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  • Originally posted by speights boy View Post
    My guess Perry, is that Mr Wheeler's mandate is monetary policy not economic policy.
    So what do you see as the relationship[s], if any? E.g.
    If someone said to the RBNZ that its monetary policies
    were detrimental to economic policy, could the reply be
    not our problem?
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

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    • It works inside the Policy Targets Agreement; 'owned' by the Govt, with its finances included in the Crown accounts.
      A co-operative agreement, while maintaining a healthy level of independance I guess.

      www.rbnz.govt.nz/news/2012/4941968.html
      Last edited by speights boy; 01-02-2013, 10:50 AM.

      Comment


      • Sorry not sure if rant belongs completely in here but with media making housing inflation a political issue I think its important to look at the logic.

        I don't know why money flooding in from overseas pushing up house prices is a bad thing.

        If we were mining something, everyone would be like yay, this is good for the economy. But mining something would mean the resources leave the country forever, land can not be taken overseas. If a bunch of people want to pay ridiculous prices for a few hundred square meters of land then let them, we have paddocks of the stuff.
        Hamish Patel | ph: 09 625 4693 | mob: 021 625 693
        My Website
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        • Originally posted by mortgage broker View Post
          I don't know why money flooding in from overseas pushing up house prices is a bad thing.
          I guess Hamish, if you are in the business of organising 95% mortgages then you are correct.
          It is not a bad thing.

          Comment


          • Originally posted by speights boy View Post
            It works inside the Policy Targets Agreement; 'owned' by the Govt, with its
            finances included in the Crown accounts.
            I wonder if it's 'just the money' for the gummint?

            Originally posted by speights boy View Post
            A co-operative agreement, while maintaining a healthy level of independence I guess.
            But what of the consequences to exporters, to wage and salary earners
            and to the NZ economy as a whole? Sort-of reminds me of a certain med-
            ical parody:
            The operation was 100% successful, but the patient died.
            Satirising that further:
            Monetary policy was 100% successful, but the economy died.
            Austro has mentioned the low rates for his mortgage. He says that the local
            inflation in Austria is actually higher than his mortgage rate.

            So what happens (to the NZ economy) if the RBNZ drops the OCR to 1.1%? (say)
            Or whatever figure would make it pointless for global hot money trying to buy up
            the NZ dollar, pushing it's (perceived) value up and hurting exports.
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            • A question for Hamish. I have loans with both ANZ and Westpac, a term loan with Westpac finishes in March, and my broker has come back with rates from both banks. ANZ are sharper, Westpac if squeezed might meet ANZ's rates. I have just received a cashback for a new loan for a new property so looks like banks are still doing these. My question is about churning. Loyalty aside (and yes there are vestiges of loyalty remaining in my system) the incentive is to change banks and get the cash back. Are the banks aware that the incentive is to change banks? Will I get a black mark for disloyalty if I change banks just to get the cash back? So far cash backs have far exceeded my legal fees.

              Comment


              • Originally posted by Perry View Post
                So what happens (to the NZ economy) if the RBNZ drops the OCR to 1.1%? (say)
                Or whatever figure would make it pointless for global hot money trying to buy up
                the NZ dollar, pushing it's (perceived) value up and hurting exports.
                I don't know Perry.
                https://nzx.com/markets/NZDX/bonds/GOV290

                God, grant me the serenity to accept the things I cannot change,
                The courage to change the things I can,
                And wisdom to know the difference.
                Perhaps when Spaceman is allowed back into the playgroup, he may have a few ideas.

                Comment


                • Originally posted by speights boy View Post
                  So what does all this mean for us uninitiated?
                  The government's offering 1.06% on what it
                  borrows, over 3 years, while the OCR is @ 2.5%
                  and many bank TDs are 4-5% over 1-5 years?

                  Last edited by Perry; 01-02-2013, 01:31 PM.
                  Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

                  Comment


                  • Originally posted by mortgage broker View Post
                    Sorry not sure if rant belongs completely in here but with media making housing inflation a political issue I think its important to look at the logic.

                    I don't know why money flooding in from overseas pushing up house prices is a bad thing.

                    .
                    Because people farming ruins our economy.

                    Comment


                    • Originally posted by Perry View Post
                      So what does all this mean for us uninitiated?
                      The government's offering 1.06% on what it
                      borrows, over 3 years, while the OCR is @ 2.5%
                      and many bank TDs are 4-5% over 1-5 years?
                      Inflation.
                      Is it inflation adjusted?
                      That’s the real trick.

                      Comment


                      • Originally posted by Perry View Post
                        So what does all this mean for us uninitiated?
                        The Govt is paying 4.50% pa (coupon) on this debt.
                        It was so popular, people have been willing to pay $162.787 for $100 of this debt.

                        The calculation around price paid (162) and interest received (4.50% pa) till maturity (Feb 2016) all calculates out to 1.06% pa if held to maturity.

                        Comment


                        • Originally posted by speights boy View Post
                          The Govt is paying 4.50% pa (coupon) on this debt.
                          It was so popular, people have been willing to pay $162.787 for $100 of this debt.
                          The calculation around price paid (162) and interest received (4.50% pa) till maturity (Feb 2016) all calculates out to 1.06% pa if held to maturity.
                          So what makes this investment $62 more attractive than face value?

                          Comment


                          • Security and liquidity I guess.

                            Inflation.
                            Is it inflation adjusted?
                            That’s the real trick.
                            Yes, McDuck. Well done.
                            It seemed strange that this was trading at 1.06% when the other Govt stock were around 2.5 - 3% yield.

                            I had a closer look.
                            It is indeed the inflation indexed bond, so the 1.06% figure is distorted.
                            Last edited by speights boy; 01-02-2013, 02:58 PM.

                            Comment


                            • Originally posted by Eugene View Post
                              A question for Hamish. I have loans with both ANZ and Westpac, a term loan with Westpac finishes in March, and my broker has come back with rates from both banks. ANZ are sharper, Westpac if squeezed might meet ANZ's rates. I have just received a cashback for a new loan for a new property so looks like banks are still doing these. My question is about churning. Loyalty aside (and yes there are vestiges of loyalty remaining in my system) the incentive is to change banks and get the cash back. Are the banks aware that the incentive is to change banks? Will I get a black mark for disloyalty if I change banks just to get the cash back? So far cash backs have far exceeded my legal fees.
                              The banks do not put a black mark on you and they are aware that cash backs s motivate churn, not all the banks are playing this game happily but its competition that has led to this. Its not sustainable and won't go on forever.

                              PS brokers get charged with a fee if you move usually within a12 month period,
                              Hamish Patel | ph: 09 625 4693 | mob: 021 625 693
                              My Website
                              Be informed - register for our free monthly newsletter

                              Comment


                              • Originally posted by Perry View Post
                                So what do you see as the relationship[s], if any? E.g.
                                If someone said to the RBNZ that its monetary policies
                                were detrimental to economic policy, could the reply be
                                not our problem?

                                Originally posted by speights boy View Post
                                It works inside the Policy Targets Agreement; 'owned' by the Govt, with its finances included in the Crown accounts.
                                A co-operative agreement, while maintaining a healthy level of independence I guess.
                                Monetary policy vs economic policy? Not much - if any - mention of
                                monetary policy or its relationship with economic prosperity.
                                Interesting . . . .

                                No Easy Growth Boost - RBNZ
                                Alan Wood
                                01/02/2013
                                Improving New Zealand's productivity and competitiveness is critical
                                to the country's economic prosperity, the Reserve Bank governor says.
                                In a speech to the Canterbury Employers' Chamber of Commerce in
                                Christchurch, RBNZ governor Graeme Wheeler said there was no easy
                                formula for boosting economic growth rates. Like other small,
                                commodity-producing economies, New Zealand's economic prospects
                                depended greatly on the growth in world output and trade, he said.
                                Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

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