Fascinating going through the OECD country balance sheets (no, really). For example, I never knew how much of an outlier NZ was in terms of business net financial worth. And, there's more... [🧵1/n]
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Here's household net financial worth (not inc property). Now, obviously, this wealth is concentrated, but, wow!
The eagle-eyed amongst you might have noticed that most of the countries near the top of this graph were near the bottom on the previous one. Let's have a look... [2/n]
Yep, there is plucky little NZ, giving the hegemonic superpower a scare. We can load businesses with debt and suck rent out of them like world champions.
Now, quick check on outliers... how come Japan has a high household financial worth without the sky high business liabilities? [3/n]
Good question. To explain, consider NZ net financial worth by sector. Our balance sheet is dominated by negative financial worth for businesses balanced out by positive worth for households (note: the former *enables* the latter - business liabilities = household assets). Now, Japan... [4/n]
Japan has similar household net financial worth to NZ (~300% of GDP) but the financial assets held by households are liabilities shared by multiple other sectors - Govt, businesses, and rest of the world. Note that Japan is in credit with rest of the world, NZ is in debt. [5/n]
Worth a look at the strangest country balance sheet: Norway.
Household net financial worth is relatively low.
Govt invested revenue from oil/gas sales into a sovereign wealth fund. The Norwegian Govt's financial assets are mostly the liabilities of onshore/offshore companies and other Govts. [6/n]
Why does this matter? Well, NZ businesses pay dividends / interest etc to shareholders & creditors. So, if NZ businesses have net liabilities (shares, loans, equity etc) of 350% of NZ GDP (~$1.4 trn) even a modest payout will be tens of billions of dollars a year. Now... [7/n]
I was just out on my bike pondering exactly this question. Not sure there is much by type of business but there will be clues in the subcategories of financial assets / liabilities. I'll have a look.
Rentier economy where the only way of staying in the game of life is enter the non productive rentier comfort class. Labour took that on with KO but Nats will smashed it every time
We have to have to address this - we can’t all be landlords with us or imported slave labour
After a few hours of digging, I suspect the reason business net *financial* worth is so negative is because NZ business balance sheets rely heavily on the value of non-financial assets (mostly property).
Yes exactly. Most small (let’s call them micro) businesses will raise capital on credit cards, equity in the home or business loan secured against property
My theory on this…
NZ is a country of small businesses that suck $ out of their businesses into the rental, the bach, the boat. The leaves the business in debt, but high household net worth.
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The eagle-eyed amongst you might have noticed that most of the countries near the top of this graph were near the bottom on the previous one. Let's have a look... [2/n]
Now, quick check on outliers... how come Japan has a high household financial worth without the sky high business liabilities? [3/n]
Household net financial worth is relatively low.
Govt invested revenue from oil/gas sales into a sovereign wealth fund. The Norwegian Govt's financial assets are mostly the liabilities of onshore/offshore companies and other Govts. [6/n]
Surely there is something about real estate in there?
Rentier economy where the only way of staying in the game of life is enter the non productive rentier comfort class. Labour took that on with KO but Nats will smashed it every time
We have to have to address this - we can’t all be landlords with us or imported slave labour
NZ is a country of small businesses that suck $ out of their businesses into the rental, the bach, the boat. The leaves the business in debt, but high household net worth.