Yes why is my taxpayers money being used to fund repayments to investors in Finance companies that were obviously insolvent at the time they offered rates that they could never have made a margin on and why did the ratings agency trump up the values so GG could be acheived.

Bernard - a good article: grim but true.

But it doesn't have to be grim. The new normal simply requires a change in thinking. Then it won't be so grim.

If we can shake off our dirty consumerist, debt- ridden addiction, then we might grow to love the new normal. We might be able to return to enjoying the simple things in life, the things that really matter.   

Yes some are still deluded. I have friends who were expecting things to return to normal by the middle of this year. They tell me they are very surprised things are so tough still. They still cling to the old mantras of eternal growth, even if in the short term they acknowledge they will be doing well just to get work to cover costs. 

Extend and pretend still exists throughout the economy . The regulators will not take on the villians Hanover owners live a life of luxury while the investors died. How can this country let this crap continue. The banksters are still in control and until they are allowed to fail globally and the guilty fried we cannot have a new normal. It will be a case of the rich bankers and the poor who put their hard earned cash with the wrong people.

Justice - well said. Unfortunately so many fail to acknowldge the new normal, they are in denial. They will only acknowledge it when it is too late, when their business has floundered and they have to sell the house

 PS. My wife and I were just looking at houses on trademe, this of course is very anecdotal, however we were noticing lots of places have cut asking prices, and lots of places asking for well below CV

The critical player in this "game" as Mr Spencer at the RBNZ calls it, is the govt or to be precise the Cabinet. The name of the game from day one has been protect the bubble save the banks and stuff the families. So we have this sick, going nowhere economy, which has not a chance in hell of the pipe dream "recovery" ever taking place....but...the govt knows the population will swallow what ever spin they churn out and so we will continue to get the rubbish strategies.

Now we see the govt is up to its neck in flogging property to anyone with any sort of munny in Beijing. Again, it is obvious the plan is to pump the bubble...to keep it going..! The rage across the country over a sellout to foreigners will likely cost Key and his bunch the next election. On such things govts are lost. It was a dumb thing to do.

The core funding rate has been nout but a giant puff of smoke...fodder for a dumb media. The hot munny is rushing past Bollard as though he were standing in a tidal race. All that is being achieved is to make certain Kiwi families remain forever in rental accomodation or up to their necks in debt for a mortgage on a property the best part of 40% over priced.

There will be NO recovery and NO real growth until your Kiwi families have something left over from their incomes after paying rent or the mortgage....some 'leftover' that can be saved or spent.

Guess the aim is to keep a  steady as we go approach for next while, and then there will be some stimulus with the RWC and election year.

In the current worldwide severe recession with fast changes, western economies need more structure more planning – a “Mixed Economy Model”.

I agree without changes in behaviour we are increasingly moving towards a Zombie Nation.

Bernard,

Don't you worry about John Key, Bill English could well be another duped dunce, but Mr Key knows exactly what his plan is, and who he works for. He can say all the populist stuff about not allowing 'all' our land to sold to the highest bidder lest we become 'serfs' in our own country, but he knows those that monetise our money supply as debt already have us in ever deeper serfdom. The articles I include below I believe spell it out quite clearly to any one with half an ounce of alertness to danger:

National MP John Key gets a gleam in his eye when he starts talking about New Zealand becoming the "Jersey of the South Pacific".

"Why not have an offshore banking industry based here?" he asks.

"In the right conditions you could attract 200 banks to register here - each with a CEO and staff. You could attract insurance companies. Bring back lots of Kiwi accountants and lawyers. Single out clusters - such as high-class yachts - or other special sectors as the Irish did."  

http://www.nzherald.co.nz/fiscal-policy/news/article.cfm?c_id=203&objectid=10336608 

'The big picture is that the Irish debt crisis has put the banks into lines of business that they never planned to be in.  With the result that significant sectors of the Irish domestic economy are now being run by them.  But there is a strange flip side to this situation.  There is exactly one sector of the economy that the government has declared off-limits from the process of debt distress, restructuring, and external management — the banking sector.  And so it is that unlimited public funds are available to keep solvent what would otherwise be insolvent banks, the €24 billion or so directed to Anglo Irish Bank being the epitome of this problem. '

http://fistfulofeuros.net/afoe/economics-country-briefings/ireland-a-recession-of-the-banks-by-the-banks-and-for-the-banks/ 

'A more pressing concern is the impact that ballooning bank bail-outs are likely to have on Ireland’s public debt. Ireland is paying for its decision to set up a toxic-loan repository that forces banks to clean up their balance-sheets vigorously, rather than put off dealing with problems (as Germany has done) or insure dodgy loans and just hope they improve (as Britain has). In the long run Ireland’s response is the better one, but in the short term it puts pressure on borrowing because the government has to keep injecting capital into broken banks.'  

http://www.economist.com/node/16846639 

I quess we should be honoured that they have sent one of the very sharpest of banker co-operatives right down under to finish the predatory lending job on NZ, least it wont be as insulting getting done over by the duped dunces and monetarist juke boxes of the past, for I alledge its hard not to conclude Mr Key is the real deal, an orchestrating benefactor of the highest order.

wibble wibble, what the hell are you talking bout man.

For your information:   5.4 acres in Pencarrow Road, Tamahere, Waikato. Desirable life style area. Land run down and untidy, Mid 70s brick house, 3 bedroom, untidy state. $750,000, underbidder, $ 730,000.  Sold!

Good article.

We are an "Easter Egg Economy" i.e. hollow in the middle. To fund our lifestyles, we have progressively sold our productive companies to foreigners, outsourced our productive industries to Asia and shipped our productive people to Australia en-mass.

The zombies are those who continue with the deluded notion that we can continue to have a first world welfare system with a third world productive system. We are currently bridging the gap by borrowing by foreigners. However, this will soon hit the wall. And we are unable to increase the tax on the productive sector without driving the taxpaying individuals and businesses across the Tasman and hence eroding the tax base further.

This is not cylical, it is structural. 

A couple of key statistics which should make you nervous:

43% of Maori and Pacific Island youth are unemployed. It is highly likely that jobs for these unskilled and uneducated will not exist within the next decade. This is a financial and social disaster.

Half of young Maori woman are on the DPB. 

There are more and more young  Maoris now living in Australia, so may be that trend will continue

Wipe out our individual net worth, and then what? Most will have nothing left to buy anything with; then it's a spiral downhill as unemploymnet follows consumption destruction. Maybe the Zombie Nation is a better alternative than facing reality. Because reality will destroy whatever is left our our economy. New Zealand does not ,yet again, have to be the test case for whatever ails the world at the moment. Let's just quietly sit back and see what happens. If it's bad out there, it won't matter whatever NZ does. Oh, and the answer to your good question is : The Government will. It will keep borrowing and praying!

So we get to point where we can no longer borrow or the costs become prohibitive and we hand an economic wasteland on to the next generation. The suggestion seems to be nobody has any equity in any assets they own only debt which is plainly nonsense.

PasT polices lead to the development of asset based economies largely non productive non revenue orientated. Borrow and hope is no longer a realistic strategy we have done this for the last 30 -40 years just kicking the can down the road. Markets work when they are allowed to. We have had far too much well meaning but ill conceived interference.

Bernard, what was the point of that stupid article? Yes NZ along with most other countries are still trying to recover from the GFC. What do you suggest should be happening? Should the banks be hitting the panic button and forcing the sale of all non-performing loans? Of course not. They have learned that the best way to handle a financial crisis is to be patient and measured in their approach to ensure a more orderly recovery. I dont think you really have any intelligent point to make, other than that it annoys you that there is not more blood on the floor from this recession. Get it over mate.

Only way forward is by adding to the economy through productive business, I for one am going into business, it is very profitable and is growing very well and it is a reasonable basic trade, we need to be making businesses that are basic and contribute to the economy, instead of being complicated and run inefficiently.

Well I just watched it again...Bernard... and I think it lacked a little theatre.....some finger pointing would be good......a dismissive hand-wave.... a background  picture of a prominent Real Estate person looking like a possum in the headlights ....would also have added to the drama of the piece...... but  very well reasoned anyway......... work on those highs and lows.... Richard Burton had a great impending menace tone you could borrow from.

Anonymous(at 11.39) can see why you prefer to be anonymous, vying to be  the biggest loudmouth in the bar  There are a good number of people (not referring to the rip-off merchants) who are actually doing bettter than ever with plenty of disposable cash, well paid jobs, and soon to get tax cuts to boot. They don't need to sell their propery/ properties because they have good equity in them, and they haven't experienced any recession and the chances are they won't be the ones affected. Indeed all the specials on at the moment, the price of oil etc makes for good value.

The government is taking a fairly measured approach to things and of course next year will see the effects of the RWC and it being election year. C'est la vie.

forsooth brother Christov...methinks thou needs to be tied to a chair and made to listen to Leonard singing Chelsea Hotel and Tower of Song until you behave yourself!

otherwise, keep taking the thrills

Dear, Matt in Auck, Muzz, wow, steven-orig, kin, Anonymouss, Ludwig, Nathan, Dean Left-us (broke), RDee, Fungus, rayzzor, 28 (now 29) year old, Steve-o, Elliot, Greg G, Colin, IanC

The various Anonymouses

And definitely Waymad 

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cheers

Bernard

Agents are idiots, I had an agent who thought it would be a great idea to put our house to auction not too long ago, was a total exercise in futility, no one turned up, no bids $1500 down the gurgler. What a pro. It was actually quite funny, as soon as I walk in to the house, which is a rental, another agent comes up to me and says "buying a house today?" to which I replied "No,I own it". Shows how pro they are lol

a good comment and very realistic. The real Bernard, the journalist.

this from tony alexanders weekly update received 30 minutes ago..and if Big " ba-da-boom" Tony says this then we're really in trouble..perm or no perm!

"But we retain the same warning we have had for many many months now. No-one on the planet has a reliable model which tells us what is likely to happen with business and consumer willingness to spend,borrow, hire etc. and their tolerance of interest rates and desire to get debt down coming out of a near depression scenario. We are two years down the track from the Lehman Brothers and nothings changed "

do you get that all you flakes out there that keep talking about cycles and wheels and good times..it ain't comin' back.

cheers

Rob Zombie

O him....you wouldn't even let him in your car.
 

What's the use of worrying, it never was worthwhile... So pack up your troubles in your old kit bag and SMILE, SMILE, SMILE..."

- $ingapore's National Anthem.

So, with the home owner market fighting for its life, what does the rental market look like after the bubble bursts?

too much in-tent-city.. that's what ...Dean Left-us?!

Bernard I note Tony Alexander has changed his forecasts for housing to improve from late 2010 to mid 2011 in his BNZ weekly report. Even he is now conceding that housing sentiment has changed for the worse.

Excellent report. Blind faith in property is endemic in New Zealand. Steve.