Hello people. I should not be sitting here, but out working. Have a fair bit on, and more coming in weekly. I seem to be getting known or accepted in the locality. Got on the job nice and early only to find the digger still working.

Down to business. Last month I dialed in on Cameron Baigrie’s NZX exchange commentary on the economy and where he saw it going forward. (internet) he pretty much said what I have been alluring to in this blog. The main points are NZ,s national debt will balloon from 20% GDP to 50%. Tourism is buggered. World wide people will stay home. In NZ it employs 15% of the work force. (But more importantly it is one of the pillars of the new economy that govt for decades have been nurturing with tax and rate payers money to replace Agriculture, as govt policy slowly but surely plants up the agricultural economy with pine and thus carbon $. My view. This last month has seen the fragility of such policies exposed.) Baigrie states that major structural changes will happen. Along with tourism, NZ will see commercial property values fall, personal savings will grow, there will be more govt intervention in the economy, and globalization will be on the back burner as national economy,s realise that they will have to sustain themselves should things internationally turn really bad. (One has to wonder about “More Govt ” intervention in the economy. Look at the mess they have made of ours. Sure you say What !!!. But the true damage has been masked buy hidden $ subsidies to the Tourist industry, and distributed by both central and local govt, thus average Joe and Mary have not taken any notice. Then there is this carbon value, with people not realizing just how much $ it is really costing them. In all this the Govt’s lackies the Media have been silent.)

Baigrie states that there will be a recalibration of the debt to equity ratio across all aspects of the economy. Thus a lot of high flying, highly indebted populous company’s that have been the darlings of the “Old New Economy” including infrastructural company’s are going to feel the heat from Banks. (That will not be good for Joe and Mary.) He was the first to say that small -medium sized business’s are in trouble, (and sure enough next minute wage subsidies and small – medium sized business loans are available. It will also blow away this Govts determination to do away with the low wage economy. Remember Labour is big on this. Good luck Jacinda.)

He said that NZ will need “Strong” economic performance out the other side of the depression  to soak up unemployment . I arrived at the figure of 25% unemployment based on the figures that he quoted  in the presentation. Since then I have heard the same % mentioned in other commentary. Baigrie said “Agriculture is the only industry capable of doing that !. (Cricky dicks. Whhat a call. Govts will not want to see that or have to be seen to encourage such. It will mean a complete reversal of 45 years of negative policy from the Mc Gullicuddy drop kicks we have had running the country. Yes. 1975 was the year the “Principles of The Treaty of Waitangi” was enacted into legislation. NZ $ value plummeted accordingly, yes down from in excess of $1 to the $USD to at one point .49c What a cost that imposed on Joe and Mary.) Baigrie was very strong on the “Need to Accelerate Farming”

With regard to the banking sector. He said interest only loans are gone. Banks will demand repayment. Currently these loans account for 60% dairy, 60% housing and 30% business.  (Thus you can see the potential for real carnage in asset values in these sectors, and housing is one asset this govt is really worried about. Will they navigate away through ,or will they merely delay the inevitable ?) Baigrie appeared to contradict himself a little in that he stated that with less globalization there will be more inflation ,but interest rates will stay low. But then further on said interest rates will rise.? (I can see interest rates rising. Banks are banks. And share holders come first. The world cannot print forever. The world monetary system needs goods and services of material being to function. Other wise inflation will rise as consumers seek to enhance their material wealth .) But he said, in his view. House prices will be absolutely slaughtered.

Baigrie was strong all the way through on a “Fundamental rebalance of the NZ Economy” The new normal will not be the now normal. and at the end of this Govt “Will have to cut Govt debt”. Your thoughts how.

Our accountant tells us last week that Taumarunui town looked pretty quite. Depressingly so. During my time in local govt I tried really hard to get the District Councilors to realise just how bad their local economy would get, with regard to negative central ,regional and district objectives and policies towards AGRICULTURE. Taumarunui has suffered really badly from 3 really bad Mayors and 1 or 2 crook CEO,s. Yes Ruapehu went hard out on Tourism and let Agriculture slip into the shadow of pine pollen . In its hey day in the 1970,s – 80,s Ruapehu,s population was 15,000. When I left it was 11,000, with potential to fall to 8,000 permanent residents as a consequence of their folly. What I did not think of at all was that it would be a virus that would really ram it home.

Last month I said NZ needed a fresh face/party in govt . Baigrie is not going to get his rebalanced economy from the politicians of all descriptions that are in Wellington now. It will take a mammoth miracle and plenty of Baigries to make a about turn on Govt policy.

Good luck with that.