John Key’s “rock star” economy:

Posted on August 5, 2015 by KG

‘New Zealand commodity prices fell at their fastest pace on record in July, notching up a fourth straight month of declines to the lowest level in almost six years, led by dairy.’

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10 Responses to John Key’s “rock star” economy:

  1. mawm says:
    August 5, 2015 at 09:50

    Not only the commodity prices but the dollar has fallen massively against the USD as well. This means not only are our exports worth less in USD terms but that your wealth (e.g. your personal savings, your monthly cheque, your super) has been savaged. The Reserve bank keeps on telling us there is no inflation and cutting the OCR, and yet everything we import is costing more and the rise in housing prices (and not only in Auckland) reflect the cost of building new being far more than buying old.

    One of the primary duties of a government should be to protect the value of their dollar and control inflation. Instead they use both as a way to manipulate the markets and hide their poor economic management. The Swiss used to know how to do it.

    • rivoniaboy says:
      August 5, 2015 at 14:42

      You know mawm , I have been involved in the financial markets for over 30 years and imho the majority of players – Reserve bank, economists, traders haven’t the faintest idea of what the hell they are doing.

      Consider this statement -“We’re transferring wealth from the poor to the rich by keeping interest rates low. I`m not even sure the economy gains at all by a low-interest rate. And furthermore no one is established convincingly that it is a good idea. It`s a tradition that is a good idea. That`s not the same.”
      Jeremy Grantham.

      We pay a legion of Economists and bureaucrats millions of dollars, and the best that they can do is to piss around with interest rate settings and hope for the best. It would be laughable if it weren’t so pathetic.

      Their understanding of money is mostly limited to lending for fridges, cars and housing. So expecting these clowns to safeguard the value of your wealth is way passed their understanding.

      • mawm says:
        August 5, 2015 at 14:55

        It is also way past the understanding of the voters who think by voting more benefits for themselves will give them more purchasing power.

        • Warren Tooley says:
          August 6, 2015 at 09:20

          Mawm, the attitude some people have is the government will pay for it, or 4.5 million tax payers will all pay a little. Because the person who takes is not paying the full cost, that is why people take what they can.

          And if you want to protect your wealth from inflation gold and silver is the only way to do it.

      • Warren Tooley says:
        August 6, 2015 at 09:18

        Rivoniaboy, it seems to me all these economists who don’t know what they are doing are demand side economists. That if the rich have more money, they won’t necessarily spend more, but if the poor have more money they will spend more, creating more jobs.

        The only problem from a pragmatic point of view, is that the rich protect themselves by trusts, precious metals and tax havens, so this stops the money from trickling down.

        The real deal is that most people are totally confused, so at least they can plunder from the middle class, and that’s who really ends up paying. I’m not saying the rich pay nothing. Just that the really smart ones pay less in proportion to their earnings than the middle class.

    • The Gantt Guy says:
      August 6, 2015 at 07:59

      You’re clearly just a throw-back. Maybe that was one of the primary duties of a government, decades ago.

      Now, the government’s primary duty is whatever the UN tells it. Voters? Citizens? Yougottabekiddingme.

  2. Lara says:
    August 5, 2015 at 11:05

    Not to mention his total disregard of the ridiculous cost of houses in Auckland, and the fact he doesn’t even acknowledge a housing boom/crisis. Oh wait till it all busts!! (no doubt of course, he will shift any blame…)!!

    • KG says:
      August 5, 2015 at 11:51

      And I’d like to know how much this government is borrowing, Lara.

    • Warren Tooley says:
      August 6, 2015 at 09:29

      Ah now Lara, have you heard of ‘capital adequacy requirements’ and rates. When you deposit money into a bank, the bank will allow itself to lend out 90% and keep 10% on hand. Ah but it works a little different. They must keep 8% on hand mulitiplied by the risk weighting.

      If the loan is personal or business, the risk weighting is 100%, they must therefore keep 100% of the 8% on hand.

      If the loan is on residential property, they must keep 50% of that 8% on hand which equals 4%.

      This is called ‘capital adequacy requirements’. So by lending on property they only have to keep half as much on hand. This is why we have high house prices, because the bank’s system regulators have made it this way. And 2ndly most people don’t know how to risk assess their investments. If I knocked on your door and said so and so is offering 7.6% return, chances are you wouldn’t be able to look at the financials and work out the risk level.

      Because of this the choice for most kiwis is put it in a bank and get low interest, or borrow for a house and get some real value. That’s why house prices are so high, because most people don’t know where else to put it.

      Now about rates, the Councils want it to stay this way, higher house prices, higher rates.

  3. Brown says:
    August 5, 2015 at 13:24

    Its time to ask the Greens what all those unemployed miners and farmers will do now that the market has dictated some Green policy has come about by accident.