Capital Gains Tax finally on a major party's agenda

[mashman]

?? Where do you get that from?

The Department of Statistics records that 10% of the population control 50% of the wealth. http://www.stats.govt.nz/browse_for_...w-zealand.aspx Nevertheless that doesn't tell us much.

The more interesting fact is 50% (half of us) hold 90% of the wealth. That's not a healthy distribution IMHO.

Asshat propoganda figures... thanks for the document... Shame there isn't anything more up to date, but would imagine things won't have changed that much.

Totally agree on that last part... and that was back in 2004.

[mashman]

Would an interest rate rise affecting floating rate mortgages automatically increase our levels of private debt? In that the mortgage rate goes up by x% and therefore my debt rises by $x once recalculated.

[BoristheBiter]

I'm completely consumed with jealousy. I can barely contain myself at the thought of frolicking in pools of someone elses money with hired women named Inga.

It's Olga, Inga was so last week.

[Winston001]

Would an interest rate rise affecting floating rate mortgages automatically increase our levels of private debt? In that the mortgage rate goes up by x% and therefore my debt rises by $x once recalculated.

Good question. Don't know. I've always assumed total debt was calculated on the nett sums owing. Its certainly possible to calculate a forward value of debt including annual interest in which case it would grow.

The importance of say 0.5% interest rise is sovereign (government) and private debt costs more each year to service. Thus outsiders looking at NZ conclude we can't spend/invest as much because of the extra interest burden. Our internal economy shrinks.

[mashman]

Good question. Don't know. I've always assumed total debt was calculated on the nett sums owing. Its certainly possible to calculate a forward value of debt including annual interest in which case it would grow.

The importance of say 0.5% interest rise is sovereign (government) and private debt costs more each year to service. Thus outsiders looking at NZ conclude we can't spend/invest as much because of the extra interest burden. Our internal economy shrinks.

It wouldn't really make sense to increase interest rates after being downgraded then? not that interest rates will rise, but I guess it would follow that if we have to borrow money at a higher rate, due to our downgraded credit rating, then something has to rise to cover the extra costs incurred? is there a "traditional" response to being downgraded?

[Oscar]

It wouldn't really make sense to increase interest rates after being downgraded then? not that interest rates will rise, but I guess it would follow that if we have to borrow money at a higher rate, due to our downgraded credit rating, then something has to rise to cover the extra costs incurred? is there a "traditional" response to being downgraded?

Usually the first thing that happens is that people sell our currency and it falls in value. Depending on which currencies the govt. is borrowing, this increases our indebtedness.

[Winston001]

It wouldn't really make sense to increase interest rates after being downgraded then? ... is there a "traditional" response to being downgraded?

Certainly, interest rates rise both internally and externally for NZ. That is because lenders (Dutch dentists, Saudi investment funds, Chinese banks) reckon we are more risky and require higher interest if we want their money.

Consequently lenders within NZ need more interest to cover what they borrow from overseas. Your mortgage rate rises. The NZ government has to follow this by offering to pay higher interest on government bonds. If they didn't, they wouldn't be able to borrow money.

It gets worse. Our currency drops with the credit rating (down at least 5% at the moment) which means our exports bring in more money. But as soon as we start offering a higher rate of interest (government, banks, councils), the currency jumps up. Wiping out export gains.

She's a hard road to tune an economy.

Usually the first thing that happens is that people sell our currency and it falls in value. Depending on which currencies the govt. is borrowing, this increases our indebtedness.

Exactly.

[mashman]

Usually the first thing that happens is that people sell our currency and it falls in value. Depending on which currencies the govt. is borrowing, this increases our indebtedness.

Certainly, interest rates rise both internally and externally for NZ. That is because lenders (Dutch dentists, Saudi investment funds, Chinese banks) reckon we are more risky and require higher interest if we want their money.

Consequently lenders within NZ need more interest to cover what they borrow from overseas. Your mortgage rate rises. The NZ government has to follow this by offering to pay higher interest on government bonds. If they didn't, they wouldn't be able to borrow money.

It gets worse. Our currency drops with the credit rating (down at least 5% at the moment) which means our exports bring in more money. But as soon as we start offering a higher rate of interest (government, banks, councils), the currency jumps up. Wiping out export gains.

She's a hard road to tune an economy.

I'm sorry I asked... kinda, but thanks for the info... It's kinda funny, for me anyway, seems a lot like a dog chasing its tail.

[BoristheBiter]

I'm sorry I asked... kinda, but thanks for the info... It's kinda funny, for me anyway, seems a lot like a dog chasing its tail.

Only if you only look to the money side when you should be looking at what it is funding and do we need it.

[Clockwork]

Certainly, interest rates rise both internally and externally for NZ. That is because lenders (Dutch dentists, Saudi investment funds, Chinese banks) reckon we are more risky and require higher interest if we want their money.

Consequently lenders within NZ need more interest to cover what they borrow from overseas. Your mortgage rate rises. The NZ government has to follow this by offering to pay higher interest on government bonds. If they didn't, they wouldn't be able to borrow money.

It gets worse. Our currency drops with the credit rating (down at least 5% at the moment) which means our exports bring in more money. But as soon as we start offering a higher rate of interest (government, banks, councils), the currency jumps up. Wiping out export gains.

She's a hard road to tune an economy.



Exactly.

Interesting post. Leads me to wonder if there actually is any way to 'tune' an economy. Seems to be for every positive action there is a negative compensation and vice versa.

Starting to wonder if the whole thing is meant be remain in a constant state of flux simply as a means to generating winners and losers.


....and the beat goes on!!

[avgas]

Interesting post. Leads me to wonder if there actually is any way to 'tune' an economy. Seems to be for every positive action there is a negative compensation and vice versa.

Starting to wonder if the whole thing is meant be remain in a constant state of flux simply as a means to generating winners and loosers.


....and the beat goes on!!

HOLY SHIT! YOU OF ALL PEOPLE!
are now starting to sound more like an economist..........pat yourself on the back sir - I believe you have become more aware and educated!

[Oscar]

I'm sorry I asked... kinda, but thanks for the info... It's kinda funny, for me anyway, seems a lot like a dog chasing its tail.

Interest rates will probably go up as overseas lenders increase risk premiums.
The ANZ borrowed $400m from the US on Friday (the first local bank to do so since the whole Euro zone problem started), the risk premium margin increased from 1.7% to 2%.

[Clockwork]

HOLY SHIT! YOU OF ALL PEOPLE!
are now starting to sound more like an economist..........

No need for the personal abuse.

[Winston001]

Only if you only look to the money side when you should be looking at what it is funding and do we need it.

Exactly. The problem is that we are used to government spending and cuts are unpopular. Private spending on McMansions and pure consumption using borrowed money fuels our balance of payments deficit.

What frustrates me is that we do not have a national conversation on these issues.

Interesting post. Leads me to wonder if there actually is any way to 'tune' an economy. Seems to be for every positive action there is a negative compensation and vice versa.

Starting to wonder if the whole thing is meant be remain in a constant state of flux simply as a means to generating winners and losers.

Every finance minister in the world would agree. As for being in flux, very true. But so are our daily lives, nothing is certain, illness strikes, accidents happen, redundancies etcetera.

One way to remove some uncertainty is a fixed exchange rate. TBH I don't understand how its done - or can be done by small countries. China is one place with a fixed rate.

[mashman]

....and the beat goes on!!

it's be nice if they could carry a tune to go with it

Interest rates will probably go up as overseas lenders increase risk premiums.
The ANZ borrowed $400m from the US on Friday (the first local bank to do so since the whole Euro zone problem started), the risk premium margin increased from 1.7% to 2%.

Wonder how many mortgage defaults are on the way, especially if the double dip recession hits, or triple dip, as English already said that we'd had a double dip some months ago...

Only if you only look to the money side when you should be looking at what it is funding and do we need it.

like we'll ever find that out and get a chance to make those decisions... Lifetime perks for pollies would be the first on the block