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.

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    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

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