Musical Chairs

Because of the way we've constructed our cities and regions, there's not much choice but to drive. But at those prices, someone on the minimum wage might be working 10-15 hours a week just to put petrol in the car, let alone deal with spiralling food costs

Not going back to 1960. Here's the most recent consistent dataset by sector.

We got a HUGE injection of global reinsurance money to spend and the domestic demand it created was a 'Key' reason we pulled the economy out of the Post-GFC slide sideways.

Yes, while the country deficits with the rest of the world. How was that possible? Maxing out private debt levels (a trick that can't be repeated). Govt finance on cheat mode.

The key implication btw is that shareholders expect a return and loans need to be repaid. These costs have to be passed onto customers through higher prices.

A lot of debt, yes, but also company shares are their liabilities. How are NZ companies worth so much? Basically, because they own a lot of expensive land and property.

PS... the Govt having a net positive financial worth relies on the private sector, net, being in debt to Govt. This is very unusual - normally reserved for Govts that use the proceeds from trade surpluses to build up wealth funds.

Oh, and if you want to really spin the ghouls' heads ask them whether our businesses having the most negative net financial worth in the OECD is perhaps a bigger problem than having very low levels of Govt debt (and crumbling infra)? [Ends]

Perhaps most importantly, the NZ Govt is not really in 'net debt' at all - the Govt has more financial assets than liabilities. We're saving up for a rainy day apparently. Let's hope that all those shares and equity will be worth something when it rains. [3/n]

2. If you want to compare Govts, at least consider changes in private debt levels. I don't like these comparisons much tbh given that we change Govts mostly when the global economy takes a downturn (or RBNZ engineers our very own recession). Oh, and ffs Muldoon! [2/n]

Folks on the other place trading competing 'analysis' of Govt debt levels / surpluses 'handed over' by red/blue led Govts. Few things to consider...
1. We could only reduce public debt by increasing private debt. We now have v.high private debt and we're getting milked by banks and rentiers. [🧵1/n]

So, how do businesses afford to pay $23bn dividends to shareholders and $14bn interest on debt? By charging us loads for stuff, basically. We have a chronically low-competition, weakly-regulated economy. Also worth noting that our businesses have serious high liabilities (shares, debts etc). [3/3]

Now let's look at dividends payable / receivable to see how NZ business profits are distributed. Again, we're in vassal state territory here - businesses paying out $23bn in dividends (net) with offshore rentiers being the main beneficiary. [2/3]

Couple of off-cuts...
Interest paid and received by sector without the banks (who take $48bn and pay $47bn). This *has* to balance.
See how much interest we pay to the rest of the world on the NZ financial assets they own? Note the net $14bn paid out by our business sector! [1/3]

Random off-cut... landlords spent the 2010s building up their equity. Great work guys.

It's the pile of mortgage debt that matters, but house prices are a factor in that, yes.

$392bn mortgage debt x avg 4.97% interest rate = $19.5bn of interest payable.

Created to answer a question elsewhere. The interest and dividends receivable and payable by sector. These are enormous flows - driven by stocks of financial assets and liabilities held and owed by each sector. Who are the winners and losers?

This one's a bit more up to date...

If Trump keeps burning the world for the Epstein Class, Luxon will soon be mansplaining to Heather how oil price spikes drive inflation surges in NZ. You know, like in 2022.

Shameless inclusion of one of my favourite charts to finish. I would argue that we have nearly reached the end of the 'yay, we have more money to spend thanks to cheaper mortgages' period. Yet, our job growth is zero and businesses are not looking to invest. So, tell me, is the recovery on? [Ends]

Lower debt servicing costs *have* translated into higher profits for business. That's why we have seen some stabilising in the economy, and why GDP, which is a measure of 'surplus', will stop slumping. But, the latest data suggests that we have hit the floor here. Card played. [4/n]

Same metric over the last 20 years. Note that in the post-GFC period, whenever real mortgage interest per capita exceeds $250, the economy quickly slows. It's obvious: more money taken from spenders and given to savers and bank equity holders = less money being spent = less demand / jobs. [3/n]

Let's adjust those interest payments for inflation and the size of the population. Nope. Still a good 20% higher than the 2017 - 2019 period. [2/n]

Quick update on the source of much hopium - cheaper debt costs. Here is today's data on interest payments per month for mortgages. The average interest rate paid has just dipped below 5%, BUT, outstanding housing debt has hit $392bn ($100bn higher than Oct 2020). So, that sucks (literally $) [🧵 1/n]

Begging the media to point out that job schemes are pissing in the wind of a depressed economy. There is not enough demand, so not enough jobs, so stop gaslighting poor people and the public you ghouls.

See also: It seems young kiwis aren't willing to leave their friends and families to work split shifts in care homes / pick fruit / labour on rural road builds, while living five to a room in a dodgy rental or a farm portacabin.

Quick look at where the tax revenue is coming from - ah, yes, bracket creep. Fwiw, taking money off wages is a terrible recession escape strategy. (3/3)

Here's the zoomed out view. Bobbling down or along still - like 2010 maybe? (2/3)

Tax revenue day. Still sliding sideways / down on last year (it's almost like there is a pattern here). (1/3)

Regular readers will know that I have been worrying about the apparent recovery being, actually, a settling at a new low. Latest jobs data doing nothing to allay my fears. No pushing through to job growth apparent in the data at all. Image 2 has the critical service jobs.