The recession is now official
Stats NZ confirmed today the New Zealand is in recession for the first time since the Asian crisis in 1998.
The economy in the last two quarters is around $300 million smaller than the last quarter of 2007.
But the worst may yet be to come. The second quarter drop was 0.2%. And expectations for the third quarter are now as bad as a 0.5% drop. That would be a 1% drop over nine months.
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Tags: GDP, recession
September 26th, 2008 at 4:36 pm
Surprise!
September 26th, 2008 at 4:41 pm
If only John Key hadn’t worked at Merrill Lynch!
September 26th, 2008 at 4:55 pm
Not a threadjack but Whale Oils reporting the Socialists are in suicide bobing mode prepared to sacrifice one of their own so desparate are they to stave off their march to defeat.
My picking their next tactic will be to accuse the Nats of enrolling ghosts in Auckland Central to excuse the defeat of the bag lady by Nikki.
Next up will be death threats to Ron Marks to increase his vote when they pull their canidate from Rimutaka to parachute NZ1 and Luigi back into the House
September 26th, 2008 at 5:27 pm
Sickening, doesn’t history repeat……no truly responsible government ever stays in power for long, look at how unpopular Roger Douglas is now, we always end up being stuffed all over again by evil socialists and their stupid, stupid, stupid supporters. How bad does it have to get before anyone of the calibre of Sir Roger gets to make the tough unpopular calls that we deperately need, and when oh when will we get a good LONG term of responsible government that cements in the gains instead of blowing them, cleaning out the cupboards and scorching the earth?
September 26th, 2008 at 5:35 pm
I note that the squawking prick Sullen is now saying there is no money left in the kitty and the tax cuts National are talking about can not now happen. Fuck these people are dropkicks, if this deseased bastard gets back in you can bet the farm that there would be no tax cuts just tax increases. Any excuse would be good enough to hold or increase tax rates. Fuck I can’t wait till November.
September 26th, 2008 at 5:48 pm
“when will we get a good LONG term of responsible government”
So, er, not the Bolger/Shipley Nats?
September 26th, 2008 at 6:51 pm
Not the ones who sack Ruth Richardson or have one hand tied behind their backs by a coalition deal with Winnie “poison dwarf” Peters, stephen………
September 26th, 2008 at 6:59 pm
If you want good government then vote ACT and if you want a true economy get ride of income tax
September 26th, 2008 at 8:54 pm
The Labour Party line is we are recession because of the world economy yet America which is where it all began is not in recession
I’m gonna be the first to call bullshit on that
September 26th, 2008 at 9:16 pm
I’m picking no growth for 2009 and maybe none for 2010 and unemployment to hit 8% +. But the ‘economists’ are sticking to their text books for the answers. The problem with that approach is that the textbook doesn’t tell you how to analyse your way out of a world depression.
Oh, as I type, Washington Inc has just gone – the biggest mortgage provider in the US. There are about 1,000 more to go too.
If Dr Cullen had let us have some more of our money over the last nine years we might get out of it. Cullen always forgets the economy isn’t the Government, it’s us – you and I. He’s stuffed us, but the Government’s books are looking pretty good.
September 26th, 2008 at 9:51 pm
Cullen said there is no recession and that the economy was picking up. We all knew it was here since the beginning of the year. Cullen is a rich prick who hasn’t a clue how to handle this situation but he thinks he does, his arrogance is like a bad case of body odor. Keys is coming along at the perfect time and hopefully he will manage government better.
September 26th, 2008 at 10:05 pm
Good call Gooner and your stats are probably very accurate.
I’m very concerned about this new P4 arrangement as direct links with the US could prove consequential to us the more they are hurting. How can Klark confirm 60B profit through this FTA when America is virtually broke. Thery owe billions to China in war reparations and they certainly can’t use the excuse that the Chinese are ‘haters’ if they call in debts.
Maori are haters of course cause they gonna vote for the Maori party
Do you think helen will cal the Maori Party a bunch of haters when she loses. I’m sure she’ll use the term a lot in opposition.
September 26th, 2008 at 10:25 pm
Thanx Riki. And let’s stop this horseshit that the bailout will cost $700 billion. It’ll be more like 2.3 trillion, adding a further 1 trillion to the US budget deficit. The US$ is going to get hammered; the cost of money is going to go through the roof; and there is nothing Bollard or anyone else can do about it.
Batten down the hatches as Houston, we have a problem. I think a lot of people are going to wish they never heard of the word ‘leverage’.
Have any of you seen Babcock & Brown $400 + million rights issue last year @ $13 per share? It is now worth 23c. B & B won’t last much longer I don’t think and I reckon Macquarie Bank should be worried also.
This is the most serious financial crisis since the Great Depression and it has barely started.
Good night, sweet dreams!
September 26th, 2008 at 10:35 pm
I knew Bush was going to find a way to wreck the elections and this looks like the train wreck of the century.
He’s gonna take the whole world down with him and not get one inch of blame.
“Read my lips, I did not have relations with those banks!”
September 26th, 2008 at 10:51 pm
As I’ve said a few times, the solution is to look East, quickly.
As Gooner says our books aren’t bad. China, baring the real possibility of conflict, is in great shape and neither needs nor cares about the states. If you think it does you’re not reading the situation correctly. China has got a huge unexploited internal market that can keep it ticking over, while the western world adjusts itself. That’s why it doesn’t need the US or even Europe, but it will keep it’s hand in the latter.
So if this is right we should immediately move closer to China and the region. It’s just logic.
September 26th, 2008 at 11:08 pm
Reid, you were exactly right several days ago.
Now we’ve signed the P4, we get dragged down with the US.
Plse tell me I’m wrong !
September 26th, 2008 at 11:16 pm
Nah we’re sweet. Nothings going to be agreed for years. Big danger is opening ourselves up to US lobbyist pressure through industries like big pharma that want to widen a crack to get rid of our cheap products and replace it with theirs. But only idiots would let that happen. I believe Mark Twain had something to say about that.
September 26th, 2008 at 11:17 pm
Reid:
I agree with your point about China’s unexpoited internal market. But I’m less sure about your suggestion that China “neither needs nor cares about the states”.
The other day I read an interesting analysis of corporate Asia and the subprime crisis. The revealing comment, which I can’t immediately track down, was that Chinese companies and political leaders (which have a cosy relationship with many Chinese companies) would be monitoring US-based developments very closely – as right now they’re sitting on substantial unrealised losses.
This isn’t the link I had in mind, but I’ll provide this for now, and if you’re interested I’ll try finding the analysis:
Now, while that can be put in the context of Bank of China’s overall operations, it’s still a material write-down.
September 26th, 2008 at 11:52 pm
You may well be right Nostradamus and I didn’t take into account the foreign securities exposure in my comment. I’ve been thinking along the lines that the Chinese govt have close to a trillion in USD reserves that they could use to cover those sorts of losses. However I have no real stats on what’s going on so any info would be good but please don’t go to any trouble if you can’t locate it striaght away…
September 27th, 2008 at 12:01 am
And the Chinese businesses run on very tight margins. When America stops buying china will come to a grinding halt. There is a lot of false economy in china with many dodgy deals their share market has actually crashed with the Chinese govt looking at intervening to prop it up. There is a good story here about what’s going on with america. http://www.counterpunch.org/
Just remember nothing is forever and it really is a good reason why there should be no income tax, only capital gains and consumer tax
September 27th, 2008 at 12:03 am
As Gareth Morgan says we are watching the decline of the roman empire, quite exciting really being part of history.
September 27th, 2008 at 12:20 am
A little gem I found over at website toolbox:
I’m against the $85 BILLION bailout of AIG. Instead, I’m in favor of giving $85,000,000,000 to America in a “We Deserve It” dividend. To make the math simple, let’s assume there are 200,000,000 bona fide U.S. citizens, aged 18+.
Our population is about 301 million counting every man, woman and child. So, 200,000,000 might be a fair stab at adults 18 and up. Now, divide 200 million, 18+ adults into $85 billion – that equals $425,000.00 each! Yes, my plan is to give that $425,000 to every adult as a “We Deserve It” dividend.
Of course, it would NOT be tax free. So, let’s assume a tax rate of 30%. Everyone would pay $127,500.00 in taxes. That sends $25.5 billion right back to Uncle Sam! It also means that every adult 18+ has $297,500.00 in their pocket. A husband and wife would have $595,000.00!
What would you do with $297,500.00 to $595,000.00?
Pay off your mortgage – housing crisis solved.
Repay college loans – what a great boost to new grads.
Put away money for college – it’ll really be there.
Save in a bank – create money to loan to entrepreneurs.
Buy a new car – create jobs .
Invest in the market – capital drives growth.
Pay for your parent’s medical insurance – health care improves.
Enable deadbeat parents to come clean – or else.
Remember this is for every adult U.S. citizen, 18 and older (including the folks who lost their jobs at Lehmann Brothers and every other company that is cutting back) and of course, for those serving in our Armed Forces.
If we’re going to re-distribute wealth let’s really do it! Instead of trickling out a puny $1,000.00 “economic incentive”.
If we’re going to do an $85 billion bailout, let’s bail out every adult U.S. citizen!
As for AIG – liquidate it.
Sell off its parts.
Let American General go back to being American General.
Sell off the real estate.
Let the private sector bargain hunters cut it up and clean it up.
We deserve the money and AIG doesn’t. Sure it’s a crazy idea, but can you imagine the coast-to-coast block party?!
How do you spell Economic Boom? W-e D-e-s-e-r-v-e I-t D-i-v-i-d-e-n-d! I trust my fellow adult Americans to know how to use the $85 Billion “We Deserve It” dividend more than do the ‘geniuses’ at AIG or in Washington , D.C. .
And remember, my plan only really costs $59.5 billion because $25.5 billion is returned instantly in taxes to Uncle Sam. Good idea? I think so.
September 27th, 2008 at 12:49 am
The problem with that theory is US$85 billion is only $85,000,000,000 (ie 85 thousand million) not $85,000,000,000,000 (ie 85 million million).
They’ve used the short scale in the writeup but the long scale in the calculations.
The We Deserve It Dividend wouldnt have quite the same effect being only $425 each
Didnt it occur to you where the US government would get $425,000 per taxpayer from?
September 27th, 2008 at 4:19 am
Reid:
Sorry mate – unfortunately I couldn’t track it down. However, given your interest in Asia, I’ll copy-and-paste these extracts from a subscription-based publication:
It’s interesting to speculate on what this means for New Zealand:
- The Reserve Bank is expected to try stimulating domestic economic growth by cutting the official cash rate.
- Cutting the official cash rate could be expected to lead to a lower NZD.
- But a lower NZD won’t necessarily translate into higher exports (as one might otherwise expect), if our major Asian trading partners are experiencing economic turbulence.
I suppose Labour’s economic “solution” will be another Knowledge Wave conference.
Wonder what others think?
September 27th, 2008 at 5:34 am
So please remind me again what Cullen said about the Economy the day before Helen announced the election date.
There is a $US 300 Trillion overhang in the total system.
Billions or a full Trillion are band-aids.
And yet this is nothing like WW11.
Infrastructure is intact, and it will spin out in a year. The Sovreign Funds have the assset base if not the cash.
September 27th, 2008 at 7:10 am
this is a black swan event – kullen is talking out of his arse.
the reason aig got bailed was because 9 of the worlds largest banking groups said that if aig fell over they would all go bust.
asia are closely coupled to the us because the us is the demand base that has driven asian growth. if the us goes bust the asian treasuries have no assets and their economies tank.
china has yet to admit their own subprime housing credit implosion, wiping out large chunks of foreign reserve wealth as they plug the gap.
nz should roll out the other side ok because of its unsophisticated financial services mkt and thefact that when the shit hits the fan everyone need primary sector goods.
it wont be pretty with the boomers all trying to bail from property in the next few years but there you go. labour champagne socialist liberal boomers who are in fact the core lbr demographic that has held hulun in power in the urban centres are going to flee the sinking ship like rats in nov.
September 27th, 2008 at 7:31 am
It’s nice seeing an informed an intelligent discussion on th economic situation without idiots wasting the worlds supply of punctuation marks.
My interest is in the policy response to the sub-prime crisis that underpins the current problems the US is happening. To work out what it should be an analysis of the policy change in the US that lead to the rapid expansion in home ownership there starting about ’98 or ’99 and the growth in ninja loans which would have only happened with if lending rules were relaxed.
Expat, your comments about boomers having difficulty bailing are correct. That applies equally to property as it does to their businesses which they are now trying to exit. In my game there are a number of older guys with businesses that they are tryng to offload with little success.
My pick before the olympics was that there would be a downturn in China after they finished. I think that we are seeing that. The cock up with Sanlu has made it worse will have more far-reaching effects than simply causing Fonterra massive losses. It will have a net effect on trade with China so that countries export industries will have a lot of difficulty pursuading the rest of the world that their products are safe. It will also effect worl trade negotiations as the anti free traders will point to that as a failing and that will completely bugger up things from a free trade, which i support, perspective.
September 27th, 2008 at 7:44 am
…eh..?…!…what…do…you….mean alex…?…eh!…you racist/homophobic/mysoginist/warmist-denier!…eh!
Excuse my somewhat snapshot braindump of my thoughts today above.
The punters predicting the end of the US empre are completely wrong (apologies G Morgan) – this is a carefully choreographed dance that re-places global wealth back into US hands besides necessary collateral damages incurred and picked up by sovereign wealth funds. The number one game is get the wealth out of china and back to the us – watch the game play out and admire greenspans strategy play.
The new eco-blok is US/mid east and has been since prince whatshus face bought citibank in 1980′s.
September 27th, 2008 at 10:11 am
The US is bankrupt and is pursuing policies that can only end in tears. It has 730 military bases around the world with about 2.5 million service personal, go read http://bastiat.org/en/twisatwins.html and this in you want a translation http://en.wikipedia.org/wiki/Parable_of_the_broken_window
America is in trouble because they have forgotten you can’t beat the market and in the end will be beaten by the market
September 27th, 2008 at 4:26 pm
I loved Gareth Morgan’s quote the other day which is so apt it’s well…..apt!
“If you owe the Bank a lot of money and you can’t pay you have a problem. If thousands of people owe the Bank a lot money and can’t pay the Bank has a problem”.
By the way, I guess you all know what fractional banking is? I will do a post on it on No Minister soon I think. Might open some eyes.
September 27th, 2008 at 4:41 pm
Those were good articles by Gareth Morgan, eh Gooner?
September 27th, 2008 at 5:05 pm
Bullit,,
Just sent your reply to http://www.websitetoolbox.com/tool/post/shnvswr/vpost?id=2995965&pid=28914405#post28914405
where someone else had criticised the math as well.
September 29th, 2008 at 6:34 am
Michael Cullen, give yourself a round of applause for a job well done.