July 26, 2007

Cause and Effect

Exporters were watching Dr Bollard's decision closely today. Photos / New Zealand Herald

Today the NZ Reserve Bank increased cash rate from 8.00% (the same as Ukraine) to 8.25% (the same as Indonesia) to curb the domestic inflation.

Apparently Kiwis spend way too much on their lattes and houses. Much more than they earn, so they are deeply in debt (buying cars on credit card and taking 100% mortgages). As the official cash rate increases, it means that the average mortgage interest will rise over 10%, credit card interest will also rise and Kiwis will come to their senses and stop spending.

A small catch there is that you can deduct interest on your investment property mortgage as "expenses" from your income tax. So as the mortgage rates rise, it affects only the people that try to pay off their family home, investors can deduct it from their taxes anyway... So they can keep borrowing and spending, even if mortgage interest is 20%. And when they sell, they don't have to pay capital income tax. Great!

Another effect of high cash rate is that interest on your savings accounts is very high, we get 7.5% on an ordinary savings account and term deposits can generate up to 9% interest. Wow!

Obviously everyone can see the benefit of this, so NZ dollar is an extremely popular currency with foreign investors. Japan (with its cash rate of 1% or so) just can't get enough of kiwi dollar. When everyone wants to something, what happens? The value rises, right? So kiwi dollar now is worth over US 80cnt. Great to be earning money in this country and spending it elsewhere at the moment. A disaster for anyone who tries to manufacture/produce anything here and sell overseas (and majority of NZ businesses do just that!)

NZ economy in a nutshell for you. And everyone is waiting for some kind of a crash... The steam has to go somewhere?

Posted by gkligyte at 01:23 PM | Comments (12)

July 23, 2007


These pictures may look sunny and summery to you.

Make no mistake. We are enduring probably the worst cold snap this winter. Last night we had +1C degree in Auckland.

We were lured out by the sun to the beach on Sunday. But it was cold and windy...

The weekend before Kaj went surfing. I was walking on the shore in my winter coat with the hood on looking like Kenny (from South Park:)

I am short of words this time...

Maybe because of the cold?

Posted by gkligyte at 09:58 PM | Comments (1)

July 15, 2007

Winter blues...

We're getting quite fed up with winter here. The temperatures don't go below zero at all, but there's definitely not enough sunlight and it slowly starts to get us... Our great achievements over the weekend were: 1) spending a blissfull hour in a sauna at Tepid Baths (should do it more often!); 2) buying a dryer! So instead of folding damp clothes after a week on a cloath rack, we can get warm and dry towels in an hour or so! That's what I call civilisation! Our power bill still hasn't come yet, I'm expecting something in the line of $500-600... :( 3) Kaj went surfing on both days (the water was freezing!!!)

We'll be going to Samoa (that's one of the Pacific islands countries) in 3 weeks and I can't wait for that! Real tropics! With stary skies and balmy nights (with moskitos!) I think, just having a lot of light will come as a shock to us! Something that we didn't appreciate enough in Singapore... NZ prides itself as having sub-tropical climate. We should have paid the "sub" part more attention... :)

Meanwhile, we moved offices and I'm working hard trying to entice the cat to move with us. She's a brave little kitty, we walked to our new office 2 times already, but she hates the sliding doors and the new location is still to scary and unfamiliar... I hope she'll stay with us, it is so much better than having an office plant! I'll also have to do the driving test pretty soon (hopefully before going to Samoa?!?) and I am not sure how good my chances are... Supposedly they're pretty serious about the practical test (it takes almost an hour and you have to explain things too, not only drive!...), but judging on the driving you can see in Auckland streets, I should be able to pass blindfolded...

Posted by gkligyte at 11:05 PM | Comments (0)

July 06, 2007

I was at the eFest conference in Wellington last week when I heard that my grandmother died. It struck me that even if I would have hopped on the plane the very same minute I heard about it, I wouldn't have been able to make it to the funeral... This was one of the first times when I realised how far actually NZ is from everything... Rationally I do know that it is far, but before this I haven't had experienced the claustrophobic "I'm too far..." feeling. Last week has been pretty sad, my grandmother was the last of my grandparents... Rest in Peace...

Going to Wellington was a welcome change from Auckland. NZ does have cities that feel like real cities instead of 8 suburbs trying to pretend to be a city. One thing about Wellington is that people actually walk to places, so the streets are full of people at all times. The distances are manageable and there are quite a few pedestrian streets (try to suggest that in Auckland and the shopkeepers will hit you on the head. They think that they won't have customers, if people can't park right in front of the shop). Wellington even has trolleybuses (no polution!) and a functioning train system. Meanwhile Auckland puts most of the tax money into building more motorways...

Wellington is the capital of NZ, so it hosts the Government, no wonder things are neat there... There's lots of public spaces, urban art and things are just nice to have, while in many cases Auckland doesn't even seem to have the basic infrastructure...

Conference went fine, we got lots of good feedback about the work that we're doing

And back home we had a major moving offices operation waiting for us. Everything is packed and was supposed to be moved to the new offices today, but as I left for home at 3pm (because I didn't have a proper workspace), we had only the 1st truck load of stuff delivered. The cat didn't like the mess a small bit!

Posted by gkligyte at 07:18 PM | Comments (94)