Our PM Jacinda Ardern (and the government)

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#2890826 23-Mar-2022 16:04

networkn:

Higher than the artificially lower rates that you have been able to benefit from up until now.

I mean, I agree you don't have to be thrilled about anything specifically or not, but it's worth putting some of this into perspective so as not to end up in a hot tub with a razer...

Are you really likely to end up in negative equity? I mean it's possible, but certainly not reality, yet at least?

'Artificially low rates' yes, but then you get into fun and games about the size of the mortgages; a lower rate on a huge number is sometimes more than a bigger rate on a much smaller number, which I think people have largely forgotten about.

Negative equity is admittedly unlikely, but that's viewed through the lens of someone who would expect the government would be under significant pressure to do something at that point; there'd be many people who would be in trouble before we were, and the country would be largely falling apart at the seams if things dropped by that much at short notice.

But then again, the cynic in me think that expecting anything from governments who seem to prefer to do nothing if the option is open to them is perhaps folly.

At times like these I remind myself that I have the house, the mortgage can be currently covered, there is food on the table and in the freezer and my son is happy and healthy; it helps keep things in perspective but tbh after the years of living like monks to get a deposit together, it's hard to feel a little twinge of disappointment about what the future may hold.

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#2890844 23-Mar-2022 16:26

GV27:

'Artificially low rates' yes, but then you get into fun and games about the size of the mortgages; a lower rate on a huge number is sometimes more than a bigger rate on a much smaller number, which I think people have largely forgotten about.

Negative equity is admittedly unlikely, but that's viewed through the lens of someone who would expect the government would be under significant pressure to do something at that point; there'd be many people who would be in trouble before we were, and the country would be largely falling apart at the seams if things dropped by that much at short notice.

But then again, the cynic in me think that expecting anything from governments who seem to prefer to do nothing if the option is open to them is perhaps folly.

At times like these I remind myself that I have the house, the mortgage can be currently covered, there is food on the table and in the freezer and my son is happy and healthy; it helps keep things in perspective but tbh after the years of living like monks to get a deposit together, it's hard to feel a little twinge of disappointment about what the future may hold.

Yeah, I totally get that, but I think save the worry for a bit further down the track if the scenarios you are worried about play out. I think some of these scenarios are somewhat unlikely, and stressing about them isn't probably helping your mental health any.

I would hope most people who got mortgages in the past 18 months should really have done the sums on affordability based on the interest rates being 6.5%. Whilst it's not nice to see rates climb, they have been much to low to sustain for a while, and like others have said, 6% is

probably where rates 'should' be.

The current world situation means that people aren't likely to advance as quickly as they might have planned, and may even have a period when they go backwards. My wife took 5 years off work to raise our kids through their very formative years, and we knew that we weren't going to make much forward progress during that time. I think people probably need to adjust expectations and focus on getting through, understanding that hopefully, this pandemic is a once in a lifetime hit we are all taking.

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#2890915 23-Mar-2022 18:54

networkn:

Yeah, I totally get that, but I think save the worry for a bit further down the track if the scenarios you are worried about play out. I think some of these scenarios are somewhat unlikely, and stressing about them isn't probably helping your mental health any.

I would hope most people who got mortgages in the past 18 months should really have done the sums on affordability based on the interest rates being 6.5%. Whilst it's not nice to see rates climb, they have been much to low to sustain for a while, and like others have said, 6% is

probably where rates 'should' be.

The current world situation means that people aren't likely to advance as quickly as they might have planned, and may even have a period when they go backwards. My wife took 5 years off work to raise our kids through their very formative years, and we knew that we weren't going to make much forward progress during that time. I think people probably need to adjust expectations and focus on getting through, understanding that hopefully, this pandemic is a once in a lifetime hit we are all taking.

We dont agee on much, but well said.

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#2891529 24-Mar-2022 18:45

I have to say, I am wildly disappointed that the PM has refused a perfectly good request from one of our esteemed citizens during a live stream QA to twerk.

I feel this reduces her coolness factor and think if Christopher Luxon is prepared to, then she should cede the crown.

(obvious jest just in case it's not obvious).

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#2891537 24-Mar-2022 19:16

networkn:

I have to say, I am wildly disappointed that the PM has refused a perfectly good request from one of our esteemed citizens during a live stream QA to twerk.

I feel this reduces her coolness factor and think if Christopher Luxon is prepared to, then she should cede the crown.

(obvious jest just in case it's not obvious).

She would twerk him into the ground.

(not a jest)

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GV27

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#2891789 25-Mar-2022 06:16

Definitely needs to be the closing portion of the leader's debate.

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#2891794 25-Mar-2022 07:19

https://www.nzherald.co.nz/business/matthew-hooton-labour-party-rebrands-ardern-national-better-stay-sharp/AMHRH554YZCV5UEUEX5BTEPAIQ/ (paywalled)
He talks about the rebranding of Jacinda from St Jacinda to more of a regular Kiwi and how it won't help National.

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#2902320 14-Apr-2022 12:52

It's going to be interesting to see what happens with the Nurses backtracking on the agreement made in December. Little stated categorically on the radio this morning, that there is no more money for this. Last time a Government minister said that, they found an extra couple of billion to sort it. It set a pretty good precedent for these situations to occur. Little says the agreement is binding, but the nurses union says there is legal avenues to explore to force payment of back pay through to Dec 2019.

GV27

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#2902374 14-Apr-2022 13:36

Didn't the nurses settle for a fraction of what the teachers ended up getting? Despite both groups being told there wasn't any extra money to bring to the table?

GV27

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#2903800 19-Apr-2022 13:16

Apparently we are going to see some white hot inflation numbers this week. There's a real desire to write it off as prompted by the Ukrainian situation but we've been hearing about supposedly transitory inflation long before Putin rolled across the border, despite what Robertson says.

While other countries also have inflation, they're not coming from a position of stonkingly massive accommodation costs as a portion of income like we are. So I'm not sold on this being either recent or a global issue - the inflation itself might be happening worldwide, but we are extremely poorly placed to weather a storm of this nature.

Also starting to see some think pieces suggesting that Kiwis should just hunker down, all things will pass and wage increases might cause an inflationary spiral. Unfortunately I cannot pay my grocery bills with counter-narrative, so I am less a fan of this argument.

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#2903806 19-Apr-2022 13:33

GV27:

Apparently we are going to see some white hot inflation numbers this week. There's a real desire to write it off as prompted by the Ukrainian situation but we've been hearing about supposedly transitory inflation long before Putin rolled across the border, despite what Robertson says.

While other countries also have inflation, they're not coming from a position of stonkingly massive accommodation costs as a portion of income like we are. So I'm not sold on this being either recent or a global issue - the inflation itself might be happening worldwide, but we are extremely poorly placed to weather a storm of this nature.

Also starting to see some think pieces suggesting that Kiwis should just hunker down, all things will pass and wage increases might cause an inflationary spiral. Unfortunately I cannot pay my grocery bills with counter-narrative, so I am less a fan of this argument.

Ditto. Also I don't accept the justification that other places are experiencing it too therefore so must we. This happens with other things as well. It really bugs me that people in high places shrug their shoulder like this. Just because something is happening elsewhere is not reason to blithely sit back and accept we should have the same situation.

Sure some inflation will be imported but much of it is occurring domestically which is something the government can have an affect on rather than just passing the buck like GR is.

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tdgeek

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#2903888 19-Apr-2022 14:24

Has anyone calculated the known inflationary causes, so as to then decide, the local and avoidable component?

There is Covid. Its been round a while, global supply lanes have been shuttered, then slow. So supply has fallen well below demand, probably exacerbated by diverting holidays to local retail and reno materials

There is Ukraine. Oil prices, although thats pretty recent, but its real at the pump of citizens and goods and services providers, everything has to be shipped somewhere..

For imports you add the global inflation to oil increases. Many, many products are imported.For local goods you add transport costs, and for many locally grown foods, factor in a number of adverse weather that has hit availability.

But, unless we can look at a basket of prices, remove temporary weather event inflation, then remove global inflation, which is mainly Covid induced inflation I assume, remove recent oil prices, then whats left are pre Covid prices. Thats the answer. Whatever it happens to be, but I'd wager its very significant.

GV27

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#2903898 19-Apr-2022 14:42

tdgeek:

But, unless we can look at a basket of prices, remove temporary weather event inflation, then remove global inflation, which is mainly Covid induced inflation I assume, remove recent oil prices, then whats left are pre Covid prices. Thats the answer. Whatever it happens to be, but I'd wager its very significant.

This ignores the fact we dropped the OCR through the floor almost overnight in response to Covid but then took our sweet time in bringing it back up even when we could see house prices spiking in late 2020 - hence the larger rates increases needed now.

Plus the changing of the RBNZ's mandate to consider the effect of decisions on employment, which implies an inherently loose monetary policy by default.

All of these things mean we have less wriggle-room when it comes to lifting the OCR now without facing adverse consequences on much, much bigger mortgage holders than we otherwise would have.

There's no point in taking all those macro-issues out of the equation because we still have to deal with them and you still have to pay higher prices caused by them.

The question is actually 'How much did we do to make our economy resilient to external shocks that we can't influence with domestic policy?'.

tdgeek

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#2903965 19-Apr-2022 17:00

GV27:

tdgeek:

But, unless we can look at a basket of prices, remove temporary weather event inflation, then remove global inflation, which is mainly Covid induced inflation I assume, remove recent oil prices, then whats left are pre Covid prices. Thats the answer. Whatever it happens to be, but I'd wager its very significant.

This ignores the fact we dropped the OCR through the floor almost overnight in response to Covid but then took our sweet time in bringing it back up even when we could see house prices spiking in late 2020 - hence the larger rates increases needed now.

Plus the changing of the RBNZ's mandate to consider the effect of decisions on employment, which implies an inherently loose monetary policy by default.

All of these things mean we have less wriggle-room when it comes to lifting the OCR now without facing adverse consequences on much, much bigger mortgage holders than we otherwise would have.

There's no point in taking all those macro-issues out of the equation because we still have to deal with them and you still have to pay higher prices caused by them.

The question is actually 'How much did we do to make our economy resilient to external shocks that we can't influence with domestic policy?'.

Is the Covid effect and Ukraine effect, macro effects?

Im not sure what would have happened if we slashed interest rates then ramped then up just as quickly.

I guess we could have ignored employment, helped that along with no wage subsidy, but to have employers supported, you need employees supported which is what the wage subsidy did.

The question is actually 'How much did we do to make our economy resilient to external shocks that we can't influence with domestic policy?'.

How can you make our economy resilient to external shocks? The answer is "external shocks" When overseas suppliers cannot supply, or enough, do we cancel price rises, thereby telling employers to absorb them? Or we use taxes to subsidise businesses? You cannot avoid external shocks. Unless you had perhaps a Muldoon wage and price freeze? Given the pressure on businesses there is already an unofficial wage freeze. Do we then the businesses to suck up the global inflation?

Im sure you, like me, hav been to many cities where there size dwarfs NZ. We have no wiggle room, nor tin and gold or oil deposits. We have to be moved by the economic wave, we can't manipulate it or be low affected by it, as far as I can tell.

GV27

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#2905183 22-Apr-2022 08:01

tdgeek:

Is the Covid effect and Ukraine effect, macro effects?

Im not sure what would have happened if we slashed interest rates then ramped then up just as quickly.

I guess we could have ignored employment, helped that along with no wage subsidy, but to have employers supported, you need employees supported which is what the wage subsidy did.

The question is actually 'How much did we do to make our economy resilient to external shocks that we can't influence with domestic policy?'.

How can you make our economy resilient to external shocks? The answer is "external shocks" When overseas suppliers cannot supply, or enough, do we cancel price rises, thereby telling employers to absorb them? Or we use taxes to subsidise businesses? You cannot avoid external shocks. Unless you had perhaps a Muldoon wage and price freeze? Given the pressure on businesses there is already an unofficial wage freeze. Do we then the businesses to suck up the global inflation?

Im sure you, like me, hav been to many cities where there size dwarfs NZ. We have no wiggle room, nor tin and gold or oil deposits. We have to be moved by the economic wave, we can't manipulate it or be low affected by it, as far as I can tell.

Pooled water goes to the lowest point first. If the government had meaningfully enacted their housing and tax reforms like they campaigned on 2017 to get elected, then there would have far far less reason for money to end up in real estate and for house prices to blow out by 30%. Changing the RBNZ's mandate to include employment considerations meant we had lower interest rates for longer, even as property prices spiked.

And now we have high domestic living costs, inflation, and now the imported inflationary effects from Vlad's war. You make an economy resilient to external shocks by actually reforming it, not writing reports about it.

Labour's response so far has been to cut back fuel excises temporarily and otherwise pretend like 'other people have worse inflation, see how great we are!' is some sort of credible response. Other places have higher wages, lower living costs and people have more disposable income to get by on too as a result; should we keep up the comparison game or is this something that they're only going to do when it suits? Funnily enough, inflation running higher in the US doesn't actually make it any easier to stomach an 18% rise in food prices. Weird huh.

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