Financial economics

More good news

While David Cunliffe suns himself on holiday, contemplating how he will hide his rich prick lifestyle from the seething masses, still more economic good news continues to roll in.

Labour and the Greens are going to have a real problem in fighting against this avalanche of good news and government likely to ask voters why they would put everything at risk.

New Zealand has begun an economic boom that could drive its currency past Australia’s for the first time in four decades, HSBC Bank Australia says.

The bank rates the rebuilding of earthquake-damaged Christchurch – one of three things driving the economy – as an economic force as important to New Zealand as the resources boom of the last decade was to Australia’s economy.

“New Zealand is set for a strong 2014, with the economy already firing on all cylinders,” Adam Richardson and Paul Bloxham of HSBC Bank Australia say in a report.

New Zealand is likely to outperform almost all other OECD economies in 2014, except Chile, Israel and Mexico.

HSBC forecasts gross domestic product (GDP) will expand by 3.4 per cent in 2014, up from 2.8 per cent in 2013.

The New Zealand dollar will rise to 87 US cents by the end of 2014. It was 82.46 US cents at 5pm on Friday.? Read more »

The “rock star” economy of 2014

People around the world are starting to understand what our opposition parties have failed to grasp…National has actually done a good job with the economy and now it is starting to hum.

New Zealand?will be the “rock star” economy of 2014, with growth set to outpace most of its developed markets peers, according to HSBC, a stark contrast with neighboring Australia, which is struggling to maintain economic momentum.

“We think New Zealand will be the rock star economy of 2014. Growth is going to pick up pretty solidly this year,” Paul Bloxham, chief economist for?Australia?and New Zealand at HSBC, told CNBC Asia’s “Squawk Box” on Monday.

HSBC forecasts the economy will grow 3.4 percent in 2014?the fastest pace since 2007 and well above trend growth of 2.5 percent. For 2013, the economy is expected to post growth of 3.0 percent, according to the bank.

What will drive this “rock star” economy then, since Labour reckons we are in the dog box…surely the experts must be wrong because David Cunliffe is right?? Read more »

The biggest issue facing middle NZ is…

So, we have just had the Labour party national conference and the biggest policy launched ahead of election year, a policy that middle New Zealand is clamouring out for, is introducing a state-owned provider for insurance?

Really? I mean really, seriously? This is it from Labour?

Why is it that in by-elections Labour roll out rinky-dink, half formed, ill-conceived policy ideas. In the Botany by-election it was GST off fruit and vegetables for example.

This conference was in Christchurch and there is a by-election so they roll out a state funded insurance company policy?

Are they really saying that the biggest thing concerning middle New Zealand is the price of their insurance?

Clayton Cosgrove is even more shameless than David Cunliffe. He announces that “”New Zealanders have seen their premiums rise by 30 percent over two years. They believe insurance companies are making money hand-over-fist.”

Did he stop to consider that insurance companies have just been cleaned out by hundreds of thousands of claims, caused not by government policy but rather two significant earthquakes in a region that no one ever thought would have an earthquake? ?Premiums have risen for a large number of reasons…but rapacious greed on behalf of insurance companies isn’t one of them. ? Read more »

When proxies fail, and university wombles prove they are idiots at business

The Labour/Green proxy blog at The Standard has a post by Anthony Robins where he generously quotes an article by some womble university professor. He says the article proves that?the?government is short sighted and at the same time proves that he has no idea what he is talking about.

Wayne Cartwright says:

The Government’s plan to sell publicly owned hydro-energy resources is a huge strategic blunder. This is not due to the objections raised so far, such as worries about the public-private ownership model or transgression of Maori water rights. The reason is arguably much more important than both of these concerns.

The Government has grossly underestimated the value of hydro-energy assets to New Zealand citizens. The assets are likely to be worth at least double the amount the Government is prepared to accept. This is because the valuations have apparently ignored the implications of clear signals that global energy costs and prices will increase greatly and permanently within the next 7 to 10 years.

Robins claims that this is proof that the government is doing the wrong thing. But he fails investing in shares 101.? Read more »

Winston wants to nationalise your Kiwisaver

? NZ Herald

Winston Peters has announced he wants to steal your savings…by force…to buy back the minority stake in the assets the government is putting up for sale:

Finance minister Bill English has attempted to blunt Opposition attacks on the asset sales plans by challenging them to confirm that they felt strongly enough to buy the assets back under a future Government.

NZ First leader Winston Peters has made that pledge, but both Labour and the Green Party have said they could not make that commitment because it would be fiscally irresponsible.

On 3 News’ The Nation over the weekend, Mr Peters said NZ First would pay no more than the opening price of the initial share offer. Asked where the money would come from, he said there were many options rather than borrowing offshore – including borrowing from the Super Fund or KiwiSaver.

“Or more importantly, why couldn’t we just ask the New Zealand people at that time – are you in to get this back in our name and I have enough belief in New Zealanders to know that they will have a memory of what happened here, how they were sold down the drain, to put their hand up.”

In order to force Kiwisaver accounts to buy back the shares he would have to pass legislation appropriating control of those Kiwisaver accounts. In other words steal your savings from you to pay for the buy back of minority shares in a state controlled asset.

This is nothing short of an attempt by Winston Peters to nationalise Kiwisaver accounts.

Of course Winston Peters hasn’t thought through that a great many Kiwisaver funds as well as the SUper Fund will probably already be large shareholders in these assets….infrastructure companies are prized by super funds and so it is highly likely they will invest substantially in the state assets now that they will?have?the transparency of full disclosure provided by a listing.

An Observation by the Owl

NZ Post Primary Teachers Association ? Observation by the Owl

The 2010 Accounts shows that the PPTA (Note 8) – Union staff have been given staff mortgages at 1% less than the average floating rate.

So here we have Union Fees paid by some extremely talented souls in the teaching fraternity which is then given to Head Office staff at favourable mortgage loan rates.

Owl’s Observation

The Owl has no problems with organisations offering staff great benefits to be part of an organisation.

As the PPTA has nearly $5m in deposits earning slightly less than the staff mortgages why doesn?t the NZPPTA offer all its union members mortgages at 1% less than the average floating rate.

The upsides are 1) the Union will get a better return on investment and 2) members get discounted mortgages.

Note: All information is available in the public domain and the Owl draws no other conclusions other than to provide an observation.

No Moodys downgrade

This will annoy Labour. They have been hoping that Moody’s would downgrade, along with the All Blacks losing the World Cup in order to create their own little perfect storm of talking down New Zealand. Unfortunately for the doomsayers Moody’s won’t be downgrading us:

Rating agency Moody’s has confirmed New Zealand’s AAA credit rating and said the Treasury’s pre-election economic and fiscal update on Tuesday was largely in line with expectations.

“The future path of government deficits and debt is overall not too different from earlier projections. As a result, this document does not change our thinking about New Zealand’s rating,” Steven Hess, Moody’s vice president and senior credit officer, told Dow Jones Newswires in an email.

Treasury has confirmed the Government’s books are on track to return to surplus in 2014/15 but warned that risks to the forecasts were skewed to the downside.


Now that’s a downgrade

Labour?has?been steadily trying to make a mountain out of a moehill over our recent credit downgrade. They might have been listened to if their?prescription?would make things better but their promises so far have amounted to billions of extra spending and no hope of funding them.

If Labour was in?the?drivers?seat then it is likely that our downgrade would have matched Italy’s:

Moody’s Investors Service has downgraded Italy’s government bond ratings to “A2” with a negative outlook from “Aa2,” the result of high debt, a weak global economy and political uncertainties that delay corrective action.

While the change moves the rating down three notches, it is still investment grade. Moody’s affirmed the short-term ratings at Prime-1.

Moody’s said the size of the rating action is largely driven by the sustained increase in the country’s susceptibility to financial shocks, however, the “A2” rating indicates the risk of default by Italy remains remote.