ADRIAN ORR our NEW RBNZ GOVERNOR

[winner69]

You sometimes wonder if the RBNZ (ie Governor of) is the cure or the disease

Aaron - look at some of those charts in the MPS and see what happened when Bollard took over from Brash in the 2000 to 2008 period

Maybe history is repeating and we heading to another big recession

[Aaron]

You sometimes wonder if the RBNZ (ie Governor of) is the cure or the disease

Aaron - look at some of those charts in the MPS and see what happened when Bollard took over from Brash in the 2000 to 2008 period

Maybe history is repeating and we heading to another big recession

What charts are you looking at in particular, in other publications you can see oil prices rising, interest rates rising into the 2008 crisis and then dropping abruptly. What do you suggest print money to avoid a recession, keep creditors whole with negative interest rates?

Many commentators have described central banks as both arsonist and fire fighter. Sounds like they prefer running things hot as rising asset prices make rich voting people happy and rising consumer prices can be shared by everyone. I am sure most renters are more than happy with their rent increases to justify the prices being paid for rental properties.

Risk takers need to be just that, taking risks. It isn't risk taking if you know the central banks will save you from bankruptcy. TeslaGod had an unshakeable faith in the central banks. Any first home buyer paying the current prices was always taking a risk that interest rates might rise and property prices might fall. Likewise any overleveraged company or speculator.

[Aaron]

Adrian suggests RBNZ is "incredibly" worried about inflation.
https://www.stuff.co.nz/business/127...bout-inflation

I guess that is why he raised the OCR the smallest increment possible. BUT he dramatically raised its forecasts of future rates.

My guess he will be doing as little as possible in the hope that a crisis of some description gives them an excuse to stop and reverse course.

Perhaps he could have qualified that statement with the fact asset prices don't form part of the CPI and they love inflation of asset prices, in fact that is the main reason they are too chicken s*it to deal with the CPI inflation.

More finance news out.
https://www.stuff.co.nz/life-style/h...r-westpac-says

Apparently rising interest rates are LARGELY responsible for the housing boom being over according to the article. They should talk with Adrian at the RBNZ as he is of the view interest rates and RBNZ policy only play a BIT part in the housing market. Bascand confirmed this by explaining it is a supply issue. Supply is increasing and demand is falling until immigration opens back up. Surely the RBNZ increasing the OCR can't have had much effect.

[Aaron]

Discussion regarding the RBNZ's handling of the covid crisis.

https://www.interest.co.nz/banking/1...8-billion-date

Did I read that right the Funding For lending Program (FLP) not only was not required but only benefited Australian owned banks lending to residential property in NZ by and large. Way to go Adrian.

Some spectacular results.

https://www.stuff.co.nz/business/300...ected-recovery

https://www.1news.co.nz/2021/10/28/c...s-huge-profit/

https://www.1news.co.nz/2021/10/31/w...ping-earnings/

No doubt NZ is better off with houses up 30% rather than down 10% as predicted prior to covid. Great that the Aussie banks have made record profits thanks to the RBNZ. Plenty of boomer votes for Labour not rocking the boat and plenty of wealth to trickle down no doubt.

It is obscene, can anyone honestly say we are better off shutting the next generation out of the housing market.

What are the odds Adrian will get some nice speaking fees from the banks at some future date (ala Janet Yellen in the US. Ben Bernanke went to work for Citadel) or a nice Chairmanship on one of their boards once he retires from the RBNZ.

This person is doing more to destroy NZ than the retards protesting in Wellington, yet no mention in the media or concern from Labour who said something about "affordable housing" a long time ago despite Adrian working hard against that stated policy they have said and done nothing regarding the performance of the RBNZ.

Actually the protestors might be a sign of things to come as a result of social mobility becoming a thing of the past thanks to Adrian, people with no opportunity or hope of getting ahead should be angry.

[unhuman]

Headline on NBR this morning: "Cheap credit trumps all in pandemic housing market -“You can talk all you want in the long run about getting housing supply up and keeping it running ahead of population growth, that’s absolutely right, but in the short run, it can be trumped by credit factors.” - Corelogic.

Shhh, no one tell Adrian.

[winner69]

So The QE exercise cost $5 billion ……..Orr took a punt, and the punt hasn’t paid off,

Easy come easy go

https://www.interest.co.nz/bonds/114...serve-banks-qe

[Aaron]

So The QE exercise cost $5 billion ……..Orr took a punt, and the punt hasn’t paid off,

Easy come easy go

https://www.interest.co.nz/bonds/114...serve-banks-qe

Tried to quit ST but no one else cares about monetary policy and the RBNZ.

Especially not labour MPs according to winners article.

Labour MPs on Parliament’s Finance and Expenditure Committee have blocked numerous requests by Green MP Chlöe Swarbrick for a review to be done of the government and RBNZ's economic response to Covid-19.
Swarbrick's concerns largely relate to the distributional impacts of low interest rates - IE the way they've benefited asset owners.
Meanwhile National MP Andrew Bayly has raised concerns in committee meetings about losses related to the LSAP programme.

No votes to be gained finding out it was a massive over reaction that helped the wealthy and exacerbated a housing crisis and is now resulting in CPI inflation as well as the asset price inflation.

It was mostly for the older wealthier boomer voters anyway. They have the houses and they have the most to fear from covid yet it is the next generation picking up the tab.

The $5bill loss over a population of 5mill is only $1,000 for every man woman and child in the country. Hardly worth worrying about, certainly no need to question the intelligence and competency of the NZRB or sack Adrian. I bet he is hoping for a recession and a cessation of CPI inflation so he can drive interest rates down again and reduce the loss some time before 2027.

[Aaron]

https://www.msn.com/en-nz/news/natio...?ocid=msedgntp

The war in Ukraine adding to inflation. Supply chain issues. No mention pf out of control central banks, I guess because this highlights out of control money printing and govt spending.

The article highlights one of the big reasons for the inflation.

the Government has already taken on more than $120 billion in debt to pay for the pandemic, according to the latest Treasury figures. A large chunk of it, about $20 billion, paid for the wage subsidy scheme.
Net debt went from 19 percent of GDP prior to the pandemic to 30.1 percent of GDP at the end of 2021. It's expected to peak at 40.1 percent of GDP in 2023. Net debt reached its peak of 54.8 percent of GDP in 1992.

The tax take is up but I imagine tax on $20billion in wages subsidies is playing a part. Does that include the Resurgence Support Payments from IRD?
$20billion or $4,000 for every man woman and child.

At a 3% death rate 150,000 dead ( team of 5mill * 3%) that is $800,000 ($120bill/150,000). I was going to say for every life saved but we are getting deaths now despite the pandemic response so I guess you could deduct these.
It is easy to forget the fear at the time so I still think it was the right thing to do at the time but in hindsight it seems like we may have over reacted.

[Aaron]

Inflation heading towards 6% DOUBLE the top of the RBNZs range.

Further labour shortages, mechanics this time.

https://www.nzherald.co.nz/business/...RQHEMMBS5ULWE/

I am not an economist but are interest rates currently at a level that are stimulative or contractionary?

Does Adrian know? How is the inflation target set? What studies were done to prove constantly rising prices are a good thing?

I was going to ask does it matter if inflation doesn't remain within its target range but that is self explanatory, a runaway housing market, levels of debt the IMF has expressed concern about and an inflation tax hitting everyone but especially the poorest hardest as they haven't enjoyed the asset price inflation. Of course it matters. How can people keep their job if they are not doing what was asked of them.

[unhuman]

https://www.nbr.co.nz/node/233867

I thought the over inflated housing market was mainly due to a shortage of houses? Adrian can you help me here???

"...places such as Invercargill and Kawerau have seen prices rise by 36% and 37% respectively from March 2020 to the November 2021 peak, despite minimal population growth over the past 25 years. Kawerau, for example, has seen its population fall by 5.5% since the mid-90s. "

Oh wait never mind:

"Global factors
Clearly there are other global factors at play influencing house prices rather than any localised shortfalls in house building....These factors include:

• monetary stimulus by the RBNZ and other central banks cutting interest rates to near zero, sending mortgage rates to historic lows;
  
• relaxation of loan-to-value ratios (LVRs) increasing the availability of credit;
• an accumulation in savings as fiscal support and limited ability to spend on travel and services saw household savings increase; and
• inflows of capital into housing as returns from bank deposits fell to near zero."