I’ve been a bit quiet on the blogging front recently as we have a number of big projects underway at the moment – you’ll hear more about these later.

It’s interesting to see that a number of other commentators are picking up on the theme of the previous blog about the chances of an early election.
Results of the latest business confidence survey and opinion poll, plus the observation that Labour was better prepared for an election than its opponents all add weight to the argument for an election before September.

On another note it is nice to see that financial planners are indeed the chosen ones.

Normally financial planners rate near the bottom of the most trusted or respected occupations – along with politicians and used car salesmen.
Well the other day when Prince Charles was in town a number of planners were invited to the Princes’ Trust luncheon in Auckland, along with a range of other business people.

I figured financial planners must be the chosen ones as they were the first group invited to meet and talk with the Prince after lunch.
Just before I go a word of praise for the Hanover Group. Apparently they came on board as major sponsors of the Princes’ Trust just before Prince Charles came to New Zealand.

I didn’t know anything about the trust prior to the luncheon, but have to confess to being quite moved by its work helping young people stay on the rails.
Well done

The Reserve Bank’s decision to raise the Official Cash Rate last week has been designed to slow the economy down, but I wonder if it may also speed the election process up.

In the wake of the RB’s move rates on variable home loans are going to hit 9%. Westpac, which is normally the first to move and the bank with the highest rates, has already put its floating rate up to 9.05%.

The other banks haven’t done anything yet, but they will undoubtedly follow this week.

What’s striking is that 9%-plus interest rates are expensive and they must have a big impact on borrowers. Whatever way you look at it 9% is a big number. If you are getting 9% on a deposit you think that is a good return, conversely to pay 9% to borrow money isn’t cheap.

Why would the odds of an early election shorten? If you think back to the recent Australian and US elections a key factor of success, particularly for Howard, was how they appealed to the so-called mortgage belt.

In New Zealand this group is well served with cheap two-year home loans but these favourable rates won’t last forever. Once the impact of higher interest rates flows through to borrowers it will hit them hard.

These traditional blue collar, middle-class New Zealanders won’t be happy.

Throw into the mix some politics (Act in disarray, National trying to make up its mind what it stands for) and you have a good case for an early election.

So what are the odds? I’m not sure; I think they are still long, but a bit shorter than before.