Listen to Larry Williams on Newstalk ZB, 4pm to 7pm. Today he looks at the Kawerau siege and the cut to the Official Cash Rate.

It was a peaceful ending in the Bay of Plenty siege.

Police arrested Rhys Warren who allegedly shot four cops. He can count himself lucky to have come out alive.

Had the cops shot the gunman dead, it wouldn't have come as a shock considering the circumstances.

The alleged offender's whanau have taken aim at the cops. They reckon that they could've ended the siege earlier.


How would we know? How would we know that they wouldn't make the stand-off worse?

The police were faced with a hostile operation and they certainly didn't need the family hindering that.

That could've complicated an already tense situation. Meddling family was the last thing they needed.

Police are the experts, they are trained to deal with these situations, not civilians.

The whanau claims that police had a "preconceived outcome" and he would "come out in a box", that proved to be wrong. It looks nothing more than another anti-cop assault.

The alleged gunman was always in control of his own destiny - he could walkout with his hands up at any time.

It was in fact a Maori liaison officer, a police Inspector, who knew the family, that negotiated to end the siege, this shows that police got it right.

Considering four police officers had been shot, the police handled the incident impeccably.


Reserve Bank Governor Graeme Wheeler announcing a lower OCR. Photo / Mark Mitchell
Reserve Bank Governor Graeme Wheeler announcing a lower OCR. Photo / Mark Mitchell

The Reserve Bank cuts the OCR from 2.5 per cent to 2.25 per cent.

Gee, thanks Mr Wheeler.

Look, I know this probably needed to be done, the global economy is in the tank, and inflation is close to zero, the Reserve Bank wants to stimulate the economy, thus leading to higher inflation, but the cut also stoke the housing market further.

Money has never been cheaper and with house prices seemingly on a never ending spiral upwards, there is panic to get into the housing market if you're a first time buyer, and if you're a property investor, it's hard to resist the combination of cheap money and tax incentives.

But here's the thing: an OCR cut must mean more debt, house prices become even more inflated, equities with high yields become even more overvalued, add in the toxic mess of low dairy prices and massive farm debt, plus the threat of a global downturn, then it's not hard to imagine a perfect storm brewing.

Eventually, you would think, something has to give. If I had to take a punt, I'd put money on a housing market correction. A housing market "crash" is possible. Disclosure -I keep getting this wrong. House prices continue to confound me.

For investors the OCR cut is a dilemma. Investors are in a hopeless position particularly those who rely on investment income in retirement. There is a lot of risk out there. The return on money in the bank is only marginally better than stashing it under your bed. The tax levied on investments is monstrous in this country and a disincentive unless it's a property investment. Mum and dad investors are in a precarious position.

The OCR cut is great for those with mortgages, but not so good for investors.

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