Here's my Top 10 links from around the Internet at 3.30 pm today in association with NZ Mint.
As always, we welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz.
See all previous Top 10s here.
My must read article today is #1 on how to avoid tax when you are a large international company. Transfer pricing looks like a lot of fun through a tax haven.
1. How to avoid paying tax - Reuters reports on how Starbucks avoids paying taxes in Britain.
Reuters highlights how Starbucks tells its analysts it is very profitable in Britain, yet, surprisingly, it tells the British tax man it is not profitable...
There's a few multi-nationals who do this.
Apple and Google are particularly adept at paying barely any tax anywhere by making transfer payments for 'intellectual property' to companies set up in tax havens.
It's a theme in a increasingly multi-nationalised world.
It makes perfect sense from a shareholders' point of view. But when much of the world's economic activity migrates into the stateless cloud, there might be a few tax revenue and wealth equality consequences...
Over the past three years, Starbucks has reported no profit, and paid no income tax, on sales of 1.2 billion pounds in the UK. Yet transcripts of investor and analyst calls over 12 years show Starbucks officials regularly talked about the UK business as "profitable", said they were very pleased with it, or even cited it as an example to follow for operations back home in the United States.
Presented with the contradiction between Starbucks' UK accounts and its comments to investors, Starbucks' CFO Alstead identified two factors at play, both related to payments between companies within the group.
The first is royalties on intellectual property. Starbucks, like other consumer goods businesses, has taken a leaf out of the book of tech companies such as Google and Microsoft. Such firms were identified by Senator Carl Levin, chairman of the U.S. Senate Permanent Subcommittee on Investigations, in a September hearing on how U.S. companies shield billions from tax authorities. He said they were engaged in "gimmickry" by housing intellectual property units in tax havens, and then charging their subsidiaries fat royalties for using it.
Like those tech firms, Starbucks makes its UK unit and other overseas operations pay a royalty fee - at Starbucks, of six percent of total sales - for the use of its ‘intellectual property' such as its brand and business processes. These payments reduce taxable income in the UK.
2. Separatists winning - Across Europe separatist movements are gaining steam as the grumpiness grows with the European project and the long, long recession.
Reuters reports on pushes for independence in Catalonia, Scotland, Belgium and Bavaria.
Flemish nationalists scored sweeping gains in Belgian local elections on Sunday, Scotland agreed terms on Monday for a 2014 referendum on independence from Britain, and Catalan separatists expect a regional election next month to advance their cause.
Just as nation states are ceding more power over budgets and economic policy to the European Union, regional grievances and conflicts that have simmered for centuries have taken on new intensity in fights over a shrinking pie of public money.
Richer regions such as Catalan-speaking Catalonia and Dutch-speaking Flanders, which already have wide-ranging autonomy, resent paying for poorer areas such as Spanish-speaking Andalucia and French-speaking Wallonia.
4. Greek crisis bubbling away - The Guardian reports Greek officials saying a deal to extend its bailout has not been done on the eve of this week's summit. It runs out of money in November.
Greek officials have admitted that friction with international creditors was such it was unlikely a package of austerity cuts that have been set as the price of further aid would be approved by the Athens parliament before mid-November.
At no other time has near-bankrupt Greece so needed the €31.5bn (£25bn) in rescue funds dependent on the measures. With public coffers set to run dry by the end of November, the country could be forced to default on its debt mountain if there are further delays in the disbursement, put on hold since July.
5. Watch the politics - Markets are now driven by central banks rather than economics, and ultimately economics and markets are driven by politics.
An example is the latest wipe out of an Austerity government in Lithuania. Here's the BBC:
These voter reactions are what will ultimately drive markets and economics. The austerity is not working.
Lithuanians have voted out their conservative government after one of the world's deepest recessions, incomplete results suggest.
Two leftist parties, Labour and the Social Democrats, appear to have finished first and second, and their leaders have met to discuss coalition. Correspondents said PM Andrius Kubilius' government had been punished for cutting pensions and public wages.
6. Round three - Bloomberg reports on how emerging markets are entering their own slowdowns, following in the wake of Europe in the last couple of years and America in the couple of years before that.
China may not be able to rescue us again.
Three years after industrializing nations led the world out of the U.S. mortgage meltdown-induced recession, the reliability of the power source is waning as Europe’s debt crisis persists. The International Monetary Fund sees them growing an average 5.8 percent in the half-decade through 2016, almost two percentage points less than the five years before the 2009 slump.
Finance chiefs at the IMF and World Bank annual meetings left Tokyo this weekend at odds over how to address the issue, with South Korea’s central bank chief urging Asia to add stimulus as Russia and Brazil called on rich nations to fix their own challenges. At stake is a world economy Bank of Israel Governor Stanley Fischer calls “awfully close” to recession.
“There is a concern that in the near term the engine of growth that provided such a great support seems to be slowing,” said Jacob Frenkel, chairman of JPMorgan Chase International and Fischer’s predecessor in Israel. “They still continue to grow, but we’re seeing a slower pace than anticipated all over the world.”
7. Grim outlook for Chinese exporters - FT.com reports on the rapid slowdown in China's exporting factories.
To Zhou Dewen, head of an industry lobbying group in Wenzhou, the famously entrepreneurial city in eastern China, the situation is “already worse than 2008”. “The difficulties are bigger and they are far more widespread.”
As China prepares to release growth data this week that is expected to confirm the slowdown in the world’s second-largest economy, companies around the world are registering the impact.
US companies such as Caterpillar, the earthmoving equipment manufacturer, and Alcoa, the aluminium producer, have warned of the impact on demand. Cummins, the engine manufacturer, last week said it planned to cut up to 1,500 jobs, in part because of the decline in the Chinese market.
Shannon O’Callaghan, an analyst at Nomura, said: “At the start of the year most US companies were saying they thought China would get better in the second half. But by the summer, it was clear it was not getting better. If anything, it’s getting worse.”
8. Some good news - FTAlphaville reports iron ore prices, which are so crucial for Australia, have rebounded over US$110 a tonne.
As regular AV readers will reccall, we’ve been sceptical of the belief that China’s demand for steel will be pulled ever-upward by the country’s (supposedly) inevitable urbanisation and per capita-GDP growth, mainly based around the work by Nomura’s Matthew Cross but also the broader views of China’s economic development held by Michael Pettis. Both would say the assumption relies on a circular argument: “China will grow because China will grow”, or because some other countries have grown, or because it has grown in the past.
In the shorter term, Cross suggested in the past few months that the falling prices for Chinese steel was a bearish signal for iron ore.
But prices are up, now. And while some steel plants certainly cut production, the cuts didn’t appear to be widespread. The most popular explanation is that mills were running down their inventory of iron ore and now they’re having to re-stock after overshooting.
9. Ready for the fallout - CNBC reports the Swiss Army is preparing for civil unrest in the rest of Europe.
Switzerland launched the military exercise “Stabilo Due” in September to respond to the current instability in Europe and to test the speed at which its army can be dispatched. The country is not a member of the union or among the 17 countries that share the euro.
Swiss newspaper Der Sonntag reported recently that the exercise centered around a risk map created in 2010, where army staff detailed the threat of internal unrest between warring factions as well as the possibility of refugees from Greece, Spain, Italy, France, and Portugal.
63 Comments
re #2
There is growing resistance to the EU project all round, now that they realise what the political elite are up to.
Nigel Farage as been hammering them on this for years (not to mention calling the demise/bailouts of the PIGS long before it happened).
No, but because every swiss male is a reservist, has his full gear including gun at home in his wardrobe, and their borders are watched and flown by fighter planes in the air 24/7, and they have a strong identity and are fiercly independend. At the drop of a hat the whole country is army.
Oops Hitler didn't mind invading "little" countries like Poland, Russia, France and almost Britain but was scared of Switzerland? The Swiss may well be tenancious and independent but I think there's a bit of nationalistic mythology at play here. Bit like the Swedes and their negotiated neautrality
The Swiss take there silly little army and compulsory military service very seriously and have even made money off the rest of us with it, Eg Swiss army knives, coats, shoes, handbags - the list appears to be endless. It keeps going because politically the people via the cantons like it. Especially old people who vote, not so much young people who have to do it for the first time. It also binds the people together , helping to create a shared identity.
Business New Zealand, the Chambers and ExportNZ demonstrate little to no real empathy with real exporters:
http://www.johnwalley.co.nz/195-simon_ward_comment_on_associat.aspx
Dismal performance.
Les.
Seen this little gem?
Ineptocracy
(in-ep-toc’-ra-cy) – a system of government where the least capable to
lead are elected by the least capable of producing, and where the
members of society least likely to sustain themselves or succeed, are
rewarded with goods and services paid for by the confiscated wealth of a
diminishing number of producers.
Obviously OMG you are particularly well qualified to talk about inept political movements. Being such a supporter of an action to block scientific research through the courts, an action which led to the development of that scientific research, with the legal challenge by proxy funding it! Obviously we should also say thankyou for drawing media attention to the sterling research which NIWA is doing!
Thats quite an achievement. Please do keep up the good work.
Your response to my post above was nothing more than a personal attack where you deliberately mis-characterised me, hence I didn't bother with it.
You need to read David Chaston's item the other day on how people lose the plot online.
Your real problem is that the global warming cult you adhere to is dying in a ditch. NIWA hasn't followed accepted international practice with the NZ temperature record and this record has been used to justify the ETS. Interesting now that the Govt is trying to back track.
16 years of no warming of any consequence while CO2 has increased. Isn't that enough for you?
I don't think you should consider that a personal attack, I pointed out that it was a positive contribution to climate science public education and said thankyou. Maybe that wasn't the intention of the action, but sometimes even be accident good things happen!
No, climate change research is not going to die in a ditch. Yes, NIWA followed accepted international practise, in fact the case (you did read the judges conclusions didn't you?) discussed if NIWA had improved their methodology since RS93. The coalition was alleging that NIWA was incorrectly not using RS93, and drew their own (eronious, the judge pointed the coallition research paper was flawed) conclusions based on RS93.
No, the NZ government doesn't make its decisions based only on the information of a single NZ research organisation.
No, even the climate conversation group doesn't support your suggestion there was no warming of any consequence for 16 years. Even they managed to point out that David Rose was incorrectly quoting this narrative from the UKMO (he has done this multiple times now). The clearest way to put the UKMO position is there is insufficient data to measure a warming trend over these 16 years. Obviously Richard Treadgold doesn't have any appreciation of how to write clearly and he prefers the slightly missleading 'confirmed the lack of meaningful global warming'. Since you apparantly accept that 16 years of data is valid I take it you accept that the other 150 years of the same data is also valid, and the clear significant conclusion from that data is that there is significant and dangerous amounts of climate change occuring, directly attributable to CO2 emissions.
Obviously you would have to be a fool to draw a conclusion from 16 years of data which gave inconclusive results. I suggest next time you try reading the UKMO statement of UKMO positions, because David Rose has a history of missleading people about what the UKMO says, and Richard Treadgold appears completely unable to explain anything in plain english.
In fact your conclusions may even be at odds with David Rose, who wrote 'Yes: Global warming is real, and some of it at least has been caused by CO2 emitted by fossil fuels.'
http://metofficenews.wordpress.com/2012/10/14/met-office-in-the-media-14-october-2012/
Since we are using the UKMO as an authority, over the past 140 years surface temperatures have risen by about 0.8 degrees celsius.
Nothing very subtle about you is there, so I guess this means you get the next round of grant money, n'est ce pas?
Let the public decide.
http://www.climateconversation.wordshine.co.nz/2012/09/judge-declines-to-intervene/
Sorry, why would I get grant money?
I fail to understand what Treadgold is talking about in this post, as I said he doesn't appear to be able to make his point clearly at all.
It does appear to be a little dis-ingenuous of his organisation to accuse James Renwick of being compromised, when one of the coalitions key 'independent' witnesses in the case was a formation member of the coalition. The judge was suitably impressed, you did read the summary didn't you, I mean you personally did read it?
Renwick is of course quite unimpressed with an attempt to challenge science through the courts, rather than the peer-review process. I can understand his frustration, I think the judge pointed out that science is done through the peer review process a few times in his judgement as well (you did read the judgement didn't you?).
Grant money, well actually I was fishing and you've confirmed you're not a climate scientist. I thought you had help writing the previous post - your mission in life - to blog for the Green Party.
Here's to peer review.
What do we want? Peer review. When do we want it? Never!
• by: BRENDAN O’NEILL
• From:The Australian
• September 08, 201212:00AM
WARNING: This column has not been peer-reviewed.
In recent years, the words “peer review” have taken on an extraordinary meaning.
Once upon a time, being peer-reviewed simply meant you had written something, usually a journal article, and some other people in your profession had read it and considered it fit for publication.
Not any more. Now, being peer-reviewed apparently means being wise.
It means you have access to some greater truth which the rest of us, the mere mortals who make up the mass of society, are unaware of and probably incapable of understanding.
The stamp “peer-reviewed” is being turned into a mark of approval, almost into a licence to speak, a licence to hold forth before the world and have your views taken seriously.
And if you haven’t been peer-reviewed? If your arguments haven’t gone through that rather stale academic process of getting a nod of approval from a tiny circle of bespectacled professors? Then apparently you don’t know what you’re talking about and should shut up.
The makeover of peer review has been remarkable.
Not long ago, the only people who knew or cared what peer review involved were academic researchers, men of medicine and white-coat wearers in the sphere of science, who were understandably keen to have their papers OK’d by a handful of their peers so that they might be published and discussed by others. Outside of the ivory towers, peer review meant little, if anything, to Joe Public.
Now, thanks largely to climate-change activists who treat peer-reviewed documents about the environment in the same way early Christians treated the gospels, peer review is all the rage.
Radical greens march behind banners declaring, “We are armed only with peer-reviewed science”. At the big left-wing demo, the Rally to Restore Sanity in the US in 2010, one of the placards read: “What do we want? Evidence-based change. When do we want it? After peer review.”
That’s nowhere near as catchy as the chants of earlier youthful agitators, who demanded change “NOW”, but it does capture how bizarrely important the process of peer review has become outside of academe.
More and more campaigners and commentators now insist that only ideas that have been peer-reviewed should be taken seriously. Everything else is bunkum, or possibly charlatanism.
Last week in The Guardian newspaper, a green campaigner described peer review as a “kitemark of quality assurance”, implying that any claims about the climate or mankind’s future that haven’t been peer-reviewed have no quality.
She suggested that even newspapers articles written by everyday journalists should be subjected to something akin to peer review.
There should be a “system of certification”, she said, where “teams of academics” would award an approving kitemark to articles that are “accurate (and that) use reliable sources and peer-reviewed studies”.
Funnily enough, a few hundred years ago we had just that kind of system in the British media. It was called the licensing of the press, where only those writers whose ideas met with the approval of the king or queen and their tyrannical court would be permitted to publish, while all the rest would be branded heretics.
Fittingly, The Guardian article calling for peer review to be used in a similar way today, as a way of branding certain published ideas Good and others Bad, was headlined “Don’t give climate change heretics an easy ride”.
In Australia, public intellectual Robert Manne says that when it comes to climate change, only “leading peer-reviewed scientific journals” should be treated seriously. A “rational citizen has little alternative but to accept the consensual core position of climate scientists”, he says.
“Discussion of this point should long ago have ended.”
Here we can clearly see the cultural snobbery and intellectual protectionism of the cheerleaders of peer review. Manne is effectively telling the little people to shut up and accept the Truth as revealed by their betters in academe.
What these modern-day licensers of acceptable thought refuse to recognise is that climate change, in terms of how it is framed by the green lobby, is not simply a scientific issue. It is a profoundly political one, touching on everything from economic growth to development in the Third World, from how we travel to what kind of expectations we have for our children.
Under the guise of promoting “correct science” and slamming “bad science”, the priestly peer-review lobby is actually enforcing an ideological world view, using the tags “peer reviewed” and “non peer-reviewed” to distinguish between those who are politically on side and those who remain stubbornly heretical.
To see how much the process of peer review has become about raising the drawbridge on political troublemakers, consider how the British writers Kate Pickett and Richard Wilkinson responded to criticisms of their book The Spirit Level: Why Equality is Better for Everyone.
That book has become a massive talking point in Britain in recent years and has attracted some fierce criticism. Somewhat stung by this, Pickett and Wilkinson said in 2010 that from now on they would discuss their ideas only with those who had been peer-reviewed. “All future debate should take place in peer-reviewed publications”, they decreed.
In one fell swoop they shut out vast numbers of people – journalists, students, the man at the bus stop who has a lot of thoughts about the equality issue – from any serious discussion of their book. Here, “peer-reviewed” is clearly code for “respectable”, for those well-educated folk who can be trusted to think in an intelligent and nuanced way.
The extraordinary thing about the liberal intelligentsia’s wide-eyed faith in peer review is that this academic process is actually massively open to corruption.
Much peer review involves little more than well-connected academics getting people they know or mates who owe them a favour to sign off on their latest bit of work. That is why the peer-reviewed reports of the Intergovernmental Panel on Climate Change have included so many factual inaccuracies and so much eco-claptrap.
In essence, huge swaths of the cultural elite are using peer review as a kind of intellectual licence, with those lucky enough to receive this stamp being treated seriously and everyone else being branded a dangerous outsider. For all the scientific pretensions of this process, it is most reminiscent of those old Vatican Councils that would get together every few years to determine what the Truth is and how it might be communicated to the pig-ignorant public.
Fishing, really, would never have guessed. You don't need to be a climate scientist to debunk that rubbish, thats why I said you should try a bit harder. All you need to do is read the bloody UK MetOffice press release, or in my case I didn't even bother as it was extremely obvious what kind of miss-representation Anthony Watts was perpetrating this time, e.g I had seen it before. Of course when I did read it (before posting the link) it merely confirmed it said what I thought it would say.
So are you knowingly miss-representing the statements of the UKMO or unknowingly miss-representing the statements of the UKMO through ignorance of what the UKMO is saying? Oh wait, you just gave that information away. You know when people work this kind of thing out, there is frequently a backlash, my advice to you is to come clean as soon as possible my friend.
Once upon a time, being peer-reviewed simply meant you had written something, usually a journal article, and some other people in your profession had read it and considered it fit for publication.
and it still does, Brendan O'Neill must have been short of a topic that day!
Luckily for mankind , no members of the Greens movement were around when microbial life first began on planet earth ( although their clothes and hair would have you think otherwise ! ) , because the bacterial life began excreting oxygen , a toxic poison , which nearly wiped them out.....
.... had the Greenies been around then , they'd have introduced an Oxygen Tax to prevent this life destroying chemical from being released into the earth's atmosphere ....
Thankfully they weren't , and mother nature evolved new life forms to sop up that poison .. ... scuttling , burrowing , furry little animals ..... the Greens !
or you could look at real science,
http://www.energybulletin.net/stories/2012-10-16/illustrated-guide-scie…
For instance the heat wave decimating us crops could only be the beginning of our food problems,
"In December 2008, the Bush Administration quietly released a US Geological Survey stunner: SW faces “permanent drying” by 2050, which found:
The serious hydrological changes and impacts known to have occurred in both historic and prehistoric times over North America reflect large-scale changes in the climate system that can develop in a matter of years and, in the case of the more severe past megadroughts, persist for decades. Such hydrological changes fit the definition of abrupt change because they occur faster than the time scales needed for human and natural systems to adapt, leading to substantial disruptions in those systems. In the Southwest, for example, the models project a permanent drying by the mid-21st century that reaches the level of aridity seen in historical droughts, and a quarter of the projections may reach this level of aridity much earlier.
8><-----
-
Another 2011 study, “The Last Drop: Climate Change and the Southwest Water Crisis,” that actually looks in some detail at the scientific literature for just one region, finds that drought and reduced precipitation in the U.S. SW alone could cost up to $1 trillion by century’s end.
or,
-
- Study finds “mass biodiversity collapse” at 900 ppm, and possibly a “threshold response … to relatively minor increases in CO2 concentration and/or global temperature.”
- Last fall, the Royal Society ran a special issue on “Biological diversity in a changing world,” concluding “There are very strong indications that the current rate of species extinctions far exceeds anything in the fossil record.”
- Nature Climate Change (9/11): “The proportion of actual biodiversity loss should quite clearly be revised upwards: by 2080, more than 80% of genetic diversity within species may disappear in certain groups of organisms“
All these experts in their fields are taking about severe and prolonged impacts....you weanwhile you listen to a few rabid right wing morons, spouting non-scienctific rubbish.
So, sure lets just carry on....want expensive food, well its coming your/our way.
regards
The piece about StarBucks is interesting. The Daily Mail also ran this story with some valid points on how the sharp practices are putting smaller competitors out of business in the UK.
The small guys simply can't compete because they don't have the resources to set up an IP Holding company in a low tax area, to syphon off earnings.
Hence the demise of Mom & Pop's corner store.
In NZ , I would think what StarBucks are doing, would fall under the Transfer Pricing regulations, be interesting to see if they are pulling the same stunt here and wether IRD are asleep at the wheel.
The Starbucks brand is licenced to Restaurant Brands in NZ, not run by Starbucks. It smacks of tax avoidance but would be perfectly legitimate if they were franchised. Franchise fees are generally 6-8% of turnover let alone profit with another 2-3% for marketing.
There are obviously huge private vested interests in tax havens as they are demonstrably bad for all nations tax receipts, even NZ. About 10 years ago my accountant suggested by business partner and I set up just such an arrangement in Vanuatu or New Caledonia (can't remember which) but then changed his mind a few weeks later. The Winebox saga involved companies in the Cook Islands. A FTT of say 5% on all transactions, especially those in and out of a country would fix it.
You're right, New Caledonia is still partly French controlled. The gist of it was forming a company and bank account in Vanuatu, paying a large royalty for intellectual property to it and using a credit card from that bank here. He had just set up trusts for us and my eyes were glazing over trying to remember who owned what shares. Accountants and laywers are the main beneficiaries I think of the tax/trust system.
Yes and no.....I'd suggest we need a bit more nationalism.....when I shop I shop for NZ produce first and foremost..OZ second. I dont buy my coffee off starbucks, I try and avoid any American food. Ive complained to pak-n-save that a sign aboive fruit "produce of nz or china is not acceptable" I want to know where or I walk away. Now everything in clearly labeled NZ so I buy, I vote with my wallet.
Same with olive oil, NZ is a lot more but its a known good quality and NZ produced....the italians might think its cr*p (its mutual, their food is over-rated IMHO) but they seem to only ship rubbish to us anyway....screw them.
Same with ppta or anything else forced on us we can vote with our wallets
Hi guys im a newbie and after some advice. Looking to buy a place here in QT....will be getting a $150k loan....1. Is it a good time to buy are the indicators showing price increases ahead 2. Should i go for floating/fixed mortgage 3. Should i split mortage across fixed/flaoting?
Cheers
Radi, unfortunately you may have come to the wrong site. As 90% of the commenters on this site are rabid property-haters all locked up in their rentals counting their term deposits.
Unfortunately, these long-term habitual renters are putting people of buying their own house (as they are bitter over all the equity they could have built up but have spurned). Paradoxically, leading more people to rent from landlords (who they also despise).
1. Yes - always a good time to buy your own house to live in - as opposed to expecting short-term capital gains (outside of central Auckland suburbs).
2. Break up your home loan in 4 parts and have a mix of 1 year, 2 year & floating sections.
3. Yes
Or
2&3: Float the lot take a bit more risk and fix in a years time when the whole system is worse & declining.
Radi : The one guy around who's consistently called ( and explained ) the housing market correctly is Ollie Newland ...... you can follow his advice , if you think his success in the past will be continued into the future ......
......... good luck ....
( .. P.S. we're not all " rabid property haters " here , some of us just prefer to invest in the stockmarket , or directly into business , instead .. )
You don't think its a bit strong accusing people of putting others off just by commenting on a web-site? I think there might be quite a few other reasons for the property market slump, which actually have nothing to do with the internet.
As MortgageBelt implied, its probably good to have a floating component to a loan, as the repayment terms tend to be more flexible on these, so you can pay it down without penalty if you want to.
Radi try a bit of research for yourself rather than rely on unsubstantiated opinion. First in foremost do you have an income stream you can rely on to service the mortgage? What if NZ went to 35% unemployment like the last depression, would your income stream still hold? This scenario is highly likely in coming years.
Think about how illiquid real estate is as an asset. For a relative rating on the security of different assets look at Exters Pyramid. Compare the M3 Money supply to E3 total overseas liabilities. Then look at the value of mortgage debt and compare this to E3, combined with 8% personal debt this ratio was 83% when I last looked. Bubble territory.
Just think that property ownership is security for the lender not the borrower.
Research and understand fiat money and fractional reserve banking: ie the bank creates from nothing the money to loan to you. Interest is a method for the redistribution of wealth, you pay you lose.
The bottom line is that it is a ponzi scheme mate, and the banks are desperate to drag in the last few suckers.
Edit. I have been watching properties where the asking price has more than halved in the last couple of years. I will wait a bit longer yet.
Property ownership is security for a family. You rent, you are at the whim of the landlord/s. We do both, rent in Auckland and own in the regions. Our experience of landlording, fantastic. Tenants paying it off with us! Quickly. How is that not a win Scarfie? And we couldnt do it without the banks input.(in the current system, still dont see any reasoned argument why I cant borrow straight from the reserve bank at 2.5%? Ticket clippers the lot)
Renting sucks. We could be moved on with 4 weeks notice. I can't potter about and add value in my spare time. (Or break stuff, yeeha!) I don't feel as good as I should about the place I spend a fair bit of my time. But I'm not buying up here. No way. All we could afford is a shit box in an undesirable location. So we rent a shitbox in a nice location, work hard and slash off the days like a prison wall until we can move onto our own dirt and put down roots, no matter the jobs/rates outlook. Make a plan, stick to it.
Ive kept my eye on some depressed areas, but more than halved? Really? Where?
If you are in housing your ticket is going to get clipped no matter what. But I don't think you quite get the interest business. Interest is as I say a redistribution of wealth, it is simple math. The only thing that has kept it going is the earth supplying enough resources to make or grow more things each year. The earth has run out of the ability to support that.
The inflection point on the population graph in 1961 is the leading indicator. Seneca effect in progress.
Halved, take a look at anything north of Auckland, particularly coast property. I saw one today that was advertising "at 2002 price".
If you rent you are getting clipped, no doubt. So......dont know where Im going with this. A redistribution of wealth to shareholders? We can all be one of those too, no? I am a dabbler on that front. Good fun.
Correct, I clearly do not get the interest business. I do get families. I will look up those cool sounding terms and have a ruminate.
Coromandel is pretty dire too, sections for a steal, but halved, I dont think so. My old man is in the game and made a fricken killing through the boom. An absolute killing. A criminal return for his not unsubstantial efforts and risk and frugal lifestyle he led to get to the position he found himself in. And cashed in. Go the old rooster! You wont hear him crowing about it though. That same boom priced the likes of us out of the market there. Oh well, we're not crying about it. Went and invested elsewhere at a level suitable for our cashflow. And we will go settle there instead. So he loses in the long run and he knows it. His new neighbours are the T bags he moved up there 30 odd years ago to get away from. Ironic aye? He fits right in now though, hippie turned capitalist!
Usury - one of the many words I have read and semi understood in context but now fully understand, cheers. Love the historical account.
So, I took from that pretty much exactly what I'm now doing. Stay away from credit cards etc(compound interest, why are people that stupid?) only borrow at the ratio of 1:3 income to debt level and pay it down like a lizard drinking. Tick, tick, tick.
It doesn't matter how you dress it up, interest always results in a redistribution in wealth. Now the real problem is when this is involuntary. With your carpenter scenario you accept that you are giving up wealth to him. When the entire money supply is debt based, that is a problem.
Really there is nothing wrong with a financial intermediary but again the knowledge has to be there that they are non productive and take a portion of surplus capacity. However this doesn't need to be interest based. It is interest that creates the problem, not the intermediary. The redistribution of wealth interest causes exists with or without the intermediary. Interest is always a problem, but it becomes an even greater problem when the surplus dries up. Notice that Aristotle is disparaging of money making money, or interest, not lending.
I think this question is directed at me? Go the caps lock! Maintain what? Define correctly. I refuse to maintain the dishwasher for the tenants but that is written into the tenancy agreement.
Bought quality, careful with who we place. Got a few skills when it comes to fixing shit. Definitely dont leave it up to property managers. No drama's.
One house. All we want/need. Dont plan on getting into the investment property gig. Washed it late last year, before the last tenants moved in. Didn't need it but hey, house proud! Tenants maintaining the grounds for cheaper rent than first agreed. Doing a great job too. They loving it.
Tenancy agreement on our property has always stated 4 weeks, is that not binding. Signed, couter signed, lodged with the tenancy tribunal. Same as the place we rent. You got property/ies Mr mist?
A cautionary tale to be sure.
When we got serious about property we did consider buying a couple of typical investment properties, thinking we may play that game for 10-12 years then sell up and get our place but decided against it for a couple of reasons.
1. Didn't want to deal with the very people you have just descibed, both the tenants or the property managers/advisors etc. We busy enough as it is and knew we would be doing it all ourselves so not keen on the constant drama. Property managers suck in general, dont they?
2. The sort of place we wanted,character villa, with view etc came up in our price range(after ~2 years sitting on the sidelines observing, no one bid at the auction, start of GFC, couldn't believe our luck?!)
So now we deal with people like us, always have multi parties who want to live in it, and we are smashing the debt. Stoked.
Yar, the CCC impost on the pre-earthquake section calcs for Prestons was $70K/section.
Wonder if the CCC (being as how they are getting a brand-new horizontal infrastructure courtesy of Swiss Re, the long-suffering Ratepayers, and of course the diminishing number of NZ Net Tax Payers) have waived the Development Contributions?
I shan't be holding My breath waiting for such a sensible move..
Perhaps we could start importing planes from the California plane graveyard. $200k looks a bargin compared to NZ housing costs, and being an aircraft at least they won't leak.
http://www.theaustralian.com.au/travel/news/high-life-would-you-live-in…
Winston Peters gets it:
"If previous governments had pursued a national economic strategy based on leadership and vision, rather than blind faith in the global free market, New Zealand would still be the envy of the world."
Easy now....... unless you`re 65+, his Winston`ness only looks out for one thing... his own survival.
Remember, he was closest of all those 11 new members in 1978 to Robert David Muldoon; and he learnt his art of survival from the master.
THAT SAID...... this interview with Salient (Victoria University student newspaper) two weeks ago is a gem.
`...I was dealing with a person called Condoleeza Rice who I think had respect for me, and visa versa.`
... and how Winston..... and how.
http://salient.org.nz/features/winston-peters-the-full-interview
In fact, these are too good not to reprint here....
Winston Peters, MP:
On current Finance Minister Bill English:
“I used to belong to a National Party where they would tell him that, ‘you’re talking bull-dust’.”
On His time as Minister of Foreign Affairs:
“I made it very clear to the Americans that I expected a fair go for my country, that we had been to war time after time to defend certain values, and in the case of two world wars had got there well before they ever did.”
On alcohol prohibition:
“And we all know what happens when you over-price alcohol. People start dying.”
On His support of the ’81 Springbok Tour:
“I didn’t see one game, but I thought other people had the right to make that choice. And I have been to Mandela’s home, OK? In Soweto.”
On plain packaging for cigarettes:
“Do you know what they’re going to do? They’re going to persuade young people to smoke because of that.”
On the rise of China:
“The day that communists are practising capitalism better than you is a day to scratch your head.”
On societal changes since the ‘70s:
“I’ve never been enamoured by the view that our world is immeasurably improved by having all these restaurants.The last people that I knew that ate their way to security was Hansel and Gretel.”
On NZ First’s 2011 election campaign:
“Look, we would have put a Scotsman out of business, that’s how well we spent our money.”
The Starbucks issue is a cautionary tale for the Gumnuts of the world, really.
What it illustrates is that smart, nimble, transnational businesses can always stay three jumps ahead of the regulators, tax collectors, and assorted minions with clipboards. Because the rejoinder to any nation-state attempted impost is always to minimise exposure in that jurisdiction, and seek nirvana elsewhere. And the effective corporate-IQ difference between Gumnuts and these entities is too vast for this ever to change.
Fundamentally no different to the old arbitraging schemes of yore, where by tipping water into bales of wool, and taking advantage of differing allowable moisture content across a state border, it was possible to make a nice little living.
And for those quaint souls who believe that a Higher Power like the UN will one day seize these malefactors and make their pips squeak, I would simply offer the Syria argument:
The UN is pursuing their standard MO for any crisis (let's hold Committee meetings until they're all dead) and it's working really well. Expecting this creature of the victors of WWII to actually become relevant requires a Leap of Faith which only the truly deluded will make.
A funny old book (1992, The Great Reckoning) predicted a few things: the break-up of pasted-together nation-states (see the Scotland referendum...), the reduction in taxing powers (to around 30-50% of the peak...), and the crash of the welfare state (refer Europe, the US, the UK). It's timing was hideously, laughably wrong (they expected all this to play out during the 90's) but it's hard to escape the thought that the rest was substantially right. It just got pasted over temporarily by bandages of debt, financial chicanery, printing, and perhaps some genuine productivity gains via the InterWebs.
But the bill has come due, and Gumnuts aren't even in the first stage of recognition aboot all this, have been thoroughly captured electorally by the Entitled so we can look forward to more of the same, and it is thus perfectly useless to expect them to be effecting any change anytime soon. The whole shebang has to hit a wall or three to unfreeze it all enough for Change to be possible.
'Don't just do something, stand there' would be good advice for them at about this point but of course there are too many Minions with Clipboards roaming the prairies, looking for Fresh Meat, for this ever to be realistic.
Hey Ho...
Unbelievable corruption within Greek govt....and did Bill English hand over money to support this filth...!
"Deficit spending can be a useful tool in countries with a central bank, such as the US. But at what point does borrowing from the future (and our children) constitute a failure to deal with our own lack of political will in regards to our spending and taxation policies? There is a difference, as I think Hyman Minsky would point out, between borrowing money for infrastructure spending that will benefit our children and borrowing money to spend on ourselves today, with no future benefit."
http://www.marketoracle.co.uk/Article37031.html
"With no future benefit"....!
These days in NZ we witness a local govt debt financed splurge on work creation schemes and a central govt splurge, using taxes and debt to prop up voting support, feed into creating jobs resealing roads and tinkering with bends, benefit landlords and ensure the salary feast in the civil service continues unabated.
We depend on commodity prices rising in a world going to hell....and on the parasitic banks retaining control of the RBNZ and therefore the opportunity to fleece the NZ economy and keep it addicted to cheap credit.
I must borrow some money and buy a few properties ahead of the mob... a fat capital gain to be had.
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