Interest Rates
January 17th, 2011 at 10:00 am by David FarrarThe Dom Post reports:
Cash-strapped homeowners will see some relief this year, with experts predicting the Reserve Bank will keep official interest rates low until at least September.
However, some experts say even that may be too early.
After two rises of 0.25 percentage points in June and July, the Reserve Bank has held the official cash rate steady at 3 per cent, as economic growth stalled.
Economists still expect a recovery this year, but there is a growing view that Reserve Bank governor Alan Bollard will leave rates on hold for another eight months.
Works for me, as from today I am once again burdened with a mortgage. My disposable income has shrunk by around 75%!
Tags: Interest Rates
January 17th, 2011 at 10:14 am
Did you buy the house at Mangaone?
Vote:January 17th, 2011 at 10:37 am
Last year with a mortgage for me, will not miss it at all, been paying $1000PW to get rid of it.
Vote:January 17th, 2011 at 11:15 am
Economists still expect a recovery this year, but there is a growing view that Reserve Bank governor Alan Bollard will leave rates on hold for another eight months.
..why cant he just butt out altogether ?
Vote:January 17th, 2011 at 11:40 am
Gary: Nope, a bigger apartment instead
Lazybum: Yeah $1,000 a week on mortgage repayments makes all your other household expenses so minor!
Vote:January 17th, 2011 at 11:45 am
DPF – other expences are minor except at this time of yr, Xmas, holiday, school uniforms, fees etc. Started off with $315K mortgage 7 years ago, just want to be debt free to remember what it feels like again:)
Vote:January 17th, 2011 at 11:53 am
@ Lazybum
I’m impressed by your “get out of debt” attitude.
Vote:January 17th, 2011 at 12:08 pm
“I’m impressed by your “get out of debt” attitude.”
This is a problem the Right seems to have. Lazybum valued the other things he would have spent his money on less than the interest payments. Others may place higher value on the other things in life and so are willing to pay the interest etc to gain them. It is just a difference in preferences, one is not a virtue and the other a vice.
Vote:January 17th, 2011 at 12:35 pm
Kimble – define value, it is not 100% money. I value my family more than my mortgage, can you asign a $ value to that Kimble for me?
I earn the dough so I chosse how to allocate it accordingly, that is something lefties do not grasp. IMHO I think I have allocated it quite well. My kids do not miss out on anything vital at all, food, clothes, skateboards (keeps them off the X-box), trips etc. My wife also pays a good portion of this as well and she enjoys her life, beats being in the UK, where she is from.
Next year I will get told by the lefties I am strangling the NZ economy by not spending enough probably. I reckon I will spend on average $3-400PW of this $1000 on other things next year when I am debt free. But, of course if Labour get elected I will pay more tax as well for them to make piss poor allocation decisions.
Vote:January 17th, 2011 at 12:42 pm
Kimble, regarding the ‘value equation’ – I will have no mortgage and I will not miss it, however I would miss my family if something happened to them. So what do I value more?
Vote:January 17th, 2011 at 1:03 pm
On excell there are some excellent tools under “Mortgage calculator” which I have been using to look at the impact of dropping lump sums onto my mortgage. Dependant upon interest rates and how much you can pay off the benefits are quite substantional. I am trying to work out how much to pay off on my mortgage – certainly there is a bigger benefit paying off rather than getting about 2.5% after tax on funds in the bank.
Vote:January 17th, 2011 at 1:05 pm
I may be wrong, but I get the impression the “other things” Kimble was on about was depriciating assests such as cars, wasting money on booze, fags & kfc/maccas ect.
I think it was meant to be a compliment?
Vote:January 17th, 2011 at 5:22 pm
What does it matter when 90% of the debt in NZ is owed to a banking cartel that prints the money without doing anything else to earn its worth? If one of us did that we’d be called counterfeiters. Why do NZers all toil endlessly to pay interest on loans (a large percentage of our taxes as well) for a bunch of international leeches who do nothing but print and lend money for personal gain?
You can here it all from the champion of genuine conservatives the world over, Congressman Ron Paul.
http://www.ronpaul.com/2010-12-02/ron-paul-the-federal-reserve-is-the-biggest-counterfeit-machine-in-the-history-of-the-world/
Vote:January 17th, 2011 at 5:24 pm
Ron Paul is a weak on defence liberal who would be crushed by the Red Chinese in a millisecond. Might as well put Bill Maher in charge.
Vote:January 17th, 2011 at 5:25 pm
more economic insight from the tree baby
Vote:January 17th, 2011 at 5:30 pm
You mean RP is a “weak on empire” republican. His values are in line with what the founding fathers wanted for their great Nation.
Bush and other traitors to the American Constitution bankrupted the country pursuing a power grab for what they saw as the strategically important pieces in the grand chess board of geo-politics.
Vote:January 17th, 2011 at 5:31 pm
Ooooh eeerrr, yeah OK…!!!
Vote:January 17th, 2011 at 5:36 pm
Yes – educate yourself Redbaiter. Read this book if you want to understand the world we live in.
http://en.wikipedia.org/wiki/The_Grand_Chessboard
Vote:January 17th, 2011 at 5:41 pm
Adviser to Jimmy Carter? Hahahahha, thanks for the laff.
Vote:January 17th, 2011 at 5:52 pm
I still fail to see why people think low interest rates are good. Sure theyre good for the few years people have a massive mortgage but for the rest of your life theyre a disaster. Raise the OCR to 10% (with appropriate restrictions on inbound capital flows) it’ll cause a recession for a number of years but it will finally make it worthwhile to save and thereafter the economy will never look back.
Vote:January 17th, 2011 at 5:52 pm
“laff” away baiter:
http://en.wikipedia.org/wiki/Zbigniew_Brzezinski
Vote:January 17th, 2011 at 6:07 pm
bullitt – most inflation is caused by exogenous factors such us global price of oil, and other major raw minerals.
High interest rates are not the answer. A central bank owned by NZers is the way to keep capital in NZ. Remember, capital investment underpins productivity and therefore wage and profit growth. At the moment we’re simply giving all the cream made by our hard work to the international banking leeches. Where’s the sense in that?
Vote:January 17th, 2011 at 6:50 pm
magic bullet,
I think you are talking about one that does not exist. Our problem is that the profits and dividends from NZ activity go off shore. The reason they go offshore is that is where the capital came from – there simply is not the capital within NZ to fund the activity to deliver growth.
What is more, our central bank is centrally owned – in fact its nationalized.
There is no silver bullet to be found in ascribing institutional problems from another country to NZ where the institutions are not the same.
Our problem is we don’t generate enough capital ourselves – we will always be beholden to offshore investors. Which alsoeans we cannot expect to retain profits and dividends in NZ. We can, however, ensure we tax those profits. (That tax, however, must be reasonable else we will be an unattractive place for investment in the first place.)
Or we could wind back the clock to an agrarian nation where we all live at subsistence level (except forthe landowners of course – anyone for serfdom?)
Vote:January 17th, 2011 at 7:04 pm
I’m aware high interest rates by themselves wouldnt stop inflation (though I don think inflation should be targeted stronger).
Imagine a upper middle class person who retires with a mortgage free house and $1m in the bank, thats far more than most families could ever dream of yet they’d still only have an after tax income of $40k per year (excluding super), hardly the sort of lifestyle such a large amount of money should generate. It’s no wonder people borrow when abit more money in the bank adds nothing to your income and the debt is eroded by inflation that matches the interest costs.
Vote:January 17th, 2011 at 7:21 pm
mb
“A central bank owned by NZers is the way to keep capital in NZ. ”
“Remember, capital investment underpins productivity and therefore wage and profit growth.”
Not sure what you mean by those two statements or how you might reconcile them. The first is just wrong, the second is in itself just meaningless and does not follow from the first. This has the air of melon economics.
Capital will find the highest returns and, subject to the prevailing tax regime, irrespective of whether they are offshore or onshore. We both export and import capital but are a net importer. Labour’s policies helped to exacerbate the export of capital when they happily watched a procession of high net worth individuals fuck off overseas and take their capital with them.
How does a central bank fix this? Will it help fuckwits make rational investment decisions when chasing the highest return(ie not invest with Blue Chip/Hanover/Bridgecorp)? No.
Bank deposit rates don’t equate with returns on equity that reflect reward for the assumption of entrepreneurial risk. Or are you advocating a central bank a la Vern Cracknell/Bruce Betroot?
Vote:January 18th, 2011 at 7:49 am
oh dear, Kimble rubs his two braincells and one chromosome together and showers the world with his economic wisdom. Please take your virtue to catholic clergy and ex-communicate yourself from the rest of us. We know what sick vice you have in mind once there.
Vote:January 18th, 2011 at 4:52 pm
To clarify – i’m in fact advocating that loans be made by an NZ-owned central bank, and not overseas banks. This would mean that the securities provided by loans, and interest paid on loans would go back in to NZ’s capital markets, thus deepening them (a higher ratio of capital to labour means higher labour productivity almost by definition), and improving our economic autonomy (NZ becomes more democratic).
The foreign banks have no interest in democracy, nor the public good of New Zealand, and the leach billions from our economy every year. We would be far better off without them.
Vote:January 18th, 2011 at 5:14 pm
mb,
Same problem – no capital. Our centrally owned bank can’t print endless capital – that has disasterous, hyper-inflationary consequences.
That bank would have to borrow from offshore – same situation as today. The larger, foreign-owned banks trading in NZ have better leverage (e.g. Their long term borrowing advantage over Kiwibank)
Simply creating a nationalized bank doesn’t not change the situation at all – in orderto fuel growth we require offshore capital
Vote:January 19th, 2011 at 2:52 pm
bhudson – the concomitant deepening in capital markets (i.e. interest and securities stay here) would boost labour productivity, thus off-setting any temporary inflationary effect. Anyhow – if the central bank creates the right monetary regulatory regime, inflation needn’t be a problem (you only print enough money to retain price stability, and do away with fractional reserve lending).
Most NZers want NZ to be owned by NZers. We never asked the right wing revolution to sell off all our state-owned banks. In fact it was a very unpopular move. Sadly we have had an IMF monetary model foisted upon us by representatives of the large international banks. Interestingly Muldoon May, 1979: was appointed by Trilateral Commission secretary Zbigniew Brzezinski to the Board of Governors of IMF/World Bank on the orders of David Rockefeller. Muldoon was able to then bankrupt the country with think big, which almost inevitably lead to the strictly right-wing austerity measures of Lange and co. Funny that huh?
The international banks had their agenda stalled for 9 years with Clark, and only just failed to get their man in with Brash (no Brash no cash) and now they have Key – whose real job is to keep the billions flowing from our government and our personal pockets to the vaults of his buddies at the federal reserve bank of the US (whom he used to work for).
We need rid of the international parasites that have been manipulating our economy for their own benefit over the last few decades.
http://nuganhand.wordpress.com/page/2/
It’s disappointing that the truth is right underneath our noses in black and white official documents, yet so few people know the truth.
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