KEY POINTS:
News yesterday that two economists are now picking Reserve Bank Governor Alan Bollard to lift interest rates again next year will send a further chill down the spine of some homeowners.
The property sector was already unsettled this week by data from Barfoot & Thompson, Auckland's biggest agency, which indicated the average house sale price fell more than $14,000 last month.
Economists at Westpac Bank and Infometrics - both picking a hike of 50 basis points by June - remain outside the consensus view. But even their more conservative colleagues are pushing the prospect of rate cuts further into the future.
Like adding ice to a good single malt, there's something that's just not right about interest rates rising as the housing market falls.
In the United States, the Federal Reserve has pulled a high-speed u-turn and started cutting rates in the hope of avoiding a recession.
Alan Bollard isn't expected to do much more than change gears next year.
Stronger than expected GDP growth and ongoing inflation fears - driven by booming dairy prices and the tightest job market in 40 years - are making it tougher to pick which gear he'll choose.
The unappealing prospect of rising rates in a falling housing market is a symptom of the multi-headed beast the New Zealand economy has become.
The housing sector has little in common with the export sector, which in turn bears little resemblance to the New Zealand stock market.
The next few months look set to be confusing but fascinating.
A showdown - which has been looming for some time between the export sector and the domestic sector - may be coming to a head.
The ideal result would be a points victory to the exporters - correcting the current account deficit but not knocking out the domestic economy to the point where people start losing their jobs and their homes.
But the intensity of the opposing forces may mean a rough ride ahead.
Westpac economists predict the annual rolling average of house price inflation will have hit nil by the end of 2008. Twin pressures of lower net migration and higher interest rates are finally coming to bear.
Meanwhile, the end of 2008 looks likely to be something of a high-tide mark for world dairy prices, which have more than doubled in the past year and are pushing hundreds of millions of dollars into the economy.
On the sidelines - although not immune to the fallout - sits the stock market. Without Fonterra in its ranks, or any significant tourist industry presence, the market is a poor reflection of New Zealand's economy.
But - as today's cover story points out - this motley collection of mostly utility and infrastructure stocks, propped up by takeover activity and speculative foreign investors, may well continue to do quite nicely.
That's if - and it's a pretty big if - the US economy doesn't go into recession. If that happens then the whole world is in for a wild ride.
Hendrix vs Page
Though new Telecom boss Paul Reynolds, at 2.04m tall, looks more like he ought to be locking for Scotland against Argentina this weekend, he told the Business Herald in June his real passion was the electric guitar.
In fact he cared enough to point out that he owns two guitars - a Gibson Les Paul and a Fender Stratocaster.
So going in to this week's annual meeting, a burning question remained - was he a Jimi Hendrix man or a Jimmy Page man?
The Les Paul was favoured by Led Zeppelin's Page, the Strat was Hendrix's primary weapon of choice.
Put on the spot at the post-AGM press conference, Reynolds made like a politician - he can't choose, he likes them both.
Fair enough. He's not about to give any clues to his own personal style.
Page - technically brilliant, powerful and studious - was far from a revolutionary player. He did, however, help Led Zeppelin rule the rock world for the best part of a decade. Hendrix, in contrast, was around for a good time, not a long time.
But in a few short years he revolutionised rock 'n' roll and his impact was far greater than that of guitarists with careers many times longer.
Right now Telecom desperately needs some of that Hendrix flair.
It's not always better to burn out than fade away. But after the long, slow malaise that engulfed Telecom while Theresa Gattung was packing her bags, it's not really a calm, steady hand that the company needs. It's time for some fresh, radical thinking. And some no-nonsense change management.
Typically, foreign chief executives - Fonterra's Canadian chief Andrew Ferrier comes to mind - face a grilling on arrival about their long-term intentions. Will he buy a house? Will he support the All Blacks?
In Telecom's case it doesn't really matter if the strapping Scot adopts New Zealand as his own. What matters is that he whips the market's most important company into shape and leaves his successor with an easier job than he is now facing.
