jamesz

Sharing the school uniform surplus

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The Commerce Commission appears to have found an unusual source of anti-competitive behaviour: schools forcing parents to use a monopoly supplier of school uniforms. Apparently schools often accept payments from clothing manufacturers in exchange for exclusive rights to sell the school’s uniform. Then the manufacturers extract large rents from their monopoly position by charging high prices to parents.

The Commerce Commission is concerned about the monopoly position that the manufacturers have but, recognising the convenience of a single contractor, recommends that the schools use a tender process to ensure value for the parents. Read more

Matt Nolan

More talking from the PM – why?

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I see that the PM has been talking about financial economic variables again – this time it is the exchange rate.  Now he says it isn’t a big deal as he didn’t say too much – which is true.  But nonetheless, he is PM, he isn’t supposed to say anything about the direction of monetary policy – which includes interest rates.

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Matt Nolan

Taking another quick look at petrol prices

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So since the last post I’ve thought of a few other things I could do to get an idea of pricing behaviour.

First, lets compare the price of petrol per litre (excluding tax) to the $NZ price per barrel of oil:

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admin

Signature test

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hopefully the copyrigth signature appears below this…..

Matt Nolan

Mis-reading confidence

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What the hell is with the headlines saying “Confidence surges post-election” and “New Zealand Consumer Confidence up 5.9 pts to 105.6, after John Key’s election as New Zealand’s new Prime Minister“.

I’ll tell you why consumer confidence rose in November – retail petrol prices fell 15%.  I wouldn’t have minded the random conjecture that a change of government made consumers confident – as I would expect a small boost myself.  However, they completely ignored fuel prices – how can Roy Morgan tell us what to do with interest rates (which he does every two weeks) without understanding the important relationship between petrol to real incomes and confidence.

How can they seriously think that the election was the primary source of this confidence boost – I’m startled!

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Matt Nolan

November NBNZ Business Outlook: Pessimism runs wild

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A couple of weeks ago the November NBNZ Business Outlook survey was release – and man was it a stinker.

The key point was the decline in own activity expectations – with a net 14% of firms expecting their own level of activity to contract!  In conjunction with the RBNZ inflation expectations number (specifically the surveys wage growth measure) this was one of the “green lights” for the massive rate cut in December.

However, I can’t get past the inflation expectation number from the Businesses Outlook, 3.7%.  This is with the economy having contracted and petrol prices collapsing.  Sure this is a slow moving measure – but it is moving in the wrong direction!

I realise that anyone reading probably cannot understand why I still care about inflation (as seen here) – but I’m afraid that can’t see a massive build up of spare capacity in New Zealand, I don’t see any “demand deficiency”, or “savings glut” (although who knows – maybe I’m suffering from recession fatigue).  Without this, all the Bank can do is focus on its mandate to keep price growth low and stable.

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