The Mike Hosking Breakfast

One of the more perverse aspects of this year, are the things that have become a part of our lives we never imagined would
Funding for lending will be one of them. I love this stuff; it’s as dry as dust and yet such a critical part of our lives directly affecting each and every one of us.
And yet, in a years’ time, a decade’s time, many will not have a clue about it.
The desire to learn is in us all, especially as kids, and tragically so many lose it as the years go by.
Funding for Lending is the Reserve Bank’s next step in its so called tool box in trying desperately not to have us sink like an economic stone.
They will lend directly at a discounted rate money to the banks. The theory is they will then pass that cheaper money on to us. Cheap money is designed to stimulate the economy.
We borrow hopefully to expand …whether that’s a renovation or a new house or a new business or a new department or a pivot
The more enticing you make money, hopefully the more of it we want. It’s like a sale: you don’t need that top, but its 50 percent off.
FLP could be here next month. It probably won’t be but it could be.
After that its negative interest rates. Apart from the workings of it, which I find endlessly fascinating given it’s a mix between the factual, i.e. the cost of money, and the psychological, i.e. are we emotionally stimulated by the prospect?
The big question I have is why are we here? How desperate are we, how out of left field is this stuff really, how close to the edge is this? And what happens if it doesn’t work?
FLP isn’t new. It’s out there internationally, and so is QE, so are negative interest rates. But that doesn’t make it good or right or effective.
It’s like comparing our economy to Zimbabwe’s: just because they’re worse than us, doesn’t make ours good.
But the trick here is if we don’t know how this stuff works, if we don’t understand it, how do we ask the questions?
FLP means you essentially, for example, as a depositor get nothing for your money, or if you’re a borrower your loan is virtually free.
Is that good? How much debt gets raked up at next to nothing, and if inflation fires up and interest rates rise, how many get caught out unable to pay the bill?
What happens when some countries get some economic traction stop printing money and we are caught swimming in debt?
What if FLP doesn’t work, do negative interest rates, and what happens after negative interest rates?
How negative can you go before it’s absurd? When I asked Don Brash this the other day, he laughed, which would have been fine if he hadn’t previously been the Reserve Bank governor.
Point is, this is on the edge; we’ve never been here before. It’s either our saviour or path to ruin. So how come you don’t know about it yet?

The British government carved England into three tiers of coronavirus risk on Monday in a bid to slow a resurgent outbreak, putting the northern city of Liverpool into the highest-risk category and shutting its pubs, gyms and betting shops.
Prime Minister Boris Johnson said the three-level national system was designed to "simplify and standardize" a confusing patchwork of local rules, as the country enters a "crucial phase." Johnson said hospitals are now filling up with more COVID-19 patients than in March, when he ordered a national lockdown.
"These figures are flashing at us like dashboard warnings in a passenger jet, and we must act now," he said during a televised news conference.
Johnson told lawmakers that the goal of the new system was to save lives without "shuttering our lives and our society" through a new national lockdown. While the measures curb social interactions and the leisure industry, Johnson said shops, schools and universities will remain open in all areas.
Some scientists questioned whether the restrictions went far enough. Minutes published Monday from meetings of the government's Scientific Advisory Group for Emergencies showed the body recommended three weeks ago that the government consider stricter measures including a short "circuit-breaker" lockdown.
The government rejected the idea.
"I and other people who were advocating for quite stringent severe local interventions where necessary three to four weeks ago, our fear is that we're in another place now," said Calum Semple, professor of outbreak medicine at the University of Liverpool and a member of the the advisory committee.
After falling during the summer, coronavirus cases are rising in the U.K. as winter approaches, with northwest and northeast England seeing the steepest increases. Liverpool has one of the country's most severe outbreaks, with about 600 cases per 100,000 people, even more than the hard-hit European cities of Madrid and Brussels.
Under the new measures, areas in England are classified at medium, high or very high risk, and placed under restrictions of varying severity.
Areas in the lowest tier will follow existing national restrictions, including a 10 p.m. curfew on pubs and restaurants and a ban on more than six people gathering. In areas at high risk, members of different households are barred from meeting indoors.
The "very high" risk tier will face restrictions including closing pubs — apart from those that serve meals — and, if local authorities want, other venues such as gyms and casinos.
Liverpool was the only area put into the top category Monday, but Johnson said authorities were still talking with other local leaders across the north of England.
Pubs, gyms, leisure centers, betting shops and casinos in Liverpool will close beginning Wednesday.
Liverpool Mayor Joe Anderson said local authorities supported tougher restrictions as long as they were accompanied by improved test-and-trace measures to suppress clusters of infections — something he said the government had agreed to.
"As well as protecting lives and doing things to tackle the virus, we also need to protect livelihoods, so we argued really strongly for a stronger financial package," said Anderson, a member of the opposition Labour Party. "Unfortunately, that wasn't listened to."
The government has announced a support package to pay two-thirds of the salaries of employees of companies that are told to close, but many in the pub and restaurant sector say that is not enough to save already struggling businesses.
Labour Party leader Keir Starmer said he doubted the new measures would go far enough to "get control of this virus, to protect jobs or retain public trust."
The U.K. has experienced Europe's deadliest outbreak, with an official death toll of 42,875. Health officials say Britain is at a tipping point in the outbreak, with strong action needed to prevent hospitals...

Records have been broken in the mortgage market. Heartland Bank has released the lowest home loan rate in New Zealand history.
The bank announced a one-year fixed loan rate at 1.99 per cent.
To be eligible customers must be refinancing or purchasing a standalone house on a single section in a major New Zealand centre, have a deposit or equity of at least 20 per cent and intend to live in the home.
In addition to this record-low rate, Heartland is also offering a fixed two-year rate of 2.35 per cent and a three-year rate of 2.45 per cent.
Director of New Zealand mortgages and securities James Kellow told Mike Hosking he believes it will become the norm.
"The base rates are converging on zero, which the positives don't like very much. But the flip side of that is the borrowers, I can see interest rates definitely one-seven-five next year and maybe lower."
"There's definitely a trend down... as competition increases - Heartland starting it here - all borrow rates should start to trend down."

New South Wales Premier Gladys Berejiklian is the centre of Australian political drama currently, after she revealed a shocking five year relationship with former MP Daryl Maguire which she kept secret.
Maguire is under investigation for allegedly using political influence in business deals.
Berejiklian says yesterday was one of the toughest days of her life, and she "stuffed up".
Australian correspondent Steve Price told Mike Hosking it is hard to see the Premier survive.
"No one had ever heard of this bloke until yesterday really... incredibly Gladys Berejiklian, she continued this relationship with this bloke ever though she had to sack him from her own party.
"It is really embarrassing for someone who I would classify as a friend of mine."
Meanwhile, Victoria's Head of Premier and Cabinet Chris Eccles has been forced to resign, after a review of his telephone records found he spoke to the state's Police Commissioner on the day private security guards were brought into quarantine hotels.

New Zealand's door has been opened to overseas students again - but only for 250 postgraduate students who will have to pay for their own quarantine.
Education Minister Chris Hipkins says the students must have had a visa to study in New Zealand at masters or doctoral level but were unable to get into the country when the border closed in March.
"These are students who hold or held a visa for 2020, and whose long-term commitment to study here was disrupted by Covid-19," he said.
"Priority will be given first to those who need to be in the country for the practical components of their research and study.
"The first students are likely to arrive November 2020, with the majority arriving in the new year."
They will be subject to the same two-week quarantine requirements as returning New Zealanders and a select group of "critical workers".
The Ministry of Education says they "will be required to pre-book a space in a managed isolation and quarantine facility prior to travel".
"Everyone entering New Zealand on a border exception, including international students, will have to pay charges for managed isolation," it says.
Priority will be given to students who:
• are enrolled in PhD programmes;
• are enrolled in a qualification that involves practical components (for example, medicine, veterinary, engineering, laboratory sciences, agricultural research);
• cannot progress or complete their study while offshore.
"If the 250 places are not filled by PhD students in these priority categories, the focus is likely to move to level 9 masters students in the same priority categories," the ministry says.
The concession is a tiny first step towards restoring the country's $5 billion international education market. The first 250 students represent about one-fifth of 1 per cent of the 117,000 foreign students who normally come to New Zealand each year.
"I acknowledge that other international education providers, such as schools and private training establishments, will be disappointed that their students are not a part of this border exception group," Hipkins said.
"Our approach is pragmatic and allows us to carefully manage the demand on our quarantine facilities and the complex nature of bringing students back into the country.
"Allowing these students to travel to New Zealand is a step in the right direction for the international education sector. The Government will review other possible border exceptions, as and when it is safe to do so."
He said the health, safety and wellbeing of people in New Zealand remained the Government's top priority.
He said international PhDs and other postgraduate students "make a significant contribution to our research and innovation systems and boost the global reputations and competitiveness of our institution".
The Ministry of Education will now contact Tertiary Education Organisations to work through student identification and selection. Students with questions about this process should contact their providers in the first instance.
Universities NZ and Education NZ both welcomed the move and looked forward to extending it.
Universities NZ chief executive Chris Whelan said: "We look forward to extending this as soon as possible to all our international students who remain overseas."
Education NZ chief executive Grant McPherson said: "We look forward to the possibility of further border exceptions, that will benefit as many providers and students as possible, as and when it is safe to do so."
National Party leader Judith Collins said earlier today that a National government would offer 200 scholarships worth $50,000 each to doctoral students from overseas in science, technology, engineering and maths.
"We are encouraging global talent to engage and connect with our business community. We hope to establish strong cultural and professional ties with the world's best and brightest," she...

Pope Francis met with Cardinal George Pell at the Vatican on Monday in their first meeting since Pell's return to Rome late last month following his acquittal on child sex abuse charges in his native Australia.
The Vatican did not provide any details on what the two men discussed.
Pell arrived at Rome's Fiumicino airport from Sydney on September 30. A source told CNN they did not know his official reason for for going nor how long he planned to stay there.
Pell served at the Vatican from 2014-2019 as Minister of Economy, in charge of Pope Francis' financial reforms, which largely stalled when he was called back to Australia to defend his name.
In 2018, Pell became the most senior Catholic official to be convicted of child sex abuse. He served 13 months in prison before Australia's High Court acquitted him in April 2020 of charges involving two choir boys in the late 1990s when he was archbishop of Melbourne.
Vatican experts say it is unlikely that Pell will return to his previous position given that next year he turns 80 years old.
His return came just days after one of Pell's main opponents in Vatican financial reform, Cardinal Giovanni Angelo Becciu, suddenly resigned.
Pell still maintains an apartment in the Vatican and in an April interview with Australian columnist Andrew Bolt, Pell said he would return to Rome eventually to collect his belongings but that he intended to live in Sydney.
- CNN

The Covid-19 pandemic has done little to stump the desire to buy businesses. Instead, demand has increased.
Data from ABC Business Sales shows between May and September this year the number of people wanting to buy a small or medium sized business increased by 15 per cent over the same period in 2019.
Managing director of ABC Business Sales Chris Small told Mike Hosking these are surprising numbers.
"Especially after the month of April when pretty much everything fell off a cliff, all of a sudden come May we've seen an absolute sudden increase in interest in buying businesses," he says.
"On one hand we've got strong demand but the supply has actually decreased, and we've got business owners who now think because of all the uncertainty it's not a great time to sell.
"We're seeing very few distressed business.
"These people [buyers] are looking for good businesses, there's the odd vulture out there, but that's not transacting."
Mr Small says things from an economical point of view are better than what many people realise.

It's just not credible. Ruling out a wealth tax conversation is just no credible. And so said James Shaw, clearly exasperated as Jacinda Ardern sat on this show yesterday doing exactly that.
In that is the Greens, and the Green voters' dilemma. Has it been ruled out or not? Do you trust Ardern or not? Could they throw caution to the wind and test us by acquiescing in negotiation, simply swallowing the rat, and hoping that 3 years later we've all got over it.
This all, of course, assumes that the Greens are there as of Saturday and if they're not, Labour have enough votes to counteract a two-party combo from National and ACT. But as part of the last week push, this is talk or a distraction Labour, especially, don't need.
If we believe Labour, that means the Greens are wasting time on the policy, and they are being disingenuous in trying to convince you to vote for them based on the tax.
On a broader measure, it’s the great weakness of their "no bottom lines only top priorities” stance. You have no idea whether any of it is going anywhere. And what do you do if your top priority, like a wealth tax, is dead in the water?
What the Greens need to do, of course, is use what could be a balance of power to force Labour's hand. It's entirely possible on Saturday night Labour will be short of a majority, it's highly likely in fact. And they will need the Greens if they are there. The Greens could force a minority confidence and supply deal. Faced with that, how much pressure is there on Labour at that point to cave on tax, give them what they want, and get across the line?
People fear tax, and rightly so. That’s why Labour have stuck with 39 cents at $180,000 plus, despite deep down wanting a whole lot more. Make no mistake, you only spend the way they have by taxing at a rate they are not, and are too afraid to try with the electorate.
The Greens have a trump card, as they sit this week on the edge of survival or oblivion, they'd be idiots not to force the issue. And on forcing the issue, they're creating a nightmare for Labour.
The policy you ruled out, but did you? The tax you're not having, or are you? Is it really dead in the water, or not?

Last time Mike Hosking spoke to Graham Norton - he was in London for the Harry and Meghan Royal Wedding.
And the TV host kindly cycled to the BBC to speak to Mike face-to-face about his latest book.
That was back in 2018.
Now, Norton is back with his latest novel, Home Stretch.
He joined Mike Hosking from his home via Zoom to talk about his new book, his writing process and his life through lockdown.

THE BEST BITS IN A SILLIER PACKAGE (from Tuesday's Mike Hosking Breakfast) Deals To Be Done/What FLP Is/Why the DST Won't Happen/Ultimate Nobel/Old School Reporting