KEY POINTS:
The Wall St bailout will help ease the credit crunch, but relief for Kiwi homeowners and some businesses may be months away, say experts.
Overnight on Friday, New Zealand time, US president George W Bush signed off a US$700 billion ($1 trillion) rescue package allowing the US Treasury to buy billions of dollars in bad mortgage debts choking the economy.
An earlier version was rejected by Congress, but a sweetener of US$150b in tax breaks for middle-class families and business swung the vote.
Experts yesterday told the Herald on Sunday the bailout was a crucial and positive step, but not a cure-all.
They agreed the bailout would help ease the credit crunch and get the banking system back on track but said we would have to wave goodbye to the era of easy global credit that helped drive property booms here and elsewhere.
They also predicted a silver lining in the form of food costs, petrol prices and mortgage rates levelling off or falling, big pre-Christmas sales and an export boost for rural areas.
Although banks were shifting towards requiring a 20 per cent deposit for mortgages, Council of Trade Unions economist Peter Conway predicted the bailout would lead to a little more credit becoming available.
"While the cost of borrowing offshore for banks might not fall sharply, it might not go up, so that's good for homeowners and investment in plants and machinery and new businesses."
ASB Bank economist Nick Tuffley expected mortgage rates to stabilise in the 8 per cent region and a trend towards short-term fixed rates for six or 12 months.
He also tipped food and petrol prices to level off or fall in coming months as global demand fell.
Dairy giant Fonterra last week signalled lower prices for dairy before the end of the year and there are signs that other staples whose prices have skyrocketed this year, such as rice and wheat, will also drop.
Economist Brian Gaynor said that as retailers feel the pinch, Kiwis can expect big pre-Christmas sales.
And he predicted that New Zealand businesses selling directly to the public, especially those in the mortgage belt, would suffer the most.
But Gaynor said the negative global impact of the San Lu tainted milk powder disaster had been underestimated.
Job-wise, Conway predicted unemployment would peak next winter at around 4.5 per cent.
