Jeremy Couchman // Venezuelan Crisis //NZ Property Market update. Darcy Ungaro interviews Senior Kiwibank Economist.

Part One

Now if I can only raise billions in foreign capital by launching my own crypto-currency – sounds like a good idea! ‘Yeah, let’s do that!’ said Nicolás Maduro, and just like that, ‘The Petro’ was born. As of August 2018 however it does not appear to be holding out that well – can’t blame the guy for trying new things but really, I think the issues run a little deeper.

In part one of this show, Jeremy Couchman, a senior economist at Kiwibank joins us to discuss the Venezuelan Crisis – how does this happen? And could it ever happen here?

You allow any leader to operate in the extremes of their personality, and you’re going to have disastrous consequences, in this case mass migration and hyperinflation. That’s not the the whole story though – one has to consider the worldwide macro-economic environment also. Almost a decade of quantitative easing has given a short term fix to many developing countries and now that the dealer’s gone quiet, and the price has increased, withdrawal effects are well and truly setting in.

Fortunately NZ has no parallels, and highlights many things that we take for granted, stable government, smooth transition of power, independent and respected institutions such as judiciary and central bank. NZ is well and truly a ‘safe haven’ in light of a worldwide economy that, let’s just say, has some ‘issues’!

There’s some meat and potatoes in part one of this interview – we hope you enjoy!

Part Two

In The Wrath of Khan (1982), Spock says, “Logic clearly dictates that the needs of the many outweigh the needs of the few.” I can’t help but suspect Spock was a closet poster-boy for Marxism. Well, for the greater good of financial stability, LVR restrictions which increased the minimum amounts required for home buyers and property investors, have been around now for a bit – the effect? Well it’s hard to say as we have no way of modelling what the results would have been without this macro-prudential regulation. There have been many side effects and the death of the first home buyer was one of them.

Is the NZ property market heading for a soft landing, or has the hand-brake come on a little too soon. Regulation distorts traditional market signals and creates other issues – much like chemotherapy for cancer.

Jeremy joined Kiwibank in 2015 following four years living in London where he was involved in econometric analysis and forecasting for a national news publisher. Prior to London, Jeremy worked for various NZ government departments including The NZ Treasury, the Ministry of Social Development and Statistics NZ. At Kiwibank, Jeremy is responsible for producing economic forecasts and regular commentary on economic matters. Jeremy holds a master’s degree in Applied Economics from Massey University.

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