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Top 10 at 10: Slow guarantee payouts; Chinese demand for NZ property may rise with yuan; Dilberts

Posted in Opinion

Here are my Top 10 links from around the Internet at 10 past 1 pm. I welcome your additions and comments below or please send suggestions for Tuesday's Top 10 at 10 via email to bernard.hickey@interest.co.nz

1. Not so fast - Those people diving back in to guaranteed investments in finance companies should be aware repayment can take up to three months, as shown in the case of Vision Securities, the NZHerald reports.

Apparently Treasury had some issues dealing with the volumes.

They might have quite a few issues if South Canterbury went under and 30,000 investors wanted their money back pronto.

Treasury says delays are possible - particularly in the early stages of its process if it has to wait to get the information from the trustees and receivers.

"It is not unusual to find less-than-ideal record keeping and processes in companies that fail. When that happens, it can take the receivers, trustees and other parties involved a while to establish exactly what-is-what, who-is-who and how it all fits together.

"That inevitably means that the Treasury can't immediately get the initial information it needs to start the repayment process."

Related Topics

2. 'When a billion Chinese jump' - Here Jonathan Mirsky at the Literary Review has looked at a new book by former Beijing environment correspondent for The Guardian Jonathan Watts about the environmental disasters happening in China. It's called "When a billion Chinese jump: How China will save mankind or destroy it." It looks like an interesting book showing how 10% growth may be counter-productive. HT Rob Mackintosh via email.

China is destroying itself and threatening the rest of us. And, like useful idiots, we are helping the Chinese do it. It is hard to single out the most repulsive examples of self-destruction.Millions of tons of sewage down the Yellow River; the North China water table now sucked so dry that it has become nearly impossible to plumb; the squillions of acres of denuded grasslands and felled forests. The mind denies and goes numb. But some horrors can be comprehended because they are small.

What staggered me in his book was this: in the West we are suffering fear and loathing of the Chinese Century and China's impressive 10 per cent national growth, compared with our paltry advances.

But I didn't know that the World Bank, as Watts shows, has calculated the annual bill for Chinese pollution - health costs, premature deaths, damaged infrastructure and crops - at 5.8 per cent of GDP. That lowers the Chinese miracle to our level. And if you add in erosion, desertification and environmental degradation, the World Bank calculates there is an 8 to 12 per cent bite into China's GDP, stopping the miracle in its eroded tracks.

Watts suggests that if we factor in climate change and the gobbling up of non-renewable resources around the planet, 'it becomes conceivable that China's environmental crunch contributed to the global financial crash of 2008'.

3. A few more taxes - Economist Robert Frank has written in a New York Times Op Ed about a few ideas to raise taxes and to change the way government money is spent. I found myself agreeing with a few of them, including the idea of a consumption super tax on the very rich. Here's a few of them, including a massive debt restructure plan for credit card debt.

Some moral hazard issues, methinks, but certainly smaller than the big one handed over to the big banks. Seems only fair masses of poor people should be bailed out in tune with the small number of very rich people. The weak jobs numbers in America on Friday night are very worrying, not least for all those American workers still unemployed. QEII is not far off.

Although rates on 10-year Treasury bonds are only about 3 percent, many consumers still carry tens of thousands of dollars of credit card debt at 20 percent or more. This burden has been a continuing drag on spending. The federal government could reduce it by borrowing at 3 percent and lending to consumers at 8 percent under a one-time debt-restructuring plan. With their debt service payments cut by more than half, consumers could increase spending immediately.

And the five-percentage-point spread on money lent under the program would help cover its administrative costs, and maybe even relieve short-run government budget pressure. (Banks might complain, but because the money owed to them would be repaid in full, and because they insist that their high interest rates barely cover their costs, such complaints would ring hollow.)

4. And I thought I was bearish... - Elliot Wave theorist Robert Prechter thinks global stock markets are on the verge of a monumental selloff. So monumental that no one will be able to afford to buy monuments again. Here's the New York Times report. HT Kiwidave and Sargon Elias via email

Buy-and-hold stock investors will be devastated in a crash much worse than the declines of 2008 and early 2009 or the worst years of the Great Depression or the Panic of 1873, he predicted. For a rough parallel, he said, go all the way back to England and the collapse of the South Sea Bubble in 1720, a crash that deterred people “from buying stocks for 100 years,” he said.

This time, he said, “If I’m right, it will be such a shock that people will be telling their grandkids many years from now, ‘Don’t touch stocks.’ ” The Dow, which now stands at 9,686.48, is likely to fall well below 1,000 over perhaps five or six years as a grand market cycle comes to an end, he said. That unraveling, combined with a depression and deflation, will make anyone holding cash “extremely grateful for their prudence.”

5. Maybe it's all about oil - Most thought the rise in the cost of oil through 2007 and 2008 was not the major reason for the slide in the US and global economies because the 'energy intensity' of the US economy was much less than it used to be. This was due to the growth of services industries and the slide in manufacturing and energy-intensive industries. But maybe it was a problem after all, as this chart below from Gregor McDonald at gregor.us shows.

US energy expenditure as a proportion of GDP almost hit the 10% threshold.

6. Watch  the yuan - Alistair Helm has an interesting post over at unconditional wondering if the stronger yuan could lead to more Chinese investment interest in New Zealand property. He also has some fascinating charts on how Chinese use of realestate.co.nz rises and falls with the value of the yuan.

Analysing this data over the past 18 months shows a striking fact – that as the currency exchange rate between the NZ dollar and the Chinese Yuan has risen and fallen so the level of viewings by Chinese and Hong Kong based computers has followed an identical path.

7. Getting serious - The British government is now looking for its bureaucracies to cut spending by as much as 40% in coming years, an escalation of the previously announced cuts of 25%, The Telegraph reports.  HT Gertraud via email

The latest plans, if implemented in full, would see spending slashed to an extent rarely if ever attempted before in a Western democracy and would strike a massive blow at key areas such as the police, transport, energy, universities and business support. The order to cabinet ministers came last night as The Treasury prepared for intensive talks ahead of this autumn's Comprehensive Spending Review (CSR) which will set Whitehall budgets for the next four years.

8. Manufacturing the key? - Harold Meyerson at the Washington Post makes some curious points about how Germany and China are coming out of the crisis in the best shape because they have the best manufacturing sectors. America, meanwhile, is suffering because it gave up its manufacturing base, he says. HT Nigel Cottle via email. I'm not sure what the next step is. Trade barriers? I hope not.

What sets them (China and Germany) apart from the world's other major powers, purely and simply, is manufacturing. Their predominantly industrial economies meet their own needs and those of other nations, and have made them flourish while others flounder. This used to be true of United States, too. In 1960, manufacturing accounted for a quarter of our gross domestic product and employed 26 percent of the labor force.

Today, manufacturing has shriveled to 11 percent of GDP and employs a kindred percentage of the workforce. For the past three decades, with few exceptions, America's CEOs, financiers, establishment economists and editorialists assured us that the transition from a manufacturing to a post-industrial economy was both inevitable and positive: American workers would move to more productive jobs, and the nation's financial security would only grow.

But after rising steadily during the quarter-century following World War II, wages have stagnated since the manufacturing sector began to contract.

So even as Germany and China have been busily building, and selling us, high-speed trains, photovoltaic cells and lithium-ion batteries, we've spent the past decade, at the direction of our CEOs and bankers, shuttering 50,000 factories and springing credit-default swaps on an unsuspecting world. That's not to say our CEOs and bankers are conscious agents of foreign powers. But given what they've done to America, they might as well have been.

9. Death of the middle class - This is a hot issue in the United States, and I can understand why. John Robb at Global Guerillas puts his finger on something with this rant. How different is it here? HT Rob Mackintosh via email.

The most virtuous and exceptional feature of modern western civilization is that it created something new to history: an economically and politically dominant middle class. The stability (political), vibrance (economic growth and diversity), and innovation (technological) it produced is historically exceptional. Unfortunately, that singular accomplishment is soon to become a fond memory.

Why? The social contract that enabled this success, particularly the post WW2 social contract that shared the increases in wealth generated by improvements in productivity with the more productive workers that enabled it, ended with the financialization of economic activity and globalization (and governments that facilitated and catalyzed the process).

In sum, the increase in wealth the western middle class produced over the last three decades has been transfered to global financial elites (who misspent it) and mercantilist nations (China, Japan, Korea, Taiwan, etc.). We can see the result of this. It's tangible: The median income (the best measure of the health of the middle class) of the western middle class today is less than it was in 1974, despite massive top line GDP and productivity growth (both global and national) during the same period. The ongoing strangulation of the western middle class is at the heart of the west's current problems.

Everything else is fluff, misdirection, and hot air.

Its death creates, in the short to medium term: Economic stagnation/depression. An ever increasing loss of vibrance. Shrinkage, across the board. Wealth destruction. Inevitable government bankruptcy. An ongoing and inexorable shrinkage of the tax base that funds government activities.

Governments become slaves to global bond markets. Political instability. Increasingly fractious political discourse. Increasing violence. A rise in criminality and corruption.

10. Totally relevant video - This is a clever video showing what has happened to Vancouver house prices over the years. It's conclusion involves a watery grave for a few housing bulls...I quite enjoyed it.... HT Donald. 

11. Bonus! Totally irrelevant video - John Oliver from The Daily Show reports on the joy and love in the World Cup...

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
World Cup 2010: Into Africa - Vuvuzealots
www.thedailyshow.com
Daily Show Full Episodes Political Humor Tea Party

 

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?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

41 Comments

#4: I'm not sure about his

#4: I'm not sure about his logic. Sure, stock markets are likely to crash in a big way, but the deflation scenario is not a sure bet. I cannot see central banks allowing banks to get slaughtered by deflation (i.e. via massive property writedowns and the resulting mortgage losses). I see more money printing on the way and a long slow grind (10yrs+) to the levels that Prechter is talking about.
I wish he was right about the people holding cash and a reward for their "prudence". However, Central Banks have not rewarded savers and their "prudence" for many decades now...what will make them start now? They are more interested in protecting banks and their balance sheets, and this runs contra to protecting savers.

I think there is much in what

I think there is much in what Prechter says about the stock market - though I dont hold to his cycle theories - the cause seems to be massive asset deflation caused by overindulgence in debt rather than some esoteric cyclical theory. Just take a look at the Japanese stock market since the 1980s to see how far a market can fall over an extended time frame. There will of course be trading opportunities (as when bouts of QE are unleashed). But buy and hold is dead and has been for some years. Investors should be minimising their exposure to investments which are aligned with share markets over a long time frame IMO (and yes that does mean Kiwisaver schemes with anything other than a negligible exposure to share markets).
Given that so many pension and investment plans are reliant on stock markets rising this will cause untold problems when the returns dont materialise - we can already see the stresses developing in the UK pension/investment industry arising from this.

A chaps that worked for me

A chaps that worked for me years ago went to work for Precther. He explained it like this, ah,
"Do you believe in the rise of the sun; the rise of a tide; the change of the season? They are all observable cycles. Financial and other patterns are no different. They follow the cycles of human behaviour"

#4. More on Bob

#4. More on Bob Prechter:.

"Robert Prechter and his Elliott Wave Theory letters (have) been in the business a long time, first making a name by going bullish in 1974 when everybody was gloomy... His Elliott Wave Financial Forecasts accurately called for a rough 2008 .. He went on to proclaim that "2010 is the year when the bear market in stocks returns in full force."

Last month, he wrote, "The topping process is over for the countertrend rally that started in the first quarter of 2009. The next leg lower that commenced in April should now deliver a decline that will ultimately be bigger than the 2007-2009 sell-off." He doesn't see it bottoming until — get ready for this — 2016. He wrote that the "most likely profile is a stock market crash of historic proportions" because: "This bear market is of Supercycle degree, the biggest since 1720-1784. It should therefore include a decline deeper than the 89% decline of 1929-1932. A decline of 91.5% or more would carry (the Dow) below 1000."

' the Elliott Wave theory — a

' the Elliott Wave theory — a technical approach to market analysis that Prechter embraces with evangelical fervor.
Originating in the writings of Ralph Nelson Elliott, an obscure accountant '

err, do the words 'technical approach', 'evangelical fervour' and 'obscure accountant' not perhaps suggest a degree of caution before embracing Prechter as a credible forecaster ?

Wasn't all that hard to visualise a 'rough 2008' even without the assistance of an Elliot wave.

I wonder if we will hear any more of Mr Prechter if , as is entirely possible, his advice to move 100% to cash/bonds turns out bad.

Attempting to draw parallels with 1720 is just daft and there are so many differences ebtween 1930 and todays recession, particularly in Govt responses, that comparisons even with the 'great Depression ' period are highly problematic.

So in 1929 I wonder if

So in 1929 I wonder if everyone was scoffing at the people who remembered 1873....

Those are figures to watch, 89%.....way, way bad...

and here we are with the PI's scoffing at the bears....just like in 1929....if they are right they have made a good call.....if they are wrong they are wiped out.

But on the bright side those who have swapped into cash could see very significant gains....sell one share, buy back 10....and the P/E ratio might be Ok....of the firms that haven't gone bankrupt of course.

So so far Ive sold out my shares, if I bought them back today I'd make about 9%, in two months...

regards

Mortgage rates being cut in

Mortgage rates being cut in Noddy and of course the banks are not acting together to boost the bubble...they wouldn't do a thing like that!...would they?

Yes.

Yes.

Your suggestion assumes

Your suggestion assumes competence...and clear logical thought...to prop up something that isnt either of these...

regards

The suggestion was that the

The suggestion was that the banks acted incompetently in the first place or at least cavalier in the lending spree that aided the over inflated values....and so leaving themselves little option but to try to maintain the bubble.
Looks like the buggers are at it again..pump pump pump "captn ah thunk she's gonna blow..!"

Re #1 timing for government

Re #1 timing for government guarantee payouts. I have wondered this before, particularly in connection with an economy experiencing high levels of inflation. By the time the government pays out, perhaps inflation has significantly eroded your investment.

Re Dilbert joke about rats with a dart board managing pension funds as well as expert fund managers; there was a report in Germany about an experiment with parrot that actually showed this, achieving pretty average (compared to experts) results.

Re #2, and 10% growth. Don't worry, it's not sustainable. Continual 10% growth means a doubling in size in 7 years. Quadruple the size in 14 years, and so on. Just who is going to buy all the stuff? Where are they going to get enough resources to make it? 10% growth is temporary.

RE: “slow” Vision Securities

RE: “slow” Vision Securities repayment - Have you got rocks in your head? Slow compared to what? Repayment by a company in moratorium or repayment by a receiver or liquidator can take YEARS, and then you’re likely to only get a few cents in the dollar.

Look at the Deep Freeze list on this very website and tell me which investors have been repaid the fastest?

50 months to get less than half your money back from National Finance
40 months (so far) to get just 9% of principal back from Capital+Merchant
36 months (so far) to get diddly-squat from Bridgecorp
35 months to get 92% of principal (no interest) back from
34 months (so far) to get a measly 3.7% of principal back from Nathans
26 months (so far) to get nothing back yet from Lombard
15 months (so far) to get half your principal back (and all your interest, so be grateful for that at least) from Geneva Finance
17 months to get 35 cents worth of Allied shares out of your Hanover deposit. And God help you if you’ve still got cash in Allied shares, which are now next to worthless.
7 months to get principal and interest back from Mascot
6 months to get principal and interest back from Strata
4 months and counting since Strategic failed and nothing back yet
3 months to get principal and interest back from Vision

The pattern showing here is that the Crown guarantee appears to repay 5-10 times FASTER than happens otherwise and the case that prompted your headline – Vision Securities - has been the FASTEST of them all.

I guess Granny Herald’s headlines about “slow payment” and your un-critical repetition of them are more about attracting readers with (non-existent) controversy than they are about the facts.

oops, that fourth example was

oops, that fourth example was Provincial Finance.

35 months to get 92% of principal (no interest) back from Provincial

"6. Watch the yuan -

"6. Watch the yuan - Alistair Helm has an interesting post over at unconditional wondering if the stronger yuan could lead to more Chinese investment interest in New Zealand property."

Boom again?

Here we go again..another

Here we go again..another Herald blurb survey blurb...:
"More consumers say that now is a good time to buy things they need. Today Consumers are feeling more comfortable about the economy and their personal finances than they were in February, a poll by UMR Research has found."....gob smacked are we?...I think they dragged out a survey from back in 06...
How soon before households receive a flatpack of happy pills in their rates review from their council.."one pill a day makes the recession go away"

So lots of ppl in la la

So lots of ppl in la la land....I see it around me.....lots of comments that the recession is over....no one grasps whats going on in Greece etc....yet they feel like its time to buy...

I dont even bother commenting now....their eyes glaze over and the shutters come down.......

regards

Not to mention the bit that

Not to mention the bit that says 'The Consumer Comfort Index (CCI), carried out last month, found 48 per cent of 1100 New Zealanders surveyed believed the economy was either excellent or good, up from 32 per cent in February and 37 per cent in April". Excellent or good. Yeah right (I wish).

#1, the second deed for the

#1, the second deed for the extended guarantee stipulates money owing will be paid 14 days after it is due.

This was not the case for the previous guarantee that Mascot et al came under.

I would be more concerned about the government forcing some form of Debt equity swap.

When is "..after it is due."?

When is "..after it is due."? Does the Due Date revert to Default Date, or remain at Maturity Date ( of the investment)?

Maturity is my Anonymous

Maturity is my Anonymous internet blogger understanding.

Re #9. Yes, fiat money (part

Re #9.

Yes, fiat money (part and parcel of that, the central banking system) together with Keynes have destroyed the middle class (by destroying free markets).

No, laissez faire

No, laissez faire policies...Greenspan, Reagan-omics....these were not Keynes by a long shot. The middle class has been destroyed by the ppl they voted for...

regards

"Do you believe in the rise

"Do you believe in the rise of the sun; the rise of a tide; the change of the season? They are all observable cycles. Financial and other patterns are no different. They follow the cycles of human behaviour"

That guy should apply for a post as Chief Astrologer. Then he can tell us when we are reintroducing slavery, removing the vote from women, abandoning parliament, dropping electricity use, returning to Chinese isolationism, and giving up the internet.

Actually, he doesn't need a

Actually, he doesn't need a job! He's one of those that'made it' and lives in the Bahamas!

#9 Death of the Middle Class

#9 Death of the Middle Class - I agree with this guys general conclusions but not with the way he blames China.

"In sum, the increase in wealth the western middle class produced over the last three decades has been transfered to global financial elites (who misspent it) and mercantilist nations (China, Japan, Korea, Taiwan, etc.)"

There has been no "transfer" of wealth from the USA to China. What has happened is that the US has stopped producing wealth and has instead borrowed from China (among others) and that China has over recent years been producing its own wealth. I repeat, there has been no transfer of wealth. China has earned every cent. The US has spent every cent it no longer has.

yep the middle class is the

yep the middle class is the engine room of a society....in the postwar years we had middle class people working hard, producing goods and services, living within their means, and investing the surpluses. Now the middle class work hard, have little or no excess(largely thanks to housing), spend their money (much of which is borrowed) on tat which needs to be replaced a year later. in addition these middle class parents are never at home because they are always working and their kids are slowly but surely going off the rails.
something needs to change for sure

#6 - Cue the 'I, for one,

#6 - Cue the 'I, for one, welcome our new insect overlords' speech...

And, good to see you quoting John Robb - one of the few analysts with a way forward - the Resilient Communities movement.

#2 "When a billion Chinese

#2 "When a billion Chinese jump"
Too true I'm afraid.
Ties in with the post a few days ago (couldn't find it) about our crazy way of calculating economic growth. Chopping down a rainforest is an economic positive or suck up the last drop of oil. Now what?
I see the Saudis are onto it, our Gerry not so much: Saudi King: Halt To Oil Exploration To Save Wealth
http://www.zawya.com/Story.cfm/sidZW20100704000064/Saudi%20King:%20Halt%...

Sorry, incomplete

" .... about interest rates

" .... about interest rates and the influences that move them." (Or words to that effect.)So these might be interesting reading:

#12 'David Cunliffe: Why monetary policy must change'

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1065...

"Labour also wants to give the bank a broader set of tools and is looking at greater use by the Reserve Bank of prudential supervision tools to regulate banks' capital adequacy and risk.

For example, the bank's new core assets ratio, which requires banks to hold minimum levels of assets in different classes such as domestic deposits and low risk securities, can help encourage domestic savings, manage risk and enhance system stability.

By adjusting this ratio the bank can also tighten or loosen monetary conditions in a counter-cyclical manner. Other central banks are exploring similar tools as part of learning the lessons of the global financial crisis.

Labour believes this new role should be explicitly provided for as part of a review of the Reserve Bank Act and the Policy Targets Agreement that operates under it."

#13 'Rudd falls in a good cause' by Rod Oram.

http://www.stuff.co.nz/sunday-star-times/business/3879924/Rudd-falls-in-...

"In New Zealand, the Reserve Bank and the Labour Party have turned against the prevailing orthodoxy of monetary policy."

"Given the new understanding growing overseas about the need to better manage fiscal misalignments in order to promote greater economic stability, plus the shift at home by the Reserve Bank and the Labour Party, monetary policy could become a defining issue at the next election. It deserves to be. It separates the architects of a more stable, higher value, investment and export-led economy from the defenders of the old boom-bust commodity economy."

Cheers, Les Rudd.
www.mea.org.nz

"It deserves to be. It

"It deserves to be. It separates the architects of a more stable, higher value, investment and export-led economy from the defenders of the old boom-bust commodity economy."

Personally I see nothing between the two sections of our economy ("commodities" and "export led") We export commodities funny that....by NZ manufacturers who often process those commodities....like milk say.

That defines / seperates them as being more stable? frankly you are weird.....I dont think you are making a lot of sense myself. It strikes me that you are trying to make things, anything in fact fit what you think suits the MEA.

MPolicy is indeed a dead duck IMHO....all it used to do is attempt to slow down growth if too fast and get it going again if it slowed. The problem is we wont be seeing consistant positive growth again, for at least a decade probably 3....by which stage it will be obvious globalisation will be finished and we will be all (mostly) local again....

But for NZ manufacturers that isnt bad IMHO, the advantage of cheap labour from China will be negated by the cost of shipping from china to here. Hence a local manufacturing boom, we will have to re-invent the wheel....make it here in NZ with NZ sourced commodities and raw materials and consume it here in NZ. By and large I think thats very positive of NZ znd NZers and the M part of the MEA anyway.

regards

Hey Anony, I see some very

Hey Anony,

I see some very valid points in your words. Put a name to them and a bit of effort into a revision of your writing style and you might gain a strong following....mine, anyway.

"5. Maybe it's all about oil

"5. Maybe it's all about oil "

Yes it is, as PDK and I have been saying, as repeated from the Peak oil guys....we are at peak everything.... so now the bill is to be collected.

regards

Steven I suggested this to

Steven

I suggested this to BH, 18 months ago but would he listen...

He has posted this

He has posted this though....maybe it is being absorbed....this isnt the first good piece on this theory of course, its at least the 3rd or 4th Ive seen in the last two years.

The interesting thing is when you look not only at this recession and that 10% but at the previous times oil price has spiked, basically 6% and we get a recesion....so 10% causes a mammoth recession, why is that a surprise....

I also agree that economists cant handle energy and its effects on the economy "its priced in dollars so just hand more dollars over, simple".....yeah right, money is a proxy for energy, you need to "spend" 1 unit and get at worst 12 back or better 14 or 15....below 10 and it (economics, our global economy) just doesnt work....and even a moron should be able to figure out that spending 1 unit of energy to extract, refine and transport 1 unit of energy to point of use makes no sense....but these are economists.....

regards

As long as the Chinese invest

As long as the Chinese invest in NZ and buy properties the economy here will be in good shape. We're riding on the upward slope of the V shape recovery.

Get a clue any mouse, better

Get a clue any mouse, better yet get yourself a one way ticket to paradise, Chinese style.

Did you read the link at #2?

http://www.literaryreview.co.uk/mirsky_07_10.html

Chinese invest? as in: Shell

Chinese invest? as in: Shell investing in Nigeria? The British Empire in India and South Africa? The yanks in every Southj American country, the French in Indochina and the Middle East, etc?

No, what happens is that the highest bidder owns the land you thought was yours, and you watch the food off it being exported, as you starve.

Investment schmestment.

re5 - well done, Bernard, maybe you're listening. That put you ahead of our esteemed leader - talking of 'explosive growth' in China, this morning. Could have just meant it will blow up in his face, of course.....

You don't get growth without energy, and that means that you don't get growth from now on, except via the diminishing returns gotten from efficiencies.

Re 8 - Manufacturing? Well, it requires resources, energy and buyers. Goodnight.

"as you starve" At which

"as you starve" At which point we will have lost our democracy.....or we will have had to lost our democracy a while back to get to that point.....so the NZ Govn holds us the ppl off with guns to ship food to china? what for? pay back debt that is worthless?

Thats the weird thing about overseas govn (or even private?) debt, you can only tax the population where enough of the population is willing....and there is a reason to pay it back, ie get back in the global "club". Without globalisation there is no reason, who cares if "we" owe some foreign investor 1million, 1 billion or 1 trillion if he cant collect because we dont have global markets?

So I cant see it..."as you starve" NZers would just vote out the Govn of the day long before that....plus if the peak oilers are right then shipping food 1/2 way across the world jsut wont be economic/profitable within at most 5 years and makes no sense.

regards

Bill Bonner on Debt: "It

Bill Bonner on Debt:
"It should be obvious that the Greeks owe too much. But so does almost everyone. Every kind of debt is so heroic it poses an affront to nature and a challenge to the gods. Much of it is unpayable. Private debt. Public debt. Short term. Long term. US. England. Europe. All kinds of debt in all kinds of places. In America’s private sector, for example, debt exploded 6 times faster than GDP since 1950. And today, the whole world staggers under debt, with more than $3.50 of debt for every dollar of GDP.

Today’s global economic problem is breathtakingly obvious: too much debt. The solution is obvious too; debt that cannot be repaid must be destroyed – by defaults, foreclosures, bankruptcies, write-downs, and restructurings.

Nouriel Roubini, writing in The Financial Times this week, is on the right track. Greece cannot bear the weight of all its debt, he says. Since it will default sooner or later, better to restructure the debt now…reducing it to a level the Greeks can actually pay. Fair enough. Creditors would take their losses in an orderly way.

When the debtor cannot pay, the creditor should take the loss. But practically the entire burden of modern economics over the last 3 years has been a scammy effort to shift the losses to someone else."

http://dailyreckoning.com/who-pays-bad-debts/

i don't know exactly how the

i don't know exactly how the China thing is going to play out but I believe ultimately China will own NZ. Either by buying it directly from our treasonous government, or by our government opening the immigration floodgates in return for money.

NZers have a poor track record in fighting back- we just let our governments roll over us. Why people are not out in the streets protesting the overseas sales of our farms and our houses is a mystery to me.

Have most of the smart people left? Are too many of the people left here too dim to see cause and effect- can't they see that if we keep selling NZ overseas we have no future as a country? This government rides high in the polls in spite of governing against the interests of New Zealanders.

We need law changes that stop the sale overseas of the land that provides shelter and food- our two most basic needs. But Key and his cronies have no intention of changing the rules and so we remain at the mercy of whoever wants to buy us.

So depressing.