Black Monday

[skid]

Yes, some oil companies will fail. That is the fundamental basis of capitalism - the best performers survive, the worst performers don't

Zero interest rates can't work in isolation. The banks must lend the money to productive enterprises, trade practices (esp subsidies/tariffs) must be reformed, and labour laws freed up.

The US and NZ are good examples of what is possible with low interest rates if the other elements are supportive - heck NZ's still has very high interest rates by world standards, and look how well we are doing with diversification and new industries flourishing to take advantage of new opportunities. Yes the US does currently have the "speed wobbles" but seems to be heading in the right general direction

The EU nations (by and large) are good examples of the ineffectiveness of low interest rates if the other elements aren't supportive. Banks aren't keen to lend, labour unions aren't keen to allow greater flexibility in employment, employers aren't keen to take on more workers due to inflexible labour laws, governments aren't keen to forgo their import tariffs, and EU producers aren't keen to surrender subsidies. This breeds inefficiencies which are now entrenched in many EU countries

Economic effects of low oil price and zero interest rates are simply not comparable with regards to raising growth

I would put my money into heathcare, retirement and tourism sectors. The boomers are now retiring, generally have sound financial backing and will be strong supporters of all 3, with tourism getting a boost from working age people as well

But yes, there could be some pain to come. I'm not saying there won't be. What I am saying is that there will be a huge boost to world growth as a result of low oil price, and the benefit will out-weigh the detriment

I dont think you will get that HUGE growth if a large bank gets into trouble or oil dependent countries go bankrupt--Oil,prices need to be reasonable ,but not EXTREMELY cheap--Extremes are not good---If things level out and everyone is on solid ground -then benefits will come IMO

Baby boomers have also created an extreme in demographics--will they completely over run the health system with heart disease and diabetes? (what percentage are happy cashed up healthy folk and what percentage are the result of overuse of processed food and just getting by) probably varies according to country.---Will the young working force be able to (or willing)to carry the load?

The USA certainly needs to do something about their high dollar--(its hurting them) --China has already fired the first shot (currency devaluation) -will the US respond ?

I remember from my days of economy 101--they show you a chart that all makes perfect sense,except for that small word ..variables.
We have gotten so far from the basics of economy 101--With this era of economic policies,we are well and truly in the land of variables.

[Hoop]

In theory you are correct, however places like Japan is proving otherwise. There is also a psychology around confidence and that is impacting the consumer. retirees have the biggest collected wealth in the demograph, but they can't get any interest and that is creating a hoarding cash mentality to a degree..................

The modern economy spins money around very quickly....Deflationary environment creates negative interest rates which creates hording of money...The Reserve (Central) Banks can regulate banks to stop hoarding but it's damn hard to regulate people to stop hoarding e,g stuffing money in their mattresses....Also deflation and hoarding slows consumer spending..

Have you noticed a media push lately...there's a kite flying articles about the Governments push towards a cashless society and surprise surprise an article about $NZ100 and the Americans $US500 notes should cease to be printed..They blame the crims ...really!!!!.... more likely to stop Grandma and Grandpop pulling their investments and burying them in the back garden...

Kite flying articles like these suggest "The powers of B" think deflation is on it's way

[blackcap]

Have you noticed a media push lately...there's a kite flying articles about the Governments push towards a cashless society and surprise surprise an article about $NZ100 and the Americans $US500 notes should cease to be printed..They blame the crims ...really!!!!.... more likely to stop Grandma and Grandpop pulling their investments and burying them in the back garden...

I did notice that article the other day and thought it was weird. Never heard of it before and with inflation etc the last 30 years a $100 bill is sort of what a $20 bill was 30 years ago, so to me the article seemed really weird. Thanks for pointing out what you did... makes a lot of sense.
As an aside, I happen to use the $100 bill quite often so I am probably adding to the perceived problem

[xafalcon]

Japan does not have a free labour market. Many people still have a "job for life". Japanese honour will maintain much of that for years to come. Japan also has some of the highest agricultural tariffs in the world and corresponding production subsidies. Japan is a better model for what may happen to the EU if they do not reform.......

Immigration is a positive to NZ growth, but growth is not limited to consumer items and housing that are primarily associated with immigration. Tourism is the major contributor IMO, along with beef, lamb (fading atm), wool, kiwifruit, foreign student education (which is also a significant portion of immigration figures), services in general, honey, catch-up residential building (has an immigration component, but still not keeping up with backlog/demand), commercial construction, roading projects, Christchurch rebuild

Ask yourself how many of the above will do better with a lower oil price. (I say most of them).

I see NZ as doing exceptionally well, despite the headwind of depressed dairy (formally our #1 export) and a significantly higher cost of borrowing than most of the developed world

[skid]

The modern economy spins money around very quickly....Deflationary environment creates negative interest rates which creates hording of money...The Reserve (Central) Banks can regulate banks to stop hoarding but it's damn hard to regulate people to stop hoarding e,g stuffing money in their mattresses....Also deflation and hoarding slows consumer spending..

Have you noticed a media push lately...there's a kite flying articles about the Governments push towards a cashless society and surprise surprise an article about $NZ100 and the Americans $US500 notes should cease to be printed..They blame the crims ...really!!!!.... more likely to stop Grandma and Grandpop pulling their investments and burying them in the back garden...

Kite flying articles like these suggest "The powers of B" think deflation is on it's way

Which begs the question ...Just how big can your mattress get before people get suspicious

[skid]

on a more serious note ..this is where the economy and state control overlap.

[Raz]

The modern economy spins money around very quickly....Deflationary environment creates negative interest rates which creates hording of money...The Reserve (Central) Banks can regulate banks to stop hoarding but it's damn hard to regulate people to stop hoarding e,g stuffing money in their mattresses....Also deflation and hoarding slows consumer spending..

Have you noticed a media push lately...there's a kite flying articles about the Governments push towards a cashless society and surprise surprise an article about $NZ100 and the Americans $US500 notes should cease to be printed..They blame the crims ...really!!!!.... more likely to stop Grandma and Grandpop pulling their investments and burying them in the back garden...

Kite flying articles like these suggest "The powers of B" think deflation is on it's way

It started with B Hickey then a couple of bankers, seen about four articles in NSM now on it....

[Bjauck]

Which begs the question ...Just how big can your mattress get before people get suspicious

Average boomers may have wealth in real estate but they have little in financial wealth assets. Lots of reasons for that including the tax system and NZ financial investment markets historical crises. As interest rates fall further will they decide to put even more in real estate as opposed to the mattress or fixed interest?

When it comes time to downsize or move into a retirement village, will land supply issues be finally sorted and the migration exodus to Australia resumed? That housing wealth may have shrunk when it comes to liquidate the mansion on the currently expensive plot of land.

[tomblu]

There is likely to be pain before the wide spread benefits you are suggesting xafalcon.
If oil stays at these sort of levels or lower then SOME of the oil industry will fail, after all that's what the Saudis want.
Some countries could 'fail' as well and the exposure to banks and the wider economy shouldn't be underestimated.
We have zero interest rates which should also put more money in people's pockets yet world growth in most Western economies is sputtering.
We now have low oil which will add to that.
The problem is we have had asset bubbles in equities, bonds & property & cash is returning zero.
So where do you put your money?

Short term I am putting my money into gold stocks - while there is fear and uncertainty gold is up. However if this turns into a depression (as in 1820, 1840, 1880, 1930) and not just a recession then gold will go south ie gold is a good store of value in inflationary times however the opposite is true with deflation

Long term $US - The only "safe haven" left

[skid]

Short term I am putting my money into gold stocks - while there is fear and uncertainty gold is up. However if this turns into a depression (as in 1820, 1840, 1880, 1930) and not just a recession then gold will go south ie gold is a good store of value in inflationary times however the opposite is true with deflation

Long term $US - The only "safe haven" left

Everything will go south in a depression except currency,your right,but US$ is not always a safe haven if the good folks who are looking after it for you get into trouble(like in the depression)...gets back to the mattress again--the criminals made out like kings in the depression (Joe Kennedy) the big boys keep their cash safe.....but what about haveing to keep it in currency ..say $20 notes..then you do need real estate ..like a house to keep it all in.

Meanwhile theres talk of an ''earnings recession'' in US (very disappointing earnings this time around))http://www.marketwatch.com/story/ris...ry_latest_news

Still markets are up ..riding on oil....just another commodity,right?

PS interesting how when a commodity gets to this extreme level 38c up,on a barrel of oil =1.19%
Good lesson on the increased value of money when things deflate)