ADRIAN ORR our NEW RBNZ GOVERNOR

[jonu]

RBNZ not in a good state due to DEI according to this former staffer. Hard to argue.

https://www.msn.com/en-nz/news/natio...5a3f5d17&ei=33

About as useful as Cindy's most diverse Cabinet ever in 2017. Go woke, go broke writ large.

[peat]

I thought there was a lag to central bank policy?




This article is American so may not relate to NZ but it would be interesting to see the similar NZ stats. This guys probably a bit extreme but nothing like a bit of confirmation bias.

https://www.zerohedge.com/personal-f...ashing-economy

There will be no reining in of the financialisaton of the economy while we have Adrian in charge.

Yes monetary policy has a long lag - more so in NZ with our preference for term rate mortgages , but investors are often very forward looking so they will be reacting now. Buy in gloom, sell in boom ;+)

A few years ago I read Nial Fergussons 2008 book "The Ascent of Money" which identifies this trend within the greater historical context.
The Ascent of Money - Wikipedia

[Aaron]

Yes monetary policy has a long lag - more so in NZ with our preference for term rate mortgages , but investors are often very forward looking so they will be reacting now. Buy in gloom, sell in boom ;+)

A few years ago I read Nial Fergussons 2008 book "The Ascent of Money" which identifies this trend within the greater historical context.
The Ascent of Money - Wikipedia

The economy is gloomy but are asset prices gloomy?

https://www.spglobal.com/spdji/en/in...ndex/#overview

https://fred.stlouisfed.org/series/QNZR628BIS

[Panda-NZ-]

Both Australia and the United States have managed to bring down inflation without any impact on jobs.

More Australians have full-time jobs ever, says employment figures | 9 News Australia

https://www.youtube.com/watch?v=n-QCG45MCdw

Meanwhile more are on Jobseeker in NZ than ever thanks to Adrian Orrful and "superior" economic manager Luxon.

[Aaron]

Adrian worries equity prices are too high.

https://www.msn.com/en-nz/news/other...67beb525&ei=12

And house prices seem high to me, I wonder what could be causing investors to buy on such low yields and high Price to Earnings ratios????

Pavlov's dogs might give us a clue. Pavlovian conditioning, posits that behaviors can be learned through the association between different stimuli.

I have read from plenty of people on share trader that they were salivating at the thought of interest rate cuts.

If Adrian doesn't know why assets are overpriced, I guess it must be an unfathomable conundrum beyond the ken of man.

[peat]

Michael continues to give Adrian so much stick

Fiction and spin | croaking cassandra

[Aaron]

Michael continues to give Adrian so much stick

Fiction and spin | croaking cassandra

Scary stuff.

Adrian might also wonder why house prices are so high. Was it covid or the war in the Ukraine? This headline might give him a clue.

Low interest rates bring property investors out of hibernation, as they borrow more than they have in three years

https://www.nzherald.co.nz/business/...KCP6VLMAFTNKY/

"CoreLogic NZ chief property economist Kelvin Davidson said investors were a group to watch in 2025.
He noted gross rental yields had been trending higher – albeit slowly – as property values had weakened and rents had risen.
From a floor of 2.8% in late 2021, rental yields are now at 3.9% – the highest level since early 2016."

3.9% gross yield is high? Only if you can guarantee that money will be cheap and freely available and that inflation will clear your debt over time. Who could give investors that sort of certainty? Not Adrian and the RBNZ? Surely not.

[Aaron]

For an organisation that only plays a "bit role" in unsustainable house prices they spend a lot of time considering house prices.

https://www.rnz.co.nz/news/business/...use-price-boom

Snippets of the article give clues to how they are thinking.

"mortgage rates remain at relatively high levels. This is continuing to constrain the borrowing capacity of potential homebuyers"

"the fall in net migration has also helped dampen demand"

Lower rates, more debt and more immigration would appear to be a cure for all our economic problems according to the RBNZ. But then that has been the solution put forward by today's great economic thinkers and politicians all along.

Funny though when prices were going up it was just a "supply" problem (Adrian thought it was the war in the Ukraine and supply chain issues).

I would suggest house prices are stabilising, interest rates are not historically that high and we do not need to flood NZ with immigrants.

The staff at the RBNZ should stop worrying about the capital gains on their houses, sack almost all the people at the RBNZ and sit back and do nothing for the next five years and see how we get on. I would suggest that might produce better results for more NZers and NZ as a nation than trying to keep the housing bubble inflated.

With so many people on such big salaries at the RBNZ they probably feel the need to do "something" to justify their jobs.

[Aaron]

Not surprising a fund manager calling for big rate cuts. They look like geniuses every time interest rates fall much like every overleveraged speculator.

https://www.nzherald.co.nz/business/...OU3JMHTM3OUIU/

Greg Smith of Devon Funds worried about the economy. Sensible bank economists calling for .5% cut rather than Greg's .75 cut. All part of the asset industry all singing from the same song book with the same prescription for success. Lower interest rates, more debt and higher asset prices is what they are calling for, why this is the way forward I am not sure, but I guess it all works with the wealth effect and then inflation taking care of everything.

Not "inflation" I mean "growth", you know like Chris Luxon talks about.

We know who does best with Greg Smith, Stephen Topliss and Mark Smith's prescription to "fix" the economy. Don't panic with Adrian in charge the "fix" is in.

[Aaron]

Not RBNZ related but I try not to clog up different threads with my bull*hit. Interesting reading in the herald this morning.

Hundreds of bus drivers from India, The Phillipines and Fiji have been brought to NZ to drive the buses. I guess this is preferable to raising wages to attract people to the job. Also in the same paper, record numbers of Kiwis leaving NZ for higher wages overseas. Hmm, what is the vision for future NZ a low wage economy with a clear distinction between the asset owning elites and the rest of NZ. I imagine that is desirable for Chris Luxon but not the NZ I grew up in but also hard to swim against the tide.