So It has started.

Feb 11th 2004  

It seems from the news accounts that people are noticing that things are not good on the home front. The economic tide is turning. Not only is our export sector having a bad time, but the domestic scene does not seem to be progressing further.

Chief executive Doug McKay said it was time for fishermen to stop competing and work collaboratively for the good of the industry. His comments came as the New Zealand dollar hit a seven-year high of US70 cents yesterday and again this morning a situation Mr McKay said was crippling exporters and sending the fishing industry into "crisis mode". Sea lord has an annual turnover of about $600 million, and 93 per cent of its product is exported to foreign markets. Mr McKay said the high New Zealand dollar meant the company was getting about 50 per cent less for a kilogram of fish sold to the United States than it did two years ago when the dollar was trading at US42 cents.

'Stunning' Fletcher profit
12.02.2004
By PAM GRAHAM  Fletcher Building yesterday reported a 34 per cent rise in interim profit, a sixth consecutive increase in dividend and a 23.9 per cent return on funds. Fletcher Building shares fell 4 cents

This slow down in the economy has the makings of a hard landing. The export sector has put away the cheque book and is prepared for a period of very low liquidity. Is the rural sector cashing out assets to stay afloat?  The spending has stopped and the cost pruning has begun in earnest. Are people cashing out of companies while the going is good and those companies still have intrinsic value?

Farmers told days of cream are going
12.02.2004
By LIAM DANN  A report by BNZ chief economist Tony Alexander has sparked farmer fears that Fonterra's payouts may be headed to levels that could make dairying unsustainable. Alexander has predicted that the high dollar could cause Fonterra's payout to fall as low as $2.50 a kg of milk solids for the 2005-2006 season. That drop could prove to be an "unsustainable shock" for those farmers who had expanded and paid top dollar for land and animals, he says in his weekly economic outlook. Fonterra expects to pay farmers $4.15 a kg of milk solids this season.

Seafood industry in kiwi 'crisis'
09.01.2004 The soaring New Zealand dollar is costing Nelson-based exporters millions of dollars and has created a crisis for the seafood industry, key players say. Sea lord chief executive Doug McKay said his company was cost-cutting wherever possible and was continually reviewing labour expenses as it bore the brunt of the appreciating kiwi.

The biggest cost for most exporters is labour, it has not been priced in relation to the currencies of our trading partners. Jobs are being shed.

Latest figures show slight rise in unemployment
11.02.2004 12.10pm The seasonally adjusted unemployment rate was up 0.2 percentage points to 4.6 per cent, Statistics New Zealand said in its December 2003 quarter Household Labour Force survey released today. That increase was not regarded as statistically significant, a survey spokesman told reporters.

At what stage do the numbers become "significant"? Every job is "significant" to the holder of that job, even more "significant" when a replacement job cannot be found. So now we have 2 people in a thousand who, if they have a mortgage, will find repaying the bank even more difficult. Maybe two more houses for sale with 2 less buyers to compensate?

Bollard won't curb housing 'bubble'
31.01.2004
By BRIAN FALLOW Reserve Bank governor Alan Bollard sees something of a "speculative bubble" and "excessive exuberance" in the housing market. But not enough to warrant any special action by the bank over and above the ordinary workings of monetary policy to control consumer price inflation, he said in a speech to the Canterbury Employers Chamber of Commerce yesterday. "In terms of the day-to-day controlling of consumer price inflation, housing is still the biggest thing being faced at the moment."

We have stepped into the first storm of the Kondratiev Winter. The number of miserable days will start to outnumber the good days.

Alan Lunt