In This Issue: Honey! Who Shrunk The Economy! - Rupert’s Holidays For Hardworking Hacks - Richard Long Fails To Front For Todd Debate.
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Honey! Who Shrunk The Economy!
While a brave face is being put on yesterday’s growth statistics, the truth is they are alarming. What was a booming economy just six months ago – may have already have become a shrinking one.
While the export sector is caning it, and the building construction sector was doing well in the March Quarter the June Quarter - that we have just finished may well be a quite different story. Last week Jack Forsyth remarked on the problem in his weekly vegetable market roundup. Prices were flat and low. Why? He didn't know.
More recent stats are showing a pattern however. The NZ housing market has now fallen substantially from its new year highs. Retail spending is flat. Food prices are flat.
Deutsche Bank is now picking 0.3% growth in the June Quarter which you will observe is only a smidgen away from 0% - and as watchers of the economic cycle will know, the trend for forecasters in a falling business cycle is for growth to be overestimated (just as the trend in a rising cycle is for forecasts to underestimate).
The bottom line is that the substantial surpluses forecast in what were seen by most as a conservative first budget from Dr Cullen, are now in threat. And while the positives are being accentuated - for fear that we will talk ourselves into a recession - privately senior business leaders are now even openly admitting that the NZ economy is in for a couple of years of tough times.
In these circles the conventional line is that the economy is rebalancing itself - whereas the domestic sector has performed through the 1990s. With a new high interest rate - low dollar environment it is the "tradeable" sector's turn to fly. Unfortunately however it ain't quite this simple. Mainly because the "tradeable" sector is only one third of the economy.
The problem of house price deflation in particular is the most significant potential problem emerging in the latest economic scenario. NZ home owners have over the last decade increased their average borrowings by around 100%. A combination of effects – falling interest rates, the accommodation supplement and the willingness of NZ’s foreign owned banks to finance this expansion (often to pay off credit cards – which are then promptly reissued) - have led us to this pass.
This expansion – in mortgages (the literal translation of which is “death grip”) – has become the most significant driver of growth in the NZ economy during the past decade. The problem is that it is now stopping. In the first four months of 2000 the level of NZ owned deposits did not rise at all. At the same time the level of foreign owned deposits – backing NZ loans - rose by $3.5 billion! Basically the Belgian dentist now has NZ by the balls. He is capitalising his interest and is not particularly keen to continue to inject more funds.
So whose fault is it? Who shrunk the economy?
National and ACT will of course blame the Government for hurting business and consumer confidence with their ‘orrible ERB.
Meanwhile Labour and the Alliance will blame the legacy of National and ACT and the huge current account deficit.
The Alliance and the Greens will blame the lack of tariffs and the rises in cheap imports.
And pretty soon – as soon as the shit starts to really hit the fan - everybody will be blaming dear old Dr Don Brash.
Sludge meanwhile believes all the politicians will have it wrong. Sludge reckons it's the dentist's fault! Sludge plans to explore this theme fuller in coming days.... watch this space....
Rupert’s Holidays For Hardworking Hacks
From the look of things the Belgian Dentist is not the only one hoarding his pennies at the moment.
After attacking our greatest equestrian hero, media mogul Rupert Murdoch has turned back to his long term goal to make New Zealand’s media more mediocre.
Rather than hiring enough staff to actually publish his newspapers, Rupert has launched a new programme for the truly dedicated hack. After all, who needs holidays!
Rupert’s minions at Wellington Newspapers are – according to an advert obtained by Sludge - being offered “working holidays” at the Manawatu Evening Standard.
“Here in PN” writes the editor Tony Curran in his advert under the heading “KIDNAPPED”. “We already have in our custody one of WNL’s senior layout subs…. He’ll be going home with a few well earned extra bucks for joining us on a working holiday…If you’d like to join us on a temporary secondment – and earn extra cash while you are on official leave – give me a call. But please – if you’re an INL employee - ask your editor first.”
Yeah right! That’ll keep them fresh and on the ball. Brimming with creative verve. Sludge also wonders if the editor will say yes? Sludge also wonders if this is legal?
Richard Long Fails To Front For Todd Sting Debate
Speaking of Murdoch’s minions, the failure of Dominion Editor Richard Long to front for a discussion on Backchat on the Mark Todd sex and drugs story, is causing considerable discussion in Sludge’s circles.
Given Michael Laws (who Sludge thought did a great job.) accusation line -“ if you are willing to publish the results of a set-up of Mark Todd how would you like the same done to yourself?” – Sludge’s colleagues have been wondering if Long himself has anything to hide?
It was a shame Long did not front, because if he had, then we might have gotten to the bottom of just why New Zealand’s newspapers took so keenly to savaging such a popular public icon as Mark Todd. One simple question. The Sunday Mirror is owned by who? Yes that’s right, Rupert! And as TV3 and the Herald pointed out - once the story was in play they had to run it.
Sludge wonders if this story would have played differently if NZ had an independent media - rather than branches of Rupert and Tony’s multinational media empires. Sludge reckons that if we did then the story on Todd might have read “NZ Hero Set Up By Shameless Pommy Tabloid Media” - rather than concentrating on the tabloid sleave perspective and the lurid details obtained through the Mirror’s “sting”.
Certainly that angle would have gone down better with the NZ public who do not appear to be enamoured with the way the media have handled this saga. But then it figures that Dick Long didn’t get his subs to re-angle the Mirror’s story - they’ve all been kidnapped and sent to Palmerston North!
© Sludge 2000