A review of things you need to know before you sign off on Tuesday; consumer sentiment dives, Mercury planning 30yr bond, tractor sales very low, eyes on RBA, swaps firm, NZD soft, & more

I am increasingly of the view that a higher OCR would have pushed inflation higher. Why?

1. Most prices have simply gone up with input costs - and interest is a major cost for many NZ businesses.
2. Wages have just followed household living costs (HLCPI) - and household living costs include mortgage costs
3. Demand has slumped but profit margins have in the main been sustained - or even increased slightly. It is clear that most NZ prices are not demand sensitive (we pay cost + margin because our markets are barely competitive).

Drink it while you can!

Will be back to a Leon Rouge or Double Brown soon.

Yes craft is undercapitalised small business with little experience of recession I think many will fail

The dream is to be able to sell out to Heineken, AB InBev, etc. Mind you, both those companies are capable of make some shocking investments.  

I couldn't help notice a few job adverts on Seek for analysts in business turnaround and restructuring.

Historically, IRD has been the biggest user of such services, appointing administrators to strip off and sell these companies for parts, so taxes and debt can be recovered for senior debt owners.

I feel like this is the most balanced comment I have ever read on this forum. Well done sir. 

perhaps get a few cows and a few sheep, grow a vege patch, get your own tank water and waste tanks so you pay no 5 waters fees

I am sure many would love to do this, but there is a small matter of purchasing the land.

1. most people do not own land suitable for animal welfare

2. most people are not skilled in animal welfare and do not have the time, ability or funds for it

3. animals that are neglected, mistreated and die early are poor sources of food and often carry more diseases

4. rampant spread of diseases through poorly managed hobby farms and mistreated animals is more difficult to contain

5. the spread of such diseases and mistreatment leads to species wide area outbreaks through shared watercourses and cross infections

6. you screw up the entire food supply through a misguided notion that everyone is super wealthy to own land to farm and everyone must have the time, ability, skills and finances for animal welfare...

7. only ignorance of reality leads people to suggest everyone must be able to grow their own. The biggest ignorance being both time and medical realities of the human condition.

Don't believe me. Just ask the SPCA how well many humans care for pets (animals we ostensibly want to live as long as possible and to integrate with our lives so we have more investment in their wellbeing).

Also I take it you have never seen the true horrors of urban "farming". They are pretty bad and even with 1-2 starting animals get very horrendous and perpetuate harm to other humans pretty quickly. Hence each council has bylaws for urban animals & welfare. For instance a minimum sqm per chicken of available ground it can roam. Species lists of ones that are and are not suitable in urban environments and their minimum reqs. etc.

It's actually biology and sociology, but whatever.

Degrowth communism. Yip yip, that’s what it is.

https://amp.theguardian.com/environment/2023/feb/28/a-greener-marx-kohe…

Er no it is not. Please learn basic physics. This only demonstrates you missed science at school and then proceeded to miss it.  Please please please stop spouting this rubbish as it only devalues what science is and makes more misinformation which only harms any attempts for consensus to sustainability. As any fool can see you are plainly lying and most people then turn away from initiatives with increasing distrust. You are causing your own initiative downfall. Try actually learning science first before making these ludicrous claims with such blatant misinformation.

When you can’t borrow and spend any more and other peoples money runs out….then you’re in the shite. Some people will win, some will lose. Pretty normal cycle. Just getting started though.

they can make rates negative , negative enough and your mortgage will pay itself and you cannot default, never underestimate their F*&kery, but they can only enforce negative rates on people if people cannot withdraw their cash ..    tried to take 5-10k out of a bank in cash lately......   

and CBs can only do it in unison otherwise  via FX funds will flee, hence QE what currency do I hide (The least dirty shirt problem, as every good drunken economist knows just before a TV interview after a hard weeks drinking)

they hate gold as it deflates their balance sheet 50 times what you convert into it...

oh and japan rates stayed low because of central bank, so what did japanese people do, borrow low and place offshore - the carry trade. Mrs Watanabi, often on margin

> There's no such thing as a "normal" interest rate. Japan shows us normal can be zero or thereabouts for decades, conversely some sort of failed high inflation state can show it in the teens or well above also.

This is not zooming out enough. Think of what a "normal" interest rate of 0 means: that there is no price to borrowing money. This can only occur in a situation where something else is deeply dysfunctional with the money supply. In Japan's case they had a massive asset bubble that crashed and heavily damaged the economy but were unwilling/unable to take other sorts of reforms in how their economy operates in order to restore consumption.

When you get to sub-2% interests rates this an economic signal that there are other areas of your economy that need to be reformed. This could include anything from taxation rules, immigration rules, approach to industrial policy etc. But when you get to a point where interest rates are that low it indicates severe economic dysfunction that needs to be addressed so in that sense is not "normal". 

The use of interest rates to resolve problems that require more structural reforms/fiscal reforms only kicks the can down the road and makes the inevitable reckoning worse. Look at Japan today to see one example of this. 

coupled with an increase in net bank lending driven by low interest rates

ok and these just happened because central bankers clicked their clogs, rates so low only happened because of QE

We first began using QE in March 2009 in response to the Global Financial Crisis. At that time Bank Rate was already very low. In fact, it couldn't be lowered any further at that point. So we needed another way to lower interest rates, encourage spending in the economy, and meet our inflation target.

look QE saved the world from default after the GFC as designed , it kicked the can towards the wall  , especially as USA Europe and china co ordinated the response, now they all hate each other, there is no more co ordinated QE.

the can is at the wall....   QE will not work again, its default time...

in fact default is happening all over the place, its just in many major industries no one is forcing mark to market, people are defaulting as they cannot even afford the interest, let alone debt principle repayments.

By Xmas this will be clear to all, some of us have our kiwi saver in NZ cash already , if there was a physical gold option i would be there.    Buy gold here