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New Zealand plunges into recessionary spiral

macrobusiness.com.au

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Re: New Zealand plunges into recessionary spiral

#81

Post by SturgeonsLaw »

mdasen wrote: post #65
robocat wrote: post #43

Earlier quoted context omitted.

In New Zealand, all mortgages are approximately at a floating interest rate. You can lock in a rate for up to 5 years (with the majority choosing 1 or 2 years), but after that “fixed” period completes, you now renew your interest rate at whatever the current market is. Most mortgages are signed up for a term of decades (mine is 30 years, and I signed up at age 50), so although you might use “fixed” rates for a few ye…

Silly question, but how do you budget given floating interest rates? Let's say that you buy an $800,000 place at 3% interest with a 20% down-payment ($640,000 borrowed). Your payments are $2,698/mo. Fast-forward a couple years and you're now at 7.3% and your payments are up to $4,388/mo. That's a 63% increase in your housing budget. That's an extra $20,280/year in housing costs. Yes, rent can increase crazy amounts w…

Your scenario desribes how it works in Australia (similar system to NZ). Almost all mortgages are variable rate, you can lock in a fixed rate for a few years but otherwise you're at the mercy of interest rates.

Buyers are subject to strict lending criteria to determine whether they can afford $current_rates + $future_increases. This means a lot of people are locked out of owning housing.

The system is benefiting the already wealthy and leaving others, particularly young people, out in the cold.

Re: New Zealand plunges into recessionary spiral

#82

Post by prottog »

yonaguska wrote: post #22
hn_throwaway_99 wrote: post #7

One clarification if you're not familiar with New Zealand banking. The article states: > Last week, Bank of New Zealand warned that “things could well and truly turn to custard” as the global economy is plunged into recession. I read that and thought "Holy hell, central bankers in the US are usually extremely measured in their comments, they would never say something like 'things could well and truly turn to custard'…

Let's be clear, the federal reserve does not belong to the USA, and is not beholden to any direct representation to the people of the United States. I'm not familiar with how the Reserve Bank of New Zealand operates, but if it's anything like our federal reserve, the country belongs to the bank, and not the other way around.

> the federal reserve does not belong to the USA

Come now, that's legal fiction designed to maintain the independence of the Fed. Congress created the Federal Reserve System and could remove it or twist it to whatever shape it sees fit tomorrow if it wants.

There's a good argument to be made that the Fed ran easy-money policies for too long in 2021 in order to secure Chair Powell's reappointment in early 2022; this gives you a clue as to who they are in fact beholden to, despite their nominal independence.

Re: New Zealand plunges into recessionary spiral

#83

Post by rich_sasha »

happymellon wrote: post #70
hn_throwaway_99 wrote: post #7

One clarification if you're not familiar with New Zealand banking. The article states: > Last week, Bank of New Zealand warned that “things could well and truly turn to custard” as the global economy is plunged into recession. I read that and thought "Holy hell, central bankers in the US are usually extremely measured in their comments, they would never say something like 'things could well and truly turn to custard'…

Assuming you are American, do you also get confused with Bank of America, or US Bank? Most countries have a retail bank that uses the name of the country or region, even if they aren't the central bank.

England, France, Spain, Germany and Italy have f"Bank of {country}" as central bank. I stopped looking after these 5.

Re: New Zealand plunges into recessionary spiral

#84

Post by hn_throwaway_99 »

happymellon wrote: post #70
hn_throwaway_99 wrote: post #7

One clarification if you're not familiar with New Zealand banking. The article states: > Last week, Bank of New Zealand warned that “things could well and truly turn to custard” as the global economy is plunged into recession. I read that and thought "Holy hell, central bankers in the US are usually extremely measured in their comments, they would never say something like 'things could well and truly turn to custard'…

Assuming you are American, do you also get confused with Bank of America, or US Bank? Most countries have a retail bank that uses the name of the country or region, even if they aren't the central bank.

Many central banks are named "Bank of ", like Bank of England (for historical reasons not Bank of UK), Bank of Germany, Bank of France (Banque de France) or Bank of Spain (Banco de España). If we had a private "Bank of The United States", then yes, that would be confusing, but no official institutions are named "BlahBlah of America".

Also, the fact that the official central bank is so close at "The Reserve Bank of New Zealand" makes it more confusing for those unfamiliar.

Re: New Zealand plunges into recessionary spiral

#85

Post by climb_stealth »

mdasen wrote: post #65
robocat wrote: post #43

Earlier quoted context omitted.

In New Zealand, all mortgages are approximately at a floating interest rate. You can lock in a rate for up to 5 years (with the majority choosing 1 or 2 years), but after that “fixed” period completes, you now renew your interest rate at whatever the current market is. Most mortgages are signed up for a term of decades (mine is 30 years, and I signed up at age 50), so although you might use “fixed” rates for a few ye…

Silly question, but how do you budget given floating interest rates? Let's say that you buy an $800,000 place at 3% interest with a 20% down-payment ($640,000 borrowed). Your payments are $2,698/mo. Fast-forward a couple years and you're now at 7.3% and your payments are up to $4,388/mo. That's a 63% increase in your housing budget. That's an extra $20,280/year in housing costs. Yes, rent can increase crazy amounts w…

Yeah, that's how it is here. Part of the thinking is that everyone is in the same boat and the government couldn't possibly let everyone go to ruin.

It's nuts. Talking about Australia though.

Re: New Zealand plunges into recessionary spiral

#86

Post by jeffbee »

tenpies wrote: post #67
jeffbee wrote: post #5

Their consumer sentiment is only at -25 for major household goods? In the U.S. it is -35! https://data.sca.isr.umich.edu/get-chart.php?y=2022&m=9&n=35...

There are a couple of Western countries that have combined a decade of terrible housing policy, banking policy, immigration policy, and every other government lever you could imagine; in order to generate an absolutely generation-crushing property bubble. New Zealand, Canada, and Australia will all be catastrophic lessons in the future. So when you see -25 sentiment in housing by Kiwis, it's much more severe than -35…

FWIW, housing sentiment according to the same survey is at -52, near the lowest level ever recorded, -60 in November 1981, and the same level as July 1981.

Re: New Zealand plunges into recessionary spiral

#87

Post by hn_throwaway_99 »

nobody9999 wrote: post #76
matteotom wrote: post #38

Earlier quoted context omitted.

The Fed is designed to be independent from the whims of any individual politician, but it still exists due to an act of congress, and could be changed at any time by congress passing a law and the president signing it. And if that can't/doesn't happen, it's because _congress_ doesn't represent the people of the United States.

Edit: As was pointed out, I didn't read the comment I replied to in the best light. As such, I'm deleting the original text, since I can't delete this comment any more. My apologies.

That is an extremely curious reading of the comment you are responding to, given that it appeared they were just arguing that if people want to change the Fed, and it doesn't happen, then that would show Congress doesn't represent the people of the US.

Re: New Zealand plunges into recessionary spiral

#88

Post by happymellon »

rich_sasha wrote: post #83
happymellon wrote: post #70

Earlier quoted context omitted.

Assuming you are American, do you also get confused with Bank of America, or US Bank? Most countries have a retail bank that uses the name of the country or region, even if they aren't the central bank.

England, France, Spain, Germany and Italy have f"Bank of {country}" as central bank. I stopped looking after these 5.

And you would also be wrong.

The German central bank is The Deutsche Bundesbank,which literally means "German Federal Bank" not "Bank of Germany".

Re: New Zealand plunges into recessionary spiral

#89

Post by WillPostForFood »

hn_throwaway_99 wrote: post #84
happymellon wrote: post #70

Earlier quoted context omitted.

Assuming you are American, do you also get confused with Bank of America, or US Bank? Most countries have a retail bank that uses the name of the country or region, even if they aren't the central bank.

Many central banks are named "Bank of ", like Bank of England (for historical reasons not Bank of UK), Bank of Germany, Bank of France (Banque de France) or Bank of Spain (Banco de España). If we had a private "Bank of The United States", then yes, that would be confusing, but no official institutions are named "BlahBlah of America". Also, the fact that the official central bank is so close at "The Reserve Bank of Ne…

no official institutions are named "BlahBlah of America".

The only one I can think of is Voice of America. Definitely none of the major departments or agencies.

Re: New Zealand plunges into recessionary spiral

#90

Post by olliej »

Waterluvian wrote: post #2

I'm sensing this tremendous tension and anxiety in Canada too. Hopefully our energy sector will buoy things a bit so they don't get too terrible.

This is a standard pro business publication that posts sensationalist headlines with regularity, and believes the only way an economy can function is by not having taxes and letting businesses do whatever they want whenever they want.

With that background we can see that they will always want to be able to run headlines like this, whether they’re right or wrong. So I wouldn’t worry about things based solely on headlines from organizations like this, any more than I’d put all my trust in economic forecasts from “The Marx Community Paper” :D

I’m similarly wary of banks own forecasts given their track record of being opposed to any economic policy that doesn’t increase their own profit margin.

Honestly I would kill for the big important government measures for inflation, etc to only account for say the 80-90yh percentile of tax residents.

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