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History for coochiee

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Posted September 14, 2024 12:57 · last edited September 14, 2024 13:10

The weak economy is mostly due to the Reserve Bank hiking up interest rates the last 18 months. Like all Western economies post the Covid sugar rush stimuli, NZ had a runaway inflation problem. The most effective if blunt instrument to rein that in is raising interest rate rises. It takes time (lag effect) but eventually home owners feel the squeeze (feel poorer) and stop spending. Businesses get cash flow problems with a double whammy of higher debt servicing costs, and customers spending less.

Those same businesses start to lay people off, people start to worry about their jobs (current situation) so consumer spending gets reined in even further. Businesses that post Covid were nicely racking up their prices with lots of demand, have to stop that or even start to drop prices to clear aged stock - get cash. Staff can no longer safely ask for a wage increase. Property developers can't make projects work, as the debt costs are too high, properties go unsold, house prices drop, developers go bust, tradies don't get paid etc etc etc. All that starts to rein inflation.

It causes pain to the economy and yes sadly unemployment goes up, but it all must happen to get inflation back into the desired 2-3% band. You have inflation above that long term, and it just becomes a nasty basket case spiral of hiking prices, hiking wage increases and damaging high inflation. Worst case a Turkey, an Argentina. Fiscal incompetence at it's worst.

And that is by far the major factor now, as to why the NZ economy is currently a bit shark. The RB want & need it so. That and some poor management by the Reserve Bank and Robertson through late 2020-2021. The RB slashed interest rates back then too low, and Robertson put too much liquidity into the economy, pushing inflation higher that it should have gone. Grant has done well to bluff Otago Uni into that nice fat cat $600K plus salary. Though I'll give him some slack as everyone was in many ways driving a bit blind during that time, as no one alive had ever experienced a global pandemic.

Now slowly there are some green shoots, of turning the corner. Inflation getting under control, interest rates now heading down, and the majority of business owners (large and small) being happier with this Govt, lead by the thumb in a suit.
'25 will be better than '24.

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Unknown editor edited September 14, 2024 13:10

The weak economy is mostly due to the Reserve Bank hiking up interest rates the last 18 months. Like all Western economies post the Covid sugar rush stimuli, NZ had a runaway inflation problem. The most effective if blunt instrument to rein that in is raising interest rate rises. It takes time (lag effect) but eventually home owners feel the squeeze (feel poorer) and stop spending. Businesses get cash flow problems with a double whammy of higher debt servicing costs, and customers spending less.

Those same businesses start to lay people off, people start to worry about their jobs (current situation) so consumer spending gets reined in even further. Businesses that post Covid were nicely racking up their prices with lots of demand, have to stop that or even start to drop prices to clear aged stock - get cash. Staff can no longer safely ask for a wage increase. Property developers can't make projects work, as the debt costs are too high, properties go unsold, house prices drop, developers go bust, tradies don't get paid etc etc etc. All that starts to rein inflation.

It causes pain to the economy and yes sadly unemployment goes up, but it all must happen to get inflation back into the desired 2-3% band. You have inflation above that long term, and it just becomes a nasty basket case spiral of hiking prices, hiking wage increases and damaging high inflation. Worst case a Turkey, an Argentina. Fiscal incompetence at it's worst.

And that is by far the major factor now, as to why the NZ economy is currently a bit shark. The RB want & need it so. That and some poor management by the Reserve Bank and Robertson through late 2020-2021. The RB slashed interest rates back then too low, and Robertson put too much liquidity into the economy, pushing inflation higher that it should have gone. But yes everyone was in many ways driving a bit blind, as no one alive had ever experienced a global pandemic.

Now slowly there are some green shoots, of turning the corner. Inflation getting under control, interest rates now heading down, and the majority of business owners (large and small) being happier with this Govt, lead by the thumb in a suit.
'25 will be better than '24.

Unknown editor edited September 14, 2024 13:05

The weak economy is mostly due to the Reserve Bank hiking up interest rates the last 18 months. Like all Western economies post the Covid sugar rush stimuli, NZ had a runaway inflation problem. The most effective if blunt instrument to rein that in is raising interest rate rises. It takes time (lag effect) but eventually home owners feel the squeeze (feel poorer) and stop spending. Businesses get cash flow problems with a double whammy of higher debt servicing costs, and customers spending less.

Those same businesses start to lay people off, people start to worry about their jobs (current situation) so consumer spending gets reined in even further. Businesses that post Covid were nicely racking up their prices with lots of demand, have to stop that or even start to drop prices to clear aged stock - get cash. Staff can no longer safely ask for a wage increase. Property developers can't make projects work, as the debt costs are too high, properties go unsold, house prices drop, developers go bust, tradies don't get paid etc etc etc. All that starts to rein inflation.

It causes pain to the economy and yes sadly unemployment goes up, but it all must happen to get inflation back into the desired 2-3% band. You have inflation above that long term, and it just becomes a nasty basket case spiral of hiking prices, hiking wage increases and damaging high inflation. Worst case a Turkey, an Argentina. Fiscal incompetence at it's worst.

And that is by far the major factor now, as to why the NZ economy is currently a bit shark. The RB want & need it so. That and some poor management by the Reserve Bank and Robertson through late 2020-2021. The RB slashed interest rates back then too low, and Robertson put too much liquidity into the economy, pushing inflation higher that it should have gone. But yes everyone was in many ways driving a bit blind, as no one alive had ever experienced a global pandemic.

Now slowly there are some green shoots, of turning the corner. Inflation getting under control, interest rates now heading down, and the majority of business owners (large and small) being happier with this Govt, lead by the thumb in a suit.

Unknown editor edited September 14, 2024 13:04

The weak economy is mostly due to the Reserve Bank hiking up interest rates the last 18 months. Like all Western economies post the Covid sugar rush stimuli, NZ had a runaway inflation problem. The most effective if blunt instrument to rein that in is raising interest rate rises. It takes time (lag effect) but eventually home owners feel the squeeze (feel poorer) and stop spending. Businesses get cash flow problems with a double whammy of higher debt servicing costs, and customers spending less.

Those same businesses start to lay people off, people start to worry about their jobs (current situation) so consumer spending gets reined in even further. Businesses that post Covid were nicely racking up their prices with lots of demand, have to stop that or even start to drop prices to clear aged stock - get cash. Staff can no longer safely ask for a wage increase. All that starts to rein inflation.

It causes pain to the economy and yes sadly unemployment goes up, but it all must happen to get inflation back into the desired 2-3% band. You have inflation above that long term, and it just becomes a nasty basket case spiral of hiking prices, hiking wage increases and damaging high inflation.

And that is by far the major factor now, as to why the NZ economy is currently a bit shark. That and some poor management by the Reserve Bank and Robertson through late 2020-2021. RB slashed interest rates then too low, and Robertson put too much liquidity into the economy, pushing inflation higher that it should have gone. But yes everyone was in many ways driving a bit blind, as no one alive had ever experienced a global pandemic.

Now slowly there are some green shoots, of turning the corner. Inflation getting under control, interest rates now heading down, and the majority of business owners (large and small) being happier with this Govt.

Unknown editor edited September 14, 2024 12:59

The weak economy is mostly due to the Reserve Bank hiking up interest rates the last 18 months. Like all Western economies post the Covid sugar rush stimuli, NZ had a runaway inflation problem. The most effective if blunt instrument to rein that in is raising interest rate rises. It takes time (lag effect) but eventually home owners feel the squeeze (feel poorer) and stop spending. Businesses get cash flow issues with a double whammy of higher debt servicing costs, and customers spending less.

Those same businesses start to lay people off, people start to worry about their jobs (current situation) so consumer spending gets reined in even further. Businesses that post Covid were nicely racking up their prices with lots of demand, have to stop that or even start to drop prices to clear aged stock - get cash. Staff can no longer safely ask for a wage increase. All that starts to rein inflation.

It causes pain to the economy and yes sadly unemployment goes up, but it all must happen to get inflation back into the desired 2-3% band. You have inflation above that long term, and it just becomes a nasty basket case spiral of hiking prices, hiking wage increases and damaging high inflation.

And that is by far the major factor now, as to why the NZ economy is currently a bit shark. That and some poor management by the Reserve Bank and Robertson through late 2020-2021. RB slashed interest rates then too low, and Robertson put too much liquidity into the economy, pushing inflation higher that it should have gone. But yes everyone was in many ways driving a bit blind, as no one alive had ever experienced a global pandemic.

Now slowly there are some green shoots, of turning the corner. Inflation getting under control, interest rates now heading down, and the majority of business owners (large and small) being happier with this Govt.

Unknown editor edited September 14, 2024 12:58

The weak economy is mostly due to the Reserve Bank hiking in interest rates the last 18 months. Like all Western economies post the Covid sugar rush stimuli, NZ had a runaway inflation problem. The most effective if blunt instrument to rein that in is raising interest rate rises. It takes time (lag effect) but eventually home owners feel the squeeze (feel poorer) and stop spending. Businesses get cash flow issues with a double whammy of higher debt servicing costs, and customers spending less.

Those same businesses start to lay people off, people start to worry about their jobs (current situation) so consumer spending gets reined in even further. Businesses that post Covid were nicely racking up their prices with lots of demand, have to stop that or even start to drop prices to clear aged stock - get cash. Staff can no longer safely ask for a wage increase. All that starts to rein inflation.

It causes pain to the economy and yes sadly unemployment goes up, but it all must happen to get inflation back into the desired 2-3% band. You have inflation above that long term, and it just becomes a nasty basket case spiral of hiking prices, hiking wage increases and damaging high inflation.

And that is by far the major factor now, as to why the NZ economy is currently a bit shark. That and some poor management by the Reserve Bank and Robertson through late 2020-2021. RB slashed interest rates then too low, and Robertson put too much liquidity into the economy, pushing inflation higher that it should have gone. But yes everyone was in many ways driving a bit blind, as no one alive had ever experienced a global pandemic.

Now slowly there are some green shoots, of turning the corner. Inflation getting under control, interest rates now heading down, and the majority of business owners (large and small) being happier with this Govt.