Yes lets bail out the greedy corporate dairy property investors. Hell why not bail out all those in the rental housing market that are in a spot of bother also. Those of us who saw it coming and were sensible are just itching to help out those poor greedy sods.

Yes, I agree with Bobby. When the payout was $7-something, I was at a party with a lot of dairy farmers in the 'Naki, all skiting about how they were expanding their farms & buying runoffs around Waverley, mainly for the hunting and capital appreciation, debt not a problem. I felt like giving them a bitch-slapping, I really did!

The first thing the farmers did when they got the sniff of more money which might have almost justified the sky-hi land prices then in place was to bid up the price of farms even more. Two women at my work have each got several hundred acres of hopeless steep country miles from anywhere that will only carry a few hundred stock units, but they are still sitting on valuations of about $1.5 million, smugly thinking how rich they are.

We shouldn't really single farmers out for criticism, it is very much the Kiwi way, we have been in love with land speculation since the 19th century, bless us.

Then it all implodes, & we spend years digging our way out of a debt mountain, I think Neville has had one or two articles where he has discussed this amazingly myopic national mania.

Aparently the $134 billion was fake. But then they would say that wouldn't they!

http://latimesblogs.latimes.com/money_co/2009/06/speculation-about-the-i...

Neil
But why? why fake such huge amounts? more to come I think.

http://www.bloomberg.com/apps/news?pid=20601039&sid=a62_boqkurbI

look at US Treasuries

http://market-ticker.denninger.net/

realestate lending in UK
http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/...

Sam M
cheers.
I should do better though. Alex away yesterday doing an exam so I was a little stretched.
A fresh one coming shortly and before 10am
cheers
Bernard

Selwyn, I think your'e onto it again:

http://www.stuff.co.nz/the-press/business/2515409/Debt-forces-farmers-of...

....both progressive and aggressive banking lenders had pushed banking ratios "beyond the comfort level".

"Which is why the banks that funded these operations have got to make some good money out of depositers and homeowners with mortgages to pay for their reckless lending in these other sectors!" From:

http://www.interest.co.nz/ratesblog/index.php/2009/05/27/fonterra-slashe...

Laughing all the way to the...

Here's an interesting chunk from The Daily Reckoning by Dr. Alex Cowie:
"Arthur Laffer, an economist in the Reagan administration and famous for the 'Laffer curve', anticipates large inflationary pressures in the economy. This week he wrote that the increase in the monetary base is the largest increase in the past 50 years by a factor of ten, and as such is potentially more inflationary than the policies of the 70's, when interest rates peaked at 20% to rein it in. He said it is hard to say how much worse if could be, because the US has never seen anything like this before."

Bernard:

http://www.stuff.co.nz/sunday-star-times/business/2520616/Rod-Oram-Time-...

Looking forward to your refutation (NOT!)

Wally
Im thinking on it. I think I see a large whole caused by deflating assets that cannot be replaced with credit( a promise to pay in the future). I think that asset values have collapsed way beyond any hope of inflation in the short term I also see a lot more wealth to be destroyed as Fannie and Freddie buckle along with commercial property.
In Germany the Wiemar republic had hyper inflation, across the channel the UK feared better. Would hyper-inflation in the USA have a similar effect on us, or would we be insulated and isolated in our own little asset destructive environment? It appears that the fed is loosing the battle against inflation, honestly I have not got a clue which side will win,Im betting deflation followed by Inflation and expect timing to be critical.

Ilargi: You know what? No. I won't get back into the deflation vs inflation debate. The numbers start to do the talking on issues we've for a long time said would come. Nothing special about that, it's been clear for years that the overflowing debt would grind the economy to a standstill. Yes, there are increases in various levels of money, credit, whatever you please to name it, though less than often assumed. But it is not and cannot be inflationary.

The reason why is that there's another side to the financial coin. And on that side, much more is being lost and simply evaporating into razor thin air than any government could ever print. If printing money were all it takes to ward off deflation, there would never have been deflation. If that were not true, it would be possible to reinflate a Ponzi pyramid. It is easy for most to see why such a thing could never work for Bernie Madoff, but apparently not so easy that neither can it for Ben Bernanke or Barack Obama.

As long as the US is active in international bond markets, and it will be as long as anyone is willing to buy Treasuries, inflation is simply not on the agenda. An economy that is built as a Ponzi scheme will necessarily plunge headfirst into deflation. The US economy is such an economy (and it's not alone). Whether or not it will later see inflation is hardly interesting today, because the deflationary phase will mutilate it beyond recognition.

The numbers don't lie; they're crystal clear. And they're about to get much worse.

A decreasing house price isn't deflation you are using it in the wrong context.

Inflation/Deflation should be reserved for talking about the money supply. If your house has lost $50000 in value then that IS NOT deflation, when your house gained $50000 NO MONEY was created and when it lost $50000 NO MONEY was destroyed, the house increase/decrease is imaginary and has 0 effect on the money supply.

The inflation people talk about has already happened, the evidence for this can be found by looking at the federal reserves expanded balance sheet. So why aren't we seeing massive double digit PRICE INCREASES because the banks who have been injected with money via the federal reserve are not lending. If they start lending fractional reserve banking will multiply that amount by 10 and then you will see price increases.

The biggest problem when talking about inflation and deflation is actually the english language. People always misuse the word inflation to describe an increase in prices, they are using the word in the wrong context the correct english word they should be using is increase and not inflation. Inflation and Deflation should always be reserved for talking about changes in the money supply, these changes in the money supply will have downstream effects on the prices of goods, if we inflate the money we are decreasing its value and this will cause an increase in the prices of goods. People really need to police themselves and not use the words inflation/deflation when talking about say house prices.

DavidC
Im more interested in the effects of money supply than the details. In farming the debts are huge the thousands of farms for sale, I thought were an indicator of peoples will to get rid of debt. I can only see assets decline in value as the number of properties for sale continues to increase.
I accept you argument on money supply but the effects of and the exactness of the science behind it I don't. I accept that we may get a devaluation of the spending power of a $ but against who's and who's is going to fall most? Who is going to be worse off?
I enjoy being able to come onto this site and get others views yours will be filed. My certainty of the future is getting blurry, some clarity would be a change.

Hyperinflation is a currency event but what we will likely see in the US is maybe 8-10% price increase, that isn't hyperinflation, even 20% isn't hyperinflation.

Looking at the exchange rate is not an indicator of inflation, especially if you are just looking at the NZD/USD. If all countries are printing then the rates are not going to change very much.

As to hyperinflation the only way we will see that is if we see a collapse of the USD and all the foreign USD come back into the US. Remember the US is the only country in the world that can export their monetary inflation and they have been doing that for years. Many people in the US don't understand that their lifestyle and wealth is a result of their currency being the world reserve.

I can't understand the Chinese they can't make things better by buying more US debt all they are doing is digging themselves a bigger hole. Of course the old argument that if they dump there T-bonds they only hurt themselves is always throw around. Of course they also don't gain anything by holding them to maturity especially when the US pays them back with worthless USD. It is impossible for the US to grow its way out of the debt problems it has, remember the US national debt doesn't include the more than 50 trillion in unfunded liabilities. So the chinese gain nothing in the long run all they seem to be doing is kicking the can down the road.

I did read a good conspiracy article on the Chinese a while back which was hinting that they were using the US T bonds as collateral to buy hard assets. Of course there is no way to know what the chinese are doing, it is so frustrating right now as the future is so cloudy.