NZ Economy is collapsing – why it will get worse

Newsroom makes the point…

Growing labour market cracks to dominate next year’s election

Kiwibank chief economist Jarrod Kerr highlights the fact that some businesses he has spoken to recently – already burnt from the misfire that occurred at the start of the year when initial growth quickly petered out in the wake of the tariff scare – are not convinced about the integrity of their own order books.

“Many of them would rather run lower inventories and miss out on potential business than run the risk of being overstocked, which highlights the lack of confidence that is evident and also explains why many employers are simply not hiring.”

… The decisions made by this Government to destroy the Infrastructure Pipeline that Labour built has had a cascade effect across the NZ economy that has seen 73 000 flee and 30 000 jobs destroyed in the construction industry.

National’s response to this is mass importation of cheaper labour from exploited migrant workers while allowing multi millionaires to buy $5million mansions.

NZ is 3 huge sparsely populated Islands.

We simply don’t have the population density for free market dynamics to generate the competitive advantages that they can provide, NZ has ALWAYS required the State to step in as the foundation stone.

National and ACT want to kick that foundation stone out from under us and pretend that’s not economic vandalism.

Unemployment reached a 9-year high of 5.3 percent, it’s 10.5% for Māori, 12.1% for Pacifica and 15.2% for 15-24year olds while an increasing number of disillusioned job seekers are opting out of joining the workforce altogether.

The reality is that it is likely to get far worse…

Is another GFC about to upend New Zealand’s recovery? – Liam Dann

• Speculation about a Wall Street tech bubble is rising, with concerns over overvalued stocks.
• Michael Burry is short-selling big tech stocks, drawing parallels to the late 1990s tech bubble.
• A major crash could dent consumer confidence and impact exports, but New Zealand’s banks are well-capitalised.

…if the AI bubble pops, if Trump invades Venezuela, if India and Pakistan destabilise, if climate change extremes become even more extreme, the list if instabilities that can all snuff out any ‘green shoots’ of recovery are becoming a doom scroll.

All this Government now have is flogging off assets, when we need a completely different upgrade and urgent redistribution of capital with a post growth focus on adaptation and self sustainability.

Bernard Hickey makes the point...

• In my view, Luxon and the Treasury are right to view the Government’s balance sheet as lazy, but for debt, not assets. New Zealand’s Government has a positive net worth after including assets and the NZ Super Fund of 43.6% of GDP, largely because the Government hasn’t used debt to invest to keep up with population growth and maintain existing infrastructure.
• The Government and Aotearoa would get a much better ‘return on equity’ by using leverage to build up its assets and the wellbeing of its people.

Shit ’bout to get real.

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