Here are my Top 10 links from around the Internet at 10 to 9 pm, brought to you in association with New Zealand Mint for your reading pleasure. I welcome your additions and comments below, or please send suggestions for Monday's Top 10 at 10 via email to bernard.hickey@interest.co.nz. I'll pop any surplus suggestions I get into the comment stream.
1. It's a generational issue - Boston University Economics Professor Lawrence Kotlikoff writes persuasively at Bloomberg that America's declining national savings rate is due to increased spending of young peoples' taxes on the aged. Doesn't seem fair does it...
Our propensity to consume, privately and publicly, continues to rise. The rates of personal and government consumption are both higher now than they were in 2007, although the government consumption rate has risen by more of late. If personal consumption is the main villain for the long- term savings rate decline, whose consumption has risen? The answer is the elderly. Over the past five decades, our policy of taking ever larger sums from young savers and giving them to old spenders has more than doubled the ratio of average consumption of oldsters to average consumption of youngsters.
Much of this redistribution has taken place through Social Security, Medicare, and Medicaid. Collectively, these three programs spent $1.2 trillion on the elderly last year. Their total payment per oldster equaled a whopping $30,000, which is three-quarters of U.S. per-capita income. And, about half of this total constituted Medicare and Medicaid benefits, which are provided to the elderly directly in the form of personal consumption of health-care goods and services.
The bottom line? If we are serious about reversing the decline in national saving, we need to stop expropriating the young for the benefit of the old.
2. A couple of movies about Wall St - A documentary called 'Inside Job' looks like a cracker about the scandal on Wall St and I'm going to be sure to watch it when it gets here.
Yves Smith from Naked Capitalist gives it top marks.
Inside Job is an ambitious picture, clearly aiming to stir public anger and action by showing how criminally corrupt the financial services has become and how it has subverted government and the economics discipline. Despite minor errors and occasional oversimplification, overall Inside Job does an extremely effective job in covering a lot of ground in a compelling manner.
In addition to highlighting how the financial services industry has bought and paid for not only considerable political influence but academic endorsement of its favorite causes, it also calls to attention an overlooked factoid I’ve long considered damning: that there was no preparation on behalf of the officialdom for a Lehman bankruptcy. And by “no preparation” I mean not the foggiest understanding of what it meant.
And here's the trailer below for Oliver Stone's sequel to his famous 1987 film Wall St. "Wall Street: Money never sleeps" may not be such a good movie though according to the Wall St Journal.
Few accused it (the original Wall St) of excessive grace, but its antihero was a memorable scoundrel and his greed-is-good credo cut to the culture's quick. Mr. Douglas's performance in the sequel measures up to Gekko's rep, but the rest of the movie is pumped up to the bursting point with gasbag caricatures, overblown sermons and a semicoherent swirl of events surrounding the economy's recent meltdown.
The story certainly holds your attention, but it's a dramatic bubble about a financial bubble.
3. Will free trade rob America of its empire as it did for Britain? - Economist Ian Fletcher writes at HuffPo that America's embrace of free trade will kill its empire, just as it killed off Britain's from the mid 1800s on. Here's the thinking. Worth a read for those willing to have preconceptions challenged. HT John via email.
One of the most inexcusable things about America's ongoing economic decline by means of free trade is how clear the historical portents are. For example, we are today treading the same path trodden by a nation that Americans know reasonably well: Great Britain. It is easy to forget that until about 1850 Britain, not the U.S., was the world's leading economic power.
But then, of course, they blew it. There were, of course, many causes of this decline, but free trade was undoubtedly a major one.
Britain, like the U.S. and every other developed nation, initially rose from agricultural backwardness by way of mercantilism, the opposite of free trade. As late as the beginning of the 19th century, Britain's average tariff on manufactured goods was roughly 50 percent, the highest of any major nation in Europe. And even after Britain embraced free trade in most goods, it continued to tightly regulate trade in strategic capital goods, such as the machinery for the mass production of textiles, in order to forestall its rivals. Even the famed Adam Smith--who made his living as a customs collector!--was only in favor of free trade after Britain had consolidated its industrial power through protectionism.
4. 'A very nervous time' - Russell Brown from Public Address interviews Reserve Bank Governor Alan Bollard for nearly 23 minutes for TVNZ's Media7 on how the Reserve Bank deals with the media and how it dealt with the global banking crisis.
A fascinating watch where Bollard says he keeps an eye on international blogs, how the mainstream media was responsible during the crisis and how he likes to be transparent rather than deliberately oscure in a Greenspan sort of way.
Bollard also talks about his excellent book "Crisis", which I enjoyed reading.
5. US long term unemployment is at record highs - Smart Money points to the depths of the problems in America's jobs market. HT Troy via email.
6. Australia's last gasp of debt - There's always a moment at the end of any boom where a few people dive just that little bit deeper into debt. BusinessDay reports that Australia's share of debt-free households hit a nine year low in the September quarter.
According to a Melbourne Institute survey, only 36.2 per cent of households held no debt in the September quarter, the lowest since the series began in 2001. With the ratio of household debt to disposable income at record levels, the figures have raised concerns for the growing number of consumers living beyond their means.
Amid a debate over whether the country has a property bubble, the survey also found the proportion of people who owned their home outright had reached a five-year low of 37.5 per cent. A research fellow at the Melbourne Institute, Edda Claus, said the high debt level was a worrying trend and the financial position of households had worsened in the quarter.
''The big danger would be if people lost their jobs. If they're very highly indebted, then things can go very bad very fast,'' Dr Claus said.
7. Peak everything - Aeldric at Energy Bulletin.net writes a thoughtful piece on how resource restraints in a globalised economy might express themselves. It's long but worth a read. HT Murray via email.
If we assume a technical ability to synthesize, extract and substitute, is Peak Production of any given resource even a theoretical possibility? Yes. Because of the increasing cost of extraction of resources of a steadily reducing quality, and the reduced utility of substitution there is an absolute theoretical limit to how far these processes can be pushed.
We will have few warnings as we approach that limit. And the warnings will look like .... errr .... what we are seeing right now.
Some conclusions that this argument seems to be pushing us towards:
1. Production of any given resource is supported by a network of dependencies. These dependencies are, in turn supported by a network of further dependencies. In an environment of unconstrained availability of resources, this is not a problem. However, in an environment in which multiple resources may be approaching their economic production limit, a cascading failure can be initiated. There will be few clear, unambiguous warning signs, because our tendency to use substitutable resources with networked dependencies can easily obfuscate the nature of the problem.
2. Production Peaks may be delayed by substitution and improved extraction, but the network of dependencies that result mean that peaks may come all at once - "Peak Everything".
8. A Celtic dragon's death rattle - The Telegraph reports Ireland faces a double dip recession. And we thought we had a bad June quarter. HT AndrewJ.
The Irish economy shrank by 1.2pc between April and June compared with the first three months of 2010, the Central Statistics Office said. This followed a rise of 2.2pc in the first quarter - the first gain since 2007. Thursday's data came as a shock as most economists had expected a further quarter of growth to show the country was building on its recovery.
9. The problems of small businesses in America - Bernie Marcus, the co-founder of Home Depot, talks to CNBC about the struggles of small business in America. HT Ian via email.
10. Totally relevant video - My daughter likes the Mary Poppins movie and this song about the Fidelity Fiduciary bank is fun. If only Mark Hotchin and Allan Hubbard had taken all this to heart.
79 Comments
Wall St 2, is worth a watch but certainly wasn't exceptional. Unfortunately Shia LeBeouf was still in "Transformers" mode, trying to save the world.
Plenty of fun CNBC background shots, but all the ficitious names was a bit bizare, especially when Nouriel Roubini appeared in an interview with Becky Quick (Squawk Box) as Dr Tashibi (or something like that).
Bernard will be pleased that there were plenty of references to those nasty house flippers and their toxic debt!
Maybe the movie based on Andrew Ross Sorkin's "Too big to fail" will be a better outing. That will be a while away, though as they're still casting (although William Hurt is confirmed as Hank Paulson - Hurt does normally play villians!).
On a funnier note...
"It had been feared that whole neighbourhoods would have to be abandoned.
But Prime Minister John Key said yesterday information from Geotech engineers testing the damaged land had been positive, and he was confident the homeowners "will feel better by next week", when the engineers' report is due for release.
"The ducks are starting to line up, and it's starting to look quite good," Mr Key said.
This is known as "Indian Delhi BS".....if you say it often enough it will come true!.... Anyone see themselves buying a property in any of the neighbourhoods down there ...especially the ones that turned to spewing poo and sinking foundations....now that a fault has become active...not bleeding likely John.
Only suckers will go along with the spin that all is well. The land is shit. it should not have been built on in the first place. It now has NO VALUE. Better to finance a whole new subdivision on stable ground and allocate sections by ballot to the unlucky buggers...then bulldoze the garbage and produce some open areas of parks.
Blow being Mayor out your ear We is stuffed...I much prefer p------ into the tent. You have to laugh at this half baked BS from JK though..either he hasn't a bloody clue and is just going with the flow..or he knows dam well all that land is stuffed and worthless for housing. No way can it ever be of value again.
Fancy trying to fob them off with crap like this. Sure has exposed the insurance industry hasn't it. About the only good to come out of it will be the temporary lift in the % of punters taking out insurance, especially in wgtn. Clearly the system does not give you cover for your land turning into a worthless plot of sewage saturated sand. So even if you are covered for a full rebuild, would you build in the same place. Not friggin likely.
The right answer is for govt to force the insurance companies to fund on a proportion of cover held basis, a complete new subdivision on stable land. Ballot the sections with the coppers in charge. Keep the beaurocrats out of it. Control the area while rebuild take place. Bulldoze the sewage saturated shite left behind and make the areas parks.
Wolly
You demonstrate little grasp of the scale of the problem and also the complex issues involved, when you suggest forced mass resettlement funded by insurers. The outcome of your proposal would be savage hikes in insurance premiums well beyond what will happen anyway and sharply reduced scope of cover. Another result would be insurers and reinsurers treating NZ as a place to avoid, with serious consequences for the productive sector of our economy.
You're right Middle man...let's not try to do a proper fix...she'll be right if we just patch things up and slap some whitewash over it...good old Kiwi number 8 answer...
- So we run with the patch up answer and leave it for the inhabitants to suck it and see
- Find some "experts" prepared to give the OK
- Accept as a fact that insurance companies will either refuse to insure the new houses built on the plots given the OK by the "experts" or will demand very high premiums.
- Tell the owners "hard cheese" your values will never recover because the public know the land is crap.
- Encourage the rest of the world to understand this is the Kiwi way of solving such problems and dealing with people.
Or it just might be possible to tell all the insurance companies which have been sucking profits out of NZ for bloody decades that if they don't come to the party...they can bugger off.
The cost of laying out a new subdivision with services and plots to match those lost if need be, is a bloody sight less than trying to patch up the mess and hope another shake never happens and that the land owners just shut up and accept it.
Wolly
Suggest you have a look at a potential liquefaction map of ChCh before you grandly propose creating new subdivisions to house the thousands of people who would need to be relocated under your proposal. There is a very large area of red zone sites right across the city. To be consistent you'd need to vacate all of those areas as well ?.
Just luck that the earthquake strike direction didn't wipe out many more and the next one might possibly do just that. So - under your plan who are you going to relocate and who are you going to leave behind ?. Say you build new houses for 10,000 people at $400K and slug insurers with the bill. Add to that the $2bn + they are already up for. Reinsurers won't pay as a govt relocation decree isn't covered by insurer issued polcies. So it goes to the bottom line of insurers, who simply won't be able to pay. Suggest you do the math. Nice idea but not a goer I'm afraid.
Yeah, that is the $64 question. Try slumping values, white/middle class flight, sharp increase in the value of non liquifaction/well built houses, ghettoisation of the swampy badlands. Don't forget a good number of $1m + houses are also stuffed - what will that do to upper decile house prices as people decide they wan't wait for two years to have their mcmansions rebuilt , eh ?
Thames and other natural perils ravaged areas, re writ - buy a house in the wrong place and you loose dough. It's called risk. And it comes with any investement.
Looking at ECAN's liquification predictions, it is remarkable how random the damage was even compared to their predictions.
The worst hit areas of Kerr's Reach, Avondale, Dallington, Avonside (Loop), Burwood (Kingsford/Queensbury Sts), Bexley (Pacific Park) were predicted on ECAN's map. However they predicted significant ground damage in St Albans, Shirley, Linwood, Beckenham, Woolston and Opawa, while in all of these areas there was only limited damage.
I own property on the lower Heathcote River (predicted very high risk) where there was absolutely no damage at all. Also the properties I have in Beckenham (predicted high risk) which had very little damage. In St Albans there was also little damage, one of our properties on the St Albans stream had very limited damage while only a tiny amount of silt was visible another of our St Albans properties. Linwood was pretty much untouched. Opawa had only minor damage compared to the Avon areas.
Many areas not predicted to be badly affected by ECAN's map, were badly damaged.
Parts of Fendalton (Queens Ave, Jackson Rd, Bradnor Rd etc), Halswell, Brooklands and small pockets out in the west of the city.
Obviously the east-west movement meant that Kerrs Reach and the Avonside Loop were more susceptible than other areas but that doesn't explain why predicted liquifaction didn't occur to the same extent along the Heathcote River.
In short trying to avoid liquifaction completely would perhaps involve moving Christchurch to say somewhere in Australia?
Oh dear oh dear...property values in those red areas will do what?....and in the areas that turned to porridge?
What it takes is a firm belief that the 7.1 and the 1000 plus aftershocks will be the end of it all...no more quakes...all over...quite safe now...nothing to see here...move along....!!!
I think the values impact will be a permanent feature of the region. The quake tracker... http://www.christchurchquakemap.co.nz/....... is enuff to keep the investment away...those shallow red ones !!!!
To extend your point Chris-J.....maybe you are right re the driven piles and reinforced slabs...but how can a buyer be sure that is what they are buying....and how can an investment decision be based on the belief worse is not round the corner. You may well have excellent ground and the best foundation and receive no damage...but your market around you gets a thumping...as is the case in chch today.
The problem in many cases will be that the land was deemed solid enough not to need engineered foundations.
Houses built with shallow foundations and no reinforcing mesh in the floor slab as recently as a few months ago are now wrecked while over engineered homes on softer soils with reinforcing and driven piles are now fine.
The issue of silt erupting from the ground could to some extent be contained if geotextile fabric was laid below the ground, under engineered fill. Of course there would still possibly be weak spots where silt could erupt but it would be mostly contained around houses. Modern pipework (polyethylene and pvc) would have limited the breakages in services that we saw in old clay and steel pipes.
So the land may well be rehabitable. The question may be who will want to be on it though. The cost of repairing the worst affected land (engineered fill etc) could be $30-50,000 per site which on top of replacing all the services and repairing the roads will bring total costs similar to developing a new site (if you exclude council development levies). So it could go either way.
By the way the Press reports that retailers who are open in the CBD are getting up to 70% less business than before the quake. The real estate publications have shrunk markedly as well (down by about a third). I think that it's going to be a case of watch this space.
Not kidding Roger. Many home builders in ChCh promote the fact that they put re-inforcing mesh (only 668) under the tiled areas! (It stops cracks appearing in the tiles later on you see).
Interesting that those aftershocks tonight seem to be targeting the city - one had its epicentre near the corner of Gloucester and Manchester Sts according to GNS - as if that area needs any more damage!
cj this may be interesting ---sept 4---present time ---quake tracker
That's now the first site I'm looking at in the morning. Interesting to see that I can now tell the magnitude of an earthquake fairly accurately before even looking at it!
Btw, why is there an EQC? It seems that all it achieves is having part of the bill footed by the govt instead of letting private insurance companies pay for the lot. And since it doesn't cover uninsured people I'm just wondering what the point is. We ended up filing a claim with them after all btw, noticed 3 (small) cracks :(
Finally someone in the MSM has bought this up!
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10675888
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10674239
I hope the Govt is listening!!!!
"Bollard also talks about his excellent book "Crisis", which I enjoyed reading."
This book is where Bollard claims he personally saved the NZ financial system. However he completely failed to recognise, while dozens of other financial commentators were correctly forecasting this problem, that the system was about to bust due to excessive debt created by banks, which he was supposed to be supervising. The lunatics are truly running the asylum.
And a big bundle of funny munny for Gummy Bear.
Looks like the RBA will raise in oct...that'll thump the Kiwi again...75 looks likely...aussie tourists will swap their funny munny for 20% plus more funny munny...and buy all the rotting houses!
I see a wave of new listings hit the Marlborough market this week. Now all the ex renter rubbish is mixed in with heaps of "my property is worth the top of bubble price plus 25%" dreamer stuff.
Anyone for a vineyard...anyone...please!
Alright Bernard, here's 4 for starters:
(1) How much gold does the Reserve Bank currently hold? What is our policy on growing this strategic reserve over the next few years?
(2) We have a grossly overvalued currency coupled with a broadly deflationary environment and an economy that will contract in the september quarter (earthquake, SCF, snow-storms etc). In these circumstances, why on earth is the reserve bank not issuing NZD in exchange for foreign reserves + gold? This will (a) act to reduce the crippling appreciation of the NZD and (b) provide the nation with a critical fighting fund which is going to be required for the next few years. He has the power - is he just chicken?
(3) Does he belive there is scope to adapt the exisiting Core Capital Ratio to enable periodic rate adjustment, as an additional macroeconomic tool targeting total money supply? Has the reserve bank considered any other tools for directly controlling Bank-issued credit and addressing the explosion of M3 that it totally failed to control last time round?
(4) How does he believe the advent of QEII will impact upon the NZD?
These are useful questions. Re. #3, given banks have proven they can meet the requirements without too much purple, maybe the question could be changed to, "How, can RB adapt the exisiting Core Capital Ratio to enable periodic rate adjustment, as an additional macroeconomic tool targeting total money supply?"
a) If RB targeted higher than they presently are (say 90%) would he expect the OCR peak to be lower or higher than the current projection associated with 75%? If lower, by how much?
b) What went on here:
'You cannot implement a problem – only a solution'
http://www.infonews.co.nz/news.cfm?l=1&t=0&id=53064
"We have worked with the Reserve Bank to ensure that the speed of implementation has been slowed down on their new “prudential measures” and capital asset ratio requirements of banks. While there has definitely been a tightening on availability of capital, the implementation of these new policies will now be at a far slower pace than originally planned, thus reducing even more stress among the farming community. We argued that speed on implementation was not the solution New Zealand needed."
Perhaps Conor English was referring primarily to this:
?????????
If RBNZ had been able to implement their plans as they originally intended would he expect the OCR peak to be lower or higher than the current projection for the next tighening phase?
c) If effective asset/land/capital gains tax were to be implemented, would he expect the OCR peak to be lower or higher than the current projection for the next tighening phase?
d) If only one familiy home could be funded with fixed rate loans - all other loans being on floating terms only, would he expect the OCR peak to be lower or higher than the current projection for the next tighening phase?
e) If c) and d) had been implemented prior to the last tightening cycle does he think the OCR peak would have been lower or higher? In addition, would our national private debt be higher or lower?
f) Is it correct that RB can utilise macroprudential approaches as a supplement to monetary policy, without the need to change the present Act?
Cheers, Les.
Not that I was invited to ask Bolly anything......but I think the obvious first question would be is your position ever performance measured..? if so by whom...and who might be watching their performance....?
Of course you B.H. are not an insensitive dolt such as myself and so perhaps something more along the lines of....
Dr.Bollard which if any of your input to policies has had the greatest positive effect in regards to an Export Led Recovery.......over the last two years...?
Dr Bollard do you see a potential for a return to trade protectionism and if so what effect do you see it having on an Export Led Recovery...?
Dr Bollard in respect to the NZD...where in all honesty do you see it trading as fair value...?
Dr Bollard......at what point would you be concerned enough to act on an over-valued NZD/USD....
Dr Bollard ...Do you have an opinion on the under-valued Yuan and the effect it has on the Global Trade position...
Dr. Bollard ...do you have reason to believe we may need to prepare for eventualities that may arise from the Yuan ...not being re-valued...knowing the Americans position on this.
I don't expect to see any of these aired but nice to get it off my chest anyway.
Hey no fair GBH you know he already thinks I'm always out to unpick Bolly's iron clad exterior with unfair and ambiguous questions.....besides I'm looking after my teeth....I got a mortgage on em...........how about a spot on a chair to heckle until physically removed.
Now that's got good TV written all over it........Bernard your on the edge of stardom here don't blow it.
"It now has NO VALUE. Better to finance a whole new subdivision on stable ground and allocate sections by ballot to the unlucky buggers...then bulldoze the garbage and produce some open areas of parks."
Wally... quite cheered me up that did...
Simple, civic minded, common sense.
Ian Fletcher ( #3 ) is in Lady Gaga land ! Free trade stimulates economies and innovation . Britain's demise was due to socialist governments and all-powerful socialist unions . They bled the market-place dry through onerous taxes and regulation . ........ . And for proof of that , just see wot Barack Obama is doing to America today . ( and our history in NZ ain't so very different from Merry-Olde-England's )
Isn't that "Olde but not that merry England"....seen enuff of those property programmes to realise how rare open spaces without power pylon shite and coronation st housing rubbish spewing over the land can be...... and then you discover you are under a flight path for a poxy airport.
Thanks for the link questioning free trade Bernard. I realise that I had rather written off anything else as the province of neanderthals. Funny how you end up brainwashed by the ramblings of some long dead economist.
New Zealand's unequivocal embrace of free trade has not been an unmitigated success but I had assumed that was due to poor lower level decisions.
Perhaps the question is what should be freely traded and what not. We do not, for instance, allow free trade in citizenship.
This is an interesting and thought provoking area. More please.
I agree, we have been so brainwashed by the main beneficiaries of free trade, that we fail to realize thar it is fundamentally flawed. All it does is encourage a race to the bottom. Nz GDP has stalled since the 90s when free trade was embraced.
I believe some sort of mercantilistic overtones are needed to preserve and build wealth across the nation, rather than with specific individuals.
Free trade encourages individual wealth accumulation, and a general decline in overall wealth, whereas mercantilism encourages the growth of wealth in the area being protected generally, and an overall growth in wealth generally, rather than specific individuals
Big news here in the Philippines is that new president Pinoy Aquino , on a tour to the USA , stopped at a street vendor , and bought & ate a $US 2 hot-dog ................ Now that in itself doesn't seem so remarkable , apart from the risk of a MSG overdose . But the previous president , Gloria Arroyo was noted for exclusively dining at 5-star restaurants ........... At the expense of an impoverished populance .
And I recall that NZ's former PM , Helen Clark , sought the high alps of Switzerland for her holidays . .............. Can't help feeling more respect for those pollies who retain a feeling for the life of the everyday Joe/Jane at ground level .
And as such , I agree that we ought to import dung beetles into NZ , and replace all human politicians & civil serpents with them . We're in the poo anyway . So the beetles will cost nothing to feed , and they usually holiday in cheap places , backpackers - from my experience .
note: actually only technically 'fiat' from about 1972, although central banking always was going to require gold standard was removed - hence money multiplier effect occurred.
Excess Reserves have recently been over USD 1.2 Trillion!
http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=li…
Anyone having trouble understanding why the Aymereekan financial system is 'not working'....are we perplexed about bubbles ....stuck for answers...this is a must read for you. A real nice spring weekends read. It reads like a crime story because that's want it's all about.....one monsterous stinking filthy crime.
http://www.marketoracle.co.uk/Article22959.html
When you get to the end bit....ask yourself where to from here...how can Aymereekans fail to slide down the slippery slope of misery into the hole without hope.!
Iain : Us Bumper-Sticker Boyz prefer that you provide a set of crayons , so we can colour in those charts , for all they're worth .
"........ breaker breaker ........... calling Parksy ........ getcha arse back on the road ........"
Oooooooooooooh , the masters are calling , trot off and be a good little wage slave , my friend !
Someone pointed out the widely quoted "Debt to Gdp" figure is a load of nonsense designed to make the debts incurred by self serving bureaurats and pollies seem less like vote buying.
The relevant measures are debt to income and interest to income. Just like when you or I get a bank loan.
This is clearly fraud on an institutional scale.
What are chances of seeing this in NZ Parliament? zero?
Carswell MP (Conservative, Clacton) introduced legislation into the UK parliament that takes the first step towards ending fractional reserve banking. The bill would have the effect of making fractional reserve banking impossible, requiring a shift to full-reserve banking (where the bank either lends your money, or keeps it safe, but doesn't claim to do both at the same time!).
In plain English, it would stop private banks being able to create money as debt.
"What are chances of seeing this in NZ Parliament? zero?"
Zero for a good reason, it won't work. It would be a bureaucratic nightmare for a start. Under their system, before a loan can be be extended sufficient depositers have to agree to have their deposits locked up for the period of the loan(s) covered. A centralised committee sets a cap on the money supply, so instead of the OCR being the big announcement from the reserve bank, the "money supply" becomes the policy tool. A better approach is to tackle the question of bank reserves, the issue is that bank created credit money is "as good as money" when it comes to a reserve deposit.
Show us the Gold
http://www.marketoracle.co.uk/Article22988.html
And if you think the stone cutters will let a bunch of republican pollys post the elections in Aymereeka debate this...you are a first class idiot! The myth that there is gold in storage will remain. The peasants are kept in the dark.
There is the smell of effluent in parts of Christchurch and it's not the sewage!
http://www.stuff.co.nz/sunday-star-times/news/4168261/Quake-hit-residents-may-sue-council
"Star-Times inquiries show the council backed the development because land in the city was scarce. Staff warned about sea-level rises, given the area was prone to flooding, but there was nothing noted about liquefaction or seismic activity, and documents make no mention of tests to determine the land's suitability for housing"
There is always that loading in these decisions.
Many who stand for office do it with/for ego issues.
They feel more 'important', if they're associated with 'development', than with 'rejection'.
Add in the fact that bureaucrats are often similar - feel more important if their jurisdiction expands, and they push upwards too.
Then you get the lobbyists - the Property Councils, Straterra's, Business Round Tables. These folk have paid touts - who work 40 hours paid, while those who do what the Councils should be doing, do it unpaid. Often starting as amateurs.
I remember Garry Holden (the first fellow shot at Aramoana). He was just defending his village.. In the process, he (and others, the Save Aramoana Campaign etc) took it to, and won in, the old Planning Tribunal. Then had to re-engage in the High Court. I'm told that after that, a prominent lawyer said to him that if he got qualified, there would be a job for him in his practice.
"Eff off'" said Garry, "I was just defending my home".
The Council should have been doing it, but for the above reasons, was kicking for touch, missing in action, or downright hostile. Who did this Council represent again? Garry or Pechinet Alsuisse?
You can see it again with Hayes. Ghahame Sydney, Brian Turner, Gray Shattkey and co, doing what McPherson's bunch should have been addressing. Corner McPherson on it, and he says "the stone age didn't stop for lack of stones". That kind of idiot comment (don't get me wrong, I think he's a nice man, also caring and honest) has no place in governance at this juncture. Comparing a few hundred thousand spear-carriers with 7 billion desiring flat-screen TV's, is peurile.
But we have a populace who are shallow enough to vote for 'tax cuts' and 'growth', and those who govern only reflect that.
Bet you there are houses glued to the sides of unstable hills in wgtn, that should never have been built. This chch event has exposed the 'council' system as shonky. The rotting homes fiasco was just a tiny leetle peek at the effluent. Now we have a different view. What's next?
Unstable hillsides and sedimentary basins/(ex swamp, reclaimed land) nestled between hard rocky hills eg around the basin reserve, Petone . . . Light wooden houses without chimneys, built on hard rock/clay away from any slips or rocks rolling down the hills will be safest.
Lets be honest - when the 8.0+ Wellington earthquake does strike, there is going to be total decimation of much of the city. It's just not possible to engineer structures to withstand that sort of shock. Fred's right that the Hutt valley is just one big liquefaction zone - quite apart from the fact that a few metres down-shift would flood the entirety of Petone. (Don't forget that Rongotai and the airport were all under the harbour prior to the 1887 earthquake). Someone told me that the Terrace could have over 1 metre of broken glass on it oo preventing anyone leaving offices down there.
However, central Wellington has very few brick or concrete houses (I think they were banned util the late 70's), and the council has belatedly tried to put in place some strengthening codes for older CBD buildings. My biggest concern is the multitudious dodgy rotten wooden car-pads that are dotted all over the (affluent) downturn suburbs (Haitaitai, Mt. Vic, Kelburn, Brooklyn, Northland, Island Bay, Wadestown, etc.). many of these are directly above the houses. In the event of a decent 6.0+ earthquake, a lot of residents are going to find that their family car has just fallen through their bedroom at high speed. Lets hope it doesn't happen in the middle of the night....
Excellent article by Bernard over at the NZ Harold , slamming the previous Labour Gumnut 1999-2008 . I know folk here get bored with me continuously ripping into Helen Clark & Michael Cullen , but unless we undo the damage they did to the balance of the NZ economy , we are in for a few gruelling winters in our discount tent !
The " growth for longer " slogan is a joke . The debt level of the country is higher after the commodity boom , and our productivity is now lower than before . And yet New Labour under Phil Goff sabre rattle at the current administration . The damage was done by you guys , Goofy !
National's error as a new gumnut has been to administer medicine to the patient too slowly . The global financial crisis was a godsend opportunity for Wild Bill to Un-Cullenise the tax and welfare system ............. And he did absolutely nothing , 'cos " we weren't elected to rock the boat " . ............ No balls , Bill , no kahunas at all .
I'm off to give some lambs a wake up ring Gummy bear....Iain's pissed that Noddy always ends up with fatheads for leaders who just love being screwed by the stone cutters...poor bugger thinks he can make it all better....Cheer up Iain...hey if you can't beat them..join them...be a stone cutter...start your own bank...the Credit bank of Noddy...CBN.
http://www.geonet.org.nz/earthquake-facts-and-statistics.html If you look at the facts any more building on even the land with the slightest risk is very ill advised..unless constructions were built with "Shock absorber piles" as a matter of course...if enough were done with them it would be cost effective.....you could even build on marginal land.
"So what was the point?"...Bernard asks!....the point Bernard was that fake growth with all the hyped up activity kept Labour snouts in the trough. The point is the voters are too bloody thick and or too dam greedy to realise labour promises are poison.
Now the progressive socialist councils are in on the Keynesian stupidity...Helengate was only half of the problem.
......... and not only is there no accountability for politicans who stuff up the country , or the local council ............ but the sods grant themselves sweet superannuation and expenses packages , lasting long after their toxic tenure has ended ............ Cullen can P.O. as far as I am concerned !
Wally - I don't think it mattered who was in power.
This is simply a case of exponential doubling-times, and was going to happen regardless.
As was the overshoot.
As is the downside from here on.
Nobody - not even the Greens, have the answer to where we have to go, although they will be instinctively closest. The Nat's ideology is obsolete now, and Labour was always about who got which share of the cake, not whether the cake would run out.
The Greens seem to have moved inthe direction of socialism, just when a clear 'Limits to Growth' message, and how to address same, was needed to be clearly spelt out.
Is Bolly asleep at the wheel of that truck ...or just playing games with the spin!
http://www.nzherald.co.nz/markets/news/article.cfm?c_id=62&objectid=10676067
"Graeme Beckett, head of fixed interest at First NZ Capital, says the simple laws of demand and supply will not necessarily force rates up again. New Zealand organisations of appropriate standing can currently borrow at cheap rates from the United States, so they may not need to turn to the local market."
In plain English then, the Fed lends newly imagined munny to "NZ organisations of appropriate standing" and they get to pork the property bubble in Noddy...and the RBNZ is complicit in this rort .
Now why would the Fed be doing this...because they are a private banking scam...the Fed is not a Federal govt entity....the Fed is Stonecutters HQ.
Hey St. Nick : Forget ACT . They have utterly lost their way under cousin Rodney's stewardship . The day they let dodgie Rogie back in , I knew the party was rooted ........... The day Rodders took his young fluffster on a tax-payer funded trip overseas , our hopes of economic accountability were , alike the chicky-babe , screwed .
Peak groundwater
http://www.sciencedaily.com/releases/2010/09/100923142503.htm
"the contribution of groundwater depletion to sea level rise to be 0.8 millimeters per year, which is about a quarter of the current total rate of sea level rise of 3.1 millimeters per year
Anon... whatever the rest of your name is, you have it backwards. Mercantilism makes certain (politically connected) sections of the population wealthier at the expense of everybody else. Free trade makes people wealthier overall due to what is known as the "law of comparative advantage".
Kleefer - " Law of Comparative advantage" ... you mean like where Companies and Countries have a lower cost of production because they don't respect human rights or they environment... they can (tempoarily) externalize these costs... they have a "Comparative Advantage".
The pain in Spain where the socialists reign...yes it really is insane!
Tyler Durden - Hyperinflation, QE2 and direct debt monetization.
You have been warned!
"We were stunned to realize that over the next 6 months the Fed may be the net buyer of nearly $3 trillion in Treasurys, an action which will likely set off a chain of events which could result in rates dropping all the way to zero, stocks surging, and gold (and other precious metals) going from current price levels to well in the 5 digit range."
"In fact, every asset class will explode in a supernova of endless liquidity. To be sure, all of this will be very short lived. Very soon, all those assets denominated in fiat paper, will promptly collapse in the great black hole of reserve currency devaluation, as it becomes clear that the Fed will stop at nothing to win the race of global currency debasemenet. And of course, none of this is to be confused for an actual improvement in the economy, as QE2 will result in a dramatic and irreversible deterioration in the US, and thus global, economy, which, once the initial euphoria from QE2 recedes, will promptly progress to isolationism, protectionism, currency wars and exponentially accelerating monetization of each and every asset class, thereby rendering price discovery irrelevant, as central banks around the world stampede into irrelevant capital market, each buying up as much of everything as their printing presses will allow them, until the ink runs dry."
This sort of sensationalist nonsense gets Tyler some headlines , but ultimately will hurt his credibility , when he is proven to be woefully wrong . ................ . Someone predicted a massive 30 % collapse in NZ house prices ........ and didn't that guy wind up looking the fool !
Go Tyler , keep writing the science fiction , buddy .
Wow, lots of comments regarding the earthquake and potential loss of housing value in affected areas of Christchurch.
What strikes me however is that surely, this should have taught us that fundamentally ALL property in NZ is at risk from some sort of natural disaster? Let's face it, Christchurch was never "supposed" to be in danger of that kind of earthquake!
Floods, slips, earthquakes, storms, volcanoes, tsunamis - we're at risk from it all! Everybody knows that Wellington is due a "big one" and heaven only knows what damage will be done there when that happens. Yet the property prices in Wellington are still astronomical!
Auckland is built atop a whole bunch of volcanoes, but nobody seems to care about that either. It's weird, Kiwi's only seem to factor "risk" into their investment decisions when things have already gone belly up.
Why don't we all learn from the Christchurch disaster and burst the damn property bubble now, BEFORE something else goes wrong?
Just let me sell my house first, ok? :)
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