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  1. #61
    A BEARISH BULL winner69's Avatar
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    MPS nxt week. It will be interesting to see if it’s Adrian’s show or will the new Monetary Policy Committee have some input?

    An OCR cut looks on the card next week .....but is this laying the foundations for what happened when the then Governor went on a misguided pro growth strategy only resulting in a series of rate hikes and a recession?

    I reckon RBNZ not giving likely wage inflation sufficient consideration in their thinking

    Only time to tell.
    Last edited by winner69; 04-05-2019 at 01:48 PM.
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  2. #62
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    Well, he did cut and says more to come

    Good for many now but I fear we will look back in 2021 and say why did he do it.

    Must have a different agenda from than just caring for monetary policy.
    “Just consider that maybe the probability of you being wrong is higher than you think.”

  3. #63
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    Quote Originally Posted by winner69 View Post
    Well, he did cut and says more to come

    Good for many now but I fear we will look back in 2021 and say why did he do it.

    Must have a different agenda from than just caring for monetary policy.
    The Reserve Bank manages monetary policy to maintain price stability, promotes the maintenance of a sound and efficient financial system, and supplies New Zealand banknotes and coins.

    1/Price stability by my definition is not pushing the price of everything up by 1-3% per year. Worse they are pushing asset prices up way ahead of general inflation and the price of other goods.

    2/Promote the maintenance of a sound and efficient financial system. Is that why the NZ taxpayer provided a guarantee to the businesses in the financial sector in 2008/09. The rate cut is to protect house prices which is the security underpinning the NZ financial system. I would suggest the Reserve Bank is beholden to the financial services industry.

    3/Supplies NZ bank notes and coins.

    1 out of 3 ain't bad.

    Stealing off people who save and invest for the benefit of spendthrifts and gamblers seems wrong to me but what do I know.

  4. #64
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    It always seems to be a difficult decision to make for a Guvnor, I mean committee, i.e to make a change to the rate rather than just leave it alone.
    Wheeler was superbly boring. But Orr probably wants to make his mark and 'show off' just a little, by pre-empting, or 'picking perfectly' (depending on how it all goes) the time to cut. Time will only tell, but Orr has done something! I have actually read the speech yet though I'm very curious about how it will be woven into the world of Tane Mahuta

    I reckon it should be called an Orr Put!
    Last edited by peat; 08-05-2019 at 04:14 PM.
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  5. #65
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    Quote Originally Posted by Aaron View Post
    … but what do I know.
    I think you know that despite how ‘wrong’ it all is (all the things you’ve talked about that is wrong and will blow up one day), the great reckoning isn’t working out for you so well and you’re more afraid of missing the reckoning than your fear of missing the wealth creation that abject dysfunction is presenting to you.

  6. #66
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    [QUOTE2/Promote the maintenance of a sound and efficient financial system. Is that why the NZ taxpayer provided a guarantee to the businesses in the financial sector in 2008/09. The rate cut is to protect house prices which is the security underpinning the NZ financial system. I would suggest the Reserve Bank is beholden to the financial services industry.
    ][/QUOTE]

    There was a good reason in 2008/9 to provide that guarantee - charged for, admittedly cheaply as it turned out - at a time when every other comparable Western country had a similar deposit guarantee in place. Not to do so would have risked a massive capital outflow from the NZ financial system/economy. Now that would have been "bad".

  7. #67
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    Quote Originally Posted by macduffy View Post
    There was a good reason in 2008/9 to provide that guarantee - charged for, admittedly cheaply as it turned out - at a time when every other comparable Western country had a similar deposit guarantee in place. Not to do so would have risked a massive capital outflow from the NZ financial system/economy. Now that would have been "bad".
    Yes it would have been bad, really really bad, the Gummint did what it thought it had to do at the time, perhaps a bit knee jerk and awkward, but saved a ton of folks who would've otherwise been right royally shafted (although disparately lots were shafted that had no choice or say in the matter).

    Gummint never gets it quite right, damned if they do, damned if they don't and they suffer the long tail of derision from perfect hindsight with 2020 vision of the perfect present. Despite all that there is no real vision for what might unfold in the future, or policy to avoid, mitigate or minimise the damage from it. History might not repeat as they say, but it does rhyme.

  8. #68
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    Quote Originally Posted by Baa_Baa View Post
    I think you know that despite how ‘wrong’ it all is (all the things you’ve talked about that is wrong and will blow up one day), the great reckoning isn’t working out for you so well and you’re more afraid of missing the reckoning than your fear of missing the wealth creation that abject dysfunction is presenting to you.
    Not sure I entirely understand what you are saying but the thought of missing out on a large fall in asset values has meant watching a lot of wealth creation missed for me and being endlessly frustrated by Central banks ability to keep asset prices inflated at what I think might eventually be at the expense of "the maintenance of a sound and efficient financial system". Unless a "sound and efficient financial system" involves constantly dropping interest rates and printing money to keep asset prices elevated and increasing debt levels.

    It would be interesting to know how many on the reserve bank committee are committed to a leveraged investment approach or how many still have a mortgage or have recently helped family into an overpriced house lately.
    Last edited by Aaron; 09-05-2019 at 08:54 AM.

  9. #69
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    Quote Originally Posted by macduffy View Post
    [QUOTE2/Promote the maintenance of a sound and efficient financial system. Is that why the NZ taxpayer provided a guarantee to the businesses in the financial sector in 2008/09. The rate cut is to protect house prices which is the security underpinning the NZ financial system. I would suggest the Reserve Bank is beholden to the financial services industry.
    ]
    There was a good reason in 2008/9 to provide that guarantee - charged for, admittedly cheaply as it turned out - at a time when every other comparable Western country had a similar deposit guarantee in place. Not to do so would have risked a massive capital outflow from the NZ financial system/economy. Now that would have been "bad".[/QUOTE]

    What interest rates in NZ would have had to rise to attract capital back and NZ house price growth would have been stunted by higher interest rates??
    Last edited by Aaron; 09-05-2019 at 08:54 AM.

  10. #70
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    Quote Originally Posted by macduffy View Post
    There was a good reason in 2008/9 to provide that guarantee - charged for, admittedly cheaply as it turned out - at a time when every other comparable Western country had a similar deposit guarantee in place. Not to do so would have risked a massive capital outflow from the NZ financial system/economy. Now that would have been "bad".
    Thinking about it a bit further it might not have just been outflows from NZ but a good number of people in NZ were considering stashing some cash in the mattress which may have created a run on the banks.

    We are on a well trod path other countries have already taken. There is already speculation regarding the next steps.

    https://www.stuff.co.nz/business/opi...-going-to-zero

    I am seriously looking at buying land at a crappy yield just so I have some borrowings and no money in the bank.
    Last edited by Aaron; 09-05-2019 at 09:09 AM.

  11. #71
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    You're on to it, Aaron! Call it a capital outflow or a run on the banks - it's the same thing.


  12. #72
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    Quote Originally Posted by macduffy View Post
    You're on to it, Aaron! Call it a capital outflow or a run on the banks - it's the same thing.

    I've said it before call in the loans wipe out the borrowers first, then the shareholders, then the bondholders and if there is anything left afterwards give it to the depositors.

    Also not that I like him I see Don Brash is pointing out the blatantly obvious.
    https://www.msn.com/en-nz/news/natio...NT9?li=BBqdg4K

    The Reserve Bank itself suggests this will reignite housing inflation to about 5 percent per annum," he told The AM Show.
    What the Reserve Bank is saying is that houses will continue to rise faster than incomes."

    This is seriously f**ked up in my view, that no one seems to give a s**t is hard to believe. I would guess it is because most intelligent people already have a least one house and don't see it as a problem as long as they can help their own kids up onto the property ladder. This leaves a large chunk of the population and young people without parental assistance getting reamed by the reserve bank. I would have thought a left leaning government might comment even though the reserve bank is independent. Any efforts to improve housing or housing affordability in the current financial system is a joke if they are not going to address the root cause of the problem.


    His second concern is about what the Reserve Bank could do if a recession occurs, with the rate at the lowest it's ever been there isn't much room to go any lower.

    The reserve bank is meeting its inflation targets and unemployment isn't a problem yet they are cutting. I am assuming as long as they are not the evil b**tards I think they are then they might see what I see for the future but they need to extend and pretend rather than allow a correction.
    Last edited by Aaron; 09-05-2019 at 12:53 PM.

  13. #73
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    Quote Originally Posted by Aaron View Post
    Any efforts to improve housing or housing affordability in the current financial system is a joke if they are not going to address the root cause of the problem.
    His second concern is about what the Reserve Bank could do if a recession occurs, with the rate at the lowest it's ever been there isn't much room to go any lower.
    The reserve bank is meeting its inflation targets and unemployment isn't a problem yet they are cutting.
    These are exactly my thought when I saw it was cut. I mean sure, I've never worked for the RBNZ, but the above seems to make common sense to me.

  14. #74
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    Quote Originally Posted by Aaron View Post
    I've said it before call in the loans wipe out the borrowers first, then the shareholders, then the bondholders and if there is anything left afterwards give it to the depositors.

    Also not that I like him I see Don Brash is pointing out the blatantly obvious.
    https://www.msn.com/en-nz/news/natio...NT9?li=BBqdg4K

    The Reserve Bank itself suggests this will reignite housing inflation to about 5 percent per annum," he told The AM Show.
    What the Reserve Bank is saying is that houses will continue to rise faster than incomes."

    This is seriously f**ked up in my view, that no one seems to give a s**t is hard to believe. I would guess it is because most intelligent people already have a least one house and don't see it as a problem as long as they can help their own kids up onto the property ladder. This leaves a large chunk of the population and young people without parental assistance getting reamed by the reserve bank. I would have thought a left leaning government might comment even though the reserve bank is independent. Any efforts to improve housing or housing affordability in the current financial system is a joke if they are not going to address the root cause of the problem.


    His second concern is about what the Reserve Bank could do if a recession occurs, with the rate at the lowest it's ever been there isn't much room to go any lower.

    The reserve bank is meeting its inflation targets and unemployment isn't a problem yet they are cutting. I am assuming as long as they are not the evil b**tards I think they are then they might see what I see for the future but they need to extend and pretend rather than allow a correction.
    I agree with you that they are not evil b*****ds but they sure are f*****g up the economy with this pro-growth stance / experiment.

    Seems rather odd a ‘pro-growth’ cut is needed when their own GDP forecasts have quarterly growth rates averaging 0.8 per cent for the next couple of years. That looks pretty healthy to me.

    Never mind Aaron it’s all going to be OK but I’d buy that land pretty quick before it gets too expensive.

    That
    “Just consider that maybe the probability of you being wrong is higher than you think.”

  15. #75
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    Quote Originally Posted by winner69 View Post
    Never mind Aaron it’s all going to be OK but I’d buy that land pretty quick before it gets too expensive.
    Too late for that already too expensive it is just a question how far they can take it for how long and maybe "this time is different" we are certainly in a new era. Although I would be interested to compare current central bank policy with that of John Law.
    It worked out alright in the end back then with the age of enlightenment but there was a period of adjustment that was unpleasant. Particularly for the French monarchy.

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