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Top 10 at 10: NZX death rattle?; US borrowing short to spend long; Peak oil by 2014?; Dilbert

Posted in News

Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments below or please send your suggestions for Thursday's Top 10 at 10 to bernard.hickey@interest.co.nz FYI we don't have a Pandemic Bonus for interest.co.nz. Dilbert.com 1. You don't say - Rob Cameron, who is chairing New Zealand's Capital Markets Development Taskforce, has written an opinion piece in the NZ Herald saying out loud what many investors know: New Zealanders have given up on capital market and the NZX. He does go on to suggest some solutions, but there's no silver bullet. I'm beginning to wonder if there is any hope while the powers-that-be refuse to address the massive bias in favour of property.

Negative attitudes may have been shaped, initially, by the 1987 share market crash, in which New Zealand fared worse than the rest of world. More recently the failures of some finance and property companies and losses resulting from poor advice have left many with a sour taste in their mouths. And New Zealand came bottom of 16 countries in a recent Morningstar report on investors' experience of managed funds. No wonder people prefer property - as the figures show. Owner-occupied houses and rental properties account for about three-quarters of New Zealanders' household savings, according to the Reserve Bank. Even if we allow for investments in unlisted businesses and farms, which aren't included in this research, we are still out on a limb. In a number of other countries - Australia, Canada, Germany, Italy, Japan, Britain and the US - property makes up about one-third to one-half of savings. Furthermore, just three per cent of New Zealanders' savings is in direct holdings of listed shares, with the rest in other financial assets. That is also very low by international standards.

2. Borrow short, spend long - The US government staged a very successful auction of 2 year Treasury bonds overnight as spooked investors put their money in a short term safe haven. The longer term Treasury auctions are not going so well. It turns out much of the US deficit is being funded with short term bond issues. That's fine until it's not, particularly as much of the US fiscal problem is now a long term problem. Rolfe Winkler at Reuters points this out.

Timothy Geithner wants to lock in low rates for the government while he can, extending the maturity of Treasury debt to 72 months from 49, a 26-year low. It's a smart move "” if he can pull it off. To do so, he'll have to increase longer-term issuance by 40 percent, to $600 billion, according to FTN Financial estimates cited by Bloomberg. That could put pressure on interest rates, nipping the recovery in the bud. It's a risk he should take. The bigger risk is that the government continues to fund itself at the short end of the curve, requiring Treasury to roll over its obligations more frequently. With short-term rates near zero, Treasury has drastically reduced interest costs by selling so much short-term debt. At a certain point it may have to do so in a less receptive market. This week, Treasury plans a record $123 billion worth of issuance. A big buyer, meanwhile, is leaving the market: The Federal Reserve will exhaust its $300 billion purchase program for Treasuries once it buys another $2 billion. Still, demand remains healthy. Monday's 5-year, $7 billion auction of TIPS was well received. And at 3.52 percent, the current yield for the 10-year remains near historic lows. Yet demand won't be this strong forever. For one, there's demographics. As boomers age, more Treasury securities will be sold to finance retirements. The Social Security trust fund, the largest holder of U.S. government debt, will exhaust its surplus by 2016. At that point, the fund will cash in its IOUs, forcing Treasury to borrow more. That sounds like a long way off, but those estimates assume an optimistic increase in employment and payroll taxes.

3. The madness goes on - Gillian Tett from FT.com is closely watched because she was one of the commentators who was warning pre-crash about risks in global financial systems. In this piece she relates her fears about how cheap money has pumped up and supported fundamentally unstable stock prices and credit markets. What happens when central banks try to suck out the cheap money? She cites a senior banker:

"Forget about the events of the past 12 months ... the punters are back punting as aggressively as ever," he wrote. "Highly leveraged short-term trades are back in vogue as players ... jostle to load up on everything from Reits [real estate investment trusts] and commercial property, commodities, emerging markets and regular stocks and bonds. "Oh, I am sure the banks' public relations people will talk about the subdued atmosphere in banking, but don't you believe it," he continued bitterly, noting that when money is virtually free "“ or, at least, at 0.5 per cent "“ traders feel stupid if they don't leverage up. "Any sense of control is being chucked out of the window. After the dotcom boom and bust it took a good few years for the market to get its collective mojo back [but] this time it has taken just a few months," he added. He finished with a despairing question: "Was October 2008 just a dress rehearsal for the crash when this latest bubble bursts?"

4. US dollar carry trade bubble - Nouriel Roubini has latched on to the problem caused by the US dollar carry trade replacing the Yen carry trade, Ed Harrison points out at CreditWritedowns. This, of course, has implications for New Zealand. It is reassuring that the Reserve Bank has essentially intervened to prevent the banks from using the cheap hot global money too much by imposing its strict prudential liquidity policy (which seems to be being adopted by other central banks).

My view has been that the Japanese yen carry trade was a major contributor to asset bubbles globally as the Bank of Japan's excess liquidity found its way to other asset markets via the carry trade. Last August, in my post "Japan's easy money policy was the trigger for the tech wreck" I also pointed to the yen carry trade as a major factor in the Internet bubble. And I certainly see it as a major factor in this decade's housing bubbles. Now the U.S. dollar is the carry trade currency of choice, with zero percent interest rates funding asset purchases globally. This play is certainly pumping up all manner of asset prices. But as with the yen carry trade before it, I do not see this ending well. Roubini takes a similar tack: "The risk is that we are planting the seeds of the next financial crisis," said Roubini, chairman of New York-based research and advisory service Roubini Global Economics. "This asset bubble is totally inconsistent with a weaker recovery of economic and financial fundamentals."

5. Middle class debt stress - Yves Smith at NakedCapitalism carries this interesting email from a very stressed member of America's middle class. Here's a taste of what's really going on in America, which remains the world's consumption engine. Essentially, the credit cards are being hammered just to survive and now the banks are calling in the credit card debts.

Just like most everyone I know, my husband and I are in big debt with our credit card companies. My husband was laid off on New Year's Eve last year. We were in total shock. I am retired from the USAF and receive a small monthly check, and my husband began collecting a meager unemployment check. He searched all over the US and made several trips out west knocking on doors and handing out his resume. NOTHING. Anyway, we had no saving and a little bit of stock which was cashed in at an all time low. No help there. Then we started living off our credit cards. Without them, we would have not made it, period. Our daughter and her family moved in upstairs and her husband was working of a whopping $8.50 an hour. No help there. So basically we were supporting them as well. We have a mortgage payment of $1175 and $30,000 equity still in our home, but we are unable to refinance at a lower rate BECAUSE my hubby was unemployed! Getting back to my B of A card, I have NEVER been late on a payment in 10 years (until last month). I have always paid more than the minimum (until January 1st). BUT, my interest rates have inched up and up in the last few months and then, BOW! I tried to use my card about 3 weeks ago at the grocery store and it was denied. Needless to say, I walked out without the food. We don't waste anything, not money, not food, not heat or lights, nothing, but we are going down fast. The good news is that my husband got a job this week (at a much, much lower wage) and will finally get a pay next week after almost 10 months. The bad news is that B of A is killing me and will ruin me soon. I sent them a "token" $10 payment on the $450 monthly that I owed. The payment was on time, but the $10 sure didn't make them happy. They slapped a "LATE FEE" of $39 even though my "payment" was not late AND of course the dreaded overdraft fee of $39. Yesterday I got a statement from them saying that my next payment due 11/11 is $950. I can see the snowball at the top of the hill ready to roll. What do I do? Do I revolt and refuse to pay? Do I keep sending them $10 as a promise to pay? OR do I write Kenneth Lewis and say I want some of their TARP/bonus money back so I can apply it to my B of A account? It's not fair, although I know we lived off our credits cards and much of what I owe is money that I spent on essentials, BUT, the ultrahigh interests rates combined with their slap-on-every-extra-fee-we-can mentality is outrageous. We have worked all our lives to have and keep our excellent credit ratings and now all that is shot.

Canadians talk (some) sense - Finally someone up north is talking some sense. The Bank of Canada has said the global financial system must be changed so banks can collapse without hope of a government bailout. Meanwhile, however, the central bank has hinted it may so some of its own money printing, Reuters reported.

"We have to have a system where you could have an institution going bankrupt. One of the problems during the crisis was that each institution that goes bankrupt had to be saved, and that's not acceptable," Carney told the French division of CBC television. "It's necessary to do that (let banks go bankrupt) and it's essential that the institutions themselves think it's possible." Earlier on Monday, he had said in a speech that the risks should return to the financial institutions and no longer be borne by the government. In his speech he reiterated that the bank retained considerable flexibility, even though its rock-bottom interest rates cannot be cut further, in keeping the economy and therefore inflation on an even keel. That is code language for saying the bank could, if necessary, engage in quantitative easing, essentially printing money, particularly if the Canadian dollar rose too far too fast. But, asked if this prospect were now closer given the strong rise in the currency, he said: "Not necessarily. We just decided on our monetary policy last Tuesday and we reiterated our conditional commitment (to keep rates steady till mid-2010) and that's the appropriate policy to reach our target."

7. Peak oil - The world looks set for peak oil in 2014, according to this collection of interesting analyses from an oil industry conference, theoildrum.com reports. Remember, this is from the oil industry experts, not a bunch of greenies. The article is dense but full of useful tidbits.

Ray Leonard showed that production in the Rest of the World peaked in 2002 and by 2008 declined by 7%. With OPEC and Russia unable to increase production significantly due to politics and economics, we are nearing World Peak Oil Production. "Production peak of ultra deep water fields will allow 'peak' to be a 'plateau' in the coming decade, followed by a sharp fall" according to Leonard. Unconventional production is not set to change this situation, as his expectation is that the contribution of this category of oil will be less than 3 million barrels per day in the short to middle term. The specific path of future oil production was projected by Chris Skrebowksi using the oil megaprojects approach, wherein all the large fields expected to come on-stream in the next seven years are tabulated and compared with decline rates in current fields. In this approach, only the supply side is taken into account and the demand side is ignored. From that perspective according to Chris Skrebowksi the current plateau will continue until around 2014.

8. China myths - Newsweek has a useful piece here detailing a bunch of China myths.

The conventional wisdom is that China is steaming through the global financial crisis by building on the momentum generated by its 30-year boom. Indeed, ever since it sailed through the last big global crisis"”the Asian contagion 10 years ago"”Beijing has been feted for uniquely steady helmsmanship in financial storms. So perhaps it's natural for forecasters to assume that the Chinese supertanker of state is not turning sharply now, particularly since it continues to grow rapidly even as other economies sink in the recession. Yet this crisis is different"”bigger and more damaging than any seen in generations"”and it is exposing limits and forcing change in just about every key piece of the China model: the supremacy of the one-party state, the smart economic management, the export-driven growth, the emerging consumer class, the burgeoning private sector, the headlong focus on growth at any environmental cost, and the drive to build world-class companies.

9. Citigroup breakup? - Further to the details yesterday on Citigroup cutting off credit card customers, Ed Harrison at Credit Writedowns wonders whether the US government might be trying to break up Citi quietly.

It seems that not a day goes by when you don't hear about some asset sale in Citigroup's far-flung empire. Of all the major too-big-to-fail institutions, it is easily the most troubled: the poster child for everything that is wrong in finance in America. But, when President Obama's Pay Czar Kenneth Feinberg stepped in to limit pay at Citi and six other failed institutions living off of taxpayer largesse, I noticed something that made me wonder if there was more going on than meets the eye at Citi.  I am starting to think Citigroup is being forcibly dismantled by the Obama Administration as a condition of its bailout. Could there be some bailout strings of which we are not yet aware?

10. Some amusement - This is the funniest version of an annual report from the Reserve Bank of New Zealand I have ever seen. David Haywood has written a few short stories where Alan Bollard is the key protagonist. Here's a sample.

SO ALAN BOLLARD phones me, and he's like: "I'm totally ready to sort out the Briscoes lady once and for all." And I'm like: "Too right, mate!" Then I go: "But I'll just have to phone the missus first. Not that I need to ask permission or anything,but just 'cause I like to treat my lady right." Five minutes later I hear Bollard's ute in the driveway. I get in the passenger passenger seat and he just looks at me, and asks: "Dude, why are you so totally pussywhipped?" He floors it, and I'm about to broach the subject of demand-driven fiscal policy, when he tells me that he's just sunk a dozen bottles of DB Brown. I'm like: "Dude, should you be running the economy when you're totally wasted?" And he's like: "F**k off, are you my mother or something?"

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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75 Comments

Oh thank you Bernard -

Oh thank you Bernard - number 10 points the way to some of the funniest stuff I've read in ages.

You are too modest Bernard.

You are too modest Bernard. Some good points, and comments, Selwyn. Worth a read:

http://blogs.nzherald.co.nz/blog/show-me-money/2009/10/27/less-smiling-a...

Some may enjoy this from

Some may enjoy this from Chris Hedges, 'The Cult of Illusion'

http://www.informationclearinghouse.info/article23819.htm

Good piece on China. Malthus

Good piece on China.
Malthus was right, of course, you don't run 8 - 10% exponential growth YOY except temporarily and from a low base.
All who think otherwise, caveat emptor.

"TVNZ's chief executive has been

"TVNZ's chief executive has been given a bonus of $100000, in the same year that about 90 employees were laid off. Chief executive Rick Ellis now earns $830000 plus salary - more than twice what the Prime Minister earns" Herald.
"earns" bullshit....

One back for you, Andrewj

One back for you, Andrewj ! UK originated, about Brown and Goodwin of RBS, but a good message all the same....

http://www.youtube.com/watch?v=w5EFEQ9aY6o

Well, looks like Peak Oil

Well, looks like Peak Oil is close for sure. Another recent report put it at 2020. http://www.greenbranz.org/?p=135#more-135

Point #5 "We have worked

Point #5 "We have worked all our lives to have and keep our excellent credit ratings and now all that is shot"
Ay? One is retired, the kids moved back in and working age, and they have only $30k equity in their house and mortgage outgoing of $1,175 (didn't say what frequency)?

House of cards indeed.

The full version of Haywood's

The full version of Haywood's Reserve Bank Annual Report can be purchased here:
http://publicaddress.net/default,6246.sm

Blimey Bernard - are we

Blimey Bernard - are we finally making a Peakoiler of you?

On a seperate note - there is still a great deal of stress out there on the property development front - here is a 70 apartment block in Mt Manganui being put up for mortgagee sale by Westpac.

http://www.nbr.co.nz/article/mt-maunganui-apartment-building-mortgagee-a...

#1 "Negative attitudes may have

#1
"Negative attitudes may have been shaped, initially, by the 1987 share market crash, in which New Zealand fared worse than the rest of world.

More recently the failures of some finance and property companies and losses resulting from poor advice have left many with a sour taste in their mouths."

Typically members of the club like Rob Cameron don't mention the other reasons kiwis don't invest more in our local stockmarket. Insider trading, related party transactions, exorbitant fees and salaries, exaggerated statements of companies positions, future prospects and valuations, misleading or fraudulent IPO's - brokers selling stuff they know is a dog.
I'd speculate short term in the NZ market but never invest long term - everything is stacked against you. A free market needs a level playing field when it comes to information and transparency.
Maybe when Mark Weldon starts removing the rogues from the exchange and Diplock starts prosecuting and imprisoning the worst offendors, mum and dad investors might start moving away from property and back into NZ equities.

<i>Point #5 “We have worked

Point #5 "We have worked all our lives to have and keep our excellent credit ratings and now all that is shot"
Ay? One is retired, the kids moved back in and working age, and they have only $30k equity in their house and mortgage outgoing of $1,175 (didn't say what frequency)?

House of cards indeed.

$1175 will be per month, or a not unreasonable $270/week.

The $30k of equity was probably $130k before their house prices went down, and the dude has no job because of high and rising unemployment.

greenbranz - that 2020 will

greenbranz - that 2020 will be the IEA. They actually projected 2030, but with a glorious (and retroactively hand-pixelled) wedge in the graph, labelled "yet to be discovered oil".

From memory 'IEA report November 2008, Slide 7'.

Then they said 2020, then 'supply constraints from 2010'.

All within a year......

Whichever, the timeframe for adjustment is short.....

For those of you not

For those of you not born before the year 1800 , only in the last two centuries have Western countries ( the UK and latterly the USA ) dominated the world economy . For two millennia prior to that the dominant world economy was ........... ( drum roll.......taaaaaaaaaa daaaa boooooooom..........) CHINA ! And here we are , lucky enough to be in the era where order is restored . Give them several decades , and Chairman Mao will be richer than thou !

7: Just an aside, 1)

7:

Just an aside,

1) but there is "peak oil" and "peak liquids"....Crude oil from conventional sources is how the original peak oil was determined....that's almost certainly past in 2005~2008....whats topping things up is condensates and non-conventional sources...tar sands, bio's etc...

2) I guess its "english" but the plateau started about 2005 and might last until 2014...but give or take a bit this is peak oil now....so peak isnt in 2014...its already here...effectively.....

3) The thing to look at / watch is the decline rate...at least 4.5%....and if it gets really steep later. This could happen because improved oil extraction techniques allow you to get oil out faster so the initial decline can be moderated, however the debate is around the the overall recovery rate from oil in place and if modern techniques actually change this, its probable they dont. So you could let an oil field decline at say 3% naturally and get say 1million barrels total....or you could plateau that peak for a few years but then suffer a greater decline rate, sat 6%....as you can still only get that 1 million barrels...

4) Ramping up alternatives is going to cost a lot of $. I dont think its dawned on ppl that 5~10% of GDP per annum (maybe more) is going to "dis-appear" into the mad scramble for refinery plant/machinery to make liquid alternatives...and we have maybe 4 years to do something....

regards

@greenbranz.org: "The world’s cheapest car

@greenbranz.org: "The world's cheapest car has just been launched by India's Tata. It's a compact little coupe without any of the flash expensive technology of the hybrids. I would love to see a total product-life eco-footprint analysis of one of these cute little jobbies vs a medium sized hybrid."

Agree....a Toyota Prius is $46K? v a Toyota Yararis (or some such spelling) at $27K... so 9k difference....then the Prius probably has 1/2 or maybe 2/3rds the life expectancy. So I wonder what its real cost is, it might well turn out to be a green/ecological/energy no no...

Petrol/elec hybrids are I think are a stop gap, until consumers realise just electric is good enough this is because I dont just see expensive petrol a few years off but shortages....for all the Prius will do good mileage it still needs some petrol. A pure electric car / bike does not...

regards

We are already past peak

We are already past peak easy oil, inevitable since we passed peak discovery decades ago.
What will happen to oil prices over the next year or so as this reality dawns?
My pick is its one of the factors that will trigger the next big financial collapse. The new wave of liquidity and speculative money is not going into new factories, there's enough of those already, it's bidding up the price of assets and commodities. Watch out for$150 oil and a downward sloping saw tooth economy as the world grapples with that monster.

@powerdownkiwi: Its actually a UK

@powerdownkiwi: Its actually a UK organisation, The UK Energy Research Centre. I dont think the IEA knows its a*s from its elbow to be honest. They seems to be economists and politicos with no sign of a geologist in their midst, and who are now back tracking as fast as they dare without looking like complete plonkers from getting it so wrong....(paraphrase) "2050, oh 2030, oh 2020 but maybe 2012 due to geo-politics and lack of investment"........uh huh....The sad thing is they were put in place to warn us about future energy problems, instead they are proving the opposite...ie making it worse through complacency ...clueless IMHO.

Boy wait to see how voters will re-act to the Govn when petrol doubles and trebles in price!....$3 a litre, $4 quite possible, within 5 years....if its not in a shortage....ie rationing...

regards

regards

@David: Oil at 4~6% of

@David: Oil at 4~6% of GDP has done it every time so far....4% GDP is $80 a barrel....we are at that now....and ppl think we are coming out of a recession....As the USD drops its going to cost Americans yet more to fill up....so yes I agree.....2010 could be bloody....

@ Steven. Kudos on your

@ Steven. Kudos on your energy, peak oil posts mate. Always interesting. Always informative. Plateau oil: hmmmm, saw it here first. Thanks.

To reinforce the parlous state

To reinforce the parlous state of the NZ stock exchange , the capital value of all listed companies added together , is less than that of those companies listed on the Philippine stock exchange ( PSE ) . .......... . They flogged us at tennis , twice .........And they're picking up on rugby ......... Jeepers creepers !

Gosh how do you sleep

Gosh how do you sleep at night, Bernard?

Wandered off to make a

Wandered off to make a coffee and ponder some of these articles. (mutter.. mutter.. freedom of speech is the last bastion of the western ideal etc, etc...)

So what I am to derive from reading your picks in the last few days is it that those who have made it financially are greedy, lucky buggars? Those who haven't are probably condemned to fry? Most people with any kind of political power are to some large degree clueless? Those that dissent get published by you.... (doncha just love irony) ? :-)

This is a depressing read

This is a depressing read from Eric Sprott, the canadian hedge fund manager.

It is titled Dead Government Walking and analyses the US governments ability to fund future liabilities. The upshot is that they are on a course to bankruptcy sooner rather than later.

An excerpt:

The financial condition of the US government is completely untenable. The projected US deficit from 2009 to 2019 is now slated to be almost $9 trillion dollars.3 How on earth does anyone expect them to raise this capital? As we stated in a previous article, in order to satisfy US capital requirements, all existing investors would have had to increase their US bond purchases by 200% in fiscal 2009. Foreigners, however, only increased their purchases by a mere 28% from September 2008 to July 2009 - far short of what the US government required.4 The US taxpayer can't cover the difference either. According to recent estimates, tax revenue from all sources would have to increase by 61% in order to balance the 2010 fiscal budget. Given that State government income tax revenues were down 27.5% in the second quarter, the US government will be lucky just to maintain its current level of tax revenue, let alone increase it.

Elle, I can smell the

Elle, I can smell the coffee from here...

Some of us are just in-citeful, cranky and worried, not necessarily in that order.

Or is that insightful and the only way out of this mess for others is to become aware of what is REALLY going on.

Many of the sane comments, well reasoned, are actually constructive.

As to how Bernard sleeps at night, he didn't start this Nightmare. Probably sleeps like a baby.

Probably even making money with all the increased click through traffic and maybe even a sponsor or two to boot.

And yes, strangely "Political Power", does not construe basic common sense or even fiscal prudence.

How else do you figure our watch dogs let the side down so badly...and the thieves got in.

Or maybe it was just sheer greed, avarice and snouts in the trough.

I have my theories.

Makes me think and read some more.

At least we are not in CHINA, or USA, UK being watched as activists and can state our piece.

Orf for my coffee, now it is perked.

Ambrose gets depressed (again) about

Steven If you want to

Steven

If you want to know something really funny about the IEA and that is NZ is a member, and we are required by our membership to hold 90 days supply of oil (or some such arbitary number).

But....as NZ can't (we don't have the infrastructure and it would be pointless because we couldn't refine most of it) we meet our obligation by buying insurance from northern hemisphere suppliers

Yes thats right, should there be a physical shortage NZ INC makes a claim!

Hilarious (if it wasn't true)

Neven

George Soros : in Budapest

George Soros : in Budapest , giving lectures . Says we cannot reform economic systems until a point of equilibrium balance in markets is reached . He wants certain derivative products to be curtailed .............. I must be having brain-fade , but this guy makes his dosh , billions of it , how ?

Glad to see more awareness

Glad to see more awareness of peak oil .. good on you BH for posting the article.

On that topic, its also worth noting that oil is the largest 'input' into agriculture, essentially the conversion of hydrocarbons to calories. The heart of our productive economy therefore depends on oil, and with the onset of P.O our economy will be profoundly impacted.

For the record, NZ is a net importer of oil and gas.

Yes, Know one has mentioned

Yes, Know one has mentioned that 91 has just gone up too $1.66 l/tr just happened to see it as I was putting Free Air @ Filling my Waterbottle with Free Water at Caltex for a quick pit stop on my Racing Mountian Bike. ha ha.. and no I don't know anyone with a bike shop!

IanC, I get all that,

IanC, I get all that, but say it was equity of $130k in the house. I wonder when it was going to be paid off, given the fact one of the couple is already retired? Just sounds like overstretched. Kind of like 28yo on another of today's threads asking for advice on his friends' $400k mortagage and how to structure that.

I always thought it was refered to as a property ladder....because it was a ladder. One step at a time if that's your motivation in life.

"For the record, NZ is

"For the record, NZ is a net importer of oil and gas."

Its funny (not ha ha) how we have been virtually giving away our gas for the last 20 years from Maui, Tui, Kupe and every other Maori named well to a Canadian company to convert into methanol when it could have been used as CNG and LPG at higher prices and made NZ virtually self sufficient in transport fuel. Thanks Roger Douglas and co for overnight destroying what was a world leading alternative fuel industry.

I wonder too how many electric vehicles could be powered by the Manapouri power station (15% of national supply) if we gave Rio Tinto the boot. Pollution free silent cars running from renewable electricity and large trucks/buses running on cleaner burning gas (diesels work on CNG)
Sounds like a more sustainable future and an opportunity for clever NZ companies than the staus quo. Oh I forgot. NZ governments like to wait and see what everyone else does first (Bill English's favourite excuse for doing nothing)

It's rung. Not step, rung.

It's rung. Not step, rung.

As in: when your property devalues, you're all rung out....

The peak oil issue intrigues

The peak oil issue intrigues me quite a lot. OK, BP etc rubbish it, but their credibility isn't that great. eg they talk about "proven reserves" which include all the fields in S. Arabia etc that have never had any independent audit. & the more they say they have, the more votes on OPEC they have.

I think peak (or plateau) oil is by far the likelier scenario. However, lots of economists, including all those smart cookies at the Financial Times, The Economist, etc, seem to ignore it in their predictions. They forecast returns to normal growth etc, only taking into account things like aging populations or the drag from massive debt.

Yet peak oil is greater than any of these, & must have a huge impact on the economy, as this thread discusses.

Why are they so blind? Maybe because the consequences of peak oil are just too enormous to contemplate? Or maybe because economists tend to be lousy at predicting sea changes....

The biggest failure of our

The biggest failure of our education system, in hindsight, may not be multiple rrrrrrrrrrrrrrrr's, or NCEA's, or anything currently being squabbled about.

It may be that the failure to include a physics component in an economics degree, was the crucial omission.

Can you sell omissions? We could get into omissions trading......

Yeah I remember that video

Yeah I remember that video clip powerdownkiwi...."let's get physicaaaaaal"....took my mind off economics I can tell you!

That was grease, not oil

That was grease, not oil . you need to repeat

Stevek...I'm with you....electric all the

Stevek...I'm with you....electric all the way in all the towns for all the cars....gotta boost that demand for copper somehow...I see BHP managed to destroy the shaft at Olympic dam and can't get the copper out...leading to a drop in supply...leading to a jump in prices...hahaha. Oh those bloody aussies know a trick or two. Wonder what Rudd got shoved in his earhole when he raised RIO's Hu with you know who!

You'd have to nuke the

You'd have to nuke the grid, of course.

Goes without saying....

Elle, Great to hear we've

Elle,

Great to hear we've provoked a debate with some (hopefully) useful different points of view.
...and I do sleep like a baby...have even given up snoring recently

cheers
Bernard

Mish reckons Houston has a

Mish reckons Houston has a problem.......and California......and Oregon.......

http://globaleconomicanalysis.blogspot.com/2009/10/city-of-houston-is-ba...

@stevec, bloody good points. A

@stevec, bloody good points.
A bit of an incentive to convert our vehicles to LPG would be a smart move and needn't cost the Govt a cent.
Let me see. local fuel source, work for mechanics, less pollution, security of supply, pisses off OPEC. Perfect.

LPG went through the old

LPG went through the old leverage up when petrol hit the high notes..., then dropped back a bit, so took the LPG/PETROL powered Falcon ute off the road and use another vehicle instead, which is cheaper at present to run.

Government took too much in TAX, but when didn't they.

Had my monies worth out of the UTE. Owes me nowt. Just storage space in the garage now.

Bought it when diesel vehicles were 4 times the price to do the same jobbie.

Come to think of it a decent one still is.

I will keep it until LPG comes back into fashion, maybe when peak oil is depleted.

CNG gone more or less...LPG is/was still wasted as STEVEK pointed out.

Though wife's Dad still drives the 72 Kingswood on LPG.

Still going strong and owes him even less than me as he bought it new....and only about about $1.29 a litre, but a wee bit thirsty for long haul trips and a long way between filling stations in South Island in some places.

At least they can always manufacture GAS....like the old WW11 movies..with the big gas bladders on top......can run anything on gas.

Electric may be the way to go.....but It will have to be a big electric car to tow with, (YEAH RIGHT)... or a diesel clunker on coal or BIO, or whatever...they come up with otherwise....don't hold yer breath.

But what about the big Trucks and Trains and Ships all powered by a declining product. Will have to go back to sail...for the boats...but what about the goods shifted in land...railways I guess...but didn't we dig up all those branch lines.

Better invest in a few SHIRE horses...HAY...at the daughters place.

Makes yer Think..

better start planning now. Probably need a think tank as well as an LPG one...

I have my bike and a Honda 50...till then. HO HUM.

A lot of the think

A lot of the think tanks will have thunk.

Without trace.

You'll need traces.

And Hames.

That will guarantee a hame to go to, at least.

Am not surprised Labour latched

Am not surprised Labour latched onto this this:

http://blog.labour.org.nz/index.php/2009/10/28/hickey-on-key/

Again, well said Bernard.

Mallard and the other turkeys

Mallard and the other turkeys had 9 years . And succeeded in getting the economy more out of balance , not less , Les . No good them getting all pious now . The points made are credit to Bernard , not to Labour hacks , such as Sluggo Trev .

Roger - I agree. 'Nanny

Roger - I agree. 'Nanny National' only had to wait till 'Lazy Labour' lost an election. I think it'll the same for Lab. - because so far I've seen nothing to suggest they have a snowballs for at least the next 5 years. However, maybe they can change? Maybe Nats can too? They both need to as far as stepping away from the orthodoxy they both believe in. What else is there? That's the problem.

@neven911: thats not the half

@neven911: thats not the half of it...

"oil supply security and emergency preparedness"

That covers a lot of territory....

"our membership to hold 90 days supply of oil"

Yes,

"Oil security remains a cornerstone of the IEA, with each IEA member required to hold oil stocks equivalent to at least 90 days of net imports and to maintain emergency measures for responding collectively to sudden disruptions in oil supply."

http://www.iea.org/subjectqueries/keyresult.asp?KEYWORD_ID=4103

But we dont (or didnt) hold that even. At one stage the oil companies tried claiming that oil in the tanker headed to nz counted but the rules got changed (2007?), so we are building tank farm(s) to hold that...its supposed to cost us consumers more....

The IAE also has "powers" like it can call for member countries to cut consumption by 10%? I think it is...so the NZ Govn would be obliged to drop the speed limit to 90 even 80kmh....and lots of other draconian measures....the Libertanz etc would be having a fit when that happened.

regards

Dam good idea...cut the open

Dam good idea...cut the open road speed limit to 80...save on medical care...save on ACC...save on oil and petrol and tires and possums...increase fine revenues....save road damage...reduce insurance bills....why not?

but I have a right

but I have a right to be in a hurry......I'm important!

Poor old Mr.Toad.

And aren't there a lot of him?

Wally, don't agree on possums:

Wally, don't agree on possums: spread T.B shite everywere and eat KIWI's so KILL EM ALL.
Tires will be more exspensive now we shut down the last factory, poor workers not nice xmas present from bosses.

All rest good, agree with.

And a messege to all the BOY racers out there Stop throwing your glass bottels on the road so poor racing mountain bike riders like me get puntures all the time.

IN Fact GROW a PAIR and become MEN or F##@en MOVE to L.A were all that shite started and take ya SPRAYCANS with Ya.

Good link Andy Hamilton, America

Good link Andy Hamilton, America is bankrupt who gives a stuff about house prices they are only a matter of opinion debt is real . At a guess I would say America will be a total mess in about 2 to 3 years and most people in america will be a lot of trouble
This bailout bubble will burst you have seen nothing yet.
Baz

"And as the MV Oceanliner

"And as the MV Oceanliner New Zealand turned into uncharted and hostile waters"

The Captain Ordered the crew too "Double the watch" and ''Lower the lifeboats off the side",
and ordered "All Passengers to Don Lifejackets",

"Fore we could be Torpedoed at any minute"!!!

If we can issue a

If we can issue a sovereign bond, we can issue a sovereign dollar.

1 and 3 are very pertinent to each other;

Rob Cameron aye, New Zealands latest junior partner investment bank of the Rothschild central banking empire:

"New Zealand's Cameron Partners and Rothschild Australia - the Australian arm of the global Rothschild empire - have formed an alliance to extend their global reaches."
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1052...

his story should have been titled "building with bonds", and I say bugger off ya slaveminded mongrel. The Rothchilds are the richest entity on the planet, the greatest of the primary bond dealers, market makers, underwriters, they became that way via their obscene power to monetise IOUs(bonds) with debt book entry created credit.
I say stuff your bonds Rob Cameron, Rothschild and co, we can fund our realsector with Kiwi Sovereign Dollars that are made good by the very same things that make good our Kiwi Sovereign Bonds that you are prepared to monetise for us with your compound interest attached created credit, only it would be a hell of a lot cheaper for us. You see folks, the dollars that currently circulate in NZ are not sovereign dollars, they are private central banking network dollars(electronic computer entries) with a NZ stamp on them. We need to introduce Kiwi Sovereign Dollars that wipe out the terminal cancer that are the created dollars of the privately owned central banking network that we currently rent at a rate that will never allow us to own.

Re:5 Bankruptcy the best option

Re:5

Bankruptcy the best option I think.

Yeah - it's the trickle-up

Yeah - it's the trickle-up thing.

Watch water - it's the next biggie. I watched an interview of the CEO of Nestle, a couple of Film-Festivals back. Very scary.

Wally - sorry, it came to me last night - it wasn't Grease, it was Xanadu. Getting old....

Simon7...imported Firestones will cost less...means

Simon7...imported Firestones will cost less...means reduced costs for transport industry...greater profits or lower rates on jobs...sad about workers but that's the market. Trade protectionism at our loss! powerdownkiwi...Grease it was.

Is the word!

Is the word!

Wally sais: Simon7…imported Firestones will

Wally sais:
Simon7"¦imported Firestones will cost less"¦means reduced costs for transport industry"¦greater profits or lower rates on jobs"¦sad about workers but that's the market. Trade protectionism at our loss! powerdownkiwi"¦Grease it was.

No Wally that thinking is a New Zealand mentality - part of our culture- a real problem in my opinion. Why ? - I explained that many times.

Wally what are the advantages

Wally what are the advantages to keep Firestone here in NZ ? Can you list a few ?

Walter, if we have a

Walter, if we have a competitive advantage in the production of wool and grass fed meat...we have to accept that other economies can make stuff at a lower cost than we can. There are still shoe and boot makers in NZ but the vast majority of footwear is imported. Why is that so Walter?

You are probably right Wally.

You are probably right Wally.

..and I just shake my

..and I just shake my head- again !
It seems the only point counting in this country is who can make/ produces cheap - got the job = importing. Every other points are out of question - great - no wonder we can only afford cheap. It is a circle. Will we ever learn ?

I also recommend Sore- loser articles.

..and we cut the branch

..and we cut the branch we are sitting on to use it for firewood only - HA !

Tip: To make our economy

Tip: To make our economy going again: We should use more shovels made in NZ then Chinese calculators.

Tip: To make our economy

Tip: To make our economy going again: We should drive brains from NZ and less cars from Toyota.

Tip: To make our economy

Tip: To make our economy going again: We should freeze some outrageous salaries in stead of productive, hard working Kiwis.

W. KUNZ.... I ain't so

W. KUNZ....

I ain't so sore...Just not gonna be...but thanks for the plug.

No Super Rich via Money Manipulating prick and his cronies are gonna plug me.

I have worked with idiots before.

I can speaka da English, but I don't have to endure it.

Brash I ain't that is KEY, but if Hell-en can work overseas, it cannot be all bad.

That is where the Labour THIEVES go isn't it to feather their nest some Moore.

We should all leave as Bernie often says.

Just send em an email, as to why. Nice place to visit as all my visitors from overseas say.

Just looked at some land, 26+ acres... at a fire-sale.

Was gonna buy a farm off the Crafars, but maybe a lifestyle block instead and keep the motorhome on it for the summers.

Same work in the summer, but boy the winters overseas are way better.

Lease out the land....to pay the rates. That is all any farm in NZ is GOOD for at present.

And I don't have to lose as much money when it all explodes.

May have to BUILD a bomb shelter and a huge cess-pit.... We are in deeper doo doo than I first thought 5 years ago, when I quit the rat race, expecting this sort of crap..

Batten down the hatches. Cos you TAXPAYERS cannot afford these idiots.

And funnily enough neither can I, my accountant and the business I was gonna start with my kid.

Even my mechanic is feeling the heat, not that he can afford any.

Many businesses near him are in the same boat, near bankrupt.

And we are in the RICH area. SHEESH.

My BANK MANAGER is having kittens, cos I am getting out of his bank, So will the other 5....and I shall just fade away overseas and take the lot.

It is all liquid...for this very reason. Some is in copper, some is in gold, some is in TRANSIT.

NZ money has always been worth less, now it is likely to become WORTHLESS.

As every scammed investor will find out as they just piled in a load of loot into GODZONE....for their sins, looking for a SAFE HAVEN.

The CHARITY of the South PACIFIC....is that specific enough.

At least I can come back to visit.

NZ has always been a nice place to TOUR, but there are limits to my endurance, if not my future sex life.

Have been screwed before, just don't wanna be raped. (I am married after all).

I do not intend to fund someone else's LIFESTYLE any-more.

Is that... PLAIN ENUFF..... ENGLISH.

Stop playing with yer BOLLARDS, we cannot afford you both.

And never damn well could.

Have I got a SOLUTION for you.

QUIT, while I am ahead.

No, no Sorry Schmuser hold

No, no Sorry Schmuser hold the ground. NZ is a great place and we can do it - just read my tipps combined with your brillant mind and we can change NZ for the better - from :-( to :-)

PS...sorry about the CULL-EN like

PS...sorry about the CULL-EN like language.

Oil. If you can get

Oil.

If you can get a recent book by Morgan Downey titled Oil 101 - grab it and read it.

Pretty much covers all aspects of the industry.

Remarkably easy to read and written so that lay people can follow.

Quite pricy - so check your Library.

My basic take on oil - less worried about mobility issue - I'd focus on food. In that regard it's good to live in a country that can feed itself. Plenty of others can't.

Not good for stability having hungry populations.

he US government staged a

he US government staged a very successful auction of 2 year Treasury bonds overnight as spooked investors put their money in a short term safe haven.
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After last post on marketing

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