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  1. #101
    Speedy Az winner69's Avatar
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    Apparently Orr fends off any criticisms of his tree god nonsense with the allegation that criticism is racist

    Quite sad really
    Last edited by winner69; 11-06-2019 at 04:30 PM.
    . To say extreme valuations are “justified” is also to say that long-term market losses are “justified.” .

  2. #102
    Speedy Az winner69's Avatar
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    Orr either useless or has some secret agenda.

    RBNZ communication almost non existent and transparency is a worry

    Reserve Bank used dubious assertions to justify its aggressive rate cut.
    https://www.interest.co.nz/opinion/1...ggressive-rate
    . To say extreme valuations are “justified” is also to say that long-term market losses are “justified.” .

  3. #103
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    Quote Originally Posted by winner69 View Post
    Orr either useless or has some secret agenda.

    RBNZ communication almost non existent and transparency is a worry

    Reserve Bank used dubious assertions to justify its aggressive rate cut.
    https://www.interest.co.nz/opinion/1...ggressive-rate
    Scathing, but it’s not just Orr is it, cunning move or admission of inadequacy putting in place the Monetary Policy Committee?

    Pitiful reduction in bank lending interest rates supports the views that RBNZ OCR manipulation has reached the law of diminishing returns, as well as having almost no ammo left when the next shock occurs.

  4. #104
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    Michael Reddell's latest blog on the subject:

    https://croakingcassandra.com/2019/1...f-a-strongman/

  5. #105
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    Quote Originally Posted by macduffy View Post
    Michael Reddell's latest blog on the subject:

    https://croakingcassandra.com/2019/1...f-a-strongman/
    Missed a couple of articles
    https://www.stuff.co.nz/business/116...nomy-economist

    https://www.stuff.co.nz/business/116...-of-adrian-orr

  6. #106
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  7. #107
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    Quote Originally Posted by macduffy View Post
    Maybe they need to reduce their proposed increase, it sounds like the banks will run out of money to lend. Although personally I don't think that is a bad thing I appreciate everything needs to be kept afloat with more and more debt.

  8. #108
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    Quote Originally Posted by Aaron View Post
    Maybe they need to reduce their proposed increase, it sounds like the banks will run out of money to lend. Although personally I don't think that is a bad thing I appreciate everything needs to be kept afloat with more and more debt.
    I don't know about "everything" needing more debt but in a growing economy/ growing population new businesses rarely flourish without borrowing at some point in their development and first time home purchasers likewise.

    Personally, I think AO is letting his dislike of Australian banks and their NZ profitability affect his view on the capital adequacy question.

  9. #109
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    Quote Originally Posted by macduffy View Post
    I don't know about "everything" needing more debt but in a growing economy/ growing population new businesses rarely flourish without borrowing at some point in their development and first time home purchasers likewise.

    Personally, I think AO is letting his dislike of Australian banks and their NZ profitability affect his view on the capital adequacy question.
    OK not everything but at least property prices and the share price of publicly listed companies.

    No doubt new business and first home buyers require debt, but my concern would be more about the size of the debt.

    A spiral of ever increasing land prices and valuations justifying larger mortgages which in turn further increase land prices as well as interest rates coming down improving debt serviceability. We didn’t have the lower interest rates until after 2007-2008 but it was a similar cycle and finance companies were coming up with a lot of the development debt.
    Since then the finance companies have largely disappeared and it was the depositors into those companies who would have probably taken the biggest hit from the GFC in NZ.

    As a percentage of GDP I understand debt has been growing for households https://tradingeconomics.com/new-zea...ds-debt-to-gdp
    Hopefully a reliable website as I googled debt to gdp, and this was near the top. Although that said since 2008-2009 it has levelled off. I would have thought that with the increase in GDP from business and housing investment this ratio would find a sustainable level as gdp growth increases and debts get repaid maybe 100% is the natural level I don’t know. Possibly something wrong back in the 80s and 90s with such low levels of debt to gdp.

    Although our government seems to be more responsible than households. https://tradingeconomics.com/new-zea...nt-debt-to-gdp

    I also understand that first home buyer’s debt as a percentage of income is larger although this graph only shows a 60% increase since 2000.
    https://www.rbnz.govt.nz/statistics/...household-debt

    I would like to think that AO is concerned about depositors rather than what you suggest as NZ is one of the few countries without deposit insurance. We saw how depositors were treated in the GFC until the taxpayers of NZ guaranteed the banking and finance industry. I guess AO doesn’t want to see that happen again and I would tend to agree with him on that one. The role of the reserve bank is to promote the maintenance of a sound and efficient financial system. Not one that relies on the taxpayers of NZ when it gets into trouble. Although there appears to be room for debate regarding the level of capital the banks should hold.

    Unfortunately AO's concern for depositors doesn't extend to getting interest rates on deposits above the inflation rate so he is reaming depositors slowly rather than quick in a violent bank collapse.

    Disclaimer; I own no shares in Australian Banks, how about you?

  10. #110
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    A lot to agree with there, Aaron. A few points, though.

    We certainly need a deposit insurance scheme although it's anyone's guess as to who will end up paying for it. Mostly the depositors themselves via even lower interest rates, is my guess. Incidentally, the fact that Aus had insured/guaranteed deposits prior to the GFC forced our govt to act - or risk an outflow of funds. And the banks/depositors paid the insurance premium, let's not forget.

    We don't get to hear a lot about the effect of low deposit interest returns on either depositors or the economy. It's one thing to seek to stimulate the economy by knocking 50 basis points off already low rates but there is a cost in terms of lower spending power on the part of depositors, who, we have been told, heavily outnumber borrowers. The RB really hasn't much choice but to follow the rest of the world there but it's a moot point whether we should try to lead the pack. Question. To what extent does this affect business/consumer/investor confidence?

    Yes, I hold Aus bank shares, around 5% of a widely diversified investment portfolio- about 70/30 equities/bonds - built over the last 50+ years. Another question. How much do NZ Kiwisavers have invested in Aus bank shares? Do we have any idea?

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