LEANZ March 09 Auckland Seminar

This month’s seminar by the Law and Economics Association of New Zealand (LEANZ):

Topic: Perspecitves on the ‘credit crunch’ and the state of finance markets

Speaker: Brendan O’Donovan, Chief Economist, Westpac

Date: Tuesday 10 March 2009

Venue: Chapman Tripp, Level 35, ANZ Centre, 23 Albert Street, Auckland

Time: 5:15 pm for a 5:30 pm start, followed by refreshments

RSVP: to: jenniene.fleming@chapmantripp.com


As talk of the ‘credit crunch’ has given way to assessments of how long and how deep a recession will be, it is more important than ever to get an informed perspective on the negative and positive features of financial markets here and abroad.


Brendan O’Donovan has been Chief Economist with Westpac since 2003. Previously he has worked as Chief Economist for National Bank and worked as a macro-economist at the NZ Institute of Economic Research. Brendan has been published in NZ and international journals. He is a regular on the speaker circuit and is frequently providing comment to the media.

Faux Marx

I just got  an email from an investment banking friend of mine with following quote attributed to Karl Marx

Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism.

Karl Marx, Das Kapital, 1867

Apparently this has been doing the rounds on Wall St. If you are suspicious that this is actually Marx you have the right to be! The dead give away for me is the reference to buying “technology”. Not sure what technology workers were buying in 1867….

Megan McArdle has a good discussion of this quote here

The urban regeneration solution to a recession

Source (Snorgtees)

I wonder whether this is going to be part of the National government’s infrastructure package?

The baby boom: A result of what?

According to Mansoor Khawaja from Statistics New Zealand, the recent baby boom is the result of:

young women … refusing to follow their mothers’ decisions to have few children later in life

I don’t know – I might be a bit more cynical and suggest that young women are more likely to have children now because the government is subsidising it (eg Working for Families).  Of course this may turn out to be testable as:

Professor Pool and Mr Khawaja expect the recession to have a dampening effect in the next few years

While in my view, the fact that having a kid provides a guaranteed and stable income (from WFF) would actually increase the value of having kids, leading to a greater number of kids being born.  Although I guess this would be counter-acted by the potential loss of the tax credit (from lower hours, or potentially from the loss of a job).

And we thought New Zealand’s building slowdown was bad …

Check out Spain (ht Calculated Risk):

Just 135 new housing starts in the last quarter of 2008, and not a single one in December: That was the combined output in terms of housing starts for the G-14 group of Spain’s biggest developers

Yikes.  We are just under about 3,500 – and it looks like we could slump under 3,000 over the first quarter of the year.  But 135 housing starts is madness!

One major difference – Spain has a large over-supply of property (like the US), NZ doesn’t.  However, we definitely have pretty restrictive lending conditions for builders at the moment …

Quote of the day – tax cuts paying for themselves

This is from Alex Tabarrok:

Mark Thoma makes fun of Judd Gregg for thinking that tax cuts pay for themselves. Mark is right to make fun. What a ridiculous thing to believe. All the good economists know that it is spending increases that more than pay for themselves.

😀 . BTW, this is sarcasm – which is why it is awesome 😉

Also, apologises for the lack of substantial updating – I am extremely busy doing that “predicting things” stuff that I always say economists shouldn’t do