Well - that's a huge disappointment - 1% would have been better right now - despite the cautionary comments he is going to have to cut again later. Very suprised he didn't do more now given that he has just travelled internationally and witnessed first hand the global chaos.

"Real house prices would fall 25%, it predicted.
Don't do anything with the mortgage, Russell, sell the house whilst you can....
It's cheaper to rent, and likely to stay that way for a while.

PITY...

The only sensible part was that they couldn't cut more...or they would be cutting the BORROWING capability from overseas....to pay for what THEY actually OWE.

PITY our systems are all designed to only work in INFLATED times. And that includes GOVERNMENT spending....so they will have to lay off their over-abundant Public Servants.

(IRONY...Isn't a Servant, one who WORKS for people...not the other way around)

PITY the poor schmucks who will lose their jobs, because of the INCOMPETENCE of the FINANCIAL EXPERTS.

PITY...they didn't see that before when interest rates were artificially lowered for too long for CONSUMER WASTE.

PITY the banks did not see that, on-lending to profligates, building MCMANSIONS, not our ECONOMY.

PITY, Seems we will all be paying for the sins of our so-called FINANCIAL EXPERTS, who ROB us daily.

PITY any poor SAVER. They made the biggest BLUNDER. Who would have thought it.?...WORTHLESS NZ MONEY, how novel...how UN-PATRIOTIC.

PITY, things must be really bad. Cos they want to cut MORE....but cannot.

PITY us poor schmucks who have no debt, but are PAYING anyway.

Tis a REAL PITY....except for those who get PAID out of all this MISERY, they actually created, THE GRAVY TRAIN bunch.

PITY I AM TOO OLD and TOO TIRED and TOO HONEST, TO JOIN EM.

An investment these days is one you can get yer money out of....but at an inflated PONZI price.

The MANIPULATION of the MASSES for the greater GREED..

What next....more PUBLIC WASTE....and guess who PAYS....in the long run...

YOU.

Keep on WORKING....if you can.

Seems the BORROWERS got in ahead of me.....

Is there no-one not in debt.?

Sure is, LOLO! As the Japanese know..their property market fell for 18 years straight, from 1988 (with official interest rates near zero for much of the time). But we have a so much better economy...

You have done all things right, Kate.
But I would venture to say that YOUR savings are the monetary reward for YOUR past efforts. Allowing others to use your savings, by placing your surplus in a bank etc., allows the economy to advance. The return you get for this is not "earn(ing) money for doing nothing", but a price you are paid for risking the non-return of your savings. Hence higher investment rates for a finance company vs a bank. I do not believe there is a problem with interest, per se, if the risk is priced correctly ( which sadly in NZ has not been the recent case).
Without savings lent out, like yours, we will not go forwards as a country, and therein lies the root of our current collective problem. WE have not used YOUR savings productively, but speculatively.

Well in theory Janet, yes, but in reality people didn't really spend money they wouldn't have been able to spend as a result of my savings.

As I understand it - they spent money as credit - which was created from nothing.

The notion of the fractional reserve system is I believe part of a mythical past, a way it was conceived but shamefully abused and now found to be broken/bankrupt.

Indeed anyone with cash reserves these days probably has them as a result of speculation, not production. One had to produce to be able to afford to speculate, but from there on the speculation paid far more dividends than the production. At least this is the case for us. And, the more knowledgable I become about the state that behaviour/belief got us (the world) in to - the more miserable I feel about my part in it.

I just happened to be born in the right decade. These same opportunities do not seem on the horizon for a new generation, unless of course, those in power (many of whom similarly profited like we did) decide its 'game over' and a new way (which is likely a debt free money system) needs to be forged.

Ruru - at last they know they don't know..took a while though...

Everybody is born into the right decade, Kate! You are better off than your parents, and they their's etc. And whilst you ( and I!) can't see it at the moment, our children will be better off than us. And I'll bet you parents were just as concerned about "how will you will get a job; buy a house or whatever" as you are about your children. That's what evolution is about. And regardless of the opinions concerning fiat money; Bretton Woods; Keynesism; laisezz faire or whatever one subscribes (or not) to, one thing is certain; and that is that there is no one-size-fits-all in the economic or social world, otherwise we would have evolved into that one system. Don't get despondent about fractional banking. It's part of the process of we have had as the best we could come up with at the time! Maybe it's on to something new; maybe not. The game is not over - it has just begun.

Kate:
>The notion of the fractional reserve system is I believe part of a mythical past, a way it was conceived but shamefully abused and now found to be broken/bankrupt.

Kate, you'll be pleased to know that as of about November last year, it seems fractional reserve banking ceased to exist. No more worries there, then...;-)

Glad to see the good Doctor has arrived at my frequently stated prediction of 20% fall in house prices
Although he has moved it up from a 16% fall prediction so maybe next round he'll be at 25% and close to bernard's 30%!!!!

janet - it depends on how you measure "better off". Yes, I've got more clothes and shoes in my closet than my Mother ever did, and yes, I've got a pretty outstanding collection of art and artifacts that she never had, and I (as a woman) was given much greater employment opportunities than she ever was. But she was able to raise me and two siblings on a nurses wage - and (from the US) we travelled as a family to Europe, South America, Canada, the Carribean, Tahiti (where I met my future husband) - and then she shouted me a trip to NZ on my graduation from University - so I could marry the bloke and live here happily ever after.

And I grew up in a suburb of Chicago, where there was so much land, the lot sizes were all half an acre, and no one had or needed fences, and no one locked their doors unless going on holiday, and everyone let the family dogs out loose at night because there were no leash laws and no traffic hazards to speak of. And I and my friends had our own little walking school bus at the age of five, and didn't need any adult supervision or company - because the streets were safe and all the Mother's were at home anyway during the day watching after us out the windows. And we had TVs, and fridges, and all the mod cons of the day, but on that nurses wage my Mother didn't need to use hire purchase to obtain them (indeed I don't even know it existed back then!). So, aside from the house mortgage, she never paid anyone an ounce of interest in her life.

Now she did have to bake everything from scratch, because the store bought cakes and cookies were in her opinion too expensive, but the difference was - the raw ingredients were a pittance in comparison - whereas these days, I find wholesome, home made is usually more expensive. And she didn't need to replace the vacuum cleaner, the coffee pot and the toaster every 3-5 years, cause the stuff like that just seemed to last forever.

And, on top of all that - my Mother (now 83) is a wealthy woman. Not through her own savings, but through the pension plans afforded to her by both the State and her past employer. And because since retiring at 65 she has needed less and less money, she had to invest her surplus pension somewhere - and of course that grew and grew over the fair weather times - and indeed, we kids got her out of the market and into government bonds a couple of years ago - given she didn't need to earn any more, she simply needed to preserve her capital.

I could go on and on - but you get the picture. I do not think I will have it as good as my Mother (indeed ironically, I will have it better than most, due to her inheritance) - but that said I believe middle class society are going backwards - if we really, really look at it.

Inflation has been a killer, the trend toward cheap materialsim has created false economy, the buying power of our wages is eroded with each year that passes.

I would love it to be different for my kids and grandkids, but I am not hopeful - at least not yet... but I don't intend to go out without putting up a fight for them, that's for sure.

Thank's 4 A Nice Read I found Free Credit Reports is definitely a excellent website to get my credit report & see the score 4 nothing. Has Anyone else used it?