early 2022. A recession now looks inevitable.
For just the USA, not counting Europe Australasia Japan India and China all-in money printing totalled $13 trillion: $5.2 for COVID + $4.5 for quantitative easing. All those trillions have to be stolen back from the population sometime – now is the time. The left in NZ need to be talking up the necessity of massive public works for job creation to see us through the coming depression
And putting great distance between us and the coming war with China. Thank God there are still sane people in China who are not ready to be trapped into a war by Pelosi provocations.
” Adrian Orr has kindly explained that he needs to burn New Zealand to save New Zealand ”
But who gets burnt ? the usual suspects who are heavily in debited , on slave wages , paying excessive rents and now more money in interest on their depreciating homes to the banking cartels and that is the people who get above the minimum pay rate and have a combined income.
Capitalism and the neo liberal politicians and their refusal to even look at the carnage being created and honestly admit its not working and that this economy stopped delivering for everyone a long time ago.
Orr Adern , Robertson , Luxon Seymour and the economists who are experts I believe are so intoxicated with market trickle down economics that for them regardless of the consequences and crises their polices have created that to talk about thousands of people losing their employment is a worthwhile cost to save the market.
Socialism for the top and capitalism for the rest.
We need double digit interest rates if there is to be any chance to break the current inflationary spiral. The issue now is people are demanding more money to buy the very good they’re making/selling, increasing costs for the business they’re working for and forcing them to increase prices to compensate (the “living wage” is a disastrously inflationary policy for this very reason). Further, when interest rates are lower than inflation, it’s a no-brainer to borrow to buy a good today, if you know it will be more expensive tomorrow (even after interest). Inflation is very much like a rolling snowball. It can be stopped, but only if the government (by completely stopping deficit spending) and the central bank (by raising interest rates to a level where people stop borrowing and start saving) are willing to make it happen.
“We lament your 2%! 2% won’t pay the rent!”
So let me get this straight. There are no people to fill jobs supposedly. In order to control inflation we apparently need more unemployed. Meanwhile everyone is screaming for the immigration gates to open for all manner of people, while we are trying create unemployment. Awesome.
So if we need more unemployment to sort the things out do they start with Governors of the reserve bank and economists?
What if we closed our borders, kicked out the four foreign owned parasitic banksters, wrote off all mortgage debt, re nationalised our assets, paid a universal basic income, gave our farmers cocaine, Ecstasy and big hugs and gave no fucks?
Well CB I can see no logic in opening the borders when according to infinite wisdom we should be sacrificing jobs to reduce demand? Why import people who might be able to “consume” things? Let’s hear the rationale from all the politicians for that.
Hello! Hello!! It’s Austerity 2.0 calling!
Great image for an illusory theory, all effect but no truth in it.
However a bit of good news – who’d have thunk it.
https://www.rnz.co.nz/news/business/477886/unilever-sees-revenue-grow-despite-staff-reducing-time-on-the-job
A four-day work week trial run by Unilever over the past 18 months has been a huge success and is being expanded to Australia.
The company’s 80-strong New Zealand workforce were allowed to spend 20 percent less time at work while retaining full wages.
As a result the company saw a growth in revenue, absenteeism dropped by 34 percent, and stress dropped by a third. Work/ life conflict – the way a job impacts on personal life – fell by 67 percent.
Will Luxon skite, reflected glory – he was from Unilever wasn’t he? Unilever, a little device for getting under the edges of lids to open up a can so you can get at the goodies!?
An eternal truth that you on the Left will never accept:
Inflation is always and everywhere a monetary phenomenon. It’s always and everywhere, a result of too much money, of a more rapid increase in the quantity of money than in output. Moreover, in the modern era, the important next step is to recognize that today, governments control the quantity of money. So that as a result, inflation in the United States is made in Washington and nowhere else.
If you listen to people in Washington talk, they will tell you that inflation is produced by greedy businessmen or it’s produced by grasping unions or it’s produced by spendthrift consumers, or maybe, it’s those terrible Arab Sheikhs who are producing it. Now, of course, businessmen are greedy. Who of us isn’t? Trade unions are grasping. Who of us isn’t? And there’s no doubt that the consumer is a spendthrift. At least every man knows that about his wife.
But none of them produce inflation for the very simple reason that neither the businessman, nor the trade union, nor the housewife has a printing press in their basement on which they can turn out those green pieces of paper we call money.
That old right wing rhetoric is so boring.
Shorter Gus: I got no argument agains it.
the average NZer is up to his arse in debt because trying to pretend to a developed lifestyle on poverty wages can’t be done so personal/household borrowing was the answer…gottta have that new ute..
.as my aunty used to say ‘fur coat and no knickers’