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Top 10 at 10 to 2: Queenstown empire implodes; US housing ATM; Fiscal fallout; Dilbert
Here are my Top 10 links from around the Internet at 10 to 2. I welcome your additions and comments below or please send suggestions for Monday’s Top 10 at 10 to bernard.hickey@interest.co.nz We try to absorb everyone's workflow energy...
1. End of empire - The Southland Times reports that New Zealand Resorts Ltd, one of the companies in Ross Wensley's Queenstown property 'empire', has been placed into liquidation. It owns The Club development.
Mr Wensley's developments have been hit hard by the credit crunch and a drop in apartment prices.
Last year Mr Wensley travelled to the United Kingdom to chase money owed by people who had bought apartments at the Marina Baches complex in Queenstown, leaving his company $23 million out of pocket.
2. Map of doom - Check out this county-by-county interactive chart of mortgage delinquency rates in the United States. It's from the New York Federal Reserve. If you have any doubts about the scale of the disaster unfolding in the US then you need to look at this. Most of the West Coast, South West and South East have delinquency rates north of 10%.
3. Damaged credibility - Ron Hera makes the case at Seeking Alpha for eventual hyper-inflation in America and the destruction of the US dollar. There have been plenty of doomsayers predicting this, but so far the US dollar hasn't collapsed and demand for US Treasuries remains strong, partly because all the money printed is sitting idle in Federal Reserve accounts. Hera reckons it's all about credibility in the long run, rather than financial market confidence now. Eventually, the money printing will kill the US dollar, he says. It's a long read but well worth it. HT Troy Barsten via email.
Rather than a crisis of confidence, hyperinflation results from a crisis of credibility. Hyperinflation results when the social, legal and political structures that create the value of paper money break down. When a government borrows excessively and its promises to repay are contradicted by mathematical realities, the value of its currency cannot be maintained.
Related Topics
If a government so lacks credibility that it cannot issue bonds because there are no buyers other than its own central bank, the value of its currency declines faster than money is printed to cover its obligations.
Perhaps the most important indicator of impending hyperinflation is whether the statements of a government or of its central bank, e.g., with respect to the government’s budget or the central bank’s balance sheet, are evidence based or ideological. If they are not evidence based, the credibility of the government or central bank, and its currency, will weaken and eventually fail.
When the balance sheets of US banks are maintained by suspending accounting rules and when banks hold financial derivatives liabilities greater than world GDP, both the stability and credibility of the banks is questionable.
When US economic data consistently seems to reflect a Pollyanna bias and the US federal budget contains unrealistic projections of GDP growth and tax revenues, while public debt and government liabilities (which now include unlimited bailouts for government sponsored entities Fannie Mae (FNM) and Freddie Mac (FRE)) are obviously unworkable and the US government’s own central bank is already a major buyer of US Treasuries, the federal government’s credibility is questionable.
When private financial losses and toxic financial assets are transferred to taxpayers while profits and bonuses abound on Wall Street thanks to accounting rule changes in the midst of the worst economic contraction since the Great Depression, the credibility and competency of the US Treasury and Congress, with respect to the finances of the nation, is questionable.
When the US Federal Reserve defies the US Congress, resists independent auditing, engages in ongoing QE and is the lender of last resort for banks that under normal conditions would be insolvent, its credibility is questionable. When the Chairman of the Federal Reserve, who failed to detect the largest asset price bubble in the history of the world and who has been consistently wrong in his assessment of the US economy is reappointed following the worst financial and economic disaster in generations, both his credibility and that of the Obama administration are questionable.
The plethora of red flags spewing from Wall Street, from the Federal Reserve and from the federal government point to a breakdown of de jure value that is already in progress, thus to a hyperinflationary outcome for the US dollar.
4. UK CRE crisis - The next penny to drop in Britain is likely to be commercial real estate (CRE) , similar to the one that is crumbling in America. The Independent points to a warning from the FSA about British CRE. HT Troy.
The City watchdog has sounded alarm about the prospect of a meltdown in commercial property. Announcing much tougher stress tests for banks, the Financial Services Authority raised concerns that they are not setting aside enough to cover losses on the sector.
In its overview of the financial risks facing Britain this year, the FSA said about £160bn of UK commercial property debt would mature over the next five years. During the recession, many commercial property companies were supported by forbearance from banks, which often waived conditions attached to loans, it added.
However, banks could decide not to renew loans after their terms expire. "This could force liquidations and release commercial properties on to the market, possibly triggering further price falls. Leveraged loans to UK companies that were subject to buyouts also face a maturity hump and present similar refinancing changes to the banks in this sector," the rgulator's report warned.
5. 'He said it' - I've called Barack Obama a liar and a fool for over a year. Now Barack Obama is saying that more than half of the letters he gets are from people who call him an idiot. The wisdom of crowds... HT Gertraud via email
"I will tell you, that my staff is very even-handed, because about half of these letters call me an idiot!'' Mr Obama said overnight, chuckling at his own joke during a rally in Saint Louis, Missouri.
6. Fiscal crisis - Mohamed el Erian, The head of the world's biggest bond fund PIMCO, has again warned in the FT about the scale of the fiscal crises unfolding through much of the developed world and how it changes everything. A must read I reckon.
Every once in a while, the world is faced with a major economic development that is ill-understood at first and dismissed as of limited relevance, and which then catches governments, companies and households unawares.
We have seen a few examples of this over the past 10 years. They include the emergence of China as a main influence on growth, prices, employment and wealth dynamics around the world. I would also include the dramatic over-extension, and subsequent spectacular collapse, of housing and shadow banks in the finance-driven economies of the US and UK.
Today, we should all be paying attention to a new theme: the simultaneous and significant deterioration in the public finances of many advanced economies. At present this is being viewed primarily – and excessively – through the narrow prism of Greece. Down the road, it will be recognised for what it is: a significant regime shift in advanced economies with consequential and long-lasting effects.
Many metrics speak to the generalised nature of the disruption to public finances. My favourite comes from Willem Buiter, Citi’s chief economist. More than 40 per cent of global GDP now resides in jurisdictions (overwhelmingly in the advanced economies) running fiscal deficits of 10 per cent of GDP or more. For much of the past 30 years, this fluctuated in the 0-5 per cent range and was dominated by emerging economies.
7. Americans are saving again - This is a fascinating chart put together by the boys and girls at Calculated Risk which shows how Americans are using their houses like ATMs (via Mortgage Equity Withdrawal (MEW), but instead of withdrawing cash they are effectively depositing cash. This is important because it shows American behaviour has turned around and the global recovery should not depend on US consumers to drive it. Let's hope Chinese consumers start consuming an awful lot more.
8. The final bailout - Now it seems a bunch of Americans are lobbying the US government for a bailout for those who suffered at the hands of Ponzi schemesters Bernie (10% forever) Madoff and Allen (I just like cricket) Stanford. Peter J Henning at the New York Times' Dealbook has the story. Oy Vey. Will it ever end.
Investors who lost billions of dollars by placing their money with Bernard L. Madoff and the Texas financier R. Allen Stanford have banded together to seek relief from the last bastion of protection: Congress. These investors are lobbying senators to add a provision to the financial regulatory bill requiring banks and investment firms to pay into a fund that would be used to compensate them for a portion of their losses from Ponzi schemes.
The plan involves about $4 billion, which seems like almost chump change in the current era of trillion-dollar federal deficits and is minuscule compared with the tens of billions of dollars that financial firms like Citigroup and the American International Group received from the government to keep them afloat. But should the Madoff and Stanford investors get better treatment than anyone else who falls prey to a financial scam with little prospect of any significant recovery and no insurance fund to repay at least a portion of their losses?
9. Standard and Poor's warning - The ratings agency has warned that the United States' AAA credit rating is at risk without a more credible plan to control the US budget deficit, the FT reports. Are you listening Barack? Maybe not. He's too busy chuckling at his own jokes about himself. He is a joke.
The triple A rating of the US is at risk, S&P has warned, unless the country adopts a credible medium-term plan to rein in fiscal spending.
In a report published on Thursday, the ratings agency said that there were risks that “external creditors could reduce their US dollar holdings, especially if they conclude that eurozone members are adopting stronger macroeconomic policies”.
10. Totally irrelevant video - There were a few ... er... technical difficulties for this US news reporter when doing a live cross on a sentencing recently. Not a happy camper. Better than the Wendy Petrie fist pump.
69 Comments
http://www.youtube.com/watch?v=dYlckOkcLsY&feature=related
http://www.youtube.com/watch?v=dYlckOkcLsY&feature=related
I thought this was a
I thought this was a great idea (from K Denninger) for NZ going forward. This is what the "Dutch did when Tulip Mania blew up. They declared all the contracts that had been written against Tulip Bulbs (which were an awful lot like a CDS!) to be unenforceable gambling contracts and thus void."
We could do the same here and make New Zealand a haven for banks and corporations!
How is that for innovation?
Thursday, March 11. 2010
Posted by Karl Denninger in Regulatory at 11:38
(Page 1 of 388, totaling 1937 entries) » next page
Is That Fear I Sense? (CDS Regulation)
Amusing how Bloomberg comes out pumping the CDS monster:
March 11 (Bloomberg) -- European politicians and regulators could initiate a continent-wide ban on speculative trading of sovereign credit-default swaps tomorrow. Making it stick without the Americans won’t work.
Oh there you're simply wrong, my friends. The assertion is made:
“You need to get the U.S. on board, otherwise the effect will be minimal because trading will simply move elsewhere,” said Jan Hagen, head of the financial services group at the European School of Management and Technology in Berlin. “A ban would allow European politicians to tell voters at least they’re doing something.”
On the contrary.
EU nations can pass laws and regulations that make the collection of bets placed in this fashion unenforceable. That is, you're free to write all the swaps you want over in London, but you can't force anyone in the EU to pay when the bet goes against them.
This, incidentally, is exactly what the Dutch did when Tulip Mania blew up. They declared all the contracts that had been written against Tulip Bulbs (which were an awful lot like a CDS!) to be unenforceable gambling contracts and thus void.
POOF!
Such a law, if passed EU-wide would make the European Union a haven for corporations and even banks. No longer could you be attacked within the EU - and frankly, who gives a tinker's damn what London or Wall Street thinks if they can't reach into your firm if and when their contracts go bad!
Oh, and if you think the Europeans don't have a real solid reason to do this either individually as nations or collectively, you're wrong. Italian cities, for example, appear to have been scammed with swap contracts written in English rather than their native language by a bunch of High Street shysters. They're now bleeding from all orifices on these "deals" and looking for a clean way to stop it.
This is the way to do it and it's entirely within their rights as sovereign nations to do so, just as it is ours.
Should the EU do so America would be forced to go along, lest it be effectively depopulated in terms of large financial and industrial concerns. Same with Britain.
So go ahead and put forward this sort of BS "firebreak" kind of argument, Bloomberg. It's abject nonsense.
The creation of a "safe haven" where fraudulent swaps are no longer enforceable would be of tremendous benefit to the western world.
If London and Wall Street have managed to bribe their respective governments to a degree that makes banning fraudulent conduct impossible, then we will simply have to look to the Europeans to take the proper - and long overdue - step forward in fixing this problem, and suffer the consequences in the loss of both jobs and companies that come from the "big banks" obfuscation and BS.
rc - that is the
rc - that is the funniest clip I've seen in ages...
@1 there was a time
@1 there was a time when anybody could own a batch along the lake in Queenstown, but then, Queenstown was marketed to the whole world by "enterprising" and (therefore virtuous) people and a capital gainsrush ensued. Now all you can get is a shoebox with a slice of view and a copy of Up Skippers Road on the coffee table and Queenstown isn't overdeveloped.... It isn't.... no it's not .... no, really it isn't!.
That would be a bach.
That would be a bach. Probably plenty of folk making a batch in their bach in Queenstown. ;-)
@LearnToSocialDance maybe this is what
@LearnToSocialDance maybe this is what John Key and co had in mind when they suggested turning NZ into a financial services hub? Would be a good way of generating a few thousand jobs potentially.
How would these laws work, as they can't make retroactive laws? The investors or "gamblers" must be recompensed what they invested in order for this to work, or is this just one of those cases where if you invested in something you must take into account the legal/political risk of your investment?
@Bernard, you say :"<i>This is
@Bernard, you say :"This is important because it shows American behaviour has turned around and the global recovery should not depend on US consumers to drive it. Let’s hope Chinese consumers start consuming an awful lot more."
Your first sentence was true and important.
But that second sentence (and all the assumptions that go with it) is just nuts. Consumers do not drive economies--economists who think they do are destructive, and countries who think so are stuffed.
@Peter would you care to
@Peter would you care to elaborate, what do you think can drive the world economy?
Joe, you're dreaming. When was
Joe, you're dreaming.
When was the time "anyone" could afford a bach on the lake in Queenstown?
Prices have been sky high relative to the rest of the country for 40 years (with a few dips along the way, mind you). In the early seventies baches up around Lake Esplanade were selling to developers for over $100,000 each, when a brand new house in Invercargill cost $10,000.
Even when the market was down and out post the Asian crisis (late 90s), you couldn't exactly pick up a freehold bach in Queenstown for much less than the average NZ house price unless it was an ice box on a steep south facing slope.
Yes, baches an hour away at Kingston were cheap (they still are relatively - you can pick one up well under $200k) and you could always pick up a cheap leasehold one in Qtown (probably for about $20k today (leases only have a few years left)) but forget about the suggestion that Qtown baches were cheap anytime recently. You would need to be thinking back to the halcyon days of the 1950s and early 60s when you could still buy a farmlet on the edge of Remuera for not much more than the price of a house in town.
The reality is that things move on.
@Peter If we don't have
@Peter If we don't have consumers... who buys the goods that are produced, or pays for the services rendered? Think I'm missing a trick here
@6: interesting piece....yet another nail
@6: interesting piece....yet another nail in the coffin of [quick] recovery...
"Countries will thus be forced to make difficult decisions relating to higher taxation and lower spending. If these do not materialise on a timely basis, the universe of likely outcomes will expand to include inflating out of excessive debt and, in the extreme, default and confiscation."
"confiscation."
Does that mean if say NZ defaults a foreign country can take goods that belong to NZ companies as compensation? how about NZ citizens who own shares? property? or bank accounts? pensions?
ho hum...
@ Bernard #5 I think
@ Bernard #5
I think Liar "a liar and a fool" is a bit harsh on Obama. I think he's idealistic certainly, and made some big promises prior to taking up residency in the White House which a normal healthily cynical person would have said were pipe dreams.
The big picture is though that Washington is overrun with lobbyists and politicians who are not interested in changing things and have a way more advanced game than poor old Barry Obama from the Big Island. He sure caught the biggest hospital pass of all time getting elected in late '08.
As we see here with the tax-inaction of Key and English, whenever vested and moneyed interests get on the front foot it is mighty hard for real change to happen.
Of course if your opinion is that he knew all along what he was getting into and just didn't care then maybe you are right.
Try to buy a bach
Try to buy a bach in Queenstown and the locals will know to add a 20% premium for North Island buyers. In Otago, you stay in a crib when holidaying.
Bernard - the receivers have
Bernard - the receivers have just been called into Strategic.
A shedload of more investors money disappears...........
@jimmy397: "If we don’t have
@jimmy397: "If we don’t have consumers… who buys the goods that are produced, or pays for the services rendered? Think I’m missing a trick here"
Exactly....no one buys the goods...not a trick its danger...deflation/depression is probable from what I can see....
eg So to my mind the goods have to get cheaper or not be produced anymore, in either case its deflation...ditto services....if say we have 30 coffee places selling 10000 coffees a day and consumer's wallets snap shut and we only sell 6000, 10 coffee stalls close, and /or the price of a coffee drops and / or the hourly wages of the barristas drop.....this is deflation which leads to a depression.....
So due to our increasing debt we have spent money we have not earned yet...this means there are more coffee shops in existence (30) than is sound....say the sound number is 25...but to pay back the debt and the interest there is now going to be -5 for the capital and -1 for the debt, so 19....then there is all the knock on effects, less wholesale coffee, farmers sell less milk....its all a nasty spin with lots of knock on effects...
If our Govn's / markets etc had balanced things then they should have aimed for 25 which we could have sustained indefinitely...they didnt as Govns and markets are not rational....
regards
<i>the receivers have just been
the receivers have just been called into Strategic.
NBR were reporting the Trustees were making a decision this afternoon.
Chris Lee was holding out, I think, for Strategic merging with SCF to provide the nucleus for a South Island Bank. Am I right in that? I guess that option is off the table now for SCF also.
Lee was big on Strategic
Lee was big on Strategic I recall and no doubt put many of his clients into them.
Not very good is he...........
<b>Obama</b> may well be a
Obama may well be a " liar & a fool " , Bernard ; but does it do your credibility any good to label him as such ? Unless of course , you are the " emotional economist " as Jim Mora introduced you , yesterday . Greg-out-West is closer to the mark in labelling Barack as idealistic . Such was Hell'en Clarke's raison d'etre , and her down-fall . We cannot live in a world solely of high morals ; the folks gotta have jobs and eat , too .
Here it goes, from Lee's
Here it goes, from Lee's March 4 Taking Stock:
http://www.chrislee.co.nz/index.php?page=newsletter-display&list=2&month...
@Dogma, you ask: <i>would you
@Dogma, you ask: would you care to elaborate, what do you think drives economies if consumers don't?
Well, I did leave a link up there at which there was plenty of elaboration.
http://pc.blogspot.com/2008/11/consumers-don-drive-economy-stupid.html
Short answer: to be a consumer, you've first got to be a producer
Longer answer:
The laws of economics--indeed, the laws of reality--contain an implicit footnote: that to be a consumer, you've first got to be a producer; that all goods are paid for in the end not with little bits of paper, but with real goods; so that in order to consume you've first got to produce, and to produce what other producers actually want.
So what drives economies is not consumption, but production.
And what drives production is nor little bits of printed paper, but real savings (which is why Americans saving more and spending less is good news, not bad news).
"Consumption is the final, not the efficient, cause of production. The efficient cause is savings, which can be said to represent the opposite of consumption: they represent unconsumed goods. Consumption is the end of production, and a dead end, as far as the productive process is concerned."
- Ayn Rand (“Egalitarianism and Inflation,” 'Philosophy: Who Needs It,' 132.)
Greg Out West -- I
Greg Out West -- I think you are right about Obama. I think when he first arrived in the White house he made some comment about not listening to or getting rid of the lobbyists in Washington --ie. he recognised the problem but was probably being abit ideallistic to think he could silence them in any way.
Greg out west, Roger Thompson
Greg out west, Roger Thompson
Happy to defend my comments on Barack Obama. He re-appointed Ben Bernanke as Fed Chairman and appointed Tim Geithner as Treasury secretary, both of whom had demonstrated as defacto members of the Bush Administration that they failed to understand or prepare for the crisis.
Unlike FDR who did back the Glass Steagall Act that clamped down on the banks for 60 years, Obama has rolled over at their first whimper of complaint. He is a fool for not recognising this.
Read a little more widely on Obama. He is a true failure and will get the fright of his life in the mid-terms.
I was hopeful too. He said he could. But he couldn't and didn't.
cheers
Bernard
Obama could easily have fought the lobbyists distorting Congress and appointed decent people to run the Fed and Treasury. He promised change and pretends to be a leader. He has delivered no change and failed to lead.
cheers
Bernard
Prior to the early 1980's,
Prior to the early 1980's, Queenstown was a holiday village where property values had remained relatively static for at least a decade. At this time approximately eighty-five percent of property transactions were made to local and regional buyers - approximately half for owner-occupation and approximately half for investment/holiday purposes.
1980 - 1989
Property values began to rise in 1983 and then accelerate over 1984. Over this boom period significant speculative investment occurred and property values generally increased by a factor of between two to three times. The residential market was the first to move and with tourist numbers expected to increase dramatically in the short term, a demand increase and resultant value increase in developable tourist accommodation/servicing zoned property soon followed.
1990 - 1999
In the subsequent year however, there was still an over supply of property available and forced sales continued, generally to owner occupiers and South Island based investors. The cycle turned for the rise in early 1991, resultant in part from an optimism in falling interest rates, but to a greater extent through an increased enquiry/purchasing from off-shore - mainly in prime lake front, commercial and tourist accommodation property. These off-shore purchasers entering the market acted as a significant catalyst to recovery. In effect this period represented a "discovery" of Queenstown by the offshore market.
http://www.queenstownproperty.com/queenstown_property_overview.html
Did someone here link to
Did someone here link to this Obameter before?
Ignorant of its political objectivity - but loved the concept....
Great idea the Obameter -
Great idea the Obameter - someone here should do a KeyPI.
Bernard- re Obama, quite right.
Bernard- re Obama, quite right. The world will regret his inaction, there is little or no time to wait for a replacement, and something like Palin would be a continuation of 'no replacement'.
Peter Cresswell - I have no problem with your answer, but it begs a further question:
How long can you supply the stuff of consumption?
Re:7 Many americans don't have
Re:7
Many americans don't have much choice but to save considering some 25% of homeowners are in negative equity. Don't think China is productive enough yet to replace their consumption unfortunately.
Somewhat off topic, but just
Somewhat off topic, but just sitting watching TV and lo and behold there is an advert for Sinopec (the Chinese National oil company).
A broad spectrum advert - along the lines that Shell or Mobil might do.
But what are Sinopec doing advertisng in NZ???
What interests do they have here, anyone know?
Bernard, Think you're being harsh
Bernard,
Think you're being harsh on Barry. He has been a massive dissappointment but the 'liar' comment implies wilful deception. I am still willing to give him the benefit of the doubt and say he is more guilty of naiivity.
The hope is that after the mid-term drubbing we get a hardened Obama who does everything in his power to pull the US out of their current slow-motion death spiral.
Bernard - For hyper inflation
Bernard - For hyper inflation people have to spend or create demand and use "all that printed debt money" and yet what are americans doing? saving more and adding to the environment for deflation.The US Govt is doing its absolute best to stop deflation - good luck! Strategic finance has just gone bust, how much NZ debt money has been destroyed??? Guess how much USD debt money has and will be destoyed as opposed to being created and spent??
Michael - I agree. People
Michael - I agree.
People need to realise since the end of the last century we have been witnessing a major global change from an inflationary environment to deflationary.
Globalisation brings us an almost unlimited supply of cheap labour, demographics brings us an ageing (=lower consumption) society in the high-income nations, technology and growth is focussed more on intellectual property than physical property and environmental awareness is shifting people away from the 'bigger is better' philosophy. And as we've been reminded the last 2-3 years large parts of the global economy are swimming in debt on a scale never seen before.
All deflationary.
i don't often comment but...
i don't often comment but...
regarding #3, i find it amazing that there is not more in-depth discussion of the "hyper-inflation versus deflationary spiral" debate. by "discussion" i don't mean shouting back and forth. i mean looking closely at and analysing the historical evidence. imho, it is not an either/or dichotomy. both could happen in fairly quick succession. to me, the question of the credibility of the US dollar, the Federal Reserve and US Treasury debt are at the absolute core of the current global financial system. if the US currency loses its exhalted status, the whole system must be overhauled from the ground up. no vinegar-and-brown-paper carry-on like TARP, Gordon B and all the others. anyway, i just wanted to say that i am surprised that more people do not look closely at the hyperi-inflation phenomenon or the deflationary spiral.
Bernard - after his apalling
Bernard - after his apalling choices of Bernanke, Summers and Geithner a tiny little step in the right direction from B.O. here...
http://www.businessweek.com/news/2010-03-11/yellen-said-to-be-obama-s-pi...
Re: the deflationary versus hyperinflation
Re: the deflationary versus hyperinflation debate. I certainly agree that the deflationary forces are massive at the moment - but governments are doing all they can to inject inflation into the system (as deflation terrifies them, and inflation offers a way out of the debt crisis). They are at least partly aided in this (though they would never acknowledge it) by resource depletion. If they suceed they will almost inevitably over-egg the cake and let inflation run riot.
So study both phenomena closely, and invest on short timescales in order to adapt accordingly.
andy - yes the government
andy - yes the government intervention at the moment is a risk, but I think the experience in Japan is the closest we can come to the reaction (printing and govt deficits) in the US and the UK to a debt implosion/demand shock and the result has been persistent deflation. Admittedly their demographics are worse than the others but the other conditions mentioned above apply there just the same.
I think it is the
I think it is the political system of America, which fails not only Obama, but presidents before him. Presidents picked, drilled and placed on top by powerful and often invisible lobbyists.
In a modern society, how can a single men have so much power over 400 Million people and the world – a mystery !
Walter
Joe, I'm not sure your
Joe, I'm not sure your commentary on Queenstown property is that accurate:
"Prior to the early 1980’s, Queenstown was a holiday village where property values had remained relatively static for at least a decade"
What the?
House prices tripled in the decade prior to 1980!!
A holiday village prior to 1980?? Really???. The big tourism boom in Q/town hit in the late 60s early 70s. You only need to look when the big hotels were built: What's now the Crowne Plaza was built in 1974, what's now the Copthorne was built in 1972. A lot of big motels were built at this time as well.
Admittedly after the early 70s boom, Q/town prices hit the wall with the national property crash in 1975 and they rose only modestly until the boom that accompanied the stockmarket hysteria of the mid 80s.
But there's no denying Q/town has been an expensive place to buy for at least forty years.
My parents were looking at sections (to build a crib) in the region in the early 80s and the cheapest they could find in the Queenstown area was around the same price as a good house in Invercargill. They ended up buying (for about a third of the price, $14,000) in Clyde, (The same type of section in Clyde in 2001 was only worth about $19,000, today it'd be worth about $100,000), which I guess shows how turbulent prices can be.
Anyway I digress, it'd be better to see people base their view on facts rather than a rose-tinted view of the past when "prices were reasonable".
Yes Obama is a joke
Yes Obama is a joke AND so is Standard and Poors! They still have the US rated as Triple A? WTF
One thing the world does
One thing the world does not need right now is procrastinators BUT unfortunately we have them in just about every western government on the planet. They are straight up useless! They are like possums staring back at the torch held by the hunter. All is good, everything is fine, then BOOM!
The whole Queenstown issue is
The whole Queenstown issue is has happened before. In the 90's the back lash went on for nearly 10 yrs. Myself; I was forced out due too the cost of living vs the actual wages. This will go on for yrs to come and the only people to benefit will be the 3 johns and the rest of the 20 or so land bankers, athough a few of them have had some hits already. QT has been 100% pure greed for the last 8 yrs. If the normal people think that I may get into the market now, the problem is the spread of ownership. I doubt that will change at all.
@tochigi : deflation or inflation...there
@tochigi : deflation or inflation...there is a lot of evidence for deflation, little for inflation, in the short term....but its like walking a knife edge I believe....it could fall either way...if the Govns stop massive spending too soon it will be deflation, indeed I dont think they can spend enough to stop it....too late and it will kick-start inflation....
After a deflationary period with oil being in short supply then yes inflation....oil effects everything....
I think its impossible to predict the future right now everything is to crazy....
regards
I don't know if Barrack
I don't know if Barrack Obama is a fool, but I hope so, because the alternative is a heck of a lot more frightening. Reading down the 10@2, along with everything else I'm reading, leaves me with eyes glazed over. On the one hand it is an interesting time to be alive, but I hope to God that my conclusions about how this will impact the world of my grandchildren is so very wrong that someone will have me straight-jacketed and committed.
Obama: I agrre with Bernard....Personally
Obama:
I agrre with Bernard....Personally I think he's cooked his goose.....He promised and americans expected great things from him, instead he has done little....not useless, he seems to have some sort of public healthcare system locked down....but he seems to have otherwise ignored main street and kept wall street in luxury...he cant afford that, he had to sort it, instead he hasnt, so either he is a liar and broke his promises or something fundimental stopped him leaving him no choice. Now the mid term elections and his 2nd term run could end very badly for him and a lamer duck we will see IMHO....even if he wins a second term which I now doubt...
The alternative of course is a nutcase like Palin...which is even worse...maybe it will take really incompetant and self-centered GOP to nail the last nail into America's coffin which they seem intent on doing....
I mean Im gob smacked on just how extreme the republicans are....and still enjoy a very significant % of the vote....Im mean in NZ I dont see them getting even a 1/10th of ACTs vote let alone runnig the Govn, yet thats what we see and will see again....that has to be a worry because they have a shed load of guns, bombs and nukes...and think the world owes them and will try and collect.....resource wars are so much more likely with someone like Palin...
It would be nice if NZ found a few billion barrels of oil and our Govn was sensible enough to sit on it....or at least manage it well...but that might encourage the Americans to come visit....
regards
@Doug: "I hope to God
@Doug: "I hope to God that my conclusions about how this will impact the world of my grandchildren is so very wrong that someone will have me straight-jacketed and committed."
I think Id be in the same cell with you....and then of course there is also AGW...
Personally I sometimes lay awake at night and think what the f*** have we done....how will I explain this to my children, and (hopefully) grandchildren.....sorry chaps we used all the oil, we burned it....sorry about the climate, burning the oil caused it....sorry about the debt....a lot to be disappointed in ourselves about.
regards
@Peter Cresswell While Ayn Rand
@Peter Cresswell
While Ayn Rand makes passionate arguments I am not sure that Objectivism is widely recognised among those who are not disciples. I
If you are interested in
If you are interested in linking to us, directions are at the bottom of the page. Wholesale Lots
Maybe the greatest ponzi scheme
Maybe the greatest ponzi scheme of all time...
our ponzi lifestyles.....set to implode at a person near you right now...
Chinese oil consumption is exploding
Chinese oil consumption is exploding - up 28% y/y.
http://news.bbc.co.uk/2/hi/business/8563985.stm
Had Western demand not hit a wall due to the recession we would now be looking at $150/barrel or more oil.
The Taranaki Basin Hoki drill may well produce some results this coming week. Fingers crossed for a 250m barrel hit, we are going to need every drop.
By the way I think I have just answered my question (see further up). Maybe Sinopec are coming to drill in NZ...........
Yes, I think Sinopec are
Yes, I think Sinopec are after our oil Andy.
What scares me is what sort of a deal our desperate government will do? Will Sino employ any Kiwis - the terms of our "free" trade agreement allows them to use their own crews.
I can see it now - no jobs for us and 50cents a barrel royalties - and Browneye telling us what a great deal he got, how this will boost GDP and exports and we'll all be rich blah blah blah
And another thing, WTF are
And another thing, WTF are the NZ super guardians thinking getting involved in petrol retailing and the Marsden point refinery?
Don't these clowns know that Chindia are building huge low cost refinery capacity? Here we are at peak oil - great time to be buying? Mobil and Caltex want out as well - go figure.
That money should be going into developing our oil and gas fields, we should be saying not for sale to the Chinese.
Or the NZ Super Guardians
Or the NZ Super Guardians ( Adrian Orr & co. ) could go up the technological tree , and put that super munny into the new trans-ocean pacific fibre cable . The future is not fossil industries .
Steven / Doug - agreed.
Steven / Doug - agreed. I've long apologised to my own kids, on behalf of my own generation.
I've just done a blog about Enviroschools, and how you've got to be careful that teaching kids about reducing, reusing and recycling, isn't just you laying off your guilt on them.
It's us leaving that debt to them. Not fair, they didn't sign up for that.
Just goes to show, debt shows up as more than student loans and empty oil-wells!
What's the bet the NZsuper
What's the bet the NZsuper G mob are stuffing loot into Kiwibank very soon...buying some of those 'bond' things that last forever but could turn to smoke tomorrow...that way the super loot can be used to pork the ponzi bubble and keep the stupidity going!
Let's see now..$150million times 10....jeez that's about 1.5 billion less a few bob kept back to keep the peasants happy that they can get 'their' money out....say 1.3 billion to warm up the dying property market....Kiwibank to be offering oodles of cash and all you need is heartbeat....oh and a valuation made by the neighbours 10 year old...don't knock it...he'll probably be better at it than the fools doing the task over the last 10 years.
Remember that idiot ex national
Remember that idiot ex national minister Cooper who used to be mayor of Queenstown? Commenting on the expensive and tasteless overdevelopment of one of NZ's finest locations and whether it risked "killing the goose that laid the golden egg" he said you'll know when development's gone too far because people will stop coming. How's that for far sighted. Thats the calibre of the politicians that have run this country for so long.
@steven: thanks for your comments.
@steven:
thanks for your comments. in the article (#3) cited by Bernard, the last part is particularly interesting: de jure value versus de facto value. if the authorities issuing the bonds lose credibility, the de jure value ceases to exist. it is quite separate from resource scarcity, etc. in simple terms, people stop trusting the monetary authorities and government treasury. game over. de facto value, on the other hand, is something that is useful by its very nature (food, fuel, timber, repair services, etc.) rather than depending on the contract represented by fiat money.
<b>Warren Cooper</b> : Mayor of
Warren Cooper : Mayor of Queenstown 1968-75 & 1995-2001 .
<a href="http://www.timblandbuy.com/" rel="nofollow">Timberland
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Re: inflation vs deflation -
Re: inflation vs deflation - debate between Faber and Mish
http://finance.yahoo.com/tech-ticker/the-great-%22inflation-or-deflation%22-debate-mish-vs.-dr.-doom-441196.html?tickers=^DJI,TIP,TLT,TBT,XLF,UUP,GLD
@andy hamilton: thanks, i'll have
@andy hamilton:
thanks, i'll have a look.
Weekend read if you have
Weekend read if you have time:
http://www.zerohedge.com/article/sprotts-last-decade-retrospective-it's-deja-voodoo-economics-all-over-again
@GertradT: good piece... "Kanjorski recounts,
@GertradT: good piece...
"Kanjorski recounts, "If they had not done that, their estimation was that by 2pm that afternoon (September 18th), $5.5 trillion would have been drawn out of the money market system of the United States, [which] would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed. We talked at that time about what would happen if that happened. It would have been the end of our economic system and our political system as we know it."
So the Q is what's so great about the system we have?
"Our central planners in our central banks are religious nuts. They show none of the attributes of professionals in a disciplined field of study, and all the attributes of brain-dead zombies performing ritualistic incantations (like the banks they pretend to manage and regulate). Our treasury departments are equally insane."
hehehe....oh why am I laughing?
Its my life these nuts are screwing with!
"Being non-charitable: Economists are literal economic and common-sense morons."
regards
"Possible tax cuts" http://www.stuff.co.nz/national/3446307/Tax-
"Possible tax cuts"
http://www.stuff.co.nz/national/3446307/Tax-cuts-what-you-ll-get
Slices of pork for the
Slices of pork for the peasants!...gotta buy that election next year... must keep the BS going....must secure spot at the trough...then we can begin clawing back the loot to pay for the slices of pork.
<b>Bernard Hickey</b> : Yet again
Bernard Hickey : Yet again you play the " Intergenerational War theme in your latest NZ Harold article . Man , you are getting as predictable as Winston Peters . Playing one age " bracket " off against another . So wrong to pigeon-hole us into convenient little boxes ( Pete Seeger !!! Ticky Tacky ! ) . As a 1960 entrant , I do not agree with the sentiments that you attribute to " baby boomers " .
For what it's worth , the pitiful policy decisions ( or lack of taking on new , hard policies ) of this National Government is political expediency ; the desire to win the 2011 election , rather than a conscious decision to rort " generations X , Y & Z " . And if we recall the 9 years of Helen Clark , she was the consumate politician , superb at winning and maintaining power . Utterly pathetic on policy . And John Key simply watched , learnt , and waited . Oh dear !
RT - I'm not sure
RT - I'm not sure it's conscious, but it's the effect, regardless. The inter-generational wealth-theft is parallelled by the upward one - and it's hard to work out whether that is cause or effect, also.
It might just be that the thing is as simple as selfishness, running into time and supply issues.
Shaw said something about 'robbing Peter to pay Paul will always get you Paul's vote....
Democracy never sits well with a society needing to shift gears rapidly. You are just randomly lucky if an appropriate intellect like FDR happens to be there at the time.
Oddly enough, we seen to have more success from the bottom up, at changing attitudes. Nuclear, Springbok tour, whaling and the like. Then it becomes populist, then the 'pollies adopt it like a long-lost bro.
Problem is we're running out of time for the required morph...
Just listen to Grey Power
Just listen to Grey Power and whinney Peters....busy buying votes.....its just great that they can take or give someone elses money with such ease.....I agree with BH....there is and there will be even more of a generational upset, the BBs are too numerous and to determined to see themselves right, they always have been....We are leaving our kids our debt and our great and great-great grandchildren AGW all with less energy....lucky them.
There does need to be balance and its my concern is there is little to ensure a balance so its going to get worse, Whiney Peters will sell my bank balance to Grey Power thats for certain. For myself I pretty much accept I wont ever retire, not untill ill-health comes along, being on the tail end of the BBs I expect to be stuck with working towards, maybe past 70...and paying high taxes and high rates etc etc...keeping the senile BBs in their retirement homes...
:/
regards
@RT: you maybe a "Generation
@RT: you maybe a "Generation Jones" the gap filler between BBs and X's...
regards
@PDKiwi: I dont think we
@PDKiwi: I dont think we will morph until its clear there is no other option....I assume that when David Lange took office and found we were bankrupt he must have had such a moment. So I dont think we will change...we will see the status quo retained even as more ppls lives are sacrificed to do this....this is because the ones who have everything intend to their ponzi lifestyle. Eventually we will change, there will be no other option at some point, a Lange moment....I still dont know how or when that will happen, I guess it will unfold at the time and take some catalyst...one of the oil price spikes on the way down from peak oil I suspect .
Interesting that many economist types still dont see the rise in oil price cold have been a physical limitation of the geology/geography/engineering...but instead its a by-product of "finance" eg speculators, anything but the possibility that it was in fact a production limit... ie peak oil......personally the more I read Im convinced most economists are complete and utter real world morons....
regards
Thanks I really needed this.
Thanks I really needed this.