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.