Tuesday, December 30, 2008

Another goat is not the answer

Before I drop the subject of Christmas for at least another year, I must mention a television commercial that ran in the weeks before the festive season to solicit donations to a Christian organization.

Viewers were told their contribution, however small, would help people in the "developing world". "The what?" I asked myself incredulously. "Are we still seriously using this term from the 1960s, when many people still believed the poor nations of the world would, with the right kind of education and assistance, be able to catch up with the West, and someday enjoy a similar, affluent lifestyle?"

We now know, of course, that this is simply not possible — that if everyone on planet Earth earth consumed precious resources, and polluted the environment, to the extent that we do, several planets would be needed to support them. And the sad fact is that we only have one.

In a final touch of irony, one of the TV commercials ended with a Christmas box opening to reveal a pretty white goat that was presumably destined for a "developing" community. I say the scene was ironic because, after man, the goat has probably done more than any other creature to degrade the environment (by stripping landscapes of their vegetation, and indirectly causing catastrophic soil erosion).

From a long-term point of view, another goat is thus a recipe for impoverishment.


Monday, December 29, 2008

A flurry of fake snow

I hate Christmas.

There, I've finally said it. Everything about the celebration, in the southern hemisphere, of this pagan, northern-hemisphere festival is both boring and ridiculous.

Few things are more absurd than the fake snow that is plastered everywhere, or the red "Santa hats" that sales assistants feel obliged to wear — despite the decidedly unwintry weather in shopping malls. But worst of all, I think, is the endless repetition of Jingle Bells and other such Christmas ditties, which seem to be designed to drive you insane long before the Jolly Gentleman comes guffawing down your chimney (or even tighter flue) with his bagful of consumer goodies.

This year, I didn't buy any Christmas presents, and was somewhat surprised, on Christmas morning, to be presented with two parcels, one containing two pairs of pants and the other a pair of pajamas.

In contrast to my parsimony, New Zealanders went on a spending spree that prompted the Dominion Post to ask rhetorically: "Recession? What recession?" In fact, Christmas Eve broke all sales records, according to Paymark, the company that processes 75 percent of electronic transactions.

By the end of the day, sales had reached $216 million — up almost 20 percent on the previous year. It was, the company said, the first time $200 million had been spent in a single shopping day.

Yet early next year, there will almost certainly be appeals for contributions to the local foodbank, so that "ordinary families in financial difficulty" can be helped to make ends meet.


Monday, December 22, 2008

Coping with hard times

If you are over 65, as I am, what can you do to cope with the hard times ahead? The answer, as far as I can see, is "Not a lot".

Of course, I will try to keep my casual employment, which brings me between $100 and $500 a week. But many people of my age are irrevocably retired: there is no way in which they can go back to the office/factory on a part-time basis, as I did in 2006.

Such people, who are on low, fixed incomes — or incomes that are precipitously declining, thanks to dramatic cuts in interest rates — are among those who are to be "sacrificed" as the authorities desperately strive to revive the economy (or "reinflate the bubble").

If such elderly people are not "computer literate", they are also unable to take advantage of the significantly higher interest rates that are available to holders of "online call accounts". At the ANZ Bank, where I do most of my banking, the online call account rate is 5.15 percent on a balance of at least $2000, compared with 4.60 percent on a six-month term deposit of at least $10,000.

As I now do most of my banking on the net, I closed two low-interest-rate accounts this week and consolidated the funds from them in a single online call account.

Any extra money, however small the amount, is still worth having.


Saturday, December 20, 2008

HomePages Friends scam

A few months ago, I signed up at HomePages Friends (http://www.myhpf.co.uk/), which says it will pay you for "searching in your normal way".

If you go to its website, you will find the following: "HomePages Friends gives you, free of charge, an Ask internet search box from which we generate advertising income which we split 50:50 with our partners. This service is 100% branded and promoted under our partner's name and the HomePages Friends involvement remains invisible. You use the search box just as normal and get precisely the same results."

After clicking for a while, I checked my earnings – and found that I had made more than £2. Great! Searching on my HomePages Friends "homepage" seemed like an excellent way to make a little extra money. In fact, I was so impressed by the service, I put several of the outfit's banners on two of my websites.

Then, out of the blue, I received the following email yesterday:

Disallowed searches

Dear Customer,

ID. 180282 - Alan Ireland

As part of our ongoing review of search traffic through our service it is apparent that your search activity is in breach of our terms and conditions or those of our partners at Yahoo! Search Marketing.

We are receiving from you a type of traffic of which the quality is less than that which we determine, in our absolute discretion, to be acceptable.

If this situation continues we will be obliged to terminate the service.

Review Department
myhpf.co.uk
e. info@myhpf.co.uk

I immediately clicked "Reply", and sent off the following message:

Dear HomePages Friends Review Dept.

I am an editor at a daily newspaper in New Zealand. I have been searching from my office computer to verify information in submitted articles. If these searches are not to your liking, I suggest you go ahead and cancel my account. I will not, in any event, use your service again.

Alan Ireland
ID 180282

Within seconds, my email bounced back. I then tried emailing info@homepages-friends.com (the email address on the website) and info@myhpf.co.uk. In both instances, the result was the same.

I also did a (Google!) search for "HomePages Friends scam", and got some interesting results. If you, too, have been taken in by HomePages Friends, you might like to do the same thing.


Sunday, December 7, 2008

My bookshop bites the dust

Another business in town* is closing its doors as a result of the economic downturn — my secondhand bookshop.

During the past two weeks, I have made several sweeps of the shelves (and stacks of books on the floor!) and weeded out (a) all those of little or no interest to me, and (b) all those I don't need because I have another, better copy. All these superfluous books have then been stacked by the entrance, loaded into the car and dumped at the Red Cross.

When the process is finished, I will convert my bookshop, which is in my former garage, into a private study.

As I said, my decision to close down is a result of the recession, which has made selling old books even more difficult than it was when times were good. But I was also influenced by the decline in literacy — by the fact that, by and large, people don't read books any more.

Yesterday afternoon, I gave a couple of books to our neighbors, who have three young children. One was Charles Dickens' A Christmas Carol and the other was John Buchan's Prester John — one of the great adventure stories about Africa.

Somewhat to my surprise, the husband, who is from South Africa, had not heard of Prester John. "It's a bit like King Solomon's Mines," I said, referring to that other great African adventure story by Rider Haggard.

Alas, my neighbor hadn't heard of that, either.


* Palmerston North, New Zealand.

Saturday, December 6, 2008

A bitter blow for savers


The above cartoon appeared in yesterday's edition of the Manawatu Standard in Palmerston North, New Zealand, after Reserve Bank governor Alan Bollard slashed the official cash rate by a record 1.5 percent on Thursday.

The OCR now stands at 5 percent. But it is unlikely to stay at that level, economists say. A further cut to 4 percent is predicted for next month.

These cuts are, of course, intended to lift the economy out of recession, by making money easier to borrow. So here we have yet another example of borrowers — those who are largely responsible for the financial mess we are in today — being rewarded, while savers are penalized. And needless to say, those savers, such as elderly people, who rely on interest to supplement their meager income, are going to suffer considerable hardship.

One also has to wonder whether New Zealanders, who have never been good savers, will bother to save anything if interest rates go much lower. And if savings fall, where is the money for the borrowers going to come from? From Japan and China?

How deep into debt is New Zealand prepared to go?


Wednesday, November 26, 2008

South Canterbury Finance still going strong

The other morning, while driving down Broadway Avenue in Palmerston North, I noticed an office of South Canterbury Finance — the second-largest finance company in New Zealand, and one that has flourished during the recent turmoil in the finance sector.

I hadn't realized there was an office of the 80-year-old company in town, and made a mental note of its location. I thought I might invest some money there, after my deposits at Kiwibank reach the target total of $40,000.

"But is South Canterbury Finance covered by the New Zealand retail deposit guarantee scheme?" I wondered. In these uncertain times, I don't think I would put any money into an institution that wasn't covered by the scheme.

My question was answered by Aaron Lim in today's issue of Businessday. South Canterbury is, indeed, covered. Furthermore, it is raising as much as $100 million through a new offer of bonds that will return 8 percent a year — more than any bank is paying at present — until the maturity date of October 8, 2010.


Sunday, November 23, 2008

A crazy schedule

As I write this, at the end of my 68th birthday, I am trying to remember everything I have to do tomorrow morning:

1. Get up about 5.25am and go to work.

2. Work from about 6am to about 8am — that is, until the deadline for the Manawatu Standard. (We have had to have this early deadline since the printing of the newspaper was shifted to Petone, near Wellington.)

3. Drive home, pick up my daughter and take her to Terrace End post office.

4. Collect the Cancer Society's mail from the society's box, and take this and my daughter to the offices of the Cancer Society. (My daughter has a full-time job there, from 9am to 5pm, looking after its accounts.)

5. Drive home and have breakfast.

6. Drive to work, and work from about 10am until 5.30pm on advertising feature articles for the Manawatu Standard.

A pretty crazy schedule, but an unsurprising one in these times of minimal staff levels. After all the "redundancies" in the editorial department during the past few years, workers are now a little thin on the ground.

Will I, too, be declared "redundant" in January 2009, after working like a maniac during the last two months of this year?


Monday, November 17, 2008

CEOs worth every penny they make?

One thing the financial meltdown should do, if it doesn't do anything else, is put paid to the claim, made ad nauseam until early this year, that corporate CEOs are worth their astronomical "remuneration packages".

How many times were we told that these economic supremos were so far ahead of us, in terms of financial expertise, that they deserved every penny they made? If we didn't pay them $5 million a year (or whatever), they would simply take their knowledge and experience elsewhere — and we would all suffer as a result.

I remember an incident in the 1980s, when my company's big boss briefly stood behind my desk in the editorial office of the Manawatu Standard and cracked a few jokes with the sports editor. He was there for only a few minutes, but I later worked out that he had been paid more for those minutes of jocularity than I was paid for a whole week of hard work.

When he went out for a run one day, and died of a heart attack, he was replaced at the trough by someone else, on an equally high rate of pay. But neither he nor his successors were able to reverse the steady loss of newspaper readers. In the end, all they could do to maintain profitability was make more and more people "redundant" — and thereby lower the standards they were charged with maintaining.


Wednesday, November 12, 2008

On culinary catastrophes

Hospitality Association of New Zealand (HANZ) chief executive Bruce Robertson today urged New Zealanders to travel within their own country this holiday season, to counteract the drop in the number of foreign tourists.

His call followed the release of Statistics New Zealand’s (SNZ) accommodation survey for September, which showed total guest nights at 2.2 million - down 5 percent from September 2007.

I'm not surprised by the fall. Tourism was bound to suffer as a result of the credit crisis/financial meltdown (or whatever you like to call it). And I'm happy to report that I have already made reservations for our upcoming summer holiday, which will see us travel to Wanganui, New Plymouth, Stratford, and back to Palmerston North.

I would be even happier if I could say I were confident of finding food of an acceptable standard at every stop. Two years ago, in Te Anau, one of the premier destinations for tourists in the South Island, the food was so bad that we stopped dining in restaurants and bought buns and rolls from a bakery.

Two years before that, I took my mother-in-law and her sister to the Duxton Hotel in Wellington for a couple of nights. For those who have never been to New Zealand's capital city, the Duxton is one of the poshest, most expensive hotels in town.

The dining room had a suitably refined atmosphere. The menu was also impressive, with lots of those almost incomprehensible French names for dishes. But the soup, when it came, was atrocious. It both looked and tasted like lukewarm gray sludge. And the rest of the meal was almost as bad. In fact, it was so bad that we didn't dine at the Duxton the next night. We went around the corner to the next hotel, only to find that the food was not much better.

I could go on. My list of culinary catastrophes in New Zealand is almost endless. Oh to be in Melbourne again, where we had excellent meals wherever we went - even in a rather prosaic food court.


Sunday, November 9, 2008

To hell with retirement!

Yesterday's feature article in the Dominion Post on Dargaville electrician Tom McKay, who is still working at 101, makes one wonder about the almost universal acceptance of retirement at the age of 65 - and death at some time in the subsequent 15 years.

When I started work at the Manawatu Standard, a daily newspaper in Palmerston North, there was a compulsory retirement age of 60. The thinking in the 1970s was that a person was both physically and mentally incapable, after that age, of doing a decent day's work. If they pressed on, they would be too slow, and too easily confused by the demands of the task in hand, to be of much use to their employer.

I remember my amazement, on being told by the editor that Reporter X was 70 - and had just been given a year's notice of termination of employment. How could one work at 70? The mere fact that he wanted to continue to work seemed to be evidence of advanced senility.

Of course, my thinking had changed by the time I reached the age of 65. But I retired anyway, mainly because I found the 5am starts intolerable. Getting up at 4am on a cold winter morning, driving through the predawn darkness, hoping the office computer system would be up, and then working like mad to meet the 8am deadline, wasn't my idea of fun.

But when, after four months of retirement, the telephone rang, and I was offered work at more reasonable hours, I couldn't wait to pack my little rucksack with my sandwiches. And nearly three years later, I am still going into the office nearly every weekday - and still having no difficulty in finding errors and illogicalities in the copy of our reporters.

I don't think I have taken a day off sick since the 1990s. Yet I occasionally get a letter from Southern Cross, my health insurer, that informs me that I have moved up into an age bracket in which, inevitably, people make greater use of health services, and that I must therefore pay a higher monthly premium.

Needless to say, I find these letters a little irritating.


Saturday, November 1, 2008

A new broom in the office

Last week, my newspaper announced the appointment of a new editor - the eighth since I joined the company in 1972.

Only a few years ago, such an announcement would have left me feeling a little anxious, as a new editor almost always wants to "revamp" or "redesign" the paper and "reposition it in the market".

Sometimes, this exercise involves making one or two people redundant and revising the rosters/duties of those who remain. Then come the peremptory directives on style. Pictures must be of certain sizes, must be placed in certain positions on the page, and must have (or not have) overlines. The spelling of certain words must be "updated", and so on.

Then we go public with our "bright, rejuvenated" paper, which has "much more of the news you want to read" and "a finger that is even more firmly placed on the pulse of the community". The self-congratulatory ballyhoo is splashed all over Page 1, and may even be broadcast via local radio.

The funny thing is that, from the reader's point of view, nothing much changes. In fact, subtle tweaks in headline/caption/intro styles - issues that cause considerable angst in the editorial department - invariably pass unnoticed by the public.

Furthermore, if the general upheaval results in a demoralization of the staff and, during the ensuing weeks or months, in several resignations, the outcome may actually be a deterioration in the overall service to the community.

But eventually, of course, everything settles down again - until the editor resigns and a new, "enthusiastic" person of "vision" is appointed. Then the whole tedious process starts again.

If all this doesn't make me feel anxious any more, that's because I am now in the advertising department and am not directly affected. I can simply sit back and be a cynical spectator.


Monday, October 27, 2008

It's time to return home . . . or is it?

The telephone rang yesterday morning, while I was still in bed.

"We think it's time you came back home," I heard my 91-year-old mother say. She and my 96-year-old father live in Stow-on-the-Wold in the Cotswolds, a picturesque part of southern England.

She went on to explain that she was thinking only about the future of our 38-year-old daughter, our only child. "When you go, she won't have anybody," my mother explained.

In reply, I pointed out to her that the value of the New Zealand dollar had fallen by about 20 percent, vis-a-vis the United States dollar, in the past few months, and that its fall against the British pound had almost certainly been similar. (I don't track the Kiwi dollar's value in relation to the pound, for the simple reason that I never do business in pounds. But a quick check a few minutes ago revealed that it has, indeed, declined in value this year, and that it today bought only 36p.)

What this means is that, if we:

1. Sold our house in New Zealand on a depressed real estate market,

2. Converted our depreciated New Zealand dollars into pounds,

3. Disposed of all our furniture, etc., which couldn't be economically shipped to England, and

4. Paid for travel to England, and for temporary accommodation at both ends of our journey,

we would be virtually wiped out. In fact, we would arrive in England like refugees. Besides, I left England in February 1960, when I was only 19. The country is hardly "home" to me now, as I approach 70. And I couldn't count on relatives, many of whom I hardly know, to provide any kind of support to our daughter in the distant future.

Why do parents make such unrealistic suggestions?


Friday, October 24, 2008

The failure to govern

The following passage, from an article entitled Predatory Scapegoating by Patricia J. Williams (The Nation, October 23, 2008) puts the credit crisis/economic meltdown into perspective:

...it is not merely a failure to regulate Wall Street; it's a failure to govern at all. The FDA is packed with industry insiders who seem content with the gross understaffing of inspections bureaus. Animal feed laced with melamine was imported from China, consumed here and has now entered the human food chain. Nontherapeutic experimentation with pesticides on humans has been given the nod. Pharmaceutical companies have gotten approval for drugs like Vioxx and Fen-Phen that should never have been put on the market. Efforts by farmers to do voluntary testing for mad cow disease have been blocked by the Agriculture Department. The Justice Department's civil rights division has been gutted. The FCC has hacked away at public access to the airways and OK'd obscene concentrations of media power. The Transportation Department is underfunded beyond all conscience, and the toll has been tragic: collapsed bridges, breached levees up and down the Mississippi and nearly unnavigable railroad tracks. And FEMA... well, we all remember FEMA.

In this country (New Zealand), I don't think there are many people who appreciate the full extent of the disaster in the US. There seems to be an assumption that the $700 billion bailout of the US financial system* has solved, or will soon solve, the problem, and that everything will soon settle down again.


*The Emergency Economic Stabilization Act of 2008, enacted on October 3, 2008.

Sunday, October 19, 2008

Current crisis was predicted in 1997

I was interested to read at Alternet.org today that Brooksley Born, head of the Commodity Futures Trading Commission, warned in congressional testimony in 1997 that unregulated trading in derivatives could "threaten our regulated markets or, indeed, our economy without any federal agency knowing about it".

Her concern was met with scorn and condescension from former Federal Reserve Chairman Alan Greenspan, former Treasury Secretary Robert Rubin and his deputy Lawrence Summers - "three marketeers" who continued to peddle the complex financial instruments at the heart of the current crisis.

Click here for the Alternet article.


Wednesday, October 15, 2008

The crisis: how it all happened

Financial Meltdown 101 is good explanation by Arun Gupta of how we got into the current financial mess. It's from Indypendent, and was posted on October 13.

Monday, October 13, 2008

Falling dollar to make Christmas expensive

I got up early on Sunday morning, and called my 96-year-old father in England. "Have you lost any money in the economic meltdown?" I asked.

"No," he replied. "It's all in bank deposits and government bonds."

I assured him that we, too, had not suffered in any way - yet.

Then, this afternoon, I found the catalogue of Christmas gifts from Egertons, an English company, waiting for me in my PO box. And as I opened it, to see what I could order for my parents before December, I was struck by the realization that I will have to spend a lot more than I did last year.

For a start, the prices have gone up. They always do. But this year, for the first time in several years, the kiwi dollar has gone down - precipitously. Earlier this year, it was around US80c; today it was at US59.80c at 5pm, down from US60.19c at 8am. Last Monday morning, it was buying US66c.

So as soon as I start buying overseas, as I must before long, I will begin to feel the consequences of the current economic turmoil.


Saturday, October 11, 2008

The writing was on the wall in 1991

With the effective destruction of the union movement by the Employment Contracts Act of 1991, the fate of the employee was sealed. At the time, we all knew that, as the workforce was fragmented (in the name of "freedom of choice", of course), we would, little by little, lose all the gains made by the labour movement during the previous 100 years or so. We would, again, become mere minions - ciphers to be underpaid, pushed around, and dismissed at will/whim by the employer.

In the newspaper industry, the seemingly endless waves of restructurings and redundancies began in 1997. More than 10 years later, one can discern a sort of pattern in the successive upheavals. It is a pattern that sees each cutback establish a new "norm", which then becomes the basis, or starting point, for a new round of cuts.

Today, it was the turn of the staff of Dunedin's free weekly newspaper, D-Scene, to suffer. Only a month after Australian-based media company Fairfax bought the paper, the company confirmed, through Southland Times general manager Gareth Codd, that eight employees have been made redundant. They are the paper's news editor, three layout sub-editors and four administration staff.

An NZPA report quotes Mr Codd as saying production will be centralised at the Southland Times' Invercargill operation.

One staff member has reportedly since been re-employed in the Southland Times' Queenstown office, while three others have applied for positions at Fairfax's sub-editing "hubs" in Wellington and Christchurch.

Let's go back and look at those two innocuous-sounding clauses in the Employment Contracts Act that ended compulsory unionism, and radically shifted the balance of power in favour of the employer. Here they are:

(a) Employees have the freedom to choose whether or not to associate with other employees for the purpose of advancing the employees' collective employment interests:

(b) No person may, in relation to employment issues, apply any undue influence, directly or indirectly, on any other person by reason of that other person's association, or lack of association, with employees.


Friday, October 10, 2008

And still the borrowing continues...

I am exceptional, I think, even for a member of my generation. I have never been in debt. No, I haven't even had a mortgage. When, at the age of 24, I decided I wanted a house, I worked every day for two years at The Japan Times, my principal place of employment, and also took on a few part-time teaching jobs. (Every English-speaking person in Japan teaches the language.) After two years, I had my house.

It wasn't much of a house. It was what I used to call a "matchbox house", because it was tiny, made of wood (lauan timber from the Philippines), and a little flimsy. After several earthquakes has loosened things up, so to speak, I would sometimes see a flash of daylight through a tiny crack that had opened up in a join in one of the exterior walls. But when I sold it, in 1972, I made more than the $NZ14,000 I needed to buy a house in Palmerston North.

When we settled here, we didn't have anything except the house, and a few items of essential furniture - a kitchen table and chairs, a double bed and two single beds. But we didn't borrow to buy the other things we wanted. We saved, and bought them one by one as we could afford them. Within five years or so, we had virtually everything. And because we had always paid cash, we had paid less than we would have paid if we had taken out loans. This meant that, as time passed, we were able to enlarge our house, make a few overseas trips, and save more than $NZ400,000 (at the time of writing) for our retirement.

The superiority of this procedure is so obvious, I can't understand why more people don't adopt it. Yet even today, as the world sinks deeper and deeper in the credit crisis, the thinking of the average person seems to be that, if you want something, you should have it right away, and that the best way to get it is to borrow, borrow, borrow - even if the interest rate is close to 20 percent.

Hence today's finding of a Consumer Credit Expectations Survey, conducted by credit reporting agency Dun & Bradstreet, that one in four Kiwis expect to use their credit card to cover purchases they otherwise could not afford in the next three months.

That figure jumped to 31 percent, up from 22 percent in the last quarter, for those aged 18 to 49 and for those earning between $30,000 and $49,999.

The survey also found that 19 percent of 18- to 49-year-olds expected to apply for a new credit facility in the coming three months, as did 17 percent of middle- and high-income earners.


Sunday, October 5, 2008

The tragedy of industrial civilization

I wasn't surprised by the 2008 Lowy Institute Poll, which revealed that Australians want action on climate change, but not if it costs jobs or hits them in the pocket.

I'm sure a poll in New Zealand - or anywhere else, for that matter - would come up with exactly the same result. Those who are prepared to make "sacrifices" for the sake of the environment are almost always those who are in a financial position to withstand a little "pain". They also tend to live in towns and cities, and to view the countryside as a place of recreation.

People who actually live in the countryside, and earn their living from the land, often have a radically different view of it. Try talking to a logger, for instance, about the need to preserve native bush, or to a farmer about the need to preserve wetlands. Such people are unlikely to look far beyond the next pay packet.

So in the end, only minor, token adjustments will be made in humanity's "flight path" - enough to convince people that "something is being done", but not enough to prevent us from hitting the mountain ahead. This is the tragedy of our industrial civilization.

For the record, the Lowy telephone poll of 1001 people, conducted between July 12 and 28, found that 21 percent of respondents were not prepared to pay anything extra on their electricity bill to help solve climate change.

Another 32 percent favoured paying only A$10 (NZ$12.26) per month extra on their electricity bill to help solve climate change.


Wednesday, October 1, 2008

We can weather the storm, say Kiwis

Today's stuff.co.nz poll, which asks the question: "Do you think NZ is well placed to cope with the current global credit crisis?", has found (at 9.30pm) that more than 60 percent of New Zealanders think it is.

Those who answered "Yes" totalled 406, or 63.5 percent of respondents, while those who answered "No" totalled 233, or 36.5 percent of respondents.

No doubt they were influenced by the benchmark NZX 50, which rose 97.745 points, or 3.07 percent, to 3187.961 today.

Meanwhile, Reserve Bank Governor Alan Bollard said: "The New Zealand banking system is sound... We don't think there are hidden nasties there at all."


Tuesday, September 30, 2008

Latest confidence survey already history

Is there any point in conducting surveys of economic sentiment, when the financial situation changes from day to day?

More specifically, should we pay any attention to the findings of the National Bank's business confidence survey for September, released today, which show that business sentiment in this country has turned marginally positive for the first time since May 2002?

Among today's developments:

  • New Zealand's NZX 50 Index fell 123 points, or 4 percent, to 3064, in response to the rejection by the United States Congress of the US$700 billion (NZ$1.05 trillion) plan to bail out the ailing US financial sector.

  • Finance Minister Michael Cullen and National leader John Key both warned that New Zealand could suffer serious economic damage if the US fails to reanimate the plan.

  • The New Zealand dollar continued its downward slide against the greenback. In early afternoon trading it was buying US66.91c, having traded at US67.16c this morning.

    Though the fall in the dollar will undoubtedly please some exporters, there was little else in today's news that will engender optimism.


  • Monday, September 29, 2008

    Everything says 'Made in China'

    Last weekend, we went to the local branch of Briscoe, a seller of household goods. Mission: to buy a new thermos flask. We eventually bought a "Canadian" one. I put the word "Canadian" in quotation marks because, of course, the Canadian company now has its goods manufactured in China.

    "Is there anything, these days, that is not made in China?" I wondered. Not so long ago, when I was in my 20s, nothing was made in China. And if you had gone to China, you would have seem millions of impoverished people wearing padded jackets, riding around on bicycles, and fanatically waving copies of the infamous Little Red Book of Chairman Mao's quotations.

    But in those days, almost no one went to China. And in New Zealand, those who did could expect to be put under surveillance by the Security Intelligence Service (SIS) upon their return. For going to China was widely seen as the moral equivalent of supping with the devil.

    Then the Chinese leaders effectively dumped communism, embraced capitalism, and put on business suits. And suddenly, China was acceptable - though it remained an authoritarian state in which individual freedoms were still rigorously circumscribed. How quickly attitudes change, when our leaders decide, for reasons of expediency, that the time has arrived to pursue a new policy.

    I was prompted to write all this by Research New Zealand's latest monthly survey of attitudes and opinions, which has found that nearly two-thirds of Kiwis try to buy New Zealand-made goods.

    The telephone poll of 529 people earlier this month found that 59 percent of New Zealanders said they made a point of buying New Zealand-made goods. Another 13 percent said their purchasing decisions depended on what the goods were.

    But of course, New Zealand-made goods are often not available. While at Briscoe, I checked the china/porcelain section - just in case it had an aesthetically acceptable dinner set. It didn't. Everything was ghastly. And although I didn't check the backs of the plates, etc., to see where they were made, I'm pretty sure they were all from China, Indonesia and Thailand. Crown Lynn - the main New Zealand manufacturer - was forced out of business years ago.


    Saturday, September 27, 2008

    ANZ Bank taken to task by cartoonist


    The above cartoon, published in the Manawatu Standard today, follows yesterday's news that the ANZ Bank plans to freeze recruitment, reduce the use of casual staff, tighten up on overtime, and call for front-line staff to take voluntary redundancy.

    In April, the bank announced the off-shoring of hundreds of jobs to India.


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    Friday, September 26, 2008

    Our banks firm, New Zealanders told

    We're in a recession, but we'll be all right. That seems to be the gist of the news reports and opinion pieces I have been reading today.

    The confirmation of the recession - if any were needed - came from Statistics New Zealand, which said there was a 0.2 percent drop in GDP for the three months to June 30. This is the first time New Zealand has been in recession since March 1998.

    But worries about the stability of local banks, which have sent their share prices plummeting, are largely unfounded, say both Reserve Bank governor Alan Bollard and his Australian counterpart, Glenn Stevens.

    And David Tripe, head of banking studies at Massey University, says the fall in share prices will become an issue only if one or several of the banks has to recapitalize - to go to the markets for more shareholder capital.

    But the ANZ Bank and the three other big (Australian-owned) New Zealand banks have total assets of A$1.6 trillion, combined shareholders' funds of A$92 billion, and "comparatively tiny" exposure to sub-prime assets, all of which makes a move to recapitalize unlikely at this stage.


    Monday, September 22, 2008

    Ethos of deregulation turned on its head

    I don't get it. The whole point of "deregulating the market" in the 1980s and 1990s, I thought, was to create a system in which enterprises would be left to either sink or swim.

    The Government would NOT intervene to save those who were weak, and thus unworthy to survive, we were told. And as the strong prospered and expanded in this cutthroat economy, we would, we were assured, eventually find ourselves on a firmer, more viable footing. There would be some pain along the way - some bitter "medicine" to be taken - but in the end we would all be better off.

    As Richard Sylla, a financial historian at New York University says: "The last 20 years saw people actually mouthing the idea that government should keep [its] hands off. We had this free market ethos: Reagan’s 'government isn’t a solution, government is the problem.' Now people are saying, 'The market is the problem. The government is the solution.' "

    How quickly the times have changed! I have just picked up the following AP list of US Government interventions since March of this year:

    March 16 - The Federal Reserve agrees to guarantee $29 billion of Bear Stearns' assets in connection with the government-sponsored sale of the investment bank to JPMorgan Chase & Co.

    July 11 - Federal regulators seize IndyMac Bank's assets after the mortgage lender succumbs to the pressures of tighter credit, falling home prices and rising foreclosures. The Federal Deposit Insurance Corp. says the action will cost about $8.9 billion out of its $53 billion insurance fund.

    Sept. 7 - The Treasury Department seizes teetering mortgage finance institutions Fannie Mae and Freddie Mac, temporarily putting them in a government conservatorship with plans to inject up to $100 billion into each.

    Sept. 16 - The government announces an $85 billion emergency loan to rescue American International Group Inc., the world's largest insurance company, in return for a 79.9 percent stake in AIG.

    Sept. 19 - The Bush administration announces a plan to let the government buy hundreds of billions of dollars of bad mortgages and other forms of toxic debt that have been weighing down US financial companies.

    And when did I last hear Bush & Co say that the US economy was "fundamentally sound"?


    Saturday, September 20, 2008

    Facebook the best social network site

    Alan Ireland's Facebook profile

    I recently opened several social network accounts, mainly to promote my online business at Kiwi Dollar websites. I didn't intend to use any of them on a daily basis - until I came to Facebook. In my opinion, this is easily the best of the bunch, with all kinds of useful applications (along with a fair number of silly ones, of course). In particular, I plan to use it to access news videos and keep a record of the books I have read. And maybe I'll even pick up a few friends.

    Thursday, September 18, 2008

    Redundancies, redundancies...

    On August 26 of this year, I reported that my own employer, Fairfax Media, was axing about 160 jobs in New Zealand as part of a group move to cut costs and be (in the words of chief executive David Kirk) "lean and agile" in the modern media world.

    The interesting thing about any such wave of "redundancies" is that, in no time at all, it establishes a new "norm" in the newsroom - a norm that, within a matter of months, can be seen to have considerable "fat" in it, notwithstanding the earlier company press releases that described it as "lean". The management then proceeds to make further cuts, all of which are, again, ostensibly in the interests of positioning the company more competitively (read "more profitably") in the marketplace.

    The latest round of redundancies, announced in August, is now largely complete. But already, I have heard that the next round is planned for January 2009. How will I fare then, I wonder. And will the newsroom really be more "lean and agile" after the exercise?

    I suggest that Mr Kirk is attempting to make reality the servant of rhetoric when he resorts to such trite imagery - in much the same way as Churchill did when he spoke of the "soft underbelly of Europe". Just as the "underbelly" of Europe was not soft - as the campaign in Italy proved - a newsroom that is cut to the bone, and which is thoroughly demoralised in the process, is considerably limited in what it can accomplish.


    Monday, September 15, 2008

    Spare us those motivational seminars

    I am old enough to remember the days when you went to work to, well, simply work. I was in my mid-50s, I think, when I first heard the term "office culture" - a term that, surely, defies definition. Of course, every office has its bright spark and, occasionally, its professional grump, but does it ever have any sort of pervasive atmosphere, common ethos or "integrated pattern of human behavior" (to quote from Webster's New Collegiate Dictionary) that can somehow be molded, or redirected, by means of pep talks by "motivational experts"?

    To my mind, few things are more exasperating than being dragged away from one's work to attend a "motivational seminar", which is invariably given by someone who has little or no knowledge of one's industry or employment conditions. It's also degrading and demoralising to be lectured in this way, as though one were 15 again and back in a school class.

    I say all this after reading that 67-year-old American psychologist Stephen Lundin - one of those "North American toilet trainers" (in the words of David Lange) - is in the country to pitch "a power-of-positive-thinking attitude" in the workplace. I just hope the author of Fish! doesn't show up in my office, which is not a Seattle fish market - and does not, as far as I am concerned, need any journalistic counterparts of Lundin's animated fish mongers. Let's do our work quietly, thoroughly and with the dignity of adults.


    Lucky Kiwi websites take wing


    The above is a small advertisement I have made for
    Lucky Kiwi websites. The service I am offering is not the cheapest, but is the best in terms of value for money. I don't think you will find better technical support anywhere else.


    Friday, September 12, 2008

    Tuesday, September 9, 2008

    Climate bill to make life tougher for all

    "Climate bill set to sting households," today's top local news headline in the Manawatu Standard announces.

    The "bill" is the Climate Change (Emissions Trading and Renewable Preference) Bill, which is set to pass tomorrow.

    According to the Institute of Economic Research, the scheme will cost households about $3000 a year by 2025. Other institute predictions are that 22,000 jobs will be lost, wages will drop by the equivalent of $90 a week, and nearly $6 billion will be lost from the economy during the next 17 years.

    The higher costs to households will be for everyday items/services, such as electricity, petrol, milk, and rubbish disposal.

    I recently passed a man in the main square who was holding a sign that read "I'm hungry. Can you spare a few coins?" How many more such people will we see in the future?


    Monday, September 8, 2008

    NZ house prices drop 8.1 percent in past year

    I feel sorry for some friends in Palmerston North who have to sell their house - a new house they bought about six months ago - because one of them has to move to Wellington to work.

    How many thousands of dollars will they lose on the sale, in view of today's news that property prices in the city have fallen by 8.1 percent in the past year?

    This fall has taken the average Palmerston North house price to $286,943, according to the August report from Quotable Value.

    The average price for a house in New Zealand as a whole is now $391,487, after a fall in property prices of 4.5 percent in the past year.


    Wednesday, September 3, 2008

    Lucky Kiwi websites


    I have spent the past few days setting up a Lucky Kiwi websites venture. If you have ever wanted a website, but been deterred by the cost or difficulty of operating one, click on the link. You will be pleasantly surprised by our low prices and great support service.

    Sunday, August 31, 2008

    NZ a leader in the race to 'perfect inequality'

    An article in the Manawatu Standard on August 25 told us something we all knew: that in New Zealand, as in all countries that have succumbed to laissez-faire capitalism, the gap between the rich and the poor has widened dramatically during the past 20 years.

    "Heard of the Gini coefficient?" the article by Barbara Phillips, Christchurch Supergrans' fieldwork co-ordinator, asked in the third paragraph. I had to confess that, if I had, it had slipped my memory.

    Fortunately, Ms Phillips supplied a definition, though it's a little different from the one given by Wikipedia. "Named after an Italian statistician," her article continued, "the Gini coefficient is an international measure of income inequality. The bigger the number, the greater the distance between a country's haves and have-nots.

    "In the 1980s, our Gini coefficient was down around 26, where zero is perfect equality and 100 is perfect inequality."

    Wikipedia says the coefficient "is defined as a ratio with values between 0 and 1: A low Gini coefficient indicates more equal income or wealth distribution, while a high Gini coefficient indicates more unequal distribution. 0 corresponds to perfect equality (everyone having exactly the same income) and 1 corresponds to perfect inequality (where one person has all the income, while everyone else has zero income)".

    Ms Phillips continued: "Then came Rogernomics [of Finance Minister Roger Douglas], National's 1991 'mother of all budgets', the slashing of welfare and other economic shocks. Suddenly we had the fastest-growing income gap in the developed world.

    "By 1990, the Gini benchmark had leapt to 29. By 2004 it was more than 32. In contrast, Scandinavian nations like Denmark and Sweden were maintaining Ginis of about 24."

    If New Zealand was ever the egalitarian society of popular belief, it no longer is.

    NOTE: The Gini coefficient was developed by the Italian statistician Corrado Gini and published in his 1912 paper Variability and Mutability (Wikipedia).


    Thursday, August 28, 2008

    The Traffic Wonderland widget

    I'm still surfing at Traffic Wonderland, which is one of the more interesting traffic exchanges (as I noted on May 6, 2008).






    Tuesday, August 26, 2008

    More jobs going at Fairfax Media

    Today's top business story is about my own employer, Fairfax Media, which is axing about 160 jobs in New Zealand as part of a group move to cut costs and be "lean and agile" in the modern media world.

    The words "lean and agile" are those of David Kirk, chief executive of the trans-Tasman group. Altogether, Fairfax is cutting about 550 jobs - or 5 percent of its workforce - in a move that is expected to save about $A50 million ($62 million) a year.

    Fairfax New Zealand chief executive Joan Withers says the jobs going in New Zealand include those of 30 people already made redundant by the centralisation of newspaper sub-editing, plus those of another 30 people who are leaving as a result of "natural attrition".

    Kirk says he is "very comfortable" about the move, and doesn't believe it will "in any sense" undermine the quality of the Fairfax newspapers, which include The Sunday Star-Times, The Dominion Post, The Press, The Sydney Morning Herald, The Age and The Australian Financial Review.

    But the Engineering Printing and Manufacturing Union disagrees. In a press release issued today, it says:

    Fairfax's proposed redundancies will be a huge blow to already strained newsrooms and to New Zealanders' democratic right to be properly informed about their country's major issues, says the Engineering, Printing and Manufacturing Union.

    The 160 redundancies were announced today and follow the Australian media giant registering a profit of AU$387 million - a 47% increase on the previous return.

    EPMU national secretary Andrew Little says the move will ultimately hurt New Zealand journalism and Fairfax's bottom line.

    "Fairfax claims these cuts are about adapting to new technologies and platforms but the way to deal with these changes is to increase the size of newsrooms and compete on the quality of news.

    "Further reducing newsrooms will only mean more of their already overworked journalists will struggle to give properly researched treatment to their stories and as a result their readers will not get the information they need to make informed decisions in their day to day lives.

    "That this is happening in an election year is particularly disturbing as this is a time in which people need the best information possible to make important decisions about the future of New Zealand.

    "A strong and well resourced fourth estate is a vital part of a functioning democracy but today Fairfax dealt a blow to all New Zealanders."

    The EPMU will be taking the issue to its members to discuss its next move.


    Sunday, August 24, 2008

    Greens want only NZ citizens to own land

    The Government should stop the buying of land by foreigners, Green Party co-leader Russel Norman said today.

    Earlier, The Herald on Sunday said international buyers were "snatching up" New Zealand properties as the dollar dropped, interest rates came down and the market fell.

    "We believe land should be owned by New Zealand citizens and residents only, and our laws should be changed to say that," Dr Norman said.

    "Why should we allow Singaporean, Australian or American speculators to buy investment properties in our country, shutting first-time home buyers from the market.

    "The Government has a responsibility first and foremost to ensure New Zealand citizens and residents can afford to buy a stake in their own country."


    Thursday, August 21, 2008

    Do hard times boost the birthrate?

    Is the downturn in the housing market related to the rise in the number of babies being born in New Zealand?

    Economic commentator Bernard Hickey thinks it is. In an article in today's Manawatu Standard, he says he has watched birth numbers increase at a time when houses have been at their least affordable level since late 2005.

    "We suspect there is a correlation," Mr Hickey says. "People who were thinking of having a family, but were waiting and saving [with the intention of buying] a house first, have decided to rent and have a baby anyway."

    The article says that, at Palmerston North Hospital and the Horowhenua Health Centre, 169 more babies were born in the past 12 months than two years ago.

    Statistics New Zealand says 2530 more babies were delivered around New Zealand in the year to June compared with the previous year.


    Wednesday, August 20, 2008

    Will New Zealand's banks be affected?

    Today's warning from former IMF chief economist Kenneth Rogoff - that the worst of the global financial crisis has yet to come - makes me wonder to what extent New Zealand's big banks (all Australian-owned) will be affected.

    "We're not just going to see mid-sized [US] banks go under in the next few months, we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks," Mr Rogoff told a financial conference.

    Partly in response to the crisis, I have moved $10,000 from the ANZ Bank to government-owned Kiwibank - the safest bank in New Zealand, according to some commentators. I am going to cap my investment in the ANZ at $80,000.


    Tuesday, August 19, 2008

    Globalization hits local companies

    Every now and then, the effects of globalization hit close to home.

    Today we learned that Everest Fashions, in Palmerston North, and Beardsley Pearce, in Levin, are being forced to close by the flood of cheap imported clothing from China.

    The owner of Everest Fashions, Courtney Darby, said his company went into liquidation yesterday after 56 years of trading. About 28 women machinists were told of the closure on Friday.

    Their last day at work would be this Friday, Mr Darby said. "There is no work. There's too many Chinese imports, cheap imports."

    National Distribution Union president Robert Reid said about 15 Beardsley Pearce staff were advised of their fate yesterday.


    Friday, August 15, 2008

    HomePages Friends: Get paid for searching

    I do a lot of searching during the course of my work, so I may as well take advantage of any opportunity to profit from it. That was what I was thinking earlier today, when I signed up at HomePages Friends. The passage below is from the HPF website:

    When you register for FREE you get your own search homepage. Every time you search using your own search box page you earn! We partner with Yahoo! to provide this for you. Simple! It's completely FREE and you can start earning right away. What's more, you can recommend a friend and earn an additional 10 percent from us.





    TheGoodBlogs: You belong here

    I came across TheGoodBlogs about an hour ago, and decided to sign up. The reasons for my doing so can be found in the passage below, which is from TheGoodBlogs site.

    TheGoodBlogs service helps bloggers to promote other bloggers. By putting TheGoodBlogs on your blog, your readers will see the titles of the latest blog entries of bloggers with interests similar to yours. We present a different set of bloggers each time the page is viewed. Unlike a blogroll, we show new bloggers that you or your readers may not know about and the content is always fresh. With the network effect, we can help you reach far more bloggers than any other means today and the service is free.





    Thursday, August 14, 2008

    More Kiwis seek help from Salvation Army

    In today's lead story in the Manawatu Standard, headlined No petrol to get to Sally meals, Janine Rankin says some regular recipients of help from the Savation Army "can no longer afford transport to get to low-price dinners as the cost of living bites".

    As many as 140 people reportedly turn up for the Salvation Army's $3 meal every Thursday evening. Children dine free.

    In the same article, Salvation Army community ministry manager Gwenda Kendrew is quoted as saying that, in June alone, 23 families who had never used the Salvation Army's foodbank before had asked for help.

    "Hopefully, some of them will be just one-offs," Mrs Kendrew is quoted as saying. "But things are worse this winter.

    "It's not just beneficiaries, but people in jobs, often with a number of children. A lot of people are mentioning power costs and, of course, the price of petrol."


    Wednesday, August 13, 2008

    The Toksee chat widget

    I'm trying the various things offered by the Toksee community, including the chat widget below.



    Tuesday, August 12, 2008

    Kiwi dollar's decline inexorable

    As in the case of the housing market, one wonders how far the kiwi dollar will eventually fall. At 1.30pm today, it was at US69.63c, after touching a low of US69.52c.

    As interest rates here are still high, the fall can only reflect a lack of international confidence in the future of the New Zealand economy.


    Monday, August 11, 2008

    House vendor takes loss of $93,000

    The extent to which New Zealand property values have fallen was revealed by today's news a Christchurch vendor has accepted a loss of $93,000 on a house he bought a year ago for $685,000.

    The case is cited in new data from Quotable Value (QV).

    The figures show the value of property sales fell 2.2 percent in the city in the three months to July, compared with the same period of last year.

    "There are a significant number of vendors who have mounting pressure on them to meet the market, as mortgage repayments on top of increased costs of living start to bite," QV Christchurch manager Mark Dow said.


    Thursday, August 7, 2008

    Don't worry, be happy ... the oil will never run out

    The short-sightedness of the Palmerston North City Council never ceases to amaze me.

    In announcing the go-ahead of its plan for a second bridge across the Manawatu River - at the end of Staces Road in the east of the city - it says: "Current modelling is that if we don't get a bridge there by 2015, there will be significant congestion and traffic queues with [sic] the Fitzherbert Bridge."

    Does the council seriously think we will still be driving cars in 2015? And even if petrol is still affordable for more than a wealthy few in 2015, for how many more years after that will the average motorist be able to keep his/her vehicle on the road?

    Instead of planning to spend $55 million on a new bridge - almost certainly a gross under-estimation of the final cost, if precedent is anything to go by - the council should be planning for those dark days, in the not-too-distant future, when public transport will, for most of us, be the only means to get around.


    Yet another finance company fails

    And still they fall like ninepins...

    When Strategic Finance today announced it had suspended redemptions of its secured debenture stock and subordinated notes, it became the 27th finance company in the past two years to either run into difficulty or collapse.

    Strategic has also stopped accepting subscriptions for debenture stock and subordinated notes under its current prospectus and investment statement.


    Wednesday, August 6, 2008

    Will Kiwibank be sold?

    Late last month, I finally got around to opening a Kiwibank savings account at New Zealand Post. My only hope is that Kiwibank doesn't go the way of the old Post Office Savings Bank, which was set up by the New Zealand Government in 1876 to give small investors a ready means of saving.

    The POSB, which traded as PostBank, survived until 1989, when it was bought by the ANZ Bank. (In 1987, the Postal Services Act had split the New Zealand Post Office, a department of the government, into three entities - PostBank, a postal services company [now known as New Zealand Post] and a telecommunications company [now known as Telecom New Zealand].)

    And what did the ANZ Bank do with its acquisition? The answer is that, after a "decent interval", the ANZ closed it down. One by one, PostBank's branches were shut, and its customers were shunted to the ANZ. Today, I doubt you will find a single branch of PostBank in the country.

    None of this was in accordance with the wishes of the New Zealand banking public, which has always favoured retention of a New Zealand government-owned bank. Hence the initiation of Kiwibank, as part of Alliance Party policy in the 1999-2002 Labour-Alliance coalition government.

    Today, Kiwibank is owned by the New Zealand government and is chaired by former New Zealand prime minister Jim Bolger. But who can say what will happen in the future, in view of National Party deputy leader Bill English's comment, at a party conference last weekend, that National will sell the state-owned bank "eventually"?

    Since then, there has been some fairly furious back-pedalling by National, which knows how keen New Zealanders are to see that Kiwibank remains in government hands. But does that mean that Kiwibank won't be privatised - and bought by a big "Aussie bank", possibly the ANZ?

    Only time will tell.


    Saturday, August 2, 2008

    Economy goes down, but alcohol sales go up

    New Zealanders are spending less on almost everything except petrol and alcohol, a Fairfax report in today's edition of the Manawatu Standard says.

    "Not surprisingly, the biggest spending increase [has been] at the pump, [where] motorists shell[ed]-out 25 percent more on petrol in May than 12 months ago," the report says, citing the findings of Statistics New Zealand's latest retail survey.

    "Spending increases of around 10 percent were also seen at bars, clubs, department stores and liquor outlets, which comes as no surprise to social commentators.

    "Canterbury University psychology department professor Simon Kemp [says] though Kiwis [are] spending less money out of concern about their future prospects, alcohol [is] different as it help[s] people relax."


    Friday, August 1, 2008

    More pain for investors in property

    Where will it end?

    Today's freeze of a property fund that has nearly $420 million under management, by AMP Capital New Zealand, makes one wonder how many more investors are going to be financially ruined, or at least seriously inconvenienced, by the global economic crisis.

    The AMP Capital NZ Property Fund has suspended redemptions and will accept no new applications, the company announced.

    The fund has about 2900 AMP retail investors.


    Thursday, July 31, 2008

    The frustrations of globalization

    On Tuesday, I took my old Sunbeam water purifier, which leaked every time I used it, to the recycling center. I then headed to the electrical goods store to buy a replacement. A routine operation, you might think.

    About half an hour later, I had my new machine on the kitchen bench at home. The machine's design had changed, but its principle seemed to be much the same. It even used the same filter cartridge.

    The instructions left a little to be desired, but were probably superfluous. After all, there is not much more to do than fill the machine's receptacle with water and switch it on.

    All went well until I noticed that water was leaking from the base as well as spurting into the jug I had positioned under the spout. I switched the machine off and consulted the "troubleshooting" section of the instructions. These said such leakages could be caused, as in the case of the previous model, by an incorrectly fitted cartridge.

    I removed the cartridge and reinserted it. No improvement. I called the help line and was put through to a gentleman with an Indian accent. Where was he, I wondered. In Bangalore?

    The man suggested I check a screw on the base, which might be loose. It wasn't. Eventually, I took the machine back to the shop, which gave me a replacement.

    End of problem, I thought. I was wrong. I couldn't get any water to pass through the second machine, and returned it to the shop the next day. I suggested that someone demonstrate its use to me. Of course, everyone was too busy to do that, although a mere 10 minutes would have been enough.

    The store called Sunbeam, which suggested I be given a third machine. The store didn't have one, so I accepted the offer of a refund. And now I have no water purifier.

    Was I doing something wrong? I don't know. Perhaps the fact that Sunbeam has outsourced its production to China had something to do with my difficulties. In the good old days, when appliances were made locally, I could have taken the machines back to the factory, and found out whether they were, indeed, faulty.

    Three cheers for globalization!


    Tuesday, July 29, 2008

    Kiwi dollar nosedives

    The exporters who, until recently, were moaning and groaning about the high kiwi dollar must be happy.

    As the New Zealand economy has declined, it has taken the dollar with it - from above US82c in mid-March to below US74c last week. It closed today at US74.37c.

    But worse is to come. According to a Bloomberg News report last week, Lehman Brothers expects the currency to fall to US64c by the end of the year and to US60c at the close of 2009.

    Today, the Bank of New Zealand said the New Zealand dollar could fall closer to US70c by end of the year and to US64c by the end of next year.


    Friday, July 25, 2008

    Skilled get more; unskilled get less

    A survey of 73,000 jobs listed on the Trade Me website shows average pay rates rose by 3.7 percent between the last quarter of last year and the first half of this year, the New Zealand Press Association reported today.

    During this period, the average salary in New Zealand rose from $55,583 to $57,664.

    Trade Me, which conducted the survey, said it was not scientific. It provided only a snapshot comparison.

    Another of its findings was that unskilled workers went backwards in nominal terms, even before the annual inflation rate of 4 percent was taken into account.

    Kitchen staff were the worst paid at $28,831, down from $29,625. Waiting staff were at $30,296, down from $30,826; caregivers at $30,894, down from $31,967; shop assistants at $31,668, down from $32,565, and cleaners at $31,704, down from $31,964.


    Thursday, July 24, 2008

    Reserve Bank cuts rates, but I'm not rejoicing

    It wasn't the news I wanted to hear: The Reserve Bank today lowered New Zealand's official interest rates from 8.25 percent to 8 percent.

    As far as I am concerned, as a greedy oldie, the official rates can never be too high, as high official rates invariably result in high interest rates on my term deposits.

    The reduction by the Reserve Bank - the first cut in official rates in exactly five years - could have been greater, in view of inflation figures released last week. These showed that annual inflation had climbed to 4 percent.

    Economists now believe it is likely to hit 5.5 percent later this year - a level that is well above Reserve Bank governor Alan Bollard's 1 percent to 3 percent target band.

    Working in favour of people like myself are the very high rates of interest that banks are having to pay offshore, where they source about 25 percent of their funds, because of the global credit crisis.

    So for the time being, at least, my income from my long-term deposits will probably remain reasonably high.


    Wednesday, July 23, 2008

    Hanover Finance bites the dust

    What can I say, except that I am really glad I didn't put any of my $400,000+ retirement money into a finance company.

    No doubt many people felt that Hanover Finance, which today announced it was suspending acceptance of new investments and repayment of existing deposits, was secure - even if lesser finance companies were falling by the wayside.

    This is what the company's website said until today:

    Hanover Finance has a proud history of delivering strong financial performance and consistent returns to investors over 23 years. We are one of the five biggest finance companies in New Zealand and one of only six with an international long term credit rating, BB+ from Fitch Ratings.

    Key to our success is our wealth of experience in property finance. We know the market. We deal with experienced, successful developers who we know, and we apply strict loan approval criteria which results in only one in five loans being approved. Over the years we have managed the business through a range of market conditions, delivering consistent returns to investors through sound financial strategies.


    Today, the entire website has gone, and been replaced by a press release that reads, in part:

    Hanover Finance, which continues to meet its Trust Deed obligations and has ongoing financial capacity to trade, says it is acting early to preserve value in the business as market conditions continue to deteriorate and uncertainty mounts over borrowers’ abilities to repay as forecast.

    Shareholder Mark Hotchin says: "Against a backdrop of global credit uncertainties, falling property prices and lower reinvestment rates, the industry model has collapsed. Alternate financiers are increasingly unwilling to step in, and we’re also now starting to see borrowers trying to take advantage of the uncertainty to delay payments - further compounding the situation."


    It's dismal news for the investors who put about $1.2 billion into the company, according to the December 2007 six monthly accounts (the latest available).

    Mr Hotchin, a co-owner of Hanover Finance (with Eric Watson), said this evening that the recent collapse of finance companies Dorchester Finance, Dominion Finance and St Laurence had seen all new investment in Hanover dry up.

    Reinvestment rates from debenture holders had plummeted from around 40 percent to less than 20 percent in the past few months.


    Tuesday, July 22, 2008

    The exodus to Australia continues

    A net 31,900 people crossed the Tasman in the year to June 2008, figures released yesterday by Statistics New Zealand showed. It was the highest migration level in 19 years.

    In the year to May 1989, the net figure was 32,000.

    Last month, the net outflow of migrants to Australia was 2900, up from 2200 in June 2007.

    As many of those migrating to Australia are skilled people, the exodus could worsen the shortage of strategic skills and contribute to the dampening of the economy, says ANZ National Bank chief economist Cameron Bagrie.


    Sunday, July 20, 2008

    'Incentivization' of bank workers under fire

    The finance sector union Finsec is teaming up with Green MP Sue Bradford to launch a campaign for fair lending regulations for New Zealand's banks.

    Finsec wants all the banks to join a discussion of proposals to phase out, or at least modify, their sales incentives. It claims these incentives have shifted banks from a service- to a sales-driven culture.

    In today's edition, the Sunday Star-Times says it has obtained copies of some of the banks' incentive schemes, under which staff are "incentivized" to sell products.

    At the ANZ, for example, management sets "revenue targets" before the financial year begins. These show how much money the bank would like to make from its customers for its shareholders in the coming year.

    This revenue target is then "translated into required product sales" - the number of mortgages, credit cards and term deposits the bank needs to sell to reach the target.

    Every employee with a sales role is then given his or her personal target, which requires minimum sales in each category to qualify for a bonus.


    New Zealand house prices plummet

    House prices are falling more steeply than official figures suggest, sending household wealth tumbling and curbing consumer spending, today's issue of the Sunday Star-Times says.

    The paper says Bernard Hickey, managing editor of interest.co.nz, is predicting that house prices will drop 30 percent during the next two years, as the foreign capital that funded the housing boom dries up, and that prices won't return to the November 2007 peak until 2018.

    Since last November, the national median house price has fallen $12,000 - a drop of 3.4 percent, which is equivalent to an annual drop of nearly 6 percent.

    The head of TradeMe Property, Brendon Skipper, says properties are taking 20 days longer to sell, and that the average property now stays on the site for 60 days. The number of listings is also declining, he says.

    But the rental market is "going gangbusters". In fact, he says, the number of properties listed for rent has increased by 38 percent during the past three months.


    Friday, July 18, 2008

    NZ lending rates could go even higher

    Looking forward to lower lending rates in the near future? Don't hold your breath.

    As the country waits for next week's announcement by the Reserve Bank, which could include a cut in official interest rates, the BNZ is warning that banks' lending rates could go even higher, because of the global credit crisis.

    BNZ economist Craig Ebert says 20 percent to 25 percent of funding for the New Zealand banking sector comes from offshore, and that overseas markets are "charging a pretty penny" for the money because of the credit crunch.

    "The fact of the matter is, global money has become as expensive for NZ banks as it's been in many a year," Mr Ebert said today.

    "...While all and sundry are looking forward to falling interest rates, we are worried that term retail rates might have to go up - and stay there for a good while to come."


    Wednesday, July 16, 2008

    Kiwis defaulting in basic bill payments

    Loan defaults in New Zealand are up sharply and new loan applications are down, says credit information company Veda Advantage.

    Consumer defaults were up 7 percent in the first half of the year, compared with the same period of last year, and commercial defaults were up 24 percent.

    Veda Advantage says there have been sharp jumps in the numbers of people defaulting in their payments of such basic bills as phone (up 148 percent) and internet bills (up 100 percent).

    There was a 21-percent drop in mortgage applications in the first half of 2008, compared with the same period of last year.


    Bank outsourcing work to India

    The work of 238 people in the ANZ National Bank's lending services centre in Auckland and customer transaction service centre in Wellington will be outsourced to India, the bank announced yesterday.

    Finance workers union Finsec today accused the Australian-owned bank of being greedy and a bad corporate citizen. Finsec campaigns director Andrew Campbell said the bank could easily afford to employ a New Zealand workforce, but wanted to meet a stated goal of doubling its profit in five years.

    The work of the employees in the two centres will be done in India at a quarter of the cost.


    Tuesday, July 15, 2008

    NZ food prices up 8.2 percent in June year

    Soaring food and petrol prices pushed annual inflation up to 4 percent in the June year, after the Consumer Price Index (CPI) leapt a higher-than-expected 1.6 percent in the June quarter, Statistics New Zealand said today.

    The department reported that food prices rose 8.2 percent in the June year – the highest rise in the Food Price Index (FPI) for 18 years.

    The annual inflation rate rose from 3.4 percent in the March year, and has now been outside the Reserve Bank's 1-3 percent target band for three quarters.

    Yesterday, figures released by Statistics New Zealand showed that total retail sales fell by a seasonally adjusted 1.2 percent in May, or by $69 million. It was the biggest monthly decline since February 2004, and was led by lower auto and furniture sales.

    In the past month or so, my sales of secondhand books on the internet have slowed. This week, I sold only one book.


    Saturday, July 12, 2008

    Change course now, say Greens

    Green Party Co-Leader Russel Norman has responded to the prediction by Australia's CSIRO (Commonwealth Scientific and Research Organization) that gas could cost $10 a litre within a decade by calling for a rapid change of course.

    "Petrol at that price would make the Government's entire motorway building project a white elephant - modern-day Easter Island statues. Our new motorways would be monuments to short sightedness and profligate waste of resources.

    "Governments even contemplating building motorways like the billion dollar-plus Transmission Gully project in Wellington or the $2 billion Waterview tunnel project in Auckland are seriously out of touch with reality."

    In Palmerston North, I think the city council will eventually have to remove all its traffic islands, median strips, etc., and put down tracks for electric trams. We could have an excellent tram service.


    Friday, July 11, 2008

    Net worth of New Zealand households falls

    Spicers, which describes itself as "one of New Zealand’s most successful financial advice firms", had another dose of gloomy news for us today.

    According to a new survey by the company, the net worth of the average household fell more than $5900, or 1.2 percent, during the March quarter – the largest fall in almost a decade.

    The March decline follows a revised decline during the December quarter of $2500.

    Spicers says the decline was a result of a fall in the value of financial and physical assets coupled with a further increase in debt.

    The index of household assets fell 0.5 percent in the quarter – the first decline in seven years. This was mainly due to the fall in house prices and the fall in the value of managed funds and shares.

    Household liabilities continued to rise, but at a slower rate. Liabilities rose 2.2 percent in the quarter, slower than the 2.7 percent rise in the December quarter.


    Thursday, July 10, 2008

    NZ workers who quit not being replaced

    Half the employers questioned in a survey of businesses north of Taupo, in the center of the North Island of New Zealand, say they will not be replacing staff when they leave.

    At the same time, the inaugural online survey of employment plans conducted by the Employers and Manufacturers Association (Northern) last month found only 11 percent of the 932 respondents were making definite plans to put off staff.


    Wednesday, July 9, 2008

    Bush knows the game is up

    The following passage is from http://www.lifeaftertheoilcrash.net/

    'For what it's worth, Bush's Crawford ranch has been completely off-the-grid since 2002. The ranch is equipped with the latest in energy saving and renewable power systems. It has been described as an "environmentalist's dream home." The fact a man as steeped in the petroleum industry as Bush would own such a home should tell you something.'

    As I type these words, there are still cars driving past my house in Palmerston North, New Zealand. But for how much longer? One year? Two years?


    Monday, July 7, 2008

    Goodbye good times, hello recession

    It's almost official: The economy is in recession.

    The independent economics group Infometrics says quarterly economic growth is expected to be "negative or close to zero" during the first three quarters of the year.

    It adds that the next five years are not looking positive for New Zealand.

    In its latest long-term forecast, which should come as a surprise to absolutely no one, Infometrics says the recession has been caused by high food and petrol prices, high interest rates and a slumping housing market.

    The economy is set to grow only 0.5 percent in the year to March 2009, after years of 2 percent to 3 percent growth.


    Sunday, July 6, 2008

    Renting beats owning, paper says

    I always thought, as the owner of a mortage-free house, that I had the best deal going. Not so, says The Sunday Star-Times, which has found that, regardless of whether you own an expensive house or a humble abode, "it makes more cents to rent than own".

    "We looked at three areas with different housing-market characteristics," Greg Ninness says in an article in today's issue of the paper. The three areas were Devonport, on Auckland's North Shore, where the median selling price in May was $820,000, according to the Real Estate Institute of New Zealand; Mt Maunganui/Papamoa, where the median was $395,000; and Timaru, where the median was $240,000.

    "We then estimated what that money would earn if it were invested, instead of being tied up in a property. We used a conservative benchmark for this: Kiwibank's term-deposit PIE account, which pays interest of 8.85 percent and is taxed at 30 percent. This provided an annual income figure.

    "We then looked at the cost of renting a property in the same area. We drew the likely weekly rent figures from the Department of Building and Housing's Tenancy Bond Centre. In each case, the rents were for a three-bedroom house and the rents were in the upper quartile (top 25 percent) for that type of property, ensuring they reflected the cost of renting a good-quality house in each area.

    "The rents ranged from $600 a week in Devonport to $250 in Timaru.

    "In each case, this left a significant surplus, even after deducting tax from the investment interest and paying rent.

    "In the Devonport example, this was $19,599 a year, in Mt Maunganui/Papamoa $6270, and in Timaru $1868. These amounts would be cash in the hand to the investors.

    "We also had to allow for the fact that people who own their homes have to pay for rates, insurance and maintenance on their properties, whereas those who rent do not.

    "When these are added into the equation ,they considerably improve the financial advantage of renting over owning."


    Friday, July 4, 2008

    Is there still money in sex?

    Every day, we read about the hard times that people are having, as a result of the credit crunch and the rises in gas and food prices. And if one thing is certain, it is that things will become tougher as oil reserves dwindle.

    I was therefore a little surprised to read of the ambitious plans for a "high-class brothel" in Dannevirke - a town in an area that was, as its name suggests, settled in the 19th century by people from Denmark. It is on the other side of "the Ranges", a 47-minute drive from Palmerston North.

    Who, these days, can still afford to pay $100+ for sex? I'm sure there aren't many local people who can, as the area is in economic decline.

    According to news reports this week, the Tararua District Council has given the green light to the brothel, which is to be called Promiscuous Girlz and which is to be located in the historic Public Trust Office on the town's main street.

    The brothel's prospective operator promises that signage around the premises will be discreet.


    Tuesday, July 1, 2008

    Pessimism grows over employment prospects

    The Westpac McDermott Miller employment confidence index fell eight points to 120.8 in the June quarter, reflecting the increasing realization among employees that the economic downturn will result in further job losses.

    A number above 100 indicates there are more optimists than pessimists, while a number below 100 indicates that pessimists outnumber optimists. The index is thus still in positive territory, despite the loss of 29,000 jobs in the first quarter of this year (according to Statistics New Zealand figures).

    My own employer, Fairfax Media, today announced that about 40 sub-editors (copy editors) are likely to be made redundant at the company's newspapers in New Zealand, as a result of a planned restructuring that will see "hubs" created in Wellington and Christchurch to handle the editing of the features, world and business pages for all the papers. Each paper will thus be left with a smaller staff to handle the editing of mainly local news.

    I am a sub-editor at the Fairfax-owned Manawatu Standard in Palmerston North. But as I am now employed on a casual basis in the advertising features department, rather than in the editorial department, I don't yet know whether I will be affected. My boss thinks that, as we make a lot of money for the company, we may be left alone. The fact that I am my department's only sub-editor may also strengthen my position.


    Sunday, June 29, 2008

    Solar panels: some pros and cons

    How long does it take for a solar-panel system to pay for itself?

    Unsurprisingly, that depends on where you live. According to Toby Littin, managing director of importer-installer Elemental, it can take 20 to 30 years for a solar system to pay for itself in major centres such as Auckland, Wellington and Christchurch, where the cost of grid electricity (including line charges) is quite low. But in areas such as Northland, East Cape and Southland, which have high line charges, a system can pay for itself in 10 to 15 years.

    Business customers can usually expect solar panels to pay for themselves in 10-15 years, Mr Littin says. And that if they are in a windy location, where they can install a turbine, that can come down to five years.

    My personal feeling is that the average consumer will consider 20-30 years too long to wait.

    And what is the total cost of installing solar panels - which constitute the most viable renewable energy system for an urban environment? According to the Energy Efficiency and Conservation Authority, it is in the range of $9 to $13 per Watt of power they produce.

    That means a system producing 2kW of electricity - enough to power an electric heater - would cost $18,000 to $26,000. But a similar system would have cost about $40,000 four years ago, so prices are falling rapidly.


    Saturday, June 28, 2008

    Majority don't live comfortably in NZ

    A national survey commissioned by UMR Research shows that 55 percent of New Zealanders feel their household finances don't allow them to live comfortably.

    In the United States, a similar survey found that 60 percent of Americans feel the same way.

    The survey asked people to say whether their household finances left them (1) able to live comfortably, (2) able to meet basic expenses with a little left over for extras, (3) able to just meet basic expenses, or (4) unable to meet basic expenses.

    About 45 percent of New Zealanders said they lived comfortably, 36 percent said they met basic expenses with a little left over for extras, 16 percent said they just met basic expenses, and 3 percent said their finances didn't leave them with enough to meet basic expenses.

    The survey results were announced this week.


    Friday, June 27, 2008

    Figures confirm NZ economy going down

    Data released today by Statistics New Zealand (SNZ) showed the economy shrank by 0.3 percent in the first quarter of 2008, further raising fears New Zealand is heading for a recession. (A recession defined as two quarters in a row of economic decline.)

    In its announcement of gross domestic product figures, SNZ said the agriculture and construction industries, which fell 5.6 percent and 5.2 percent respectively, were the main contributors to the decline in the first three months of the year.

    Household consumption spending fell 0.4 percent, in the first decrease since the June 2004 quarter, SNZ said.

    Adding to the pessimism, Bank of New Zealand chief economist Tony Alexander said the BNZ expects the June-quarter figure to be slightly worse than that for the first three months of 2008.


    Tuesday, June 24, 2008

    The scoffers are silent now

    Well, well, what a surprise! UBS economist Robin Clements says the era of cheap fuel is over - for good.

    I can't help remembering the oil shock of 1973. At the time, I had been in New Zealand for about a year, and was writing articles in which I was warning of the resource shortages of the future.

    I had left Japan, where I had spent 10 years, with a conviction our way of life was unsustainable, and had assumed New Zealanders would be receptive to a call for a rethink of the practices of our industrial civilization. How wrong I was!

    In an editorial in my newspaper, the Manawatu Standard, I was told that the oil crisis had given a "spurious authenticity" to my warnings, and that there was nothing to seriously worry about. Indeed, there was likely to be an oil glut in the 1980s.

    The Economist said much the same thing - that, since World War II, every shortage had been followed by a surplus.

    Well, the wasteful 1980s have come and gone, as have the wasteful 1990s. And now we find ourselves in the late 2000s. And guess what? The party's over!

    No editorial writer is today ridiculing "eco-freaks", "eco-nuts" or "Jeremiahs", and saying that, even if resources are being depleted, technology will soon come up with alternatives. Everyone with more than half a brain knows that we have a crisis on our hands - and that the switch to biofuels is a move that creates more problems than it solves.


    Monday, June 23, 2008

    New Zealand's median rent level falls

    New Zealand's median rent level has fallen $5 a week to $295, Massey University's Real Estate Analysis Unit said today.

    At the start of the year, the median rent level was $300 a week - a record high.

    The unit's director, Professor Bob Hargreaves, said the 1.6-percent drop was unexpected, as rents had been rising steadily since last year.

    Prof Hargreaves said some would-be vendors, unable to get what they wanted for their houses, had apparently taken them off the market and chosen to rent them out instead.


    Saturday, June 21, 2008

    Kiwis flocking to Australia

    A total of 40,030 New Zealanders shifted to Australia in the year to May, Statistics New Zealand migration figures showed today. It was the largest exodus since records began in 1980.

    The figures also showed that only 8504 people moved in the opposite direction in the same period.

    The reason for the exodus to Australia is not hard to find: Council of Trade Unions economist Peter Conway says Australian average wages are 36 percent higher, when adjusted for purchasing power and currency differences.

    Another factor, according to BNZ economist Tony Alexander, is that "we are possibly in a recession at the moment, while they are still growing at 2 or 3 percent".


    Friday, June 20, 2008

    95,000 jobs will go, says Berl

    New Zealand's inflation-targeting policy will cost 95,000 jobs during the next three years, independent economic researcher Berl said today. (The Reserve Bank of New Zealand has a "target band" of 1-3-percent for inflation.)

    Acknowledging the figure was based on a "cursory analysis", Berl said it would be the equivalent of about $7.4 billion of gross domestic product.

    Berl is predicting economic growth of 1.6 percent in the year to March 2009, 2.7 percent in the year to March 2010, and 3.1 percent in the following March year.

    Personally, I think any such predictions in today's volatile world are worthless.


    Thursday, June 19, 2008

    Air New Zealand service was lousy

    "Air New Zealand has tied for third-best carrier in the world, trailing winner Singapore Airlines and Indian carrier Jet Airways," the New Zealand Press Association reported today.

    It's a report I can't allow to pass without comment. When I flew from Auckland to Melbourne in January 2007, all Air New Zealand could offer me for lunch was a greasy meat pie. I refused it, with appropriate disgust.

    Four days later, I flew from Melbourne to Wellington on Qantas, which was much better. But Wellington Airport had been fog-bound that morning, and the congestion at check-in resulted in my missing my flight to Palmerston North.

    That was my fault, Air New Zealand told me. I should have pushed my way to the front of the queue - as though a civilized person could do such a thing. I was offered a seat on a flight the next day. Needless to say, I didn't take it. I returned to Palmerston North by bus.

    In today's report, NZPA said the airlines were chosen on the basis of a survey by British consumer magazine Which?

    Singapore Airlines, which carries 18 million passengers a year, won top prize, while India's Jet Airways, which carries about 10 million passengers, was runner-up.

    Air New Zealand, which carries 12 million passengers, shared third place with Palmair, which operates only one plane, a 34-year-old Boeing 737, that carries 70,000 passengers a year.


    Wednesday, June 18, 2008

    NZ financial meltdown continues


    Dominion Finance Holdings Ltd


    Dominion Finance today became the 21st New Zealand finance company in the past two years, and the 18th in the past two years, to get into difficulty.

    The company's total of debentures fell 22 percent to $276 million in the year to March, which meant that there was a net outflow of $79 million of investors' money.

    As a result of its liquidity problem, the company today said it was investigating a moratorium on payments.

    This means that a total of $2 billion of investors' money is now in question in New Zealand.

  • Despite the economic downturn, New Zealand is to retain its Aaa sovereign credit rating, Moody's said today.

    The ratings agency said in its regular review that the country's high per-capita income, institutional strength and sound government balance sheet continue to underpin the rating.


  • Tuesday, June 17, 2008

    Kiwi dollar's fall expected to continue

    There was bad news today for all those, like myself, who buy internet services with US dollars.

    Currency watchers said they expected the New Zealand dollar to maintain the downward momentum that has taken it US7c off late February's peak of US82.15c.

    One such watcher, the Bank of New Zealand, said it expected the kiwi to trade down to US72c by September 30 and to US69c by December 31.

    (By 5pm today, the kiwi was buying US75.61c, compared with US75.06c at 5pm yesterday.)

    A level of US69c sounds incredibly low these days. Yet there was a time, in the early 1990s, when I was happy to get any rate above US60c.


    Monday, June 16, 2008

    Kiwi dollar remains steady

    The New Zealand dollar remained steady today in quiet trading. It closed virtually unchanged at US75.06, compared with Friday's close of US75.02c.

    Sunday, June 15, 2008

    Kiwibank cements its position at the top

    I love the comment made today by Kiwibank chief executive Sam Knowles, after Kiwibank won the third annual Sunday Star-Times Cannex Banking Awards.

    Taking a swipe at those silly television commercials in which the big banks strive to be perceived as friendlier than their rivals, Mr Knowles pointed out the obvious: that people are not desperate to have a deep and personal relationship with their bank.

    "What people want is good, honest value. The only time they want the bank to be their friend is [when] they want to borrow money," he said.

    Kiwibank came out on top in the Awards by sweeping five of the 17 categories, and placing second or third in four others.

    In the past year, Kiwibank has introduced a credit card with no annual fee, a rechargeable Visa debit card, and term deposits wrapped up in a tax-advantaged PIE fund. It passed the 600,000-customer mark in February.


    Friday, June 13, 2008

    Kiwi dollar falls to below US75c

    By 8am today, the New Zealand dollar was buying US74.98c, compared with US75.40c at 5pm yesterday. It is thus at a five-month low in relation to the greenback.

    Thursday, June 12, 2008

    Food prices soar in New Zealand


    Today's announcement by Statistics New Zealand that food prices leapt another 1 percent in May, driving the Food Price Index (FPI) up 6.8 percent in the year to May, led to more ritual hand-wringing on the evening's television news show. And as New Zealand is a big producer of dairy products, much of the debate was about the high price of milk. Perhaps that should read "prices", as not all supermarkets and dairies (corner stores) charge the same amount per liter.

    During the course of the year, fresh milk prices rose 21.5 percent, cheddar cheese prices 59.4 percent, and butter prices 80.1 percent. A two-litre plastic bottle of milk, bought from the supermarket today, cost us $4.26. When we came to New Zealand in 1972, we bought milk by the pint and paid the princely sum of 4c per pint (in a glass bottle) delivered to our gate by the milkman.

    Remember the clink, clink of the bottles in the crate?


    Wednesday, June 11, 2008

    Recession fears rise in New Zealand

    A survey by the Royal Institution of Chartered Surveyors, published on Tuesday, showed house prices in Britain are falling at rates not seen in at least 30 years.

    The situation in New Zealand is not as bad - yet. Today's figures from the Real Estate Institute, which show that house sales fell more than 50 percent in May from a year ago to their lowest level in 16 years, led analysts to predict further price declines.

    These figures, plus today's report from Statistics New Zealand that seasonally adjusted export volumes fell 3.5 percent in the March quarter, stoked fears of a recession.

    "You'd have to say that the chances of recession are increasing," said Mark Walton, economist at Bank of New Zealand.

    The New Zealand dollar showed little reaction to the data, holding above a four-and-a-half-month low of US75c hit yesterday.


    Monday, June 9, 2008

    New Zealand house prices still falling

    New Zealand house prices rose by 2.4 percent in the year to May, down from 4.9 percent in the year to April, Quotable Value said today in its monthly report.

    "There are increasing reports that, where sellers aren't under financial pressure or needing to relocate, they are choosing to take their properties off the market or rent them out rather than accept lower offers," QV's Mark Dow said.

    "Both our preliminary statistics and feedback from our valuers in the field suggest that this decline [in prices] is set to continue for some time yet."

    Just how low will they go? Last week, the Reserve Bank forecast a fall in house prices of 13 percent, or 22 percent adjusted for inflation, from their peak last year. But perhaps we should look back to 1970s for an indication of what might happen. After the first oil shock in 1973, real house prices fell 38 percent.

    QV said that in May the average house price in New Zealand fell by about $1000 to $387,299.