The “for now“ is the trouble.
Where once Adrian Orr stood in front of us and told us 5.5% was it, it now isn't. To be fair to some of us that have been saying it for some time now, it was never going to be.
Let us not forget that at 5.5%, we are way higher than many other central banks. Australia, which is also in a holding pattern, is barely over 4% and they are barely over 4% because they didn’t fire hose the economy the way Adrian did, watched and egged on by the Finance Minister. And they certainly didn’t hand out gargantuan pay rises to compensate for the fact we had no workers, so the workers we did have held their hands out big time.
Between the printing of the money and the astonishing adherence to a closed border, we can fairly comfortably say now that of all the economic mistakes that were made around Covid, when it came to the economic part of it, although we were doing roughly what everyone was doing and we were doing it with alacrity.
We printed more per head of population than just about anyone, we held the border closed longer driven by the mad belief that all the Jobseeker Support locals would fill the gaps, and when they didn’t, six, seven, eight, nine and ten percent pay rises were needed.
Everyone everywhere has, and is, paying some sort of price for how we handled the pandemic. But we are paying a particularly severe one.
The trap we are now in is because we didn’t buckle down and bite the economic bullet last year, and now the borders are open and the wages are up and the house prices are rising, we have shifted our inflationary behaviour from printing and wage rises to immigration and housing.
Our Reserve Bank whacked the rates up fast. But the Government spent like drunks and counteracted it and at every stage, instead of taking our medicine, we stalled and procrastinated and tried to find excuses.
And now 5.5% won't be it.
Not only is the economy broken, it'll be broken for longer, to a degree the election will fix the political incompetence, but the question for the rest of us is - just how long do you want the pain to go on for?
Mike Hosking is a New Zealand television and radio broadcaster. He currently hosts The Mike Hosking Breakfast show on NewstalkZB on weekday mornings - where this article was sourced.
Let us not forget that at 5.5%, we are way higher than many other central banks. Australia, which is also in a holding pattern, is barely over 4% and they are barely over 4% because they didn’t fire hose the economy the way Adrian did, watched and egged on by the Finance Minister. And they certainly didn’t hand out gargantuan pay rises to compensate for the fact we had no workers, so the workers we did have held their hands out big time.
Between the printing of the money and the astonishing adherence to a closed border, we can fairly comfortably say now that of all the economic mistakes that were made around Covid, when it came to the economic part of it, although we were doing roughly what everyone was doing and we were doing it with alacrity.
We printed more per head of population than just about anyone, we held the border closed longer driven by the mad belief that all the Jobseeker Support locals would fill the gaps, and when they didn’t, six, seven, eight, nine and ten percent pay rises were needed.
Everyone everywhere has, and is, paying some sort of price for how we handled the pandemic. But we are paying a particularly severe one.
The trap we are now in is because we didn’t buckle down and bite the economic bullet last year, and now the borders are open and the wages are up and the house prices are rising, we have shifted our inflationary behaviour from printing and wage rises to immigration and housing.
Our Reserve Bank whacked the rates up fast. But the Government spent like drunks and counteracted it and at every stage, instead of taking our medicine, we stalled and procrastinated and tried to find excuses.
And now 5.5% won't be it.
Not only is the economy broken, it'll be broken for longer, to a degree the election will fix the political incompetence, but the question for the rest of us is - just how long do you want the pain to go on for?
Mike Hosking is a New Zealand television and radio broadcaster. He currently hosts The Mike Hosking Breakfast show on NewstalkZB on weekday mornings - where this article was sourced.
3 comments:
Robertson would have instructed his best mate Orr not to raise the OCR rate for fear of demonising their party’s chances of re-election. You can rest assured that Orr will punish us after the election for he and Robertson’s total mismanagement of the New Zealand economy.
With a myriad immigrants pushing demand and a myriad beneficiries queued for cosy bargain eviced state houses, overseas competition for the able, demand push on wages will continue. With many employment spheres indexed, like to unlike, men to women, and beneficiaries to the productive workers, inflation will not dramtically reduce soon. Any serious raising of interest rates will empower the $NZ further unsettling the truly productive farmers and others. Besides inflation shrinks the national debt. So hang in there. Tough luck savers. About 4% or less after tax you are going to lose fast (again).
On top of all that, Greens want to have a wealth tax, capital gains tax and free this and that.
A change of government won't necessarily mean things will be better short term, so much repair work is needed.
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