In his most recent book, Can We Avoid Another Financial Crisis? Steve Keen leaves readers in little doubt he believes we're heading that way unless we adopt a fundamentally different approach to private debt. Australian Steve Keen was one of only a handful of economists to predict the Global Financial Crisis.
He says it’s all about debt – specifically private debt.
“We’re focussing on the wrong topic. We’re so focussed on government debt, what actually caused the crisis was run away private debt.”
And he says there are a number of ‘debt zombies’ in the world economy - New Zealand among them.
He calls New Zealand ‘Schrodinger’s Zombie’.
The walking dead have already had a financial crisis, he says, and have been experiencing weak growth, while 'zombie-to-be' countries avoided the 2008/2009 crisis by borrowing their way through it.
Now they have a bigger debt burden to deal with when the next crisis hits, he says.
“New Zealand sits in both camps. It had 190 percent of debt to GDP back in 2009, it bottomed out at about 170 percent then went back up to 180 percent of GDP. Most of that’s in the household sector so that’s driven the housing bubble in New Zealand, which of course the authorities normally deny, but it’s clearly there although in my opinion starting to turn right now.
“So you guys have had two bites of the zombie cherry.”
He says there is no doubt the bubble will burst.
“The bubble will burst in the next one to two years - there’s been a real acceleration in house prices since 2012, they’ve increased by about 60 percent. But what I’m seeing now is the motivating force for rising house prices is rising mortgage credit. The wind in that bubble is starting to run out.”
According to the Australian Business Traveller, the airline’s own-brand credit card will be a new Platinum-grade MasterCard, and will display the Qantas brand alone.
ABT reported that 35 per cent of all credit card spending in Australia is already happening through co-branded Qantas credit cards, in partnership with banks, American Express, and retailers like David Jones and Woolies.
Now, with Qantas not co-branding with any other company, Qantas is likely to steal a bigger slice of the profits.
It comes as Virgin Australia’s own Velocity program conducted research that found that Australian credit card use is motivated by loyalty rewards, with more than two thirds of respondents saying they will make a decision to buy an item based on whether they will receive points.
It also found that the most appealing loyalty rewards for Australians are frequent flyer points and store vouchers.
The credit card launch coincides with Qantas’ 30th anniversary of its frequent flyer program, which now boasts almost 12 million members down under.
So why should we care? Well, a few extra frequent flyer perks could be in store for Qantas members, with ABT reporting the airline has hinted at higher earning rates for its members, “exclusive travel benefits” like airfare deals and lounge access, and something Qantas is calling “uncapped earning potential”.
New Zealand’s Most Famous Tabloid Editor Said it Does not Exist in the First Place
New Zealand’s last tough-talking Front Page era editor, the late Frank Haden, declared that the press in any official court room or other such tribunal would always emerge much the worse for the experience.
Therefore he stated the press should take every precaution against appearing before such a body for any kind of judgement at all.
The reason for avoiding court rooms and the like he stated was that “the public hates the press.”
This meant in practical terms that those seeking to represent the general public in any deliberations involving the press either separately or collectively would inevitably grasp their opportunity to “savage” the press.
Therefore he stated the press should always avoid, somehow, all such appearances, because it was simply not going to win. It could only come out of the encounter much the worse for it.
The press, insisted Haden, was reluctant to accept the loathing in which it was held and thus found itself before juries and other such panels in the fond and misguided belief that it’s clams would fall on receptive ears.
Instead, the crusty Haden insisted, the officially constituted panel would simply become a lightening rod through which the public hatred of the press would be transmitted.
It is hard not to consider the likelihood that the Haden dictum figured in the twice-declared no by the Commerce Commission to the nation’s two predominant newspaper chains ardently seeking permission to merge.
It is hard too not to entertain the notion that the Commission had no sympathy either for the individuals before them who were advocating the merger.
The two-act episode was a startling re-affirmation of Haden’s Law.
It holds that the press and those who work in it in any appearance before any group formed to represent the common weal, the considered opinion on the public benefit, will simply act as a conductor for the public antipathy to it.
The second part of Haden’s Law can be stated by saying that the only avenue open to the press in this entire matter is to do its utmost to avoid any exposure at all to these constituted courts of public opinion.
Haden’s views were expounded many years ago and were widely heeded at the time if only because of the distressing experience of the industry’s libel lawyers in a string of fixtures.
Since this raffish era and with the disappearance notably of Truth the tabloid tyranny largely subsided.
The institutionalisation of the press through the mandatory university induction process ensured a commonality of voguish opinion and thus stated views.
The era of politesse thus became well established. Gone are the Woodbine-smoking renegades who once inhabited Vulcan Lane and Cuba Street.
In their place are corporate employees nurturing their careers and sharing a similar liberal outlook. They are about as threatening to societal values as the Vienna Boys Choir.
The most interesting element in their newspapers is now the surreal debate over who owns them, and how.
The newspapers management, no longer now “bosses,” have the appearance of well-intentioned pillars of society, doing their best.
But who have been publicly slapped in the face, twice, for subverting society.
SO how did Haden’s Law propounded so long ago, and in an era in which the tabloids were often villainous, now so evidently, re-emerge like a bolt, two bolts, of lightening from the heavens?
Because the two chains in seeking to please everyone, pleased nobody.
The more they sought to personify diversity in all its forms the more constricted they appeared. Their quest for plurality led them to losing their singularity.
In Frank Haden’s era the unbridled cheek of the press meant it was feared and loathed with a sprinkling of respect.
Haden himself was the last practitioner to have worked for all of Australasia’s dynastic publishers – the Fairfax, Packer, and Murdoch families
Today, the corporatist harmonised fashionable wisdom-friendly version has instead inspired an attitude of low-resonating indifference of the type that in turn has inspired two Commerce Commission verdicts in its disfavour .
Even given their joint tendency to treat the world as if it had started this morning, the two chains who are said to be contemplating a return and third match, this time with an appeals court should now heed Frank Haden’s Law.
Stay away from these types of convocations be they judicial or quasi judicial.
New Zealand’s financial system remains sound and the risks facing the system have reduced in the past six months, Reserve Bank Governor Graeme Wheeler said today when releasing the Bank’s May Financial Stability Report.
“The outlook for the global economy has been improving but global political and policy uncertainty remains elevated and debt burdens are high in a number of countries. A sharp reversal in risk sentiment could lead to higher funding costs for New Zealand banks and an increase in domestic borrowing costs. New Zealand’s banks are vulnerable to these risks because of their increasing reliance on offshore funding for credit growth,” Mr Wheeler said.
“House price growth has slowed in the past eight months, in response to tighter loan-to-value ratio (LVR) restrictions, and a more general tightening in credit and affordability pressures in parts of the country. While residential building activity has continued to increase, the rate of house building remains insufficient to meet rapid population growth and the existing housing shortage. House prices remain elevated relative to incomes and rents, and any resurgence would be of concern.
“Dairy prices have recovered significantly in the past 12 months, and the majority of dairy farms are likely to have returned to profitability in the 2016/17 season. However, parts of the dairy sector are carrying excessive debt burdens, and remain vulnerable to a fall in income or an increase in costs. Banks should continue to closely monitor and maintain full provisioning against lending to high risk farms,” he said.
Deputy Governor Grant Spencer said “The banking system maintains strong capital and funding buffers, and profitability remains robust. The banking system appears to be operating efficiently when compared with other OECD countries, based on metrics such as cost-to-income ratios, non-performing loans and interest rate spreads.
“Banks have generally tightened credit conditions in light of funding constraints and the increasing risks around housing. Banks are seeking to reduce their reliance on offshore funding and have raised deposit rates. The Reserve Bank supports a cautious approach to managing foreign debt, in light of lessons learned in the GFC.
“While the LVR restrictions have increased the banks’ resilience to any fall in house prices, a significant share of housing loans are being made at high debt-to-income (DTI) ratios. Such borrowers tend to be more vulnerable to any increase in interest rates or declines in income. The Reserve Bank will soon release a consultation paper proposing the addition of DTI restrictions to our macro-prudential toolkit.
“The Reserve Bank is making progress on a number of other initiatives. A review of bank capital requirements is underway and we recently released an issues paper on the intended scope of the review. We recently concluded a review of the outsourcing policy for registered banks, and the Bank and other agencies are assessing the recommendations from the International Monetary Fund’s recent (FSAP) review of New Zealand’s financial system.”
Email followed on heels of major international flap
A scam email today is the latest in a concerted fakes sent out to Xtra users. The current one (see below) is filled with grammatical and spelling mistakes that reveal it as a fake. It follows a similar email drop last week (see below) inviting recipients to access a fake Westpac site.
The barrage pin points the need for a central bank 0800 query pool on suspect emails. The email followed on the tail of the global WannaCry cyber attack and at a time when New Zealand households still remain plagued by phone-ins from bogus Microsoft “certified” technicians now seeking to take advantage of the enhanced fear of cyber implant disruptions.
The first bogus Westpac email reads:-________________________________
Dear Westpac Customer,
New Successful Payment.For more information about this payment please follow the link below:https://westpac.co.nz/transaction
If you received this message in your SPAM/BULK folder, it is because of the restrictions imposed by your Mail/Internet Service Provider.
2017 Westpac New Zealand Limited.
The second and most recent fake email is rather more convincing being centred on account verification procedures. Its message:-
Due to the recent upgrade of our servers, we have urged all our online banking users for possible verfication.
Kindly use our website below to verify your profile to avoid account termination.
Thank you for choosing us
Westpac Bank New Zealand.______________________________A problem recipients encountered with these email mass-drops, is that they feature the inference when it landed in a Westpac customer in-box that it was specially targeted at them.
In the instance of the first email inquirers had to compete with phone-ins in the regular course of bank business, as well as those now alerted by the bogus email.
MSC Newswire has lodged an enquiry with Westpac seeking to discover the source of the bogus email as well as more details on its modus operandi.
The arrival of the second such bogus email points up the problem that the Australian trading banks have in coping with this problem.
The incidents point up the need for a cooperative banking rapid response enquiry centre for customers to obtain information about all doubtful emails.
Banks of course do not contact customers with emails. Only by traditional post. Or via a customer-prompted and subsequently verified phone call.
Aware of this the international email fraudsters seek nonetheless to entice a response, in this case by conjuring up the notion of an inward payment.
The banks are no strangers to cooperative efforts.
They have profited greatly by keeping their customers at an economic distance by electronic banking, thus reducing their premises overheads.
A small proportion of these savings should now be re-invested in a quick-response shared call centre dealing with bogus emails which are now demonstrably on the increase.
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Major disruptions in world events over the last year have not dented New Zealanders’ confidence in financial markets. The FMA today released its annual survey into the public’s attitude to financial markets. The survey shows that confidence has risen significantly to 65% among all respondents, from 56% in 2016.
Investor confidence in the markets has reached its highest level (69%) since the FMA started the survey in 2013, when the score was 58%. Confidence in the effective regulation of the markets has improved to 69% from 63% last year.
Rob Everett, FMA Chief Executive, said: “Since the survey started 5 years ago the portion of investors who said they were not confident has shrunk from 32% to 20%. All these scores show we are starting to see a shift in the public’s historic mistrust about markets and financial services. Investors seem to have started paying attention to the presence of regulators, as well as ripples from world events, when expressing confidence.”
Confidence rose most sharply among people with investments. Investors with a superannuation scheme (81%) managed funds (80%) and shares (78%) were the most confident.
Mr Everett said that sentiment had typically been a big ingredient in these confidence scores. “Prior to 2015 confidence built quite steadily and then, with market ructions last year, it dipped. While market performance has been broadly positive this year, there’s been plenty of upheaval and uncertainty from Brexit and other international events.
“Despite these issues, confidence seems to have been more resilient. One of the factors influencing perceptions is likely to be the transformation of the regulation of financial service providers, completed in December 2016.
“We hope to see a continuing trend of investors retaining confidence in the conduct within, and integrity of the markets, even if the performance of their investments goes up and down.”
Over half of investors find the investment materials they receive helpful in making informed decisions. The scores are much higher for people investing in shares (67%) or managed funds (65%) than they are for investors in bonds (51%) or KiwiSaver (51%).
“Considering managed funds and KiwiSaver have similar characteristics and both are licensed managed investment schemes, there’s clearly some improvements that could help make KiwiSaver communication materials more useful for investors. Good conduct includes ensuring your customers are fully-informed about the risks and benefits of a product and they understand how market performance and costs impact the final outcome,” said Mr Everett.
One of the FMA’s statutory objectives is to promote the confident participation in NZ’s markets. The FMA commissions and publishes this survey every year as part of its efforts to measure levels of confidence in financial markets. The survey also tests the levels of confidence in the effective regulation of the markets.
The Reserve Bank and Financial Markets Authority have welcomed the release of a new code to promote good practice in the international foreign exchange market.
The new Global Code of Conduct for the Foreign Exchange Market was released in London by the Bank for International Settlements last night. It was developed by central banks and foreign exchange market participants from 16 international jurisdictions.
“The code of conduct applies to both those buying and selling foreign exchange and is a principles-based code rather than a rules-based code,” said Reserve Bank Deputy Governor Grant Spencer.
“It aims to create greater confidence in the foreign exchange market and ensure it is functioning in the interests of all market participants.
“To comply with the code, firms will have to take practical steps such as training their staff and putting in place enhanced policies and procedures. Certainly the Reserve Bank would be following the code of conduct in its foreign exchange dealings,” concluded Mr Spencer.
Garth Stanish, FMA Director of Capital Markets, encouraged industry participants to adopt the code.
“The code is relevant to all parts of the wholesale FX industry that fall within the FMA’s conduct regulation. We support its objectives, which include the promotion of a robust, fair, liquid, open, and appropriately transparent foreign exchange market.”
New Zealand headquartered intangible asset specialist EverEdge expands into Asia through key cooperation with the intellectual property office in Singapore
EverEdge Global Ltd, the New Zealand headquartered, global intangible asset specialist, and IP ValueLab, a subsidiary of the Intellectual Property Office of Singapore (IPOS), have signed an agreement to cooperate on providing strategic intellectual property and intangible asset advisory services in Singapore.
The agreement positions the locally founded, private commercialisation firm well to expand into a burgeoning intellectual property market in Asia, through its new office in Singapore - its first in Asia - joining its existing offices in the United States, the United Kingdom, Australia and New Zealand. Asia saw the highest number of applications for patents, trademarks and industrial designs of any region in 2015, including 61.9% of patent applications worldwide.
The multi-year cooperation between EverEdge and IP ValueLab aims to support Singapore in its goal to help enterprises scale up and drive economic growth. EverEdge and IP ValueLab will work together to help Singaporean companies unlock the value of their intangible assets through customised advisory services and a suite of intangible asset management tools. These include the identification and audit of intangible assets and risks, protection commercialisation and monetisation strategies and intangible asset valuation, securitisation and financing. Intangible assets, of which IP is a key component, account for over 87% of all company value today.
Paul Adams, CEO of EverEdge Global said “Singapore is at the cutting edge internationally in its approach to commercialising intellectual property and intangible assets. IPOS was recently ranked as the second most innovative intellectual property office in the world. To be selected to partner with IP ValueLab and IPOS is a major recognition of the skills, expertise and tools EverEdge has built over the last decade.”
Singapore has consistently been ranked number one in Asia for its top-notch IP regime by the Global Innovation Index 2016 and was ranked the 6th most innovative country globally in the 2017 Bloomberg Innovation Index (New Zealand ranks 19th).
Daren Tang, CEO of IPOS and Chairman of IP ValueLab said “Singapore’s future growth lies in our ability to create value from intangible assets and intellectual property. This requires world-class commercially focused expertise. EverEdge brings a wealth of international experience and strategic expertise that is unique in this area. The EverEdge team, working with IPValueLab will help Singaporean companies to take a major step up in how they identify, create, manage and commercialise their intellectual property and intangible assets.”
Tan Shau En, Executive Director of IP ValueLab said “This cooperation combines the international reach and knowledge of EverEdge with the extensive local experience of IP ValueLab. Together, we look forward to delivering expertise, assistance and tools that will add tremendous value to companies and entrepreneurs.”
| An EverEdge Global Limited release || May 23, 2017 |||
The People's Bank of China (PBOC) and the Reserve Bank of New Zealand today announced the renewal of a reciprocal currency arrangement (swap line) to support the settlement of cross border transactions between New Zealand and Chinese businesses.
The arrangement, first agreed in 2011, aims to promote bilateral trade and direct investment for economic development between the two countries. The size of the swap facility is RMB 25 billion (NZD 5 billion) and it has a three year maturity which may be extended if both parties agree.
Reserve Bank Deputy Governor Grant Spencer said the bilateral currency swap line helps facilitate international use of the renminbi, and contributes to a strengthening of the China-New Zealand relationship.