In David Parker’s recent blog post he sums up the key problems with the high kiwi dollar, though any mitigating measures are yet to come from the government.
“The crisis has brought home something that should have been recognised even before the crisis: managing inflation is not an end in itself but a means to an end. The end is a more stable economy – not just price stability but real stability – and an economy that is growing faster in a sustainable way. We ought to be concerned about how the economy affects ordinary individuals. And here, employment and wages are critical.”
“Compared to the amount of rental income our houses generate, we rank second most expensive in the world; NZ houses are 66 per cent over-valued, behind Canada. When compared to the disposable incomes of New Zealanders, our houses are 22 per cent over-valued – sixth on the list.”
“Manufacturing contributes more jobs, sales and therefore tax revenue without needing so much capital. It is also worth noting that more than half of New Zealand’s exports are manufactures or processed primary goods.”
The Productive Economy Council has been advocating use of loan to value ratios to knobble run away inflation, now the RBNZ has joined the conversation.
The International Monetary Fund in its Fiscal Monitor report last month puts a net present value on the increases in pension spending by the Governments of advanced economies between now and 2050.
In New Zealand’s case it is the equivalent of 66 per cent of gross domestic product or $140 billion in today’s dollars.
Read the full article by Brian Fallow.
Privatisation good, finance company investors bad – it ain’t necessarily so.
It is frustrating the way some influential individuals take a biased and one-eyed stance on important issues.
These prejudices inhibit robust debate and lead to some poor decision making as far as the New Zealand economy is concerned.
Banking should be on the periphery of the economy, not sitting at its heart.
I was half tempted to pitch in and join the Occupy movement until the tent city got hijacked by rent-a-ranters, that rather smelly lunatic fringe who are against everything. Random nihilism may have its place, but it would be nicer if that place originated in the shower – with soap.
The movement didn’t gain much traction, because it lacked visionary leadership and failed to pick a clear target to hit. By and large, people had a grudging respect for the notion – a lot of people think it feels kind of right.
Property mania hurts our ability to build business and wealth, writes Gareth Morgan.
It is no coincidence that around the world attention has turned to how an economic recovery can be garnered against a backdrop of housing markets still on their knees.
In the US house prices are down 30 per cent from their 2007 peak and 40 per cent of owners have negative equity.
The response to last week’s column, which argued that our universal New Zealand Superannuation is not sustainable in its present form, indicates New Zealand is heading down the same route as Greece, Italy, Portugal, Spain and France.
The basic problem is that successive governments, National and Labour, have introduced a plethora of welfare-entitlements financed through current taxation or borrowings.