ADRIAN ORR our NEW RBNZ GOVERNOR

[macduffy]

[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".

[Baa_Baa]

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.

[Aaron]

[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??

[Aaron]

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.

[macduffy]

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

[Aaron]

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.

[tga_trader]

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.

[winner69]

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

[Aaron]

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.

[macduffy]

I don't like this latest rate cut either, Aaron. I'd much prefer that the ammo was kept for when it might be needed rather than firing off some now and risking having to resort to such desperate measures as negative rates if things fall apart. It must be said though that the RB rate committee is in a rather tricky hole - the directive is to target inflation within a band, ie there is required to be some inflation. The reason is of course to avoid deflation and the misery that would follow that. I don't envy them.