Tuesday, February 24, 2009

Peak Shopping

We have all heard about the fear mongering Peak Oil theory. Well I have one that is even more frightening.

Peak Shopping.

By my calculations, PS was reached in Christmas 2007.
Then the western world's ability to buy consumer goods peaked and has been in decline ever since.
The credit crunch, recession and redundancies are compounding the paradigm shift that is going on in people's minds - do I really need it/ can I afford it/did I ever really need it?

What are the implications.
Well firstly there will be many relieved men out there.

Seriously, this is why governments should be no where near bailing out companies that make consumer goods, such as our own F&P, right up to the largest electronic and car manufacturers.
The growth reports that these companies modelled ther business plans on are now fish and chip wrapping. Like rivers they must now be allowed to run their natural course. Some will make it, others will dry up.

So where is the good news.
Well firstly, people will think of smarter ways to provide goods and services. This may not involve large shopping malls were the landlord sucks up 20+%.

Secondly,our society may become smarter as we look for new ways of doing things. Actually the new ways will really just be a reinvention of the old ways which served humanity well for 1000's of years, making do, going without, simpler entertainment, basic healthy food etc.

The really good news is that NZ will become a highly desirable place to hang out.
Our stability under a business orientated low tax government ( if the Nats are up to it), the ability to produce clean commodities, the least worst state of our banking system and the ability to make an honest return on investments will see good people and money queuing up at our borders. NZ passports will be gold and our beaches and mountains full of people enjoying low cost fun.

As Dohbama and Drown destroy the value of the usd and pound, plenty of people will be looking wishfully at NZ.
Bank on 1nzd=1usd one day, maybe sooner than you think.

24 comments:

FAIRFACTS MEDIA said...

Excellent post Lou and this is certainly something to think about.

But what will happen to all those Chinese factory workers if they don't buy things?

Hopefully, they will protest and take down their government.

FAIRFACTS MEDIA said...

if we dont buy things made in china

PhilBest said...

Oh come on, that is far too optimistic about NZ. Our private sector overseas debt and household debt relative to GDP and incomes, are actually worse than the USA's was prior to the bursting of their bubble. Our net overseas debt per capita is second in the world only to Iceland. Our housing bubble is worst equal with Ireland and Spain.

The only reason we aren't already in doo-doo at least as deep as USA and UK and Europe, is that we have simply kept on in a state of blissful ignorance, whereas they have had all the dirty linen out all over the MSM right from the start.

I reckon our two main political parties and our news media actually have some sort of gentleman's agreement to try and prevent the crash starting by simply not talking about the truth. This is doomed to failure, for the simple reason that we are on the edge of collapse and to get away from that edge rather than closer to it, we are going to need around 5% per annum growth for several years.

We aren't even thinking about things like the ACT 20 point plan that might actually get us there. We still think the tooth fairy owes us a high standard of living, including "free" this and that from nanny state; the fact that these things carry a cost in economic growth, is simply unthinkable.

Lou Taylor said...

Thats why I said "if the nats are up to it" phil. If it was me ACT's 20 point plan would be in tomorrow. But you also have to realise that whilst our economies crash, human nature carries on and having been to around 50 countries in the world I still think that what we have here is unique.The difference with this mess is that the whole world is in it and technology brings up to date information to our computers hourly. Never have people been better informed.

FAIRFACTS MEDIA said...

I have re-read Bernard Hickey's 'Dear John' speech , which I posted lower down.
His calls for a lower standard of living fit in with what you are saying Lou.
Yes, the country spent too much, which is why it got into debt and into recession first.
That is Helengad's legacy.

Barnsley Bill said...

Personally I reached peak shopping in November 2005, life became simpler over night. I think this was a good post Lou with one wrinkle.
The Chinese govt is holding over a trillion in us bucks through cash and assets. They cannot allow the greenback to fall by half.

Lou Taylor said...

I realise that BB.As long as the usd is the world's reserve currency no one esp the chinese will want it to fall.But if us westerners aren't buying chinese crap they may not be in such a great position. All I'm saying is that a small currency like ours will increase in strength regardless of the heavies slugging it out. The same will apply to the aud despite Dudd's best efforts.
The world will be looking for safe places to invest.And people will be looking for safe places to live.

Barnsley Bill said...

"People" are already looking for safer places to live, unfortunately they cannot sell their homes for more than they owe on them. We will not see an upsurge in white middle class US and UK immigration until the house crisis is over.. If that ever happens.

Lou Taylor said...

I meant to add that I am no expert and have no idea really what the final effect on world inflation the spending of all those usd and printing of pounds. But there will be some effect and my guess is that it will be bad for those currencies. We need a high dollar or the Chinese and Arabs will be down here buying up large.

Lou Taylor said...

BB
There are still plenty of people who are not in the shit. You know the ones now bombarding Dohbama about paying the mortgages of the ones who are in the shit using their money. We can afford to be choosey.

Barnsley Bill said...

The chinese are already buying.. Cullen green lighted the wellington lines company to a hong kong arms dealer with major links to the red army.
I am no expert either Lou, I have been predicting global meltdown every year since 2004, this year I got it right. Which just proves the theory that even a broken watch is right twice a day!
2008 marked the bulge in the snake for retiring baby boomers, what this means is that even without the credit crunch, banking crisis, housing slump and spots on our arses we were always going to see a beginning to the decline in consumer spending. When you couple the baby boomer retirements with the wholesale rape of their pensions we are in deep doo doo.
The only advice I can give anyone is retire debt and make sure you have six months living expenses under the mattress. This crisis is going to take three years to fix and when it has been fixed many of us will have to live on greatly reduced means. This is not necessarily a bad thing.

re your comment about shopping centre rents..
A plague on Frank Lowey.

Barnsley Bill said...

You are right Lou, but NOBODY can cash up. There are no buyers, only sellers. everywhere!

Anonymous said...

PhilBest -

stuff a "cost in terms of economic growth"

the simple fact is that they carry a cost - full stop.

And NZ no longer has the money to pay that cost (if it ever did) - and, most certainly, no-one is willing to lend us the money any more.

So we have Key's option: the government will borrow it for us- or Roger's option: pay it all back now, and never, ever run up such debt again.

That's it, basically. And the only way to solve the problem will be to insist that only people who believe that 2+2=4 (or, rather, 2+2=2.5 after tax) should be allowed to vote.

All I'm saying is that a small currency like ours will increase in strength regardless of the heavies slugging it out.

Oh for goodness sake. Like the Icelandic Kronor for example? What's the different between the Kronor and the NZD? The Kronor had the Euro to bail it out. The Aussies are very unlikely indeed to dig out the NZD on anything like 80c. Expect 20c perhaps.


sure you have six months living expenses under the mattress.

and not in NZ dollars!


This crisis is going to take three years to fix

Yeah. If only. If only!


many of us will have to live on greatly reduced means. This is not necessarily a bad thing.

Let's be clear about it: it's a great thing. For a start, I'll be able to get good domestics.

Anonymous said...

Following on from this -

This crisis is going to take three years to fix


= remember it was only yesterday that Bill English was on National radio saying that there would be no more public spending in real times in his lifetime

rather more than three years.

Clunking Fist said...

"The only advice I can give anyone is retire debt and make sure you have six months living expenses under the mattress."


Fucking top notch advice. This is what rational folk will do (subject to their situation). I'm going to drop my KS contribution from 4% to 2% to free up a little more cash. (Yep, I am aware that I am favouring consumption now over consumption later, but due to uncertainty, I'd rather accelerate the mortgage repayments to be a little less exposed when rates next go up.)

Barnsley Bill said...

When I talked about the crisis taking three years I was not measuring the time it would take for a minister of finance to feel as though he could start spraying money around like a mad ladies piss again.
I was measuring the length of time it would take for the foreclosures and job losses to stop happening, then when everybody has woken the fuck up we can start rebuilding.

Lou Taylor said...

I should add that when I added that our $=1usd I was stirring a bit. Being 50 this year I am interested in where the nzd will be in 10 years time, not tomorrow. The rosy scenerio i painted is what I would like to see then.
I am only interested because I want to get the decisions I make today right while I still have 10 years of trading in front of me. We need to start taking a longer term view of our country.Thank you all for your comments.

FAIRFACTS MEDIA said...

Well , considering this seems a largely financial crisis, NZ should be better placed than elsewhere.
There again, NZ enetered recession first and Uncle Helen and Mickey Cullen encouraged an unsustaianable consumer boom on the back of higher house prices, helped by them raising the top rate of incomes tax, while making landlordism a tax-efficient investment.

However bad it gets, the issue for National is to firmly blame Liabour for making the situation worse than it need be,, creating our home grown recession as Brian Fallow calls it.

Anonymous said...

I was measuring the length of time it would take for the foreclosures and job losses to stop happening, then when everybody has woken the fuck up we can start rebuilding.

Yep. And so was I. I really doubt we will be able to "begin rebuilding" by 2012. We've a lot of clearance to do before rebuilding can begin.

Uncle Helen and Mickey Cullen encouraged an unsustaianable consumer boom on the back of higher house prices, helped by them raising the top rate of incomes tax, while making landlordism a tax-efficient investment.

Catch with this argument, FFM, is that if you're in an "unsustainable consumer boom" then the right things to do are: keep personal taxes high, shovel a huge surplus into government debt repayment and soverign wealth funds. Oh fuck. Which is what Mickey was doing for the last 10 years. This arguement says tax rates were to low since 2000, if anything!

Yeah I agree about the landlordism rort, personally, but even Helen was too chicken to abolish it. I can't see Key taking it out: Roger left it last time as the one big hole in his "reformed" tax system - and it turned out to be the hole the entire economy jumped down.


An alternative explanation goes like this: the real reason was unsustainable government spending displacing private sector activity; pushing up unsustainable wage rates and creating gross inefficiency. That argument says Mickey was wrong: the right thing to do then (and doubly to do now) is to force a fast, rapid, correction and contraction: eliminate the minimum wage and any remaning union agreements, drive down wages - and eliminate taxes to give some relief, while cutting benefits much faster to retain relativity.

I think this is ACT policy - but it sure as hell isn't Key's policy!

And I don't find many people here (other than me) arguing for that policy.

David Baigent said...

Anonymous of 12:08,

Good comment and only one fatal oversight.

You and/or Roger would NEED a 5 year term in the treasury benches to make the necessary changes.

Think about how Helen was able to make unpopular changes to the people of NZ starting more than a decade ago.

Put your "club and sword" away and use you brain. John Key will..

PhilBest said...

I completely agree, "Anonymous", all 3 of your postings. You are saying a lot of the same things I have been saying on Kiwiblog for a long time. Please keep up the sanity, and perhaps put a name to yourself?

Anonymous said...


You and/or Roger would NEED a 5 year term in the treasury benches to make the necessary changes.


which is why I advocate extending this term to 5 or 7 years,

Psycho Milt said...

Catch with this argument, FFM, is that if you're in an "unsustainable consumer boom" then the right things to do are: keep personal taxes high, shovel a huge surplus into government debt repayment and soverign wealth funds. Oh fuck. Which is what Mickey was doing for the last 10 years.

Fairfacts Media: read the above until it's firmly imprinted on your brain. Then revisit your post saying at least we aren't in the state the UK is and ponder whether that's really because of what John Key's been up to in his, er, 3 months in office.

Clunking Fist said...

"keep personal taxes high, shovel a huge surplus into government debt repayment and soverign wealth funds. Oh fuck. Which is what Mickey was doing for the last 10 years."

Yep, that's great for the gummint's own finances for a while (although the author overlooks the fact that gummint spending was increasing by 5%p.a. while the economy grew at only 3%).

So the gummint gets its own house in order by sucking the life blood out of the private productive sector (whilst trying to stave off death by infusing cheap (inflationary) cash into that private sector).

Socilists, repeat after me (you won't, but I gotta try): "the gummint is NOT the economy, the gummint is only PART of the economy. The gummint sector stands on the shoulders of the private sector. If the gummint sector puts on weight, the private sector will buckle".