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Friday's Top 10 with NZ Mint: 'Asian buyers pricing NZ developers out of Auckland market'; A NZ$1 mln 'do-up' in Sandringham; Most Kiwis want controls on foreign buying of rentals; China's Debt Bomb; A flash mob with guns; Dilbert; Clarke and Dawe

Posted in Opinion Updated

Here's my Top 10 links from around the Internet at midday 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 today is #5 on the debt bomb that has gone off inside China and why it's a problem for China's future growth rate (and therefore for us and Australia). 

1. Time for a Hong Kong style stamp duty The noise around non-resident purchases of 'gold bar' properties in Auckland is now building and getting onto the political radar.

BNZ's Tony Alexander has an excellent commentary overnight on feedback from his contacts about the sort of buying of development properties in Auckland.

Alexander has also started asking real estate agents what proportion of properties are being bought by foreign buyers in his monthly survey.

He says we should have more detail in a few weeks, which will be important given the lack of data around exactly who is buying in Auckland.

This is heating up as a political topic too with the Greens arguing for a ban on non-resident purchases.

Another option is a Hong Kong-style stamp duty on non-resident purchases.

Here's what Alexander is hearing:

Here is one of the emails on the issue received this week: “We build housing in Auckland both for developer clients and for our own developments. We recently put in a tender for a development plot. Spent many days working numbers and taking advice from various consultants and put in what we considered was a price at the higher end of what it was worth as a viable development. There were numerous tenders received that far exceeded our tender price and from what I am told they were all from Asian investors. Every developer we talk to is complaining of being consistently outbid by Asian investors on development land. Fair competition perhaps?

"There is a lot of speculation that these investors are using the purchase of development land to gain entry to the country under the investment route somehow (either directly or through an already established development business), and if that was the case it would not only be unfair competition (they are paying a premium for the land to purchase residency), but also has implications to the housing market and surely won’t be helping affordability?”

2. Most voters favour restrictions on foreign buying - Patrick Gower over at 3News (he's also in the office next to me in the Parliamentary Press Gallery) has this report on a 3 News/Reid Research poll showing 63% of those surveyed favoured restrictions on non-resident buying of investment properties.

Gower quotes Key as saying he doesn't think foreign buying is pushing house prices out of the reach of locals.

Key refers to the Shania Twain case. But that's not the problem area. Regular houses in Auckland are being snapped up by fly-in fly-out buyers.

Here's Paddy:

Asked, if to make houses more affordable the Government should put restrictions in place to stop foreigners from buying up investment properties here, 63 percent said yes, 30 percent no and the rest didn't know. Under law, in Australia non-residents cannot buy established dwellings as investment properties. The Greens want a similar ban here - at least on investment properties - but the Prime Minister won't go there.

“I don't think foreigners buying the odd house in New Zealand is what's driving the escalation of prices,” says John Key.

3. A million dollar do-up in Sandringham - Here's the NZHerald with a couple of examples of the issue. An ex-state house in Sandringham that needs to be (and might well be) bowled has sold for over NZ$1 mln. This is nuts. The buyers in this case are residents. But there are plenty who are not.

A packed Bayleys auction room included several bidders yesterday morning, with 94 Haverstock selling for $1.05 million - $350,000 or 50 per cent above its valuation of $700,000.

Both homes sold to Chinese buyers planning to renovate and live in them. The listing for number 94, a four-bedroom 1950s weatherboard house sitting on a 938sq m section, said the property was "screaming out to be saved by you".

It was sold to a couple - a doctor at Auckland City Hospital and an IT worker - with two children. They told the Herald they plan to subdivide the section, letting the house and building a new one for themselves behind it. They live nearby in Euston Rd and plan to keep and let their present house.

4. Aussie dollar 4-15% over-valued - David has linked to this one too in his 90@9, but it's too good to not repeat. Bloomberg reports the Reserve Bank of Australia has found 15 central banks are holding Australian dollars as reserves and the Aussie dollar is up to 15% over-valued.

I wonder if the same is happening for New Zealand.

The central banks of Slovakia and Slovenia were recent additions in a list of 16 economies that publicly hold the Australian currency, according to papers prepared in the second half of 2012 and released today under a Freedom of Information Act request by Bloomberg News. Newcomers on a list of 18 possible holders included China, France, India, South Korea, Thailand and South Africa. 

“Most models -- including the staff’s internal models and the IMF’s models suggest the exchange rate is overvalued by 4-15 percent,” a document for the RBA’s September board meeting showed.

5. China's credit boom - Morgan Stanley' Ruchir Sharma writes at WSJ about how Chinese credit has quadrupled since 2007 and about the risks that has created.

Last year, roughly half of the new loans came from the "shadow banking system," private lenders and credit suppliers outside formal lending channels. These outfits lend to borrowers—often local governments pushing increasingly low-quality infrastructure projects—who have run into trouble paying their bank loans.

Since 2008, China's total public and private debt has exploded to more than 200% of GDP—an unprecedented level for any developing country. Yet the overwhelming consensus still sees little risk to the financial system or to economic growth in China.

That view ignores the strong evidence of studies launched since 2008 in a belated attempt by the major global financial institutions to understand the origin of financial crises. The key, more than the level of debt, is the rate of increase in debt—particularly private debt.

On the most important measures of this rate, China is now in the flashing-red zone. The first measure comes from the Bank of International Settlements, which found that if private debt as a share of GDP accelerates to a level 6% higher than its trend over the previous decade, the acceleration is an early warning of serious financial distress. In China, private debt as a share of GDP is now 12% above its previous trend, and above the peak levels seen before credit crises hit Japan in 1989, Korea in 1997, the U.S. in 2007 and Spain in 2008.

The second measure comes from the International Monetary Fund, which found that if private credit grows faster than the economy for three to five years, the increasing ratio of private credit to GDP usually signals financial distress. In China, private credit has been growing much faster than the economy since 2008, and the ratio of private credit to GDP has risen by 50 percentage points to 180%, an increase similar to what the U.S. and Japan witnessed before their most recent financial woes.

6. The amazing OREO seperator machine - A physicist has way too much time on his hands, a very dry sense of humour and an entirely sensible dislike for the 'cream' that holds together OREO cookies. 

7. Obama's Faustian bargain - Jeffrey Sachs writes in this FT blog that Barack Obama actually wants to slash US government spending to pay for making the Bush era tax cuts permanent.

He made a Faustian bargain. He would champion the permanent extension of the tax cuts except for a tiny number of rich Americans, and he would silently plan for deep cuts in discretionary outlays as a share of GDP to compensate for the lack of adequate budget revenues in later years. In effect, he would allow rising outlays on mandatory programmes such as Medicaid and Social Security and debt servicing to crowd out public investments that are vital for America’s long-term economic future. And indeed, on January 1, Mr Obama and Congress agreed to make the Bush-era tax cuts permanent for 99 per cent of American households.

Mr Obama probably hoped that when the moment of truth arrived, when the spending cuts started to bite, the American people would support higher taxes rather than the spending cuts long called for in his own budget proposals. And perhaps they will still do so. Yet he has never presented an alternative with more robust tax revenues in order to fund a higher sustained level of public investments and services.

8. Go on. Push the button - This is a fun twist on a flash mob. Although I suspect it was sorta scary if you weren't in on the joke/viral marketing PR.

9. Landbanking - Leith van Onselen wrote this piece a while ago at Macrobusiness.com.au on the mechanics of land-banking and why urban limits make it worse. It's all very topical now. 

Where land-use regulations restrict the amount of developable land available – such as through urban growth boundaries, restrictive zoning, or inadequate infrastructure provision – they also encourage developers to land bank not only to ensure their own continuity of supply (production), but also to make it harder for rival developers to find suitable land. In the process, rival developers can be driven out of business, reducing the overall level of competition in the development market. This is a particular problem for smaller firms lacking the capital necessary to buy-up land ahead of time.

Another consequence of land banking is that it is likely to result in greater levels of pro-cyclicality and facilitate boom/bust price cycles. During periods of strong land/house price growth, the costs of land banking are relatively low because the rate of price appreciation typically exceeds holding costs. However, when land/house prices are stable/falling, land holding costs exceed the level of capital appreciation, resulting in negative returns from land banking.

10. Totally Clarke and Dawe  on the use of stimulants by the Australian swimming team. There was a storm in a teacup.

(Updated with cartoons)

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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44 Comments

Excellent piece highlighting

Excellent piece highlighting the role of Wall Street in boosting the shale (tight) oil and gas bubble in the US:
http://thearchdruidreport.blogspot.co.nz/
 
Its depressing (but unsurprising) that it is mainly the independent blog community that is actually researching the truth behind shale oil/gas claims in the US. If main stream media based journalists want to know why their profession is a dying one then look no further than their inability to probe and research important issues such as this.

#6 now I could do with that

#6 now I could do with that cnc router myself...
regards

Great cartoons today BH.

Great cartoons today BH.

The majority of countries

The majority of countries throughout the world have solid, stable governments and administrations. It may seem that Greece, Spain and Italy are currently experiencing unstable administrations but they are not, and i will explain later.

The reason countries have this stability is because they have constitutions. A lawful document which spells out the frequency of elections, type of voting system, make up of the judiciary, division of powers and so on. Breaches of the constitution can be challenged in the courts. It is a rule book on how things are to operate which brings order to what might otherwise be chaos.

Although people, in many countries such as Greece, Spain and Italy are upset with their government they still vote and obey their respective administrations. They are not upset with their constitution and how it works. They are upset at the political economy and all its inequalities and injustices. This is also the cause of most political unrest throughout the world.

So, for hundreds of years countries, have mainly, abided by their constitutional obligations, and had stable political administrations But when it comes to political economics we have had a hundred years or more of absolute chaos. Depressions, Global financial crisis, bad bank behaviour and bailing them out, corruption, booms and busts, asset sales, inequality, arguments over taxation, arguments over government budgets, corporations not paying any taxes and tax avoidance schemes, and so on. Total chaos.

Do we even know what taxation is for?

The National party will say they are going to build roads
The Greens say no we should build railways
Labour will say no we need it for welfare
Winstone will say we need it for the elderly
The Maori party will say it should be spent on them to lift them out of poverty.
The ACT part will say we should spend it on consultants

No one knows why we collect tax and what it is for. We only know that we do, and then hope it is spent correctly

I am not aware of a single constitution, anywhere in the world, that covers taxation and fiscal issues.

It is time to have a constitution covering political economics.

Such a constitution should cover

Who should be responsible for the nations currency, government or banks
Government borrowing, money printing and Infrastructure spending
What taxation is for, how it should be collected and who should pay
Can corporations be classed as people with constitutional rights
Free Trade Agreements and transparency
SOE, PPP's, asset sales, nationalisation and strategic assets.
Fracking and exploration in National parks
Farming - draining rivers for irrigation and river pollution
Penalties for defrauding the state
And so on
There should also be an economic bill of rights

The constitution could even go as far as stipulating expenditure as a percent of GDP and a percent of total government expenditure. Such as

Health 20% of government expenditure and 5% of GDP (just round figures to give example)

Once completed it should go to a referendum and be legally binding on the government.

Done correctly this could bring economic stability, in the same way political administration contitutions have.

A rule book on how a government should handle it's political economy.
 
 

I like most of your ideas,

I like most of your ideas, especially around fiscal responsibility and taxation, but generally constitutions require a large percentage to change (something like say 2/3 majority).
This makes it slow to adapt and change when presented with circumstances unforseen by all-knowing politicians.
 

I don't see the Aussie $ as

I don't see the Aussie $ as overvalued, they are one lucky country.
 
http://wallstreetexaminer.com/2013/02/27/australia-shale-oil-discovery-c...

i think the RBA considers it

i think the RBA considers it from a competitive viewpoint A.J. not a fair value one, we on the other hand are as exrement is to cream overvalued. 

And overseas investors don't

And overseas investors don't have problem with it. Who needs to work when you have a find like this. Its like winning Lotto.
 
>>>>
 
Money Morning’s Global Energy Strategist, Dr. Kent Moors, says that the discovery “could be the largest shale oil find ever recorded.”
It could contain as much as 233 billion barrels (or $20 trillion worth) ofrecoverable shale oil!
To put that into perspective, the 233 billion barrels is a mere 30 billion barrels shy of the estimated reserves of Saudi Arabia. It is also bigger than the Athabasca oilsands in Canada, which are estimated to hold about 170 billion barrels of proven or probable reserves.
 
>>>>
Uncle sam is going to be BFF :-0

Except its a jackanory.. 1)

Except its a jackanory..
1) typically you may only get 1~5% of the shale oil out.   Note how they mix gas output in there and imply oil extraction is just as easy, it isnt.
2) EROEI is way below 8 to 1 (I dont tyhink it even gets to 5 to 1) so actually its an energy loser in terms of our global economy.
3) Costs are crazy....typically $90 a barrel.
4) Environmental costs.
What you should be asking is why are they rushing into this if there is still substantial conventional oil to find and exploit,
It should be obvious that the answer is there isnt any or enough to matter.
The second Q is what is the impact of $90 to $110 oil price on the global economy, answer perma-recession. Or no one can afford to pay for its extraction.
I assume this is the URL.
http://moneymorning.com/2013/02/27/australia-shale-oil-discovery-continu...
Add in another,
peak gold, of course they dont use that phrase.
http://moneymorning.com/2013/02/28/the-looming-gold-production-cliff-tha...
The Q is will the gold be mined, ie will ppl be willing or able to pay the cost of extraction, I suspect teh answer is no, if it follows oils path anyway which with the cancelations and delays looks likely.
When they talk about a gold cliff of course that also probably applies to oil....interesting times reading between the lines...

"Lassonde said that from a gold supply standpoint, the past decade of exploration was not a good one. This is despite the incentive of high gold prices.
The number of so-called super-giant (more than 20 million ounces) discoveries dropped to only two in the past five years, with none being discovered in the last two years.
Contrast this rate of discovery to the rate in earlier decades. In the 1980s, there were 14 super-giant deposits found. There were 11 such deposits found in the 1990s."
- See more at: http://moneymorning.com/2013/02/28/the-looming-gold-production-cliff-that-will-drive-prices-higher/#sthash.IZLa9CjL.dpuf
 

#1 Stamp duty on non-resident

#1 Stamp duty on non-resident buyers
If non-resident land buyers are so desparate to buy land in NZ to gain residency, then a 5% stamp duty won't change anything. These investors are already paying a premium, so 5% extra isn't going to deter them.

Disagree mate. At the

Disagree mate.
At the Sandringham auctions, if the new owners were non-resident, a 4% stanp duty would have earned NZ approx $80,000.
Anything to slow the market, make homes slightly more affordable, house our own residents (not line the pockets of foreigners) and earn extra income for NZ must be a good thing. 
Over a year the potential income from a stamp duty is conservatively $80mil for NZ.  There are so many good things we could do with this 'money for jam'.

Ad.1. 2. On some streets

Ad.1. 2. On some streets Chinese residents snapping up houses for the family members. Protection against capital gain tax for non-owner occupied house....?

China manufacturing PMI

China manufacturing PMI misses 50.1 cp to expectations of 50.5.
Barely growing (and thats govt figures).
http://www.forexfactory.com/#graph=44753
 
Look at the figures for the last 18 months - almost no variability but always just about never going properly negative.

#3. Why are you finding it

#3. Why are you finding it relevant that the buyers were Chinese? What are you finding wrong when a well-educated and skilled couple (a medical doctor and an IT worker) with two kids spend a million to buy a property? What are you finding wrong with their plans to subdivide and build another house and let the existing houses to tenants?

Because of the word

Because of the word "Chinese".....it's a very emotive and scary word which means :
 
RICH (not true)
CLEVER IN BUSINESS (not true)
DIFFERENT IN IDEOLOGY (not true)
 
DIFFERENT CULTURAL VALUES (not true)
 
COMMUNIST !!!! (not true)
 
We are all looking into the future here "back to the Yellow Peril" syndrome.....or just plain jealousy ???
againsts people who work harder and longer hours, save more spend less, don't create trouble unnecessarely , etc etc ???
 
Just read Tony Alex write about what his developer friends told him about Chinese in Auckland !!!  Scare the s.....out of you  !!!

You missed out corrupt.

You missed out corrupt.

How about, behave like a clan

How about, behave like a clan rather than with loyalty to the wider community (what other group takes tours around NZ together to consolidate relationships within Chinese society)?
...........
A Chinese leader called NZ "the last paradise". New Zealand's low population and lack of exposure to foriegn buyers would have had a lot to do with that.  Chinas population is ginourmous and there will always be a percentage who rise to the top (by hook or by crook) therefore able to out bid and displace New Zealanders. This process is just inflationary.
...........
Savings Working Group
January 2011

“The big adverse gap in productivity between New Zealand and other countries opened up from the 1970s to the early 1990s. The policy choice that increased immigration – given the number of employers increasingly unable to pay First-World wages to the existing population and all the capital requirements that increasing populations involve – looks likely to have worked almost directly against the adjustment New Zealand needed to make and it might have been better off with a lower rate of net immigration. This adjustment would have involved a lower real interest rate (and cost of capital) and a lower real exchange rate, meaning a more favourable environment for raising the low level of productive capital per worker and labour productivity. The low level of capital per worker is a striking symptom of New Zealand’s economic challenge.

http://www.treasury.govt.nz/publications/reviews-consultation/savingswor...

We shouldn't give a damn

We shouldn't give a damn where they're from.  If they are not residents they should pay a little more than we do more for the privilege of owning a slice of paradise.

Re. #5" International

Re. #5" International Monetary Fund, which found that if private credit grows faster than the economy for three to five years, the increasing ratio of private credit to GDP usually signals financial distress"
Does anyone have any data on private credit ratios in NZ??

It's rising again and over

It's rising again and over 140% of disposable income. Higher than in US. http://www.rbnz.govt.nz/keygraphs/Fig5.html

An empirical nail for the

An empirical nail for the austerity coffin
"the empirical data has confirmed that a nation’s GDP will fall if its government cuts its spending – and in some cases, fall so much that the public debt-to-GDP rises because of austerity, when the objective was to reduce that ratio."
http://www.businessspectator.com.au/bs.nsf/Article/economics-austerity-b...
 

And if govts. both central

And if govts. both central and local weren't parasites and formed such a large part of the economy there wouldn't be a need for austerity.

There isn't any need for

There isn't any need for austerity.
Not only is it counter productive to its own ends (shrinking government deficits), its un-necessary, by definition, if a country doesn't want to do it that country doesn't have to do it. Countries should not let their balance sheet be controled by anything other than democratic means, obviously.

Since when was the mob

Since when was the mob consulted on such matters?
 
 

#3: Interesting that some

#3: Interesting that some do-good-er was at the auctions protesting about those state houses being sold. No doubt protesting along the lines of 'why can't poor people live in Sandringham too'. Well, not everyone can live in the central suburbs, and if middle class people who have worked hard all their lives can't afford to live there, why should people that haven't made a go in life be subsidised to live there.  
 
I think housing NZ should have a blanket policy of selling any state house that is worth more than the average in that city, people shouldn't be subsidised to live in above average houses or locations.  They can use that money to build new state houses in less expensive areas, which would increase the total housing stock in NZ.  As for the 'state house for life' rubbish, unfortunately when you rent a house the owner can kick you out if they want to sell it, and state houses should be no different, they are just a subsidised rental.

I replied some time ago to

I replied some time ago to ChrisJ and I will repeat it here.
 
If a city becomes unaffordable and has to eject citizens then that city has gone awry. A city is supposed to work for its citizens not against it.

There is a house on a piece

There is a house on a piece of land, that is a physical reality. There are people living in that house, again something tangible. Now you want to throw them out based on some theoretical construct called value, when you actually mean price.
 
The only loss being incurred in your scenario is the embodied energy that exists in the house and land.

Yay.!! it's Friday....you

Yay.!! it's Friday....you know, I think we all fancy we got a bit o jack the lad still in there sometimes and I guess I'm no different after all....
\
 

Got a new divorcee moved into the street a while back

 

She's mid thirty something....  She's cute.

 

She lives right across the street. 

 

I can see her house from my living room. 

 

I watched as she got home from work  yesterday evening. 

 

I was surprised when she walked across the street and up my driveway. 

 

She knocked on my door... 

 

I rushed to open it. 

 

She looked at me, and said, "I've just got home, and I am so horny!  I have this strong urge to have a good time, get drunk, and make love all night long! 

Are you busy tonight?" 

 

 

I immediately replied, "Nope, I'm free... I have no plans at all!"

 

 

 

Then she said, "Good! In that case, can you watch my kids?" 

 

#6 - that there physicist has

#6 - that there physicist has shurely had a dose of Oreo Cookie Blues, m'thinks....the late great SRV and the still-extant (last time I heard, anyways) Lonnie Mack, no less.

Posted on … Cantabrians UNITE

Posted on … Cantabrians UNITE facebook
 
·       Cantabriand Unite Poster by Andrew Atkin – The $NZ240,000 Houston new home.... A work of art !
 
·       The property stack up merchants last gasp – Wailing to Anne Turner in The Press
 
·       Fairfax / Stuff – Housing affordability focus of RMA reforms – Hon Amy Adams
 
·       RMA reform discussion paper
 
·       Editorial by John Jones of the Gisborne Herald – Housing affordability will be high on agenda

* Christchurch Central Blueprint fiasco - The Property Council cry babies -waking up way too late
 
Hugh Pavletich

#1 ".. they are paying a

#1 ".. they are paying a premium for the land to purchase residency"
Yes, but that's nothing new (our purchase-your-residency immigration policy, that is) - but anecdotally, it does seem that the numbers coming in on that Investor+ category (or whatever fancy name they call it these days) has increased at a rapid rate recently.  It is this number/statistic that someone should get the data for from Immigration NZ to do a trend analysis. 
Has our citizenship-for-sale gone gangbusters recently? Or is the problem more one of non-resident speculators and money launderers, I wonder.
 

John Key knows full well that

John Key knows full well that non-resident foreigners are skewing all of our property markets from lower end rental houses to farmland, he is a liar to say it isn't so
I do not however expect him to take a jot of notice of what the most of NZers want, most NZers do not want asset sales and charter schools
I am so over his arrogance

Does anybody know how many

Does anybody know how many showed up for the national rally against asset sales?  February 13 I think it was supposed to be

Don't know about "most", but

Don't know about "most", but judging by the last elections, many NZ-ers do want asset sales. There are many who also do not mind an open market, be it in property, currency, etc.

Many and most are different

Many and most are different beasts. Every survey I have seen indeed shows most are opposed, sadly, many of them voted Natl anyway, thinking that public opinion would win the day, as it had with other things in the past. John Key probably used that bit of back tracking here and there in the first term as a ploy, because hello, all of a sudden he became immovable on asset sales and a few other things. Where the hell did charter schools come from? I have a theory for that, but that is for another forum. I will just say that almost no-one had any idea that Natl would get into that boots and all prior to the election, there is definitely absolutely no mandate for these whatsoever!
Hope all of you who thought that way, are pleased you were had
 I cut the people of Ohariu a little slack in this as they at least had the opportunity to vote for a conservative sort, while having a representative opposed to asset sales, or so they thought
And to those of you clinging to the whole 51% thing, you have no assurance that there will not be further sales. Bill English was asked by Willie Jackson if 49% was all there be, he would not confirm that

Alex13 - I think it is the

Alex13 - I think it is the interpretation of "open market" that is the problem.  The sales of Goods and Services on a competitively neutral basis is beneficial. The selling of the underlying asset that producers those goods and services to off-shore investors is not however very beneficial to the country on the whole.
 
Personally I am in favour of asset sales of Government owned assets - but believe ownership is best held by private NZers via the sharemarket, private business etc.
Government should not be involving itself in business activity but should be ensuring that the business platform has no interference from Govt or bureaucrats. This allows normal market cycles to perform as intended.

The answer to "the Chinese

The answer to "the Chinese are buying up everything" meme is to invite the Chinese construction companies in to do some building and put a rocket up Fletchers.
Maybe build a new town somewhere ...
http://www.youtube.com/watch?v=Hdpf-MQM9vY
Chch would be rebuilt by now ...
 

Yeah sure, and every single

Yeah sure, and every single Chinese construction worker will have at least 32 grandparents, plus144 cousins, all tied to his entry visa, and given a free pass to NZ.
The Grandparents will consume the local health budget, but the the cousins will compensate for the lack of  pharmaceuticals by importing more Contact NT.
Sound like a good deal, Robby?

Just wow. I said Chinese

Just wow.
I said Chinese companies, not necessarily the workers. These buildings are pre-fabricated in factories and put together on site, most of the workers would stay in China.
Who said anything about having to give long-term visas anyway, you would allocate visas as we do for any other country ...
Paranoid much?