Denninger has an interesting, relevant post.

http://market-ticker.denninger.net/archives/2035-Its-Called-DEFLATION-Fo...

@Rob: that's my advice to myself....has been for 18months now....I see nothing to push to fixed until fixed drops at least 1~1.5% and/or I change my view from an outlook of deflation/depression to substantial inflation...I dont see that changing for two years if ever...at which point the extra money I would have paid for fixed has and will have gone into paying down the initial sum faster...so from my spreadsheet even if Im paying 10.5% 3 years from now Im still ahead.

@AndrewJ: Paul Krugman and Steve Keen also have some charts that should worry, its pretty clear the trajectory is almost vertically down...so we are seeing a dead cat bounce of shares and house prices....

Thats a good piece, right on...somehow we seem to think sending the better paid jobs to china does us good....individually yes its rational, to our own economy? no, all thats left is flipping burgers....that doesnt pay.... In fact I wonder if the failure to see increases in national productivity is because of this chnage of job quality.

"States, municipalities and nations are no different than people in this regard. We have played this game for 30 years. We have promised people they could have unlimited health care, unlimited prescription drugs and unlimited, compound increases in salaries and benefits. At the same time we have permitted our corporations to send their labor base overseas, destroying the income base to purchase these products and the tax base required to pay those benefits. All of this has been "facilitated" by a financial system that grew from about 7% of the marketplace to well north of 20% (in 2007) before it all fell apart."

sums it up well...........

Anyway PK's links...to add........

http://krugman.blogs.nytimes.com/2010/02/19/disinflation/

http://krugman.blogs.nytimes.com/2010/02/20/more-on-disinflation/

http://krugman.blogs.nytimes.com/2010/03/05/debt-is-a-political-issue/

http://krugman.blogs.nytimes.com/2010/02/21/inflation-perceptions/

So when I read quality pieces they seem to me to clearly point to deflation...I have yet to see anything not "Kook" say and substantiate we are recovering.

And your other bit of reading this morning Bill...Denninger's final paragraph....
"As usual, the politicians thought they could extend, pretend and lie until after the election. As in 2008, they're wrong, and if they don't cut it out we'll get a repeat of the 2008 disaster but this time around it will be much worse."
Get the picture Bill....?

Folks keep your eye on the UK housing market. After responding positively to record low interest rates and cuts in stamp duty (the cost of purchase) plus a good dose of money printing the UK market has just recorded its first month of negative growth (after 7 or 8 months of positive growth). The Nationwide monthly index showed a -1% fall (month on month) for Feb and the Halifax showed a substantial -1.5% fall for the same month.

Double dipping? You betchya.....

Re the thread...unless I am mistaken..all that has changed is to shift the peasant hatred, from the RBNZ over a higher ocr to the banks that must raise rates to meet the Core Funding Rate level. This is just smoke and mirrors. It does not make the Elephant in the room shrink to the size of a skunk...it hides the real crisis which is having an Elephant sized skunk in the room....one that is getting very pissed off.

You're right, Johnwalley, as long as the application of carry funds is into interest rates. But I can understand a Singaporean investor, who is only getting 0.5% p.a. for his $1m, gearing up at 3.5% p.a. to place his money in the NZ property market. Low interest rates here stop our house prices declining ( a worry for the Singaporean investor) and he merely reaps the cashflow benefit of the carry, and any asset improvement. It's not the worry of exchange rate movements for this type of investor ( just wait it out, even in cash. It's still better than 0.5%! And who know what will happen to the USD, let alone the Kiwi), but the risk of an asset fall that is the real deterrent. He doesn't see one; do we?

Our world balances on a sea of debt:
The banks that control the world’s supply of money are no better than counterfeiters – and their system of juggling debt has left the global economy teetering on the brink of ruin. Convicted fraudster Darius Guppy offers a provocative personal view

http://www.telegraph.co.uk/news/features/7280559/Our-world-balances-on-a...

What is needed is a root-and-branch re‑evaluation of that most curious of cultural inventions, money: how it is created, how it circulates, and how it can best be used to serve the interests of the community.

Thanks for that link Angus, here's a quote from the article.

Not me PJ.... But you are right and....yes there is an and....you left out the 180 billion owed by 'home owners'...not really home owners of course because the banks own the homes...but it sounds good to some.
What do you think the fools in the Beehive should sell first.....the Chathams to Beijing or our claim to a chunk of Antarctica?

Yes, and it is exactly this, actually healthy, upward slope with regard to longer term interest rates that will mean that resetting mortgages in the US and elsewhere will become even more unaffordable (they should never have been granted in the first place) and that sovereign refinance costs will explode too further impairing states' credibility. It may also lead to still more frantic maturity mismatching to "make ends meet" (actually they don't). So this almost inevitably will lead to first a chain of bank and mortgage defaults and not so much later to beginning states' bankruptcies. "This time is NO different".

@Wally
$400,oooooo a month for the last 3 months
But how much of this is 'consumption/consolidation' in the guise of a property loan?
i.e to what degree are we choosing/ having to fund 'lifestyle' with mortgages.
No wonder we expect the house to increase in value.... it has to.

Thanks Nicholas,
But no analysis there (that I could see), of where people had borrowed against the house to fund 'lifestyle'.

I am trying to understand whether the increased lending is for property purchase/renovation, or 'unrelated' consumption' e.g revolving credit extensions using the house as security, but in fact used to consolidate credit card debt or other purchases.

Thanks Wally...

Because I'm such an avid reader of your links, RT, could you put 'hyperlink to' HTML tags for the important stuff, rather than just 'bold' ? Thx.

A radical new technology. (Sunday Star Time 7/3/10)
Sridhar"s device was named the "Bloom Box" It converts a range of fuels, including natural gas and bio- gases, into electricity through a clean electrochemical process.
The system uses thousand's of Bloom's patented solid oxide fuel cells. They take a hydrocarbon fuel and split it into hydrogen and carbon
John Donahoe said: Five Bloom Boxes running on landfill bio- gas are now generating more power then the company's 3000 solar panels.

While our government is still talking about reforms to encourage and support productivity and Flintstone Brownlee "invests" millions to export coal and other cheap stuff from the earth and trains and phones are not working properly. What a mess in our economy !

Walter

Please read and understand this in context with many other of my articles.

Walter : Last night when we were printing Sunday's fish&chip paper I had time to look at that story , many of these " break-throughs " come to nought . $ 500 M + has been invested in the " Bloom Box " , yet the commercial applications are still scant . As they say , 100 + reseachers/laboratories world-wide are working 24/7 to be the first to achiee the critical break-through required in batterytechnology . Watch the Chinese , me old chum . Expect them to ga-zump the Yankee-Doodle-Dandies !!!

@AndrewJ: Great piece a recommended read....,

but wait isnt this what Key and Bill English are saying we need ie "The Private Finance Initiative (PFI) is a form of PPP developed by the Government in which the public and private sectors join to design, build or refurbish, finance and operate (DBFO) new or improved facilities and services to the general public." Whic in turn it seems is one huge tie on future generations if you believe what's written...

http://www.creditwritedowns.com/2010/02/just-what-is-the-real-level-of-g...

But if this is what JK and BE are trying to pull off its just immoral...if for no other reason than NZ doesnt really need this sh*te...

I mean,

"PFI contracts are currently off-balance-sheet, meaning that they do not show up as part of the national debt as measured by government statistics such as the Public Sector Borrowing Requirement (PSBR). The technical reason for this is that the government authority taking out the PFI contract pays a single charge (the ‘Unitary Charge’) for both the initial capital spend and the on-going maintenance and operation costs. This means that the entire contract is classed as revenue spending rather than capital spending. As a result neither the capital spend nor the long-term revenue obligation appears on the government’s balance sheet. Were the total PFI liability to be shown on the UK balance sheet it would greatly increase the UK national debt."

This in turn robs us and our children of our/their futures....its debt servitude pure and simple....just to give tax cuts to the better off now...

Jesus if this isnt criminal it should be..........JK truly deserves the title smiling death....

regards

@KW John: I done see it as a "fear" of a double dip (UK or USA or NZ take your pick)....its here...its starting...the sad thing is the people who will be worst burned will be the youngest....those who will bear the brunt of tax increases to pay for the services the least effected will demand.

That piece linked by AndrwJ is fasinating....or maybe the word is horrifying...and it leads onto more..........

http://www.zerohedge.com/article/titlos-llc-special-purpose-vehicle-down...

So if there is a downgrade all hell breaks loose....is greece savable? dont see it myself..

@Steven - The sad thing is that because we have MMP, ,we can not even vote out the corrupt polytick. The top dogs slide in under the "list" method and we get more of the same.

Also, when it comes to measuring GDP, the Govt spending is counted towards the total - when it is actually simply a redistribution of wealth but threat of imprisonment rather than wealth creation. All across the world, Govt spending is ramping up at the time that tax reciepts are falling.

One final comment - Inflation is running rampant as all of this excess liquidity is starting to flow into the prices of goods and services. As an example, my food shopping which has not changed much this past year has gone from $245 every 2 weeks to $290 every 2 weeks. Thats a pretty hefty % increase in 12 months

@Martin: MMP ~ list position, yes that's sort of a good point, but you are assuming that the locals for the MP dont want him, sad fact is if say Labour put a bum and a stiff before Labour voters in that electorate they get voted in......... I still think MMP is better than FPP....eg if the Green's can secure a big enough % to have 7? seats then to me its wrong that % of voters does not get represented. What I dont agree with is 1 seat and say 2% of the vote getting 2 or 3 list MPs while a straight 4.x% of the vote get none that seems unfair...

"when it is actually simply a redistribution of wealth but threat of imprisonment rather than wealth creation."

but what wealth creation? financial ponzi schemes? thats a farce, cutting taxes for the blood suckers does not help one bit. So how do you seperate out the real creators of wealth and reward them (if its money thats driving that creation anyway) from the financial "wizards" and property gamblers? I am all for rewarding the competant business man who uses NZ labour to create a good and even more if he or she exports it, cutting their tax to say <25% would see me clapping...House gamblers and the RE industry thats sucks off them well 45% and I wouldnt blink...

"All across the world, Govt spending is ramping up at the time that tax reciepts are falling." Yes and on a personal level what does a sane person do, save for a rainy day...put money in the bank and/or invest in items and areas that will make the downturn less of a pain...instead we get the clamour for tax cuts in the boom and then dis-pleasure over service cuts in the bust because we wont stand the increase in taxes...

Wakeup....things like the Cullen Fund were to carry us over the bad pain in the future...instead its been cut...so instead of some pain now those paying taxes will see proportionally more pain later...of course many of those who will have to pay off the pain are too young to vote and maybe not even born yet...for me that's immoral...

regards

@W. kunz: this assumes you have a crystal ball....but also competent Govn "intervention" or "picking the winners" usually ends up as pork barrel politics.....

An example more serious, a competitive electricity generating sector doe snot offer guarantee of supply, that means standby plant, imagine how NZ will suffer with black and brownouts....its plain potty....but rational for the generation company.

regards

steven, I noticed a few times you are not one among:

Please, read and understand this in context with many other of my articles

Hello St. Nick : I missed your comment above . Not sure wot a hyperlink is , nor a html tag . Kate tried to learn me good on computer usage once , but I isn't up to it yet .

Sorry to hear that you're an " avid reader " of postings . A dip in the Tasman Sea at Hokitika sholud clear your head of my nonsense .

We do have " Computing For Free " nearby . Must avail their services . Think that the Chch Polytech runs it .

Please read this and forget it immediately as per all of my articles

Sorry RT. I noticed you using bold so thought you'd also be into THIS

@Wally

What about going after companies such as James Hardie etc who manufactured the products and marketed them as being suitable for use in New Zealand. I was a draftsman involved in the drawing up of plans these particular units and was told on many ocasions by my suppliers that the items were safe to use in the manner specified. The manufacturers also advised the councils on the suitability of the materials.

Which ever way you slice it, this is a "cluster f###" with no solution. No matter which way it swings the tax payer will foot the bill in one shape or another. All part of our social obligation I guess.

@ Uncle Barry

1. Be cautious about taking advice from anonymous internet forums
2. Fix half float half or percentages that make you happy

The reality is noone knows if interest rates are going to shoot up or stay the same. This covers you both ways.

3. Or float it all

Dam sure I'm not paying for it. Once a beaurocratic load of toads are in place to hand out the dosh...you can bet they will delay and build...their own secure job for life as state servants serving themselves...then the fraud and rorts will begin....anyone wanna do a reno on free govt dosh...slip me a bundle and your names on the list mate.