What is the Real Economy?
The ‘Real Economy’ is made up of the farmers, manufacturers, tourist operators and service providers that sell to the world and generate New Zealand’s external income. As Angus Tait once said, “There are three ways to generate wealth; you farm things, you make things or you dig things up.” That is the essence of the real economy.
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mist Posted:
Perhaps IMF formulas are not accurate for this area.
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mist Posted:
" tax increases in one area supports decreases in another is correct" it can only be correct if it is true. Observation and repeated sampling has proven that the hypothesis is faulty. Tax increases in one area are not causally linked to decreases elsewhere - not "possibly", not "it adds up". "Philosophically" it _might_ but testing proves it does not. One could even say "it should" but we both know an equivalent term for "it should" is "doesn't" What drives taxes down is political advantage. If a political party has an agenda they don't want the public to look at too closely, then sweeters (aka "bait") is put forwards. Tax decreases is a classic. This can be achieved because the tax increases and tax decreases are not linked. They're not zero sum nor do they have causal or proportional connection. This is because the "buffer solution" in the middle is that endless hole. tax increase means more spending. tax decrease means more government borrowing. The in/out relationship is decoupled, through size and power in the marketplace (financial economy). The abysmal productivity is because of the massive overheads from doing business in NZ. personal taxes double the rates of the US, huge taxes on goods and services, massive levies on critical imports, price gouging in the energy and communications markets, interest rates 300 to 500 times that of the US!, and not nearly the number of cost writeoffs either (subscriptions, training, vehicle rebates). Nor would get the 401k option either, of rebuying into the same market and not having to pay CGT. Oh and horrendous ever inflating local rates, again much much higher, for less, than our foreign counterparts (excepting Scandinavian countries). Our "abysmal production" is a result of this overtaxation being sand in the gears of the economy, wearing it down and rubbing out real growth. Putting CGT makes that problem worse!! And to sum up... your last comment.... O.M.G. You think that improving our situation, of people not wanting to save or invest in government buggered industry is to bugger up the ability to accumulate equity in useful assets??????? Where do you think people are going to get savings or capital to do anything??? (including retiring when their earning ability is severely reduced!) Put it in finance companies???????????? Buy the oh-so-excellently-performing NZX? In the few companies squeaking by?
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John Walley Posted:
I think we agree on the lending without security issue. It might well be that the intent to change the source of tax and not increase government spending is fictitious, however given the provision that government spending does not change the statement that tax increases in one area supports decreases in another is correct. The broader point is demonstrated by the Romney situation where he pays tax at half the rate of his salaried staff - and in the USA capital gains carry a 15% tax rate - it will be interesting to see how that one pans out. For New Zealand the economic distortions supported by the complete absence of capital gains tax are clear from our abysmal productivity record. Why save, why invest in production (taxed interest paid or via the income statement) when money can be made without tax from passive asset appreciation.
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carl Posted:
"a Capital Gains Tax means less tax in other areas or lower borrowing for the same amount of government spending. " Only in your wildest dreams, mate. a drip or a bucketful does not change an infinite hole. The only reduction in tax you would see is short-term, and done to create a perception. Once the elephant was sold it'll be put back up, often with extra claw-back clauses to catch more cash. And Banks do lend for shares - but at lower rates of coverage. 50% for business assets is rule of thumb, 80% for first mortgages, 20-25% for basic unencumbered share parcels. with additional security and reasonable ability to cover debt servicing compliance. That's the ball. So why's the man (original poster) running with such blatantly obvious fouls????
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DGS Posted:
SEE ABOVE
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Recent News

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Govt must adjust for global economic decline - Dunne - Stuff, 27 Jan 2012 Revenue Minister Peter Dunne says the Government will be forced to look at how it can tighten the tax system if the global economy deteriorates further.
Market price in a 20% chance of a 25bps rate cut in the year ahead - Interest, 27 Jan 2012 Tweet by Kymberly Martin Overall, the NZ market’s reaction to the US FOMC meeting and subsequent RBNZ meeting was relatively muted. Following the RBNZ statement (little changed), and in sympathy with the fall in US bond yields following the...
BusinessDesk: "It’s going to be a mediocre US corporate earnings season" - Interest, 26 Jan 2012 Tweet Underpinning today's mixed bag of American corporate results, the Federal Reserve said it will keep interest rates low until at least late into 2014 as the world's largest economy still needs plenty of help. Economic conditions "are...
RBNZ must respond to quantitative easing and lower interest rates elsewhere http://t.co/nolra5g0
26/01/2012 1:46 p.m.
BBC: What really caused the eurozone crisis? http://t.co/aAN4Akyx
25/01/2012 12:07 p.m.
Geoff Bertram: Some thoughts on exchange rate overvaluation and bank regulation http://t.co/ahDEzxlp
20/01/2012 2:26 p.m.
CPI down, OCR cut makes sense http://t.co/TAp0FiZx
19/01/2012 3:49 p.m.






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Showing 1 of 19 pages

26/01

RBNZ must respond to quantitative easing and lower interest rates elsewhere
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The Reserve Bank of New Zealand (RBNZ) needs to respond to unorthodox monetary policy implemented elsewhere if we are to see an export lead recovery this year say the New Zealand Manufacturers and Exporters Association (NZMEA). This morning the Reserve Bank announced an unchanged Official Cash Rate and no plans to match measures used in other countries – this will continue to damage our...

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tags: rbnz, ocr, quantitative easing, non-traded inflation, exchange rate


25/01

BBC: What really caused the eurozone crisis?
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A graphic on the BBC points out that the fiscal responsibility rules being imposed as a result of bailouts in Europe were also imposed in 1997 when the Euro was set up.

"Hang on a minute. They agreed to exactly the same 3% borrowing limit back in 1997, when the euro was being set up. The "stability and growth pact" was...

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tags: european crises, private debt, public debt


20/01

Geoff Bertram: Some thoughts on exchange rate overvaluation and bank regulation
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This is a presentation by Geoff Bertram to the Fabian Society in July last year.

He comments on potential options to prevent exchange rate overvaluation:

http://www.realeconomy.co.nz/files/Bertram July 2011.pdf

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tags: geoff bertram, exchange rate, bank regulation


19/01

CPI down, OCR cut makes sense
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The Consumers Price Index has dropped 0.3% in the December quarter and inflation increased by 1.8% year on year, well within the target band. That allows plenty of room for monetary policy that supports exports say the New Zealand Manufacturers and Exporters Association (NZMEA).

NZMEA Chief Executive John Walley says, “With problems continuing in Europe and a weak domestic economy,...

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tags: reserve bank, ocr, cpi, loan to value ratio, monetary policy


17/01

Andrew Hooker: Insurance Aftershock
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Andrew Hooker writes an article for interest.co.nz on how the indemnity period for many businesses will end on 22 February, one year after the February quake. This will leave those businesses uncovered for further loss of profit.

Hooker...

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tags: andrew hooker, canterbury earthquakes, insurance, indemnity period


16/01

Currency a problem to be managed
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New Zealand’s currency overvaluation cannot be simply put down to economic weakness elsewhere say the New Zealand Manufacturers and Exporters Association (NZMEA). It is the monetary policy contrast between the RBNZ’s inaction and the interventionist policies overseas that accounts for a persistently overvalued currency.

NZMEA Chief Executive John Walley says, “The ‘there is nothing...

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tags: currency, monetary policy, rbnz


22/12

Modern economies need manufacturing
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Ray Keefe writes about a presentation from Professor Goran Roos to the South East Business Network on Australian manufacturing:

Here is the short list on what manufacturing does for an economy:

  • R&D is driven by it.
  • Innovation is primarily...

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tags: goran roos, r&d, innovation


22/12

A better but uncertain end to the year
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The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during December 2011, shows total sales in November 2011 increased 4.24% (export sales increased by 10% with domestic sales increasing 0.97%) on November 2010.

The NZMEA survey sample this month covered NZ$509m in annualised sales, with an export content of 38%.

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tags: survey, exchange rate, monetary policy, european crisis


21/12

Slow insurance action heads raft of earthquake issues
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Insurance issues are topping the list of concerns from manufacturers after the Canterbury earthquakes say the New Zealand Manufacturers and Exporters Association (NZMEA). The City Plan, electricity line charges and the impact of the earthquake on the labour market were other key concerns raised at a meeting last week.

NZMEA Chief Executive John Walley says, “There is hardly a...

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tags: canterbury earthquakes, business interruption, city plan, insurance claims


16/12

Port strike hits supply chains hard
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Exporters are paying a high price for the industrial conflict at the Ports of Auckland say the New Zealand Manufacturers and Exporters Association (NZMEA). News of further strike action from the 30th of December until the 1st of January is concerning exporters who have already had a disrupted year.

NZMEA Chief Executive John Walley says, “For international buyers supply chain...

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tags: port strike, ports of auckland, supply chains