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Mike's Minute: The economy is a mess, but will come right

Mike Hosking,
Publish Date
Fri, 21 Jun 2024, 10:07am

Mike's Minute: The economy is a mess, but will come right

Mike Hosking,
Publish Date
Fri, 21 Jun 2024, 10:07am

Think hard before you jump. 

That was a quote from the Reserve Bank economist Paul Conway in a speech this week, as he tried to explain monetary policy, inflation and our general mess of an economy. 

The comment was, in part, an answer to a question about whether the approach the bank had taken to the economy was the reason why so many New Zealanders were leaving. 

"Think hard before you jump." The prognosis he went on to say was good. 

He is right, to an extent. It always comes right. 

This country, in fact this planet, is in a mess right now. But it hasn’t, and it won't be, that way forever. History is instructive. The "leaving New Zealand" debate has been had for decades. 

We have been in a hole many times before. Young people have hated the place dozens of times over. 

Half of Australia is filled with aggrieved Kiwis who bailed first chance they got. But I detect a slight difference this time. A lot of people ask, or say, that they don’t know if the Government can fix it this time around. 

That explains the current polling around confidence. Post election confidence went up because we had acted and we had lanced the Labour boil. But then reality came back for a visit. 

The books were worse than they thought, there were hidden dramas, fiscal cliffs, the economy got really ugly, and things started to bite. Whether this Government can turn that around is still an open question eight months on from the vote. Plus, it's winter and it's always worse in winter. 

For what it's worth, I don’t have a shadow of a doubt the Reserve Bank has made it worse than it needs to be. But I was around for Robert Muldoon and he was a calamity of historic proportions. It took Roger Douglas, and a series of deeply traumatic decisions, to right that ship. But he did it. 

This lot, with fortitude, gonads and no fear, can probably repeat the trick. 

But, as we have seen this week in surveys in Australia, they are just as unhappy. The millionaires in Britain are bailing in record numbers. Lots of people have lots of grievances. 

We are not alone. 

It doesn’t make our plight any less stressful. But we aren't the only basket case in town. 

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