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Productivity Commission's final housing affordability report to look familiar to draft, but more emphasis in some areas

Posted in Property

The Productivity Commission's final report into housing affordability looks familiar to the draft, although there is some increased emphasis on some areas, Commission chair Murray Sherwin says.

The Commission on Friday handed its final report to Finance Minister Bill English, who is expected to publicly release it by tabling it in Parliament sometime within the next week or two.

It received about 80 submissions on its draft report so there had been some re-working of recommendations, Sherwin told interest.co.nz.

“It will look very familiar. There are certainly changes and extended analysis in some areas, but it will look very familiar,” Sherwin said.

There were no big turn-arounds in what the Commission highlighted in its draft report, although there was increased emphasis in some areas detailing what contributed to worsening housing affordability in New Zealand.

In its draft report released in December last year, the Commission flagged tight land supply, a slow consenting process, and poor productivity in the construction sector as contributing to unaffordable housing much more than New Zealand's tax structure.

See article: Productivity Commission wants more land for home building, puts tax changes in 'too hard' basket in draft report on housing affordability.

Also see: All the Productivity Commission needed to say in its housing affordability report: 'Quit whining about tax; It's land supply, stupid'.

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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97 Comments

A PLATFORM FOR BELATED ACTION

A PLATFORM FOR BELATED ACTION ?
 
Lets hope this time we have political action at last, following near eight long years of public conversation on these issues - and since the time of the first Demographia Survey www.demographia.com  release early 2005.
 
The current Government will be aware it stalled at the starting blocks following the 2008 election....... with its Housing Policy released September 2008 -
 
http://www.national.org.nz/Article.aspx?articleId=28498
 
http://www.national.org.nz/Article.aspx?ArticleId=28497
 
National Party Housing spokesman Phil Heatley says keeping the Kiwi dream of home ownership within reach is a central focus of National's housing policy.

"When it comes to home affordability nothing can substitute for things like keeping interest rates lower, raising after-tax incomes, disciplined government spending, and reducing red tape. That will be front and centre for a National-led Government."

A National–led Government will also take more direct steps to restore the Kiwi dream of home ownership. It will:
 
• Free up the supply of suitable land, issue a National Policy Statement that ensures local councils plan for a forward supply of suitable land zoned for housing, and make it easier to redevelop land already inside town and city limits.

• Allow state house tenants to buy the house they live in, and maintain the state housing stock by reinvesting all money from these sales in replacement houses.

• Develop new Gateway Housing as an option for some First-home buyers. Recipients will have the free use of a 'ready-to-build' leased section for a maximum of 10 years as long as they start building within one year. After 10 years, or earlier if they wish, owners will have first right to purchase the land at its original capital value plus 3% for every year they have occupied it. This equates to a significantly subsidised low interest loan for the land.

• Continue with the Shared Equity pilot. Applicants under consideration will have the choice of pursuing shared equity or switching to the Gateway Housing Initiative.

• Boost the Housing Innovation Fund. Significantly boost the Housing Innovation Fund in support of community housing providers who have a proven record of helping people into rental accommodation and home ownership.
 
Then soon after the election, Housing Minister Hon Phil Heatley had this to say at the time of the release of the 2009 Demographia Survey -
 
http://beehive.govt.nz/release/bringing-better-balance-housing-market
 
But alas....Phil got intoxicated with all the power and the glory of it all, got found out, was put in the holding paddock for a while and blubbered like a baby and got severely told off by Cactus Cate  (The Queensbury Rules for political commentary do not apply to females) -
 
http://asianinvasion2006.blogspot.co.nz/2010/02/could-not-stand-heat-ley.html
 
It is clear that at the time of the reinstatement, PM Key forgot to tell Phil to do a days work........The Hibernating Housing Minister indeed.
 
 
And even Prime Minister John Key was a (please dont laugh) "reformer " for at least a few weeks following the late 2008 election......as reported within an article by Mary Kissel of the Wall Street Jounal "You can't spend you way out of a crisis"...... 7 March 2009....
 
http://online.wsj.com/article/SB123638162497057661.html
 
Mr Key's Banking mates throughout Australia and New Zealand were effervescent during the latter part of 2008 in the NZ Herald, about his abilities as a leader and a fixer - and guess what - I fell for it hook, line and sinker!
 
It was only late 2010 I read Vanity Fairs "Blundering Herd" ( http://www.vanityfair.com/business/features/2010/11/financial-crisis-excerpt-201011 ) to learn about the old "Mother" Merrill Lynch culture that shaped John Key.
 
I think we have had more than enough of the "Blundering Governmnt" stuff Mr Key.

 
Hugh Pavletich
www.cantabriansunite.co.nz
www.PerformanceUrbanPlanning.org

They are wrong, NZ has the

They are wrong, NZ has the 3rd highest bedrooms per person in the OECD at 2.3, after Aussie and Canada.  No shortage, look elsewhere. Wages are VERY low, leverage is relatively high, did I mention we are one of the very few countries that don't tax capital gains?  But they are really in the too hard basket.  Far better to have the highest number of bedrooms per capita in the OECD, then continue to rant on about a psychological shortage, there is no such thing as enough.   Build build build, you can have overpriced housing regardless of any supply constraints.

skudiv.......your comments

skudiv.......your comments above would suggest that once the housing fiasco is sorted out, that "education" needs some serious sorting out as well.
 

Hi Skudiv Can you please

Hi Skudiv
Can you please provide a source for the bedrooms data?
Cheers
MIA

Sure, NZ has had decades in

Sure, NZ has had decades in the past, of reasonable affordability and less obstructive councils.
But once anti growth regulations are imposed, it only takes one cycle of the economy to make everything in the housing market unaffordable, regardless how affordable it once was or how many bedrooms young households used to be able to buy.
Many of those bedrooms are now in the houses of empty-nest baby boomers, while young households can barely afford a broom cupboard each.
 

Very useful submission from

Very useful submission from Salvation Army on the draft report;
 
http://www.productivity.govt.nz/submission-dre-housing/1066
 
Bet it didn't change anything in the final however.
 
Loved their statement about the Commission's seeming intention to maintain the status quo!
 
 

Kate - there is nothing

Kate - there is nothing complex about these issues at all. Its very much a case of re learning history and learning from best practice iternationally (which the Demographia Surveys clearly illustrrate is middle North America).
 
Kiwis unfortunately seem to get a perverse kick out of being confused about simple things and not learning from overseas experiences - particularly within the ranks of the public service at central and local level. We never learnt a thing of course regarding the leaky homes problems of Canada and the United States - but chose instead to remain ignorant and blindly repeat the mistakes ourselves.
 
Do you have suggestions at all about why we appear to have these difficulties learning from overseas experience?

Hugh, I think you should read

Hugh, I think you should read and comment on what the Salvation Army had to say, particularly about issues associated with some of the concerns you raise.  They don't appear to be convinced by the fringe argument - quite to the contrary with respect to the reasons behind the high price of housing in NZ,  the provision of affordable housing and the Auckland MULs.  I would be interested to understand why you think they've got it wrong.
Why don't we learn?
Largely I imagine because of vested interests - of which I suspect with respect to this issue the Salvation Army has none.

Kate - yes I thought the

Kate - yes I thought the Salvo's submission was good and balanced, but I don't agree they have no vested interests. Of course they do! As you can read in the latter part of the submission, they support greater funding of the community housing sector, within which they operate. They also have an inherent bias towards urban intensification, as it is in existing communities where severe housing needs exist, that need to be met. I've got nothing against these things, in fact I think they are doing great work, just pointing out that they do have vested interests.
Note, I think the view that planning rules have been the MAJOR influence on house prices is rather simplistic, and this has come out strongly in many if the submissions. There's a good chart in one of the submissions, I think its the David Mead one, that shows the massive increase in house prices after 2001. The fact is restrictive planning policies were in place all through the 1990s, nothing suddently changed in 2001!
So what was the switch that was turned on in / around 2001????
1. The changes in top marginal tax rate
2. 9/11 and the surge in immigrants coming in to NZ, many of them kiwis bringing UK pounds back with them, or poms themselves
3. A general liberalisation in bank lending
4. Many baby boomers entering a stage of life (35-45 years of age) where they had income to invest in something, and that something became property
I think then that all these demand side factors factors combined with restrictive planning and VOILA we had the boom
 

I'm not sure about that

I'm not sure about that 'stretch' in suggesting the Salvation Army have a vested interest - as the root meaning relates to deriving private benefit.  It's a bit like saying St John's ambulance have a vested interest in roading 'black spots'.
 
You've got to put faith, Matt, in there being some entities in civil society that are motivated purely by an interest in helping those less fortunate.

yes, maybe "vested interest"

yes, maybe "vested interest" is not the best phrase for them. But they do have certain goals which they are seeking to have realised via advocacy, and those goals are best served by liberalisation of planning controls withn the urban boundary. But this really is somewhat petty - they do good deeds indeed 

There are good people in all

There are good people in all walks of life Kate - whether they go to Church or not. They shouldn't be treated any differently.

Vested Interest. 

Vested Interest.  Absolutely.  These huge organisations have a lot of jobs.  The employees need to keep the organisations functional and wealthy to keep their jobs.
Go to the Charities Commission site and see how much charitable money is there as versus government contract income.  You will see just how illusory the 'charitable' word is for these organisations.
I am closely associated with the sector and there is a rule of thumb that seems to be proved in practice.  The more an organisation goes on about it's high minded principles, the more it will act in it's own self interest  - and frankly the Salvation Army proves this rule well.  It's one of the worst.  But it's quite true of others.
If you deal with the interests say of somebody in a rest home (just one scenario of many) it's best to avoid the church based operations. Give me a good honest private operator any day.    
I have a view obviously - but don't think of it as a view.  It's actual experience I am reporting to you.

KH - all people who sell

KH - all people who sell their labour for a wage have individual self-interest in terms of on-going employment.  What we are talking about here however is not the self-interest of individual employees (and how that aggregates into a collective will to keep the business going) but vested interests in terms of the business/organisation itself deriving private benefit from its on-going operations and subsequently distributing those benefits to private interests.
 
It doesn't really matter what the funding source of those operations are with respect to vested interests - the question is where the excess (profit) on the labour value component of the operation goes - that being whether to private benefit/interests or non-private (i.e. collective) benefit/interests.
 
I cannot be certain about the governance model of the Salvation Army - that is, whether its governors (i.e. individuals) derive an excess or 'profit component' (something greater than a normal wage) by virtue of their position with the organisation. 
 
In summary, I view self-interest and vested interests as functionally different concepts.  In my interpretation or application of the terms, there will never be an absence of self-interest (think Maslow's hierarchy of needs) where social systems/interaction of individuals/groups are concerned - but there can be an absence of vested interests.
 
 
 
 

Kate, feel free to refer the

Kate, feel free to refer the Salvation Army's experts to my lengthy comment on their submission below.
It is ironic that "Christian" churches have generally become cheerleaders for ever enlarging States, when at one time the churches themselves were left with sufficient resources, due to an absence of "crowding out" by the State, to act as social stabilisers.
It surely cannot have escaped their attention that old fashioned christian charity was accompanied by a moral element that kept society stable, in glaring contrast to what the "entitlement" principle has done to society.
I concur somewhat with David P. Goldman in his recent book "How Civlilisations Die", when he says that most of the real Christians left Europe and its "establishments" in favour of the USA and religious freedom, during the Reformation and the following centuries. I also recommend "The Theme is Freedom" by M Stanton Evans, which explains the connection between Moses, the Prophets, the Gospels, the Epistles, the Magna Carta, the US Constitution, and numerous other examples of benefical political progress; and "Fundamentalist"/evangelical christianity in the USA  today.
Of course the Salvation Army once was a bastion against the disgraceful decline into soft secular socialism and outright apostasy, of the Anglicans and the other "established" churches.

AFFORDABLE HOUSING PROVISION

AFFORDABLE HOUSING PROVISION - A SIMPLE ISSUE
 
Reputable international research is very clear on the housing inflation issues ( refer for a sample .....http://www.performanceurbanplanning.org/academics.html ), the Annual Demographia Surveys and the Harvard University JCHR Median Multiple Tables - in that what goes on on the fringes is the critical factor.
 
There is no dispute I'm aware of within reputable academic circles internationally on this issue.
 
I set this out with a clear Definition of an Affordable Housing Market on my website -
 
"For metropolitan areas to rate as 'affordable' and ensure that housing bubbles are not triggered, housing prices should not exceed three times gross annual household earnings. To allow this to occur, new starter housing of an acceptable quality to the purchasers, with associated commercial and industrial development, must be allowed to be provided on the urban fringes at 2.5 times the gross annual median household income of that urban market (refer Demographia Survey Schedules for guidance).
 
The critically important Development Ratios for this new fringe starter housing, should be 17 - 23% serviced lot / section cost - the balance the actual housing construction."
 
Ideally through a normal building cycle, the Median Multiple should move from a Floor Multiple of 2.3, through a Swing Multiple of 2.5 to a Ceiling Multiple of 2.7 - to ensure maximum stability and optimal medium and long term performance of the residential construction sector."
 
It goes back to the time of the Levitts creating the modern housing production industry following WW11 - providing $US8,000  80 sq metre homes on 700 sq metre lots to families on $US3,800 SINGLE EARNER annual incomes - a Multiple of 2.1 with mortgage loads at 18%.
 
Professor Peter Bacon Hales of the Art History Department, University of Illinois at Chicago website on the Levitts, is a good place to start for those not familiar with their work and significance -
 
http://tigger.uic.edu/~pbhales/Levittown.html
 
Internationally, housing provision is seen as a very formulaic business. Its simply just a matter of "following the numbers" to ascertain where the problems are.
 
I skimmed the Sallys Submission but with all due respect, found it "lightweight", where the authors of it clearly do not understand the significance of the fringes.
 
Atlanta is probably the best example of overbuilding - where its MM is currently 2.8 ( refer this years Demographia Survey). It boomed but did not bubble (these words are too often confused). Texas of course boomed but did not over build and the MMs have stayed pretty constant these past 10 years within the 2.5 to 3.0 MM range.
 
What Matt in Auck doesnt with all due respect appreciate, is the capacity of a properly functioning housing market to respond when demand kicks in.
 
One of the most extraordinary examples of this was Dallas Fort Worth through the S&L fiasco, where the demand (lax and grossly excessive lending) was grossly excessive and in one year the build rate / 1000 population got up to 37 (111,000 units for a population of 3 million at the time). It briefly hit an MM of about 3.5 only, prior to heading south again.
 
If we built at that rate with out population of about 4.4 million, we would put in place 162,800 residential units in a year. We are currently doing about 3 / 1000 (about 14,000 units) - the Aussies are currently falling off 7 / 1000 at an increasingly fast rate of knots (things are more serious over there than most realize).
 
We are talking houses here Kate - but look at the growth rates in demand for products where there are not political impediments to supply - cars - cruise ships - buk ore carriers as just 3 examples. While there is increasing demand, prices are kept subdued, because there are no political impediments to supply.
 
"Housing" has degenerated in to a political play thing - a sort of feeding ground for political parasites, milking it for all its worth.
 
Hugh Pavletich
www.cantabriansunite.co.nz
www.PerformanceUrbanPlanning.org

 

It needs to be noted that the

It needs to be noted that the Churches generally have had very little engagement in advocating for affordable housing. And if they do, they prefer to tread lightly.
 
The reason for tis is that the Churches themselves are so dependent on State Welfare - particularly with respect to their schools and social services.
 
They are particularly apprehensive about "upsetting" the Authorities.
 
Rather interestingly in Houston where they have had "Zoning Wars" - it was the non establishment Churches financed by their members (not government financing) who stood side by side with Real Estate interests to keep zoning out of the place. The Churches were particularly concerned about their ability to grow their facilities, if political impediments such as zoning went ahead.

Well, Hugh, with all due

Well, Hugh, with all due respect, I guess you will sadly never depart from your unwavering religous belief in these matters. Anyone who thinks you might be somewhat simplifying matters is simply patronised, as you do with me here.
What grates me, and many others, about your views is that you keep harping on about Houston and Atlanta, as if they served as examples that are directly applicable to NZ. Well let's clear things up here-  they are not!
1. Labour costs for a start are much lower in Texas than NZ. Now you might say get rid of the minimum wage in NZ - well, if you did, that would be your view, but not mine. Texas has a large immigrant supply of cheap labour
2. And then there is the little issue of SCALE. Houston has well over 5 million people, much larger than the whole populaiton in NZ. You seem to ignore this important fact, in terms of the economies of scale that accrue from this simple fact.
3. Then there is the issue of tax. Houston has much higher property taxes than the rates you find in NZ. This acts as an incentive to develop property, rather than land bank.
4. Houston also is located well inland and is surrounded by readily developable, FLAT land. Auckland's geography is much more complex. As someone involved in development I thought you would understand the  importance of topography in delveopment faisbality - it is indeed a significant factor.
With regard to Auckland, only one of the four factors above can realistically be influenced by policy - number 3. With regard to point 4, Christchurch obviously has less topographical constraints.
Its a pity you continue to be so bloody minded, because your basic view that overly restrictive planning regulation has a significant impact on housing costs is sound. Its clearly the degree of its influence that we disagree on significantly    
 

Matt in Auck - So far as

Matt in Auck - So far as affordability is concerned - we were historically - and wide swaths throughout middle North America still are.
 
The reasson why I tend to illustrate with Texas is because of its (a) land use policies,(b) bond financing of infrastructure model and (c) mortgage consumer protection legislation as well.
 
And too - the Houston Association of Realtors website www.har.com is the best Realtor website in the world that Im aware of. And their Monthly Reports are well worth a read -
http://www.har.com/mls/dispPressRelease.cfm
 
In other words, they get things pretty right across the board there, in my considered view.
 
Commenting briefly on the points you raise -
 
(1) You are correct with respect to the trade labour rates in Texas within the construction industry, but they vary and can be higher within other parts of  affordable middle North America as well.
 
(2) Scale totay with low transpotation costs domestially and internationally, should not be a significant issue. The smaller urban areas throughout middle North America are affordable as well. It is the affordable major "attractor" markets that set the productivity / pricing performance though.
 
(3) Ground conditions most certainly can make a difference - but are likely minor in comparison with the massive artificial scarcity value and inappropriate infrastructure financing / provision issues on the fringes. Bear in mind just 2000 sq kms of NZ is urbanised (0.70%) - with 8,700 sq km of lifestyle blocks which have exploded these past 13 years out to 175,000 of them - up from 100,000.
 
(4) In a competitive land supply markets, subdivision developers will naturally gravitate to the cheapest land possible - with the least issues / costs. There is just oddles of land for our small population - when one considers the UK with 62 million people and a country much the same size as ours.
 
(5) The major feature is that there are no poitical barriers to develop out on the fringes - within the unincorporated areas. Local Government in the USA provides a greater range of services than here in New Zealand. Land speculation / aggregation occurs in Texas too. I personally know guys who do it. Generally taxes overall in Texas are way lower than ours here (yes property taxes are higher) and too throughout the USA they do have mortgag interest tax deductability - something we dont have here for home owners. Interestingly its about a 50 / 50 split on owning / renting in Houston as well.
 
(6) Houston has the shipping canal out to the east of course.
 
I didnt quite respond to your points in the correct sequence Matt in Auck - bit late here now!
 
Sir Bob Jones views with respect to Christchurch and its rebuild, very much mirror my own, in that it is the middle North Amwerican markets we should be looking at and learning from The Press poll result that folllowed was the highest on record with 9,600 respondents - about 65% sharing Jones views. Contrary of course to what the sham Council "Share an Idea" exercise came out with. Heres the Jones Op Ed from September last year -
 
http://www.stuff.co.nz/business/rebuilding-christchurch/5696381/CBD-can-t-be-rebuilt-Bob-Jones
 
So what middle North American cities would you prefer we learn from Matt in Auck ? And why ?
 
Hugh Pavletich
www.cantabriansunite.co.nz
www.PerformanceUrbanPlanning.org
 
 

Well said Matt, clearly there

Well said Matt, clearly there are some pretty fundamental issues with Hughs economic philosophy. In fact I disagree only really on one point,
"Its a pity you continue to be so bloody minded, because your basic view that overly restrictive planning regulation has a significant impact on housing costs is sound. "
Fundamentally its not a sound argument. Take the conclusions of the infamous Sonnenschein-Mantel-Debreu theorem. This is discussed in detail here by Steve Keen if you need more information,
http://www.debtdeflation.com/blogs/2012/03/16/advanced-political-economy-lectures/
One of the possible, and I think in fact quite likely implications of this, is that markets are not stable and only when there is constant corrective stimulus provided can certain corrections be prevented. Much of Prof. Keens most recent analysis indicates that increasing house prices (for the past generation) were basically driven by an accelerating rate of debt accumulation, and that an eventual deceleration (not even a deleveraging of debt) started the US housing market crisis.
In otherwords starting out of a course of de-regulation or other measures primarily to immediately subsidise and cheapen the cost of new housing entering the market could easily be the very beginnings of another bubble. Eventually these measures should or must come to an end, however if they are the beginnings of another bubble then that may be difficult to achieve. See several posts again by Prof. Keen on the Australian first home buyers grants for example.
http://www.debtdeflation.com/blogs/2011/02/10/a-motley-crew-interview-on-australian-house-prices/
Its obviously possible that whatever regulations you hack away at in this way could quite easily lead to a bigger and much more costly disaster down the track. Basically this is not a sound philosophy of how to treat the regulation of the housing market.
In fact most of what Hughs policy appears to be trying to address is that the housing market has already inflated away the cheap housing. One could hardly expect anything different from the housing market in future without some pretty fundamental changes. Obviously the affordability of housing stock already in place should be addressed by suitable reforms and only these measures can lead to a suitable housing market structure and regulation.
 

Nick the NZer - I know Prof

Nick the NZer - I know Prof Steve Keen well - a great guy and a thorough gentleman, who is making enormous contributions with sorely needed discussions on the training of economists and economics generally. Steve and I agree to disagree on the primary driver of housing inflation. With all due respects to Steve, the international evidence (incl the NZ Productivity Commission Draft Report) are "on the same page".
 
Artificial scarcity is the "trigger" - finance in all its forms (equity, bubble equity, mortgage debt) is simply the "fuel". Mortgage debt loads vary massively between the Asian and Anglo world housing bubbles for example.
 
The key point is that if finance had been the primary driver, housing would have inflated pretty much equally across all markets. Texas and California for example would have inflated equally. They (and others) didnt of course as the Annual Demographia Surveys clearly illustrate.
 
In this part of the world, the young economist based in Melbourne who writes extensively on these issues articulates these issues particularly well -
 
http://www.macrobusiness.com.au/author/leith/
 
Within a recent article "Housing swollows economy" illustrates how on the GDP / housing values throughout the Anglo world, there are vast differences, that pretty much mirror the Annual Demographia Surveys. There are masive costs and consequences if the total value of housing gets out of line with its economy -
 
http://www.macrobusiness.com.au/2012/03/housing-swallows-economy-leith-van-onselen/
 
Over building in open markets (such as Atltanta Georgia) is far less destructive than the artificial scarcity induced housing bubbles of Los Angeles and California generally - where of course with respct to the latter, the lending Multiples spun out to 11 times household earnings as Herb Greenberg explained back in 2009 -
http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/
 
There was no need for them to lend much above 2.5 times earnings in Texas for example, where the housing through the past decade stayed pretty much in the 2.5 to 3.0 Multiple range. In contrast - in California - lending institutions simply had to lend at massively stretched Multiples. if they wished to participate in the California housing markets.
 
Hugh Pavletich
www.cantabriansunite.co.nz
www.PerformanceUrbanPlanning.org
 
 
 
 

Good to see there is some

Good to see there is some degree of open mindedness, because in my opinion this is still a very poor approach to housing market regulation.
It would hardly be a surprise if the productivity comission was not onto Prof. Keens ideas would it, there were only a handfull of economists who saw the crisis coming. Literally everybody else was blinded by the notion that private debt levels don't have macro effects, and many still are. One could hardly expect theoretical insight from the productivity comission.
"The key point is that if finance had been the primary driver, housing would have inflated pretty much equally across all markets.", 
This is a very weak argument to dismiss Prof. Keens thesis with. If you measured the average US land surface temperature across the US tomorrow that doesn't mean that the average temperature in every US state will be roughly the same. Far from it, that would be very unlikely.
Frankly I think the whole notion of putting everything down to a "trigger" is plain incoherent. This doesn't explain how the bubble subsequently develops (once "triggered" why does it keep growing), the links to employment, the links to spending, when the bubble bursts. It doesn't explain anything relevant at all, while Prof. Keens thesis does and it would be pretty unlikely that he got everything right except that there is this magic "trigger" which stops it all happening.
 
 
 

Nic, Please understand that

Nic,
Please understand that you and I agree on a lot. Economists failing to see the crisis coming, for example.
There is plenty of focus on the failings of economists re monetary inflation of assett bubbles; not that the mainstream from Ben Bernancke down are taking any notice.
But the failings in the area of urban economics are colossal.
There are thousands of economists making criticisms of the "monetary" policy failings.
There are probably only 20 who are right in their analysis of the failures in urban economics.
Alan W Evans, Paul Cheshire, Alex Anas, Edwin Mills, and Peter Gordon are probably the clearest guys on this.
The central failure is a total inability to distinguish between "amenity value" and "scarcity value".
Planners, with the support of numerous hack economists, all regard housing median multiples inflating from 3 to 6 to 9 and so on, as a "good sign", indicating that their regulations are creating "amenity value".
Accompanying this failure, is an appalling misinterpretation of "Ricardian" land rent theory that holds that "supply" of land is irrelevant because the total supply of land is "fixed". Well, yes, it is, but there just happens to be a few zillions of acres priced at under $10,000 an acre, that are placed "off limits" to urban land markets, while the "supply" of land in urban land markets is "fixed" by regulations, at some arbitrary amount that is a tiny fraction of the zillions of acres that Ricardo had in mind when he said supply was "fixed".
Maybe the way Hugh P and Wendell Cox and Co put this is back to front. Maybe urban planners did not "cause" these housing bubbles (and there are plenty more happening - the world economy is stuffed, terminally, because of this).
But the urban planners could have prevented them, and still could prevent them today, where they are happening. There are around 200 out of 260 cities in the USA where the "urban planning" was of a kind that prevented any price bubble.
But it is undeniable that at the same time as mortgage credit was "easing", urban planners all over the world were "tightening". There is an ideology sweeping the western world that you would have to be blind to miss. It is entirely fair to place a "causative" charge on this feature. I have also asked again and again, for someone to please tell me what banks and the finance sector are supposed to do when urban land supply is racketeered and prices go up through artificial scarcity. These prices would go up regardless of the ease of mortgage credit, and in fact South Korea is the long standing example of this. Prices simply go up faster than 1st home buyers (and their parents helping them) can save the total purchase price. The only advantage under these conditions is that national savings boom rather than debt. People tend to buy their 1st home when they are 45 instead of 25, having saved up the price meanwhile and delayed having children etc.
But in countries where there are mature mortgage markets in existence, what are banks supposed to do under conditions of supply-related housing price increases? Collude to withhold credit? Like they won't get prosecuted, and even made scapegoats for the inability of young people to buy a house. Politicians everywhere have already shown that they are much more likely to mandate that the banks make mortgage lending easier.

I think we agree on very

I think we agree on very little fundamentally Phil. I will try to do you the courtesy of not conflating your position with the position of someone like Tribeless, because you are right, I do put you into that basket mentally.
One of the big problems I have with a lot of this economic philosophy is in some sense the problem of constructionism. I think we have a couple of clear examples from your last comment in this regard.
Looking at the economics of David Ricardo, which were no doubt the height of economic thought at his time, we see he developed the idea of comparative advantage. You will see also that he applied ostensibly the same theory to the individual and to the nation, or to whole classes of people. This approach is pretty standard in economics, but it doesn't work in practise, as it doesn't work in any science.
Noam Chomsky discusses some well known historic examples of the macro failure of this idea here, 
http://chomsky.info/talks/20110407.htm
I think the same falacy applies to the idea that the South Korean credit market is tight, this fails constructionism again. In practise the mortgage market in Korea is not tight as the following article describes, there is available a very effective way for speculators to leverage their investment. This of course would cause the house prices to rise, 
http://www.economywatch.com/mortgage/south-korea.html
I assume you have some basis on which to describe the South Korean mortgage credit market as tight. But if you don't look at the whole picture then you can't really develop any more than a narrow and probably wrong theory about whats going on.
Discussing more specifically the policy advocated by Mr Pavletich, it smacks of a mild form of supply-side economics again. It would be a great service to the world if supply-side economics would just die off, I have seen enough of it to know it doesn't work as advertised in practise.
It would obviously be an economic disaster for future housing bubbles to be ignored on the principal that the market structure has regulated or deregulated them away. I doubt this is something you would want to see, but its clearly the principal that Alan Greenspan was using as Fed chairman, around his own economic thinking. This puts a pretty significant burden of proof that this concept is sound, and I don't see anything concrete behind advocating this policy myself. In addition I can see pleanty of reasoning based on failed concepts (like the assumption of rational market supply curves, and markets being in equilibrium) from neo-classical economics which would make me nervous about this even being correct, let alone practical or sustainable or fair.
Of course in the absense of a really solid scientific basis for action, we can't simply choose inaction. In this circumstance, which I think applies to the regulation around the housing market, then the only sensible course I see is to follow democratic mandate. If it was democratically determined that there needed to be changes to urban growth boundaries then fine, let 'the people' make their own mistakes, or successes. But I wouldn't make that decision for myself based on any really concrete notion of what the economic consequences will be. Everybody has seen far too much of eliteist economists telling elected governments how to structure and restructure their economy, and what the apparant results will be, and on whatever basis getting the advertised implications wrong. In general I think that democratic mandates make a better job of selecting economic policy than eliteist economists do, but I would be willing to live with mistakes made on this basis if thats not true.
 

The fact remains that South

The fact remains that South Korea's Chonsei system allowed for much more rapid saving of the purchase price of a house (or the "Chonsei" proportion of a rental) when house prices were lower, before Green belt policies were enacted.
Check out:
"Government Policies to Control the Growth and Decentralization of Large Urban Areas: International Experience and Implications for Korea" (1998)

http://hompi.sogang.ac.kr/kyungkim/freeboard/papers/government%20policies%20to%20control%20the%20growth%20and%20decentralization%20of%20large%20urban%20areas,%20international%20experience%20and%20implications%20for%20korea.pdf
SON and KIM (1998) "Analysis of Urban Land Shortages: The Case of Korean Cities"

http://hompi.sogang.ac.kr/kyungkim/freeboard/papers/An%20analysis%20of%20urban%20land%20shortages%28JUE%29.pdf

The importance of the above paper, is that these authors use a completely different methodology to Albert Saiz (in his often-cited paper on geographic constraints), that finds that “geographic constraints” do NOT have any affect on housing prices, at least in Korea.

KIM (1993) "Housing Prices, Affordability and Government Policy In Korea"

http://www.springerlink.com/content/q588721h88413u6j/
Hannah, Kim and Mills (1993): "Land Use Controls and Housing Prices in Korea"

http://usj.sagepub.com/content/30/1/147.full.pdf

GREEN, MALPEZZI and VANDELL (1993),

 " Urban Regulations and the Price of Land and Housing in Korea"
http://ideas.repec.org/p/wop/wisule/93-01.html
Noam Chomsky is just completely beyond the pale. Communist quisling. Nothing he writes can be safely assumed to be anything other than false until proven true by honourable sources. For example, on his reading of history, France in 1944 is one of the many nations "invaded" by the evil imperialist USA. What a twisted mind.

 

You do seem to have a lot of

You do seem to have a lot of pent up contempt for Prof. Chomsky. Don't believe your alagations are correct, it would be preposterous to argue that the USA performed a imperialist invasion of France in 1944. If you are refering to his debate with William F. Buckley then you clearly don't understand the point he was making, or the course of the debate in this context.
In that particular debate William F. Buckley tried to argue that there was in fact no difference between the US invasion of Vietnam, and the US invasion of France. Noam quite clearly and correctly retaliated that these are in a different category, precisely because there were two invading armies in France at the time the Nazis were in occupation already. Of course if you want to believe Noam is a stupid quisling this kind of subtle point is probably not going to filter past the enragement filter. In fact its Buckley who tries to argue your statement,
http://www.youtube.com/watch?v=R9Samvw6Z08&feature=relmfu
He has also said several times that he believes US actions, and what he calls a military government in the US at the time was in fact quite legitimate given the circumstances.
But good luck finding an honourable source to verify his statements from, he generally doesn't discuss honourable sources. Show me a quote any I might believe there is something more to this than a figment of your own imagination.
 

I don't have to read more

I don't have to read more than about 2 pages of any book by Chomsky, to see that the guy is a twisted propagandist. His "history" of the Cold War, for example, consists of a long litany of all the "evil" things done by the USA, its agencies, and its allies, without a single shred of context re the existence of Communist totalitarian enemies and what they were doing. Not to mention a total absence in Chomsky's writings, of the inherent evil in Communism; he has of course written screeds of excuses about the "pure" version that has "never been tried yet".
The fact that he has such a following is just a disturbing indicator of the number of gullible intellectual juveniles in our society.
David Horowitz is one extremely effective smack-downer of Chomsky, for people with any brain at all, that is. I think it was Horowitz who coined the term "The Politics of Bad Faith" - he has a book of that title. This refers to utopian leftists always comparing some impossible utopia of their imagination, with the reality in the free-est parts of the world; they never compare the reality in (partly) free market democracies with the reality on the "left".
Roger Scruton uses the term "The Utopian Fallacy", to describe this.
Chomsky et al have cheered on one murderous megalomaniac after another from Mao to Castro to Pol Pot, only to get all slippery about "pure" communism when confronted with the inevitable reality. The inevitable reality is that you can never have Communism without brutality; if you support Communism, you by definition support "means to ends" that will include mass imprisonments at the very least, and some amount of murder.

I don't have to read more

I don't have to read more than about 2 pages of any book by Chomsky
It shows, you should consider it foolish to critique someones arguments from a position of total ignorance. I think the example above, where you quite clearly cite the other side of a debate to be Chomskys shows how foolish this is. In fact you are completely ignorant of either side and appear to have a cursory grasp of the argument they are making, neither side of that debate equates US actions in France with US actions in Vietnam. BTW, its not that I am harping on about this point, its just that this is the only concrete point you made at all.
Ahh, the inherent evil in Communism, well as you say there is a lot of propaganda which tells us inherent evil of communism. This is very clear from the Republican debates, Obama constantly associated with the communism, and painted to be the devil. I think the point of this is clear enough, communism is inherently evil and Obama is by association inherently evil. Also the obvious conclusion which must be drawn, there is a devil, there is a heaven, there is a hell, there is a god. I will assume you accept that obvious conclusion as well.
This refers to utopian leftists always comparing some impossible utopia of their imagination, with the reality in the free-est parts of the world; they never compare the reality in (partly) free market democracies with the reality on the "left".
I suggest given your self stated ignorance of anything Prof. Chomsky has actually argued, you might want to read some of his arguments all the way through.
David Horowitz is one extremely effective smack-downer of Chomsky, for people with any brain at all, that is.
Given that you let Horowitz dictate the statement and the rebuttle to you we can only assume that Horowitz wins the argument. I suggest reviewing the Chomsky vs Perle debate if you want a more realistic base on which to form an opinion.
 
 

I managed to force myself to

I managed to force myself to read the entireity of a Horwitz critique of Chomskys writing. He certainly doesn't correctly take anything Prof. Chomsky wrote in context. Much of the time he informs the reader of what Chomsky means and quitely clearly these meanings are not there.
If this is deliberate or simply illinformed is not clear, but he often accuses Chomsky of supporting regimes and actions which Chomsky clearly does not support. I didn't actually see much substance to his article.
http://archive.frontpagemag.com/readArticle.aspx?ARTID=21541
Apparantly I am not the only person who reads it this way.
 
http://www.antiwar.com/orig/carson1.html
 
 

This isn't the place to

This isn't the place to debate about Chomsky and Communism, but I stand by what I said. I am simply unable to read a full Chomsky argument because I nearly throw up after about 2 pages. The guy is poison, twisted, evil.
Sliding out from under his opponents perfectly valid criticisms with semantics and word play, is just typical of the kind of slime that he and his supporters are. Look at you, sneering at my condemnation of Communism, as some kind of primitive absolutism.
Communism is evil. Now you say it. Come on.
Why would any rational human being have any problem with this?

Look at you, sneering at my

Look at you, sneering at my condemnation of Communism, as some kind of primitive absolutism.
I have to extend that in fact, as far as I can see all your statements here are absoluteism in one form or another. Sometimes its veiled, but not deeply. Your welcome to keep your beliefs, they apparantly work for you, and I don't particularly care myself what you write or say based on this. But you should if you actually care about honesty at all you should admit, as I demonstrated, that you hallucenated Chomskys position about the US and WW2, and this was entirely a fabrication, a statement which he never made.
The guy is poison, twisted, evil.
Quite obviously you go to far.
 
 

I admit that my comment about

I admit that my comment about France was based on a letter to the editor from an anti-American activist, who listed all the nations that had been "invaded by the USA", which list he said, came from a book by Chomsky.
But I have indeed read a few pages of Chomsky on a few occasions, and stand by what I say about his utterly one sided presentation of "history". His attitude to the USA versus anything else, is like the modern trendy liberal attitude to citizens who actually defend themselves against criminals. Chomsky's version of a home invasion where the criminal got shot and killed, even after raping the householder's daughter and murdering the householder's son, would be boilerplate "prosecution" of the householder for his "exploitation" and "oppression" and "genocide" of the poor, saintly, home invader/rapist/murderer. This is a perfect analogy for the Chomsky version of the Cold War, for example. Or the Chomsky version of the current "Cold War" with Islamofascism. The fact that prosecutions of this nature do occur, just shows how this sort of poison has spread into our civilisation.
Chomsky's writings entrap ignorant people who have learnt nothing of history or its lessons before they came to Chomsky. Chomsky, like Marx, provides theories that suit people who want to remain trapped in childhood, wishful thinking and utopianism, and never engage pragmatically with reality; all the while permitting the followers of that theory to regard themselves as "the enlightened", and anybody who actually knows anything, or has learnt anything from history, is an "absolutist".
So yep, I am a Conservative, and a moral absolutist, and glad to be thus condemned by a Chomsky-ite, that is a badge of honour, thank you. As C.S. Lewis admirably put it about moral relativists, "people who 'see through' everything, see nothing".

Oh, and it would be accurate

Oh, and it would be accurate to continue the analogy with the home invader/rapist/murderer; prosecuting the householder acting in self defence is morally the same position as wishing  the murder of the entire household at the hands of the criminal.
Prosecuting the USA under a utopian moral standard over everything it did in the Cold War, is morally the same position as wishing Communist victory and Stalinist, Maoist, and Pol Pot genocide globally. Chomsky slithers out from under such a judgement with literary gymnastics and smoke and mirrors.

Its clear enough why you put

Its clear enough why you put words into Prof. Chomskys mouth to make your point. This is basically the same kind of trick used by many anti-chomsky writers to attempt to marginalise his writing, and to stop people from reading it for themselves.
 
 

I would like nothing better

I would like nothing better than for people to be well informed enough to pick up a Chomsky item for the first time out of curiosity, and after 2 pages, throw up over it, like I have.
I do not at all suggest that people don't read it, I just say, don't let Chomsky be your first and only source of guidance re history and morals. Chomsky is nothing more than brainwashing for the modern leftwing useful idiot who actually knows nothing about history or economics or the real world.

Also when I say democracy or

Also when I say democracy or democratic mandate, I don't mean representative democracy. Representative democracy can function as a democracy, but it often doesn't. Making the structure of society more democratic can take many forms including all kinds of changes to institutional structure and governance.
One of the consequences of banks leveraging deposits is that they make almost all the investment decisions in the economy. This is highly eliteist in that deposit holders are handing over responsibility for their investments to elite bank economists, and this is the way that the law is structured in practise (you don't own your money in a bank, the bank owes you your account balance) you certainly don't have to take responsibility for what its being invested in. I think a more sensible structure is
1)  For that money actually to be invested and forsaken while invested, demand deposits are not really forsaken, they are still available on demand.
2) This really has to involve everybody being able to access information about where this money is being invested. Individuals can then make decisions about what kind of industry they want to take a punt on in future.
I think that will have a really profound effect on the direction the economy takes, but fundamentally this appears to make the structure basically more democratic. Probably this will not prevent people taking silly risks, lending into bubbles, but the non-eliteist nature of the investment ought to stop so many of them doing it at once.
I don't think this really fits into the mould of what people consider free-market reform, so I don't characterise it as such myself. I basically think of Alan Greenspan in practise when somebody says free-market reforms. Actually if objectivists objected to what Alan Greenspan was doing they really should have spoken out against it sooner. This kind of thing would hold more weight if it had been written prior to the financial crisis,
http://the-undercurrent.com/alan-greenspan-is-not-an-objectivist/
In some ways however I think this kind of structural change goes to the heart of what people like Adam Smith sought to achieve. It should not come as a real surprise that several hundred years later the concrete ideas are a bit different, but I think that Adam Smith would have been more anti-capitalist in practise than he appears from reading 'The Wealth of Nations'. Maybe thats why you think we agree in many ways?
In many ways leaving bubble prevention to such a self interested group as new housing developers seems dangerously eliteist to me. I don't think thats an un-usual position even on this blog between non liberals, which is of course highly financially oriented.
 

Nic, do you honestly not see

Nic, do you honestly not see "freedom to build" on the part of the individual and "the community", as the answer to all the problems we are discussing here?
I fail to see how you can advocate local democracy and not see "freedom to build" as an essential part of this.
Your psychological aversion to businessmen and developers blinds you to the reality that in the "free to build" markets of the USA, few people bother to build their own home on cheap land bought from a farmer (without sticky beak planners forcing you to deal with a land banker middle man) - because genuine competition between developers means that prices are so low that you can't do it cheaper yourself.
You and your type construct straw man nonsense that is nothing to do with how this stuff actually works in the markets Hugh P uses as examples.
Where are greedy developers ripping people off, when sections are $30,000 and complete new McMansions are $130,000? You tell me - where is the rip-off?
I am telling you where the rip-off is here in NZ, where the money is going when our sections are $250,000 instead of $50,000. I don't know how you can lie straight in bed at night and make the self-contradicting arguments you do.
Where do your own interests lie, if you are so keen to see the planning enabled land racket perpetuated? Scapegoating the banks is intellectual dishonesty. Any fool should know that when you restrict the supply of something, the price will go up. Credit is nothing to do with it. Easy credit doesn't make the price rise, of anything where supply is elastic. Cars did not go up in price when credit got easier.
 

Actually as I said pretty

Actually as I said pretty clearly Phil, what you call "freedom to build" is of course valid, given that this is what is democratically mandated. But unfortunately the world is not black and white, and so anything breaks down when taken to the nth degree. I don't see planning regulations gone mad myself, and they don't drive the price that much as I see it. You streatch economic theory beyond correct in your arguments.
Scapegoating the banks is intellectual dishonesty.
I am not scapegoating bankers at all, though I do focus on the institutional system, the banks. Of course one should not expect any different in similar circumstances. Their incentive is to create and lend as much money as they can possibly lend and still expect to get paid back. It should hardly come as a surprise that the result is that they do. There is no moral judgement there, thats the way the world works, and will continue to work unless their incentive is changed.
Any fool should know that when you restrict the supply of something, the price will go up.
Actually it doesn't have to be so in theory, or necessarily in practise.
http://en.wikipedia.org/wiki/Sonnenschein%E2%80%93Mantel%E2%80%93Debreu_theorem
To give a practical example (of course these apply to the market level, not the individual), say we restrict the supply and mainly allow the building of appartment blocks rather than farm blocks. In this case the average price of a dwelling could be reduced, both in terms of the lower desirability, and the lower cost of construction (per unit).
You could easily get similar overall gains by only allowing planning consents for fit for purpose buildings and so avoiding a costly (and of course un-anticipated) repair job to many of the dwellings down the track. Also don't bother pretending planners are not held responsible for any and every mistake they make, ever because they are. Also no I am not a planner or in the building trade. This is also likely to keep the cost of building insurance down.
You could reduce the price by mostly allowing planning allowing planning consents for kit set dwellings. This could shift everybody towards using kit set building systems and might eventually standardise the market onto common kit-set parts. The eventual effect being probably similar to the PC industry.
Credit is nothing to do with it.
Credit has everything to do with it, credit is money. More credit means more money. If credit had nothing to do with it, you would only get busts when planning regulations were changed, wouldn't you.
 
 
 

The supply of land is itself

The supply of land is itself crucial to affordability. It would not create affordability at all, to "only allow apartments to be built", if the land remained rationed by planning processes. Not while there were free markets in real estate, and "private property" rights.
The mix of "housing" in Britain has long since had a very much higher proportion of apartments in it, than most other comparable countries, and this has not in the slightest degree been a factor for "affordability" in the British housing market.
I would respect arguments from the advocates of urban growth containment, that it is necessary to not just use negative planning restrictions on growth, but to nationalise land or at the very least compulsorily acquire it at artificially low prices, to develop it "at cost" according to "the plan". What I am criticising is a racket based on "planning" that does not deliver the changes in urban form it alleges, precisely because real estate markets are still free and there are still private property rights.
IF we need to "save the planet", then it is worth suspending private property rights to do it. But the vested interests behind the racket would suddenly decide the planet didn't need saving after all.
Credit is nothing to do with house prices inflating and becoming unaffordable. Even without credit at all, this would happen when land supply is rationed. And a "bust" would still happen when the prices reached the point that people simply took too long to save the money necessary to buy a home at all, to sustain the increases with a small supply of new buyers. Plus old people dying off and fewer young people having been born to buy the houses.
The difference would be that at least "savings" would rise instead of debt. This is in fact what happened in South Korea.
My economics are just way ahead of the "mainstream" that just happens to have failed us dismally, has it not - I am in the company of Alan Evans, Edwin Mills, Paul Cheshire, Peter Gordon, Alex Anas, and a few other Einsteins and Galileos of urban economics today. The answers to the dismal failures will be found in the writings of an ignored minority (who nevertheless are distinguished experienced economics authors) NOT in the wishful blatherings of the "Keynesian" mainstream and their "urban economist" misinterpreters of theory.

My economics are just way

My economics are just way ahead of the "mainstream" that just happens to have failed us dismally.
Wow, you should get something published then. I think we could all use as much as possible of your concrete theories on paper from where they can be disseminated and critiqued. Just remember to tie in enough 'standard' results that people can actually understand what you are talking about is real.
Please, excuse me for asking to see some actual proof before bowing to your self proclaimed greatness, I am quite obviously not worthy of the faith.
 
 

But even in England, it is

But even in England, it is all very well for those with the disposable income - there still happens to be people "without", and "exclusion" is far worse under these conditions.
There is simply no amount of "trading down" of size of home and section, that is sufficient to compensate for the monstrous cost impositions of British style "growth containment".

I can not believe a nobel

I can not believe a nobel prize winner could be so foolish. That brings absolutely nothing new to the debate, Keen already criticized Krugman for being exactly as blinkered as he shows himself to be in fact.
He might have a point about simplicity, if neo-classical models forecast the financial crisis, but they didn't, they can't and so they are over simplified.
 

I agree Krugman is all over

I agree Krugman is all over the place.
He authored an amazing op-ed years ago, "Flatland and the Zoned Zone", pointing out that all the growth-constrained cities were the ones with housing affordability problems and bubble volatility.
Then he let this whole angle drop and has not said any more about it. Perhaps a few problems loomed with his "liberal" Leftwing, Keynesian, political allies.
Kevin D Williamson pointed out very enlighteningly that socialists number one sacred cow that all other sacred cows have to be sacrificed to, is "planning". This explains why there are NO leftwing "I care about the people" critics of urban growth constraint's connections with severe social inequity.

I have a lot of respect for

I have a lot of respect for both, thats because they think and explain....but I think Steve keen is at least more "honest" then PK...in that Steve Keen is more straight up about our problems......I do think there is  a good case for Minskys/keen's models being very good, however I think PK sees the problem equally ie depression and liquidity trap.......PK is a neo-keynesian really, not so much a heavier modeller as some...unlike the fresh water school who seem totally blind...yet had very complex models....So I dont think its a case of over-simplified....its what is modelled and how....
End result is I think they are both on the same side....
regards
 

Actually I think Prof. Keen

Actually I think Prof. Keen will continue to point the bulk of his argument at Krugmans position (once Krugman actually brings something new to the debate).
The problem with the neo-classical school is that there is really no basis in equilibrium based economics for a financial crisis to occur. One can hardly applaud Krugman for writing op-ed pieces which are inconsistent with the theory he is supporting.
The only reason there is a term called a 'liquidity trap' is because neo-classical theory doesn't explain the role debt plays in the economy. The definition is basically, people stop borrowing money for some reason which can't be explained by any other theory in neo-classical economics. So if you follow through with this you will never ever ever have any idea why a financial crisis occured, how long it might last, if there is one developing, where its coming from. Thats why Krugmans position is over-simplified, it can never explain when a financial crisis can occur. I suggest looking at Krugmans lectures at the LSE after the crisis to see how clueless about the impending crisis these guys were, and in many ways still are.
The form of Krugmans position is plain eliteism, leave the details up to me, I know what I'm talking about, trust me I'm a Nobel Prize winner, blah, blah, blah. I won't applaud him for nakedly purporting to be wearing clothes, and neither should anybody else who cares about scientific rationality.
 

I dont agree on

I dont agree on over-simplified, and I dont think you should get side tracked into it....
You dont really need a complex model to predict taht this crisis could occur....just looking at some straight forward data like the level of private debt, should tell you "it aint right"....but then many ppl will simply never believe you....and in fact will never believe you even if you have great Minsky models like Prof keen....no one wants to listen....as we just proved and as we just keep proving every day, both in here and in the real world....In terms of clueless dont put PK into the same groupings as say Neill F, I dont think he deserves it....I mean many real neo-classical who still dont understand what happened, still dont think its a problem, or that it will get worse....and then the madness that is austerit....not sure what school that is coming from,quasi-austrian? but its the complete opposite of PK's position.....Classic proof is the GD....which we seem destined to repeat.
Now I do agree very strongly that PK got the debt problem wrong, I think Minsky/keen has the best explanation by far.......and are saying it isnt over....and I agree but I dont need Prof Keen to tell me that, just open eyes.   Bear in mind Prof Keen is modeling after the event and that there is nothing he can put in to say when....ie it could be some straw that finally breaks the camels back tomorrow or next year, or something huge.....as someone says butterfly wings flapping on one place causes an earthquake somewhere else........
So I think both are right in that this is really serious and will see a depression.....I have no doubt on that......if nothing else Peak Oil will cause it and thats at most 5 years into the future.
regards
 
 
 
 

Texas and California seem way

Texas and California seem way different......texas had a LVR and various other laws, different economies and is generally is poorer paid. So to say you expected them to bubble equally is way too much of a stretch....and in fact I agree on finance being the key driver...
regards
 

For the zillionth time,

For the zillionth time, median multiples are the ratio of price to incomes.
California median multiples: 6 to 9. Texas 3.
Steven's "explanation": Texas has lower incomes.
What a time waster.
Texas has LVT's. So does New Jersey, and NJ has unaffordable housing - due to anti growth regulations. There is no correlation between LVTs and housing affordability. This has been comprehensively dealt with by the estimable Leith Van Onselen:
http://www.macrobusiness.com.au/2011/08/a-housing-whodunit/

Matt, there are 200 out of

Matt, there are 200 out of 260 cities in the USA, that had no house price bubble.
So this certainly ain't just about Houston and Atlanta.

I just read the Salvation

I just read the Salvation Army report Kate and was thinking the same thing..then you follow it with the above comment and question for Hugh:-)
 
Lets see... bluff & bluster, side step, ignore  or attempted answer?
 
We often don't learn as a result of our inherent bias.

The Salvation Army Submission

The Salvation Army Submission does indeed make some good points.
Such as, that the Report does not enter on a discussion of "how to get out of this mess". The report focuses on "why we got into this mess".
But was it part of the Commission's brief to outline an entire fiscal, monetary, macro package to get the country out of its mess? I don't think so.
The Salvation Army is right that tax policy influenced investor behavior, even if the Commission is correct that that behavior was in fact irrational. The very low institutional involvement in housing investment in NZ suggests that institutions do due process better than mom and pop investors who go by myths they heard over the barbie and coffee.
The Sallies, in dicussing "freedom to build beyond the urban fringe" simply have never looked at the way things worked quite successfully for decades, and still do in 200 cities in the USA, whereby no rural land owner is in a monopoly position due to a desire by planners, for "contiguous" development. I would respect the Sallies a lot more if they advocated the compulsory acquisition of contiguously sited fringe land, to keep prices affordable at the same time as containing urban growth. This is so obvious a solution that it is a wonder that organisations that are supposed to have a social conscience do not suggest it.
But there are numerous economic papers and texts going back decades that state that "fragmented" development beyond an urban fringe is the most efficient in the long term, precisely because infrastructure planners can make intelligent decisions after land uses in a given area have evolved in a more clearly recognisable direction. I have posted references on this subject before on this site.
In any case, many farmers are "attached" to their land and would prefer to carry on farming the land at the same time as the urban area evolves around and beyond them. The "attachment" of farmers to their land is suggested by the very distinguished Alan W Evans as the main reason that "X years of supply" calculations by planners re land within regulatory boundaries, are always hopelessly wrong. A "20 year supply" boundary almost invariably results in prices inflating within 5 years.
The Sallies fail to note that the inflated costs of housing impose very much higher cost burdens, concentrated on the young, than the costs of extra infrastructure impose on society as a whole. And the inflated housing prices don't buy anyone anything, unlike the price of infrastructure. The 80 billion odd excess mortgage debt in the NZ economy now, could have paid for truckloads of infrastructure, and the burden of this would have been shared equitably across society.
The Sallies note that the "accomodation supplement" is blowing out and "unsustainable", yet their "solution" is "greater investment in public housing" by the government, as if this is also not a cost that is equally unsustainable. I have not noticed sectors of the NZ economy begging to be taxed higher, of late. Furthermore, this investment could easily be spent instead on infrastructure for growth, which does keep prices low and stable going by US experience.
The Sallies skepticism re "trickle down" housing is utterly misplaced, given the prices of "trickle down" housing in US cities with low, stable prices.
Typical comparisons between unaffordable markets and affordable markets, would be something like the following:
Fringe McMansion in affordable market: on a half acre of land: $180,000. In NZ: $450,000, on one tenth of an acre.
Older high class suburb homes in affordable market; half acre to 1 acre lots; $250,000. In NZ, $1,000,000 plus, on around a quarter of an acre if not already subdivided.
Older lower class suburb homes in affordable market: still half acre to 1 acre lots: $80,000 or even less. In NZ: seldom under $300,000, and seldom on any more than one eigth of an acre each.
There are seldom any "social conscience" types with the Chutzpah to suggest that in these cities in the USA, government needs to get involved in "providing affordable public housing". The need simply does not exist.
Hugh's point about the evangelical Christian churches in Bible belt USA is spot on. The IMF found in a paper "Were Evangelicals Left Behind: Irrational Exuberance in US Housing Markets", that there was a high correlation between the presence of these Christians in a city's population, and stable housing markets. The IMF suggested that these Christians don't speculate; I suggest that these Christians don't allow loony post-rational pagans to sacrifice their children's future to the pagans Gaia earth mother. The "Christian churches" that have succumbed to this nonsense are simply apostate.

There are seldom any "social

There are seldom any "social conscience" types with the Chutzpah to suggest that in these cities in the USA, government needs to get involved in "providing affordable public housing". The need simply does not exist.

Yeah right.
 
Google 'homelessness in Houston'.  Here's one example providing stats;
 
http://www.chomhouston.org/default.aspx?name=chom.homelessness
 
or if you want individual testimonies, there is this one;
 
http://www.houstonpress.com/2009-03-19/news/houston-s-working-class-gets-bumped-into-homelessness-and-poverty-by-the-crashing-economy/
 
 
 

I stand by what I said - I

I stand by what I said - I agree with everything that site says about "the causes of homelessness", except "lack of affordable housing". In Houston? Come ON.
This goes to the core of our argument. If "lack of affordable housing" is a problem in Houston, what is it in NZ?????????
Houses of a status and standard that are $40,000 in Houston or many other US cities are seldom under $250,000 here. We have scungy areas too, its just that we pay through the nose even for houses in those areas. The same money as a scungy house in a scungy area costs us here, would buy you a McMansion in a quite reasonable suburb in an affordable city.
The issue of homelessness, as that site indicates, has many inputs. But you can't kid me that with houses around for $40,000, non-government agencies don't have a far easier job of providing "flophouses" etc. The Sallies could easily provide masses more such facilities under conditions of affordability.
 
 

I was too harsh for saying

I was too harsh for saying "......Christian churches that have succumbed to this nonsense are simply apostate......".
I should have said that these churches are not as awake or opposed as they should be, to apostasy. I apologise to any Salvation Army people or other true Christians who were rightly offended by what I said in the first place. I hope I do awake Christian consciences over this issue.

Meanwhile, back in the City

Meanwhile, back in the City of Two Halves, the ongoing inability to unlock good, cheap land on the fringes is forcing many people into late-life debt and economic despair. Real consequences for people who thought they were now well above this debate.
And it's not just section price idiocy that's to blame.  Many developers still have minimum building size covenants on their sections that force people into building houses way bigger and more ostentatious than they need - or have rebuild insurance for. We couldn't have people in modest sized homes, could we. That really would be a disaster.
I used to abhor Hugh's ideas on urban development, since I spent years living in a central London apartment, enjoying the many benefits of high density living.  Then the earthquakes struck CHCH and forced a stern re-evauation of what I thought I knew.
And the bugger's right.
But I reserve the right to change my opinion at a later date...

Urban intensification need

Urban intensification need not be high rise, high density.
 
Intensification can be achieved by amending sub-division rules and affordability can be achieved by restricting (i.e. not allowing) the type of covenants put on many of the residential section developments by the landowner/developers which force the building of high priced, single family unit dwellings (as a means to keep the land value inflated).
 
Encouraging fringe residential development is not the only answer - it is one of a variety of planning issues that need to be addressed.  The downside regards fringe greenfields development will always be one of infrastructure and distance to employment - which are the upsides of urban intensification within defined boundaries.
 
 
 
 
 

But there can hardly be any

But there can hardly be any country in the 1st world where "infill development" and cross-leased sections etc have had the penetration they already have in NZ. What more do you want?
The Jasmax consultants audit of the Akl Spatial Plan pointed out that the cost of land in Akl is already so high in established areas (this is urban econ 101, by the way, force up fringe prices and the entire urban land rent curve is forced up) that redevelopment in almost any form is unviable. NZ income levels simply will not stretch to what even small "townhouses" would have to be put on the market for once the property has been bought, permission granted, fees paid, permission process costs paid, the original structure demolished, and the new townhouses built.
THIS is why most of the infill going on in NZ cities for the last few years, is in the "least unaffordable" suburbs miles from the CBD. "Infill development" townhouses 30 km from the CBD might just be affordable to some at, say, $350,000 each - the same developments 10 km from the CBD would have to fetch more like $600,000 each.
This is what several academics have been pointing out for years, is wrong with urban containment "planning". It has "unintended consequences" in any case, that are the opposite of the planners intentions. Population densities end up increasing further away from urban centres, not "closer to". Hayek and Schumpeter and Von Mises must be having a good hoot up there in economist Valhalla.

Phil, I accept that to make

Phil, I accept that to make infill more affordable there has to be amendment to both rules (and requirements) as well as charging regimes.  In other words, one has to provide incentive for multiple dwellings on a single title and/or subdivision of a single lot title into cross-lease, multiple unit title and/or separate titles to the individual (and in particular the non-developer) property owner. 
 
With respect to capacity to infill - I'm only assuming there is some capacity as I know a number of individual property owners in various 'old' Auckland jurisdictions which would like to subdivide but cannot due to plan rules (even if the economics of it did stack up).  Many I have spoken to in the past would simply like to put a second dwelling on the same title (family accommodation; elderly parents, children etc.) but cannot due to plan rules.   Same goes for some extensions - rules regarding footprint, height to boundary etc. often make these difficult as well.
 
It is important to consider that in respect of multiple dwellings on a single title - land prices are not the issue - only planning rules, consenting and build costs are.  And as NZs BB population ages - there will be a great deal of call for this type of 'family share' in the suburban setting arrangement.
 
I am hoping the proposed Auckland Spatial Plan looks to deal with a number of the plan issues - and of course then there is the matter of affordability associated with the consenting, permitting, contributions and other regulatory costs.
 
 
 
 
 

Kate, that is all most

Kate, that is all most constructive.
It is absurd that planners impose growth boundaries when they have not first attended to the absolutely imperative liberalisation of infill permission regimes.
But I also suggest that urban land rent curves alone will have the consequence I am referring to, as long as fringe land prices are inflated by regulations regarding the conversion of rural land to urban.
I believe that the only way we can reverse the trend of population outwards from urban centres (refer Wendell Cox's long running series: "Evolving Urban Form" on New Geography Site) is to force the price of land at urban centres down by compulsory acquisitions at artificially low prices; the complete abolition of NIMBY rights etc; and the sales of units in the redevelopment of these centrally located sites at higher density "at cost".
There is so far, simply no evidence anywhere in the world that suggests that the existing regulatory tools are going to achieve the desired outcomes of urban intensification at central locations and other efficient locations. The way real estate markets work is contrary to achievement of the desired outcomes of the planners. No shift of urban population in any direction other than "outwards" from an urban centre, can possibly be accompanied by anything other than rising land prices, at those locations, and this sufficiently rapidly to "price out" everyone but the low proportion of people desiring to move, who actually did move first.
The fact that no-one in the planning fraternity seems to understand this, is abundant confirmation to my mind, of the very uncomplimentary things Hayek said about the kind of minds that go in for "planning" as a career.

Phil - many professional

Phil - many professional planners work for the development sector as well ... so those who choose planning as a profession cannot be typecast in this manner.  We have to have planning - someone has to administer it.  And well planned cities can be both beautiful and enjoyable places to live.
 
Look instead to the RMA - as it was not written to deal easily and effectively with the urban environment and also look to the vested interests of many of those existing landowners within the present urban boundaries.  NIMBY as you so rightly point out is an issue - particularly if the 'rules' have been written to protect the prevailing NIMBYism (i.e. the status quo, not only regarding your own property, but that of your nearest neighbours).
 
I can to a degree understand NIMBYism as well.  If you live in an area that has say minimum section sizes of 600 or 700m2 it is perhaps understandable that you might want to remain in such a 'leafy' look, low density area.  I guess the question is - should it be these households, who are likely to be more able to afford the associated costs of fringe living/commuting, that are incentivised toward the fringe - or should it be the lower income household where land values are lower and development of house type unrestricted by covenants?
 
Presently, it seems the way greenfields development has been trending on the NZ fringes - it too has typically targetted the more affluent by way of imposing covenants - meaning the low income first homeowner has no where to go.
 
Covenants as well need to be dealt to - aside from those restricting the age of residents (or requiring a level of grass mowing maintenance) - I see every other form of covenant as working against the principle of social equity.  Even those which restrict fencing of boundaries - as families typically want fenced boundaries for safety reasons.
 
  

Kate, I absolutely agree

Kate,
I absolutely agree about social equity, in fact I am miles ahead of you on this.
You are talking about location related equities. I am talking about the effect on "equity" of land price inflation within the entire urban area.
In the numerous undistorted markets in the USA, the raw land price component of "housing" is close to $10,000 per acre at the fringe, and rises through $20,000, $30,000 etc to a peak typically no more than $70,000 per acre in the most sought after locations in a highly dispersed city.
Most of the cost of "housing", is the house; and most of the cost of the section, is the cost of development. A $30,000 section at the fringe might be half an acre, and a 1 acre section might be a mere $5,000 extra, because this is the price of the raw land.
Our growth boundaries turn all this on its head. The raw land is the main cost of "housing".
$450,000 fringe McMansions contain little more than half of this value in the house itself. "Costs of development" of sections might be $30,000 per section; fees might be another $40,000 (development bonds, which Hugh advocates, are a far fairer way of raising the needed public funds). And our fringe McMansions are on what size sections? One tenth of an acre? So our "raw land" cost component is $1 million PLUS, per acre?
Of course mandated quarter acre lots will be very exclusionary under these conditions, because the difference between one tenth of an acre and one quarter, will be another $150,000 PLUS. But in the USA, mandated 1 acre lots are said to be "exclusionary" when this adds less than $10,000 to the price?
In fact I recently discovered a paper from 1990 by Joseph Gyourko, that suggested that impact fees and growth boundaries were innovations that had arisen because minimum section sizes were not effective as "exclusionary" devices.
I pointed out earlier that in the US's undistorted markets, the "raw land" price component of even the best centrally located land might still only be as low as $70,000 per acre. But in our distorted markets, the fringe raw land price component is closer to $1 million per acre: what is it in the Akl CBD? And everywhere in between the fringe and the CBD?
This isn't just "exclusionary", this is de facto eugenics.
You talk about fringe developments targetting the affluent by imposing covenants; yet without the covenants, what happens is high density development at the fringe. You can see this in many locations in every city in NZ and Australia - townhouses 20 to the acre just inside the growth boundary, with open farmland on the other side of the road. What is the earthly point in this, when efficient urban form is meant to be all about increasing density in central locations?
This perverse result happens because the fringe is the "least unaffordable" place to build anything. The raw land cost component is $1 million per acre: 10 kms closer to the CBD it is $2 million per acre, 20 kms closer to the CBD, it is $4 million per acre. The 20 to the acre townhouses at the fringe are still $200,000 each; close to the CBD they would be $400,000 each purely because of the raw land component - in reality they are even more than this, because of the sheer cost of NIMBY opposition and delays.
Undistorted markets do not have townhouses 20 to the acre near the urban fringe. Urban density curves in undistorted markets, track land price curves. In the undistorted markets, the 20 to the acre Townhouse option would result in approx. $80,000 townhouses; but because the raw land cost component is so low, the same townhouses at the most central locations would be, and indeed are, more like $83,000 each. (The difference between $10,000 divided by 20, and $70,000 divided by 20).
GUESS: in which city are more people going to opt for higher density living at more central locations to obtain low "housing plus transport" costs?
And our planners have the chutzpah to talk about "providing options"????????
 

Add to my above analysis, the

Add to my above analysis, the cost of "space" in any development. This too affects the price of housing.
When the raw land cost component is $10,000 per acre; and there are 4 houses per acre; and one half of the development is green space and roads and so on; the price of each house needs to absorb another $2,500 of development related costs.
When the raw land cost component is $1,000,000 per acre and you are doing 10 houses per acre and one quarter of the development is green space and roads and so on, the price of each house needs to absorb another  $25,000 of development related costs.
It is simply impossible to "trade off" size against land prices under these conditions. The affordable cities in the USA are all low density; cities with decades of planning (as in Britain) have the pokiest houses, on postage stamp sections, and seriously unaffordable median multiples. This is where NZ is now at.

SUTTON OF CERA NEEDS TO LEARN

SUTTON OF CERA NEEDS TO LEARN ABOUT $50,000 SECTIONS FAST
 
Grateful Surfer - thank you for the kind words - and keeping to the abbreviated version of "old buggar"!
 
Roger Sutton of CERA has had a communication from me today (very widely bcced), following the drivel he came out with regarding section prices on local radio. Here is goes -
 
To - Roger Sutton, CEO, CERA

 
Hello Roger,

 
I have been advised of your comments on the Radio this morning, that you were unaware how $50,000 serviced sections on the fringes can be provided, and that you are only “aware” of the possibility of $120,000 ones.
 
 
How a guy in your position can STILL be so clueless on these issues, is something of a mystery.

 
No doubt there will be a good airing on this at the Cantabrians Unite Facebook Page and other media as well.

 
I have covered some of the points within a communication with a local developer (below). I trust you find some of these matters of interest. I covered some further points within the comments stream to this recent The Press article as well - Tsunami Of Construction Workers Headed To Christchurch... | Stuff.co.nz.

 
Feel free to communicate with me, should you wish to discuss further. It’s looking very much like we are heading to a larger Sunday afternoon protest in the next few weeks – following the successful 4000 strong mid week one of 1 February.

 
This communication has been bcced to others with an interest in these issues.

 
With best regards,
Hugh Pavletich
Coordinator - Cantabrians Unite
Performance Urban Planning
 
 
 
 
 

THE COMMUNICATION TO A

THE COMMUNICATION TO A DEVELOPER RAN AS FOLLOWS-
 
Hello ........,

 
Thank you for your considered email – which I agree with.

 
It’s very much a case unfortunately of – “if you get the land price wrong - everything else is wrong”. Something you and I as developers are acutely aware of.

 
Within its 16 Dec Draft Report, the Productivity Commission found that there are now only 5 production builders left in this country producing over a 100 residential new builders a year. We are heading towards Tasmania territory, where they wiped out their production sector completely. Putting it rather harshly – getting bureaucratically beaten back to the Stone Age of cottage construction (with the inefficient costs that go with it).

 
The production builders are the guys who get the per square metre rate disciplines in to the market, with their buying clout and on site organisational disciplines. They must be allowed to get things underway on the fringes of our “attractor” markets (Auckland, Tauranga, Hamilton and Christchurch) as soon as possible. The rest will fall in to line in due course.

 
On the research I have done – the current basic build rate here in NZ (excluding serviced lot)  is in the order of an extraordinary $1,200 to $1,600 psm – Australia in the order of $A800 – affordable USA $US500. The ALL UP fringe starter stock costs here appear to be in the order of $2,500 per square metre – Houston $US600 psm. I covered this on interest co nz a couple of years back – 6 months prior to the Sept 10 shakes – and prior to Christmas, explained how as Local Government costs get out of control, housing bubbles are triggered - How Housing Bubbles Are Triggered | Scoop News .

 
The questions have to be – what systemic and cultural changes have to take place, to restore normal (our markets are currently severely abnormal) markets – to restore the required market disciplines?

 
As I see it – simply open fringes with post development zoning with “no go” areas clearly identified for solid reasons. Internally – flexi zoning to allow them to expand and contract as market pressures dictate. Christchurch for example must be allowed to shift abruptly south and west in particular. Those just outside the line of a current internal zone boundary should only need the consent of neighbours a further 50 metres out.

 
And get the infrastructure financing sorted out along the lines of the Texas Municipal Utility District ( MUD) model, where all infrastructure other than roading and footpaths is financed out on the bond market. I understand the Muni Bond Market in the US is something north of $US2.5 trillion.

 
You will be aware that things are currently winding down in Australia (much quicker than most realize) – and there are good numbers of the industry guys betting badly smacked there now. Rather interestingly the ones I’m dealing with there – who are interested in survival and have the capacity to do it – are doing all they can to isolate their developments from rapacious Local  Governments and Utilities and are currently furiously “studying” the Texas MUD model (info attached). They know that if they can’t get more competitive priced new stock on the market – they are goneburgers.

 
Interestingly too – there are good numbers of smaller Australian cities that take the Demographia Surveys extremely seriously – and are working to get their Multiples down. There are a few industry guys discussing these issues with me currently in NZ as well.

 
So Brownlee has only two choices with respect to Christchurch – either bust out of it or build out of it. To date it appears he and his Government have chosen the former option. If Suttons understanding of development economics on the Radio is any guide – it would appear he’s just as clueless as Brownlee – unfortunately.

 
Going forward as I see it – it’s very much a case of either – getting on the programme – or perish.

 
Note the “vigorous” discussion on the Interest Co Comments Thread below!

 
All the best
Hugh
 

While Kate and I are

While Kate and I are discussing Houston, I just noticed an interesting point in an "Economist" article:
http://www.economist.com/node/666768
"........That leads to the third of Houston's main characteristics which should prove an advantage in the 21st century: racial tolerance. Houston looked like a southern town until the 1970s: white, with a large black minority. A generation later, its population is roughly one-third white, one-third black and (slightly over) one-third brown. Other cities have similar profiles but none went from a bi-racial to a multi-racial city quite so abruptly.
Even more strikingly, it did so peacefully. Houston has not had a race riot since 1914. For the largest southern city to have gone through the civil-rights era and its aftermath without upheaval is a remarkable comment on its politics. Minorities have long been fully or over-represented in the city council, county commissions and the Texas state legislature......"

Here's the Unconventional

Here's the Unconventional Economist talking about what are the prospects for 1st home buyers in the UK now:
http://www.macrobusiness.com.au/2012/03/uk-first-home-buyers-trapped-by-...
Our young people should be warned.

Interesting article. The UK

Interesting article. The UK property market situation seems pretty similar to our own.

Of course theres no law to

Of course theres no law to say one has to live in NZ . People that object to high housing costs  and associated gripes are welcome to bunk off to Oz ,Texas or North Korea  etc as they seem fit   .Its a cost /benefit thing to live in NZ .  The  price of housing is just one factor for me ,  other points include  pollution,govt stability,police reliability,traffic,schooling,free enterprise,tax ,wages,hospitals etc. At present the benefits out weigh the costs incl housing . Theres no perfect country but NZ is better than most. Go NZ !   Also we need to be realistic about what Key ( or whoever PM  succeeds him when he flags it away)  is able to focus on .When a govt gets voted in I dont think their first briefing will be "Hugh P says housing must immediately only be a multiple of 3 times income and everything alse will have to wait "   There are other priorities eg natural disasters,offshore financial crisis,our defence forces,gangs,Maori radicalism,WiniPeters etc

agree. regards

agree.
regards

PLANNING CORRUPTION & IRISH

PLANNING CORRUPTION & IRISH POLITICIANS
 
It seems like Irish politicians do not over price themselves.........
 
http://www.guardian.co.uk/world/2012/mar/22/bertie-ahern-mahon-tribunal

 
 

http://www.independent.ie/national-news/mahon-tribunal/

 
 

It would surely help

It would surely help "economic recovery", which surely we need to be focused on somewhat, if "building anything anywhere" did not take 3 to 7 years just to get permission. And/or cost 10% plus of the price of the finished project, in consultants and lawyers fees, plus the finance carrying costs during the delays.
The economy tended to do better when "building anything anywhere" was not penalised in this way, and the world did not end, paradise did not get paved over, etc etc.
In fact, I even suggest tentatively that these penalties are part of the reason that we need an economic recovery. "Construction" actually is a driver and preceder of "the business cycle", not a follower. This is the secret to Rodney Dickens's far more accurate econ forecasting versus the mainstream (which all has "construction" in the wrong place in its formulas).
Owen McShane calculated a couple of years ago that around 35 billion dollars worth of new projects could have been well underway by 2007, that at that time were still mired in permission processes - and have been put on hold since due to cost uncertainties as well as econ conditions.
One would have thought councils could have got into the habit of fast-tracking a bit of stuff under the econ conditions we are in, but no. One hopes the recent election outcome in QLD was a repudiation of this loopy "save the planet, stuff the humans" policy, and that this phenomenon catches on in a big way in this region of the planet at least.

ROGER SUTTON OF CERA

ROGER SUTTON OF CERA DEFENDING THE LAND SPECULATORS
 
Roger Sutton of CERA gets a solid question from Rick on the Radio - then launches in to a lot of bull. You can imagine what the $100,000 sections in Belfast would be - postage stamps.......have a listen......
 
http://soundcloud.com/flip-ya-lid/rick-speaks-to-roger-sutton
 

Incomes, require that

Incomes, require that resources are processed.
 
Thus, all the ranting, and all the repeated dogma above, falls over when there aren't enough resources toi underwrite the incomes, and any temporary relationship to anything else - like building - goes out the window.
 
You don't get an 'economic recovery', when you're down to water-cutting, fracking, deepwater, and  - so help us - lignite. You're into 'desperate attempt to maintain the status-quo'.
 
See?  It takes a lot less words, fellas.

What a peddler of rubbish

What a peddler of rubbish propaganda.
These things are "desperate attempts to maintain the status quo"?????
Humanity hasn't just got itself a few more centuries of fossil fuel supplies during which to develop hi tech alternatives?
Why are Greenies everywhere frantically trying to shut these things down on any possible grounds (just as they have done with nuclear)?
These eco Nazis are saying to each other on their own forums, to the effect that "we have almost no window of opportunity left to shut global capitalism down before our pretexts are destroyed by advances in resource extraction and energy technology". I suspect PDK is one of this ilk. Tell us what you think of Fidel Castro, PDK, it might tell us a lot about you.

Fracking: An Existential

Fracking: An Existential Threat to Green Dogma

By Paul Driessen

 

Mar 29, 2012

 

TownHall.Com

 

"The Sierra Club and other environmental pressure groups are redoubling their efforts to “stop fracking in its tracks.” No wonder. The technology is an existential threat to fundamental “green” dogmas.

Horizontal drilling and hydraulic fracturing is a true “game changer.” In less than two years, this proven but still rapidly advancing technology has obliterated longstanding claims that we are running out of petroleum. Instead, the USA now finds itself blessed with centuries of oil and gas.

Poland and Estonia are using it, China has invited companies to the Middle Kingdom, Britain, Israel and Jordan are evaluating their shale deposits, and other nations are following suit – coaxing oil and natural gas from shale and other rock formations that previously had refused to yield their hydrocarbon riches.

By making more natural gas available, fracking has reduced the US price for this clean-burning fuel to under $3 per thousand cubic feet (or million Btu), compared to a peak of $8 a few years ago.

Natural gas is also supplanting coal for electricity generation. Due to excessive, mostly unnecessary new Environmental Protection Agency regulations, many US coal-fired power plants are shutting down. Replacement plants are far more likely to be gas-powered than nuclear, especially in the near term.

Natural gas makes heating and electricity more affordable for families, hospitals, government buildings and businesses; feed stocks less expensive for makers of plastics, paints, fabrics and other petrochemical products; and the prospect of natural gas-power vehicles more enticing, without mandates or subsidies. That translates into thousands of jobs created or saved.

Companies are keeping chemical plants open that were slated to close, due to soaring prices for oil that they now can readily replace with cheap natural gas. Shell plans to build a $2-biillion ethane “cracking” plant near Pittsburgh – creating 10,000 construction jobs and 10,000 permanent jobs – thanks to abundant gas from Marcellus Shale. Louisiana, North Dakota, Pennsylvania, Texas and other states are reporting subsidy-free employment and revenue gains from shale gas development. More are likely to follow, as companies seek new ways to capitalize on access to abundant, inexpensive, reliable gas.

Natural gas also provides essential backup power for wind turbines. Without such backup, electricity generation from these projects would plummet to zero 70-80% of the time, affecting assembly lines, computers, televisions, air conditioners and other electrical equipment dozens of times every day.

Even harder for environmentalists to accept, cheap natural gas also makes it harder to justify building redundant wind turbines that require large subsidies to generate far more expensive electricity only 5-8 hours a day, on average, while killing large numbers of raptors, migratory birds and bats. It makes more sense to simply build the gas turbines, and forget about the mostly useless wind turbines.

Fracking is also unlocking oil in the vast Bakken Shale formations beneath Montana, North Dakota and Saskatchewan. Oil production there has shot from 3,000 barrels a day in 2006 to nearly 500,000 today – creating thousands of jobs … and a growing need for the Keystone XL pipeline to Texas.

In response, eco-activists are spreading unfounded fears about this proven technology. Using words like “reckless,” “dangerous” and “poisonous,” they say unregulated fracking companies are operating with little concern for ecological values and causing cancer, earthquakes and groundwater contamination.

The claims have fanned borderline hysteria in some quarters and prompted Maryland, New York and other states to launch drawn-out studies or impose moratoria that will postpone drilling and the benefits it would bring.

Facts are sorely needed.

Drilling and fracking have been carefully and effectively regulated by states for decades. As studies by the University of Texas and various state agencies have documented, there has never been a confirmed case of groundwater contamination due to fracking. Even EPA Administrator Lisa Jackson acknowledged that to a congressional panel.

These analysts, drilling companies and even an Environmental Defense expert now say fracking has not played a role in any of the rare cases where methane has gotten into drinking water.

Instead, the cause has generally been a failure of “well integrity” – the result of improper cementing between the well borehole and the steel “casing” and pipes that go down through aquifers and thousands of feet deeper into gas-laden shale formations. Similar failures occur in water wells drilled through rock formations containing methane (natural gas).

The solution is straightforward: better standards and procedures for cementing vertical pipes in place, and testing them initially and periodically to ensure there are no leaks.

Similarly, fracking fluids fail to match the “toxic” and “cancerous” opprobrium alleged by anti-drilling campaigns. Over 99.5% of the fluids is water and sand. The other 0.5% is chemicals to keep sand particles suspended in the liquid, fight bacterial growth and improve gas production.

Although industrial chemicals were once used, almost all of today’s are vegetable oil and chemicals used in cheese, beer, canned fish, dairy desserts, shampoo, and other food and cosmetic products.

As to “earthquakes,” barely detectable “tremors” have occasionally been measured near fracking operations and wastewater disposal injection wells. However, calling these snap, crackle and pop noises and movements “earthquakes” is akin to giving that label to rumblings from trains and cement trucks.

Despite these facts, EPA is nevertheless trying to invent problems and inject itself into already vigilant and responsive state regulatory efforts. The agency has conducted a roundly criticized study in Wyoming and is conducting water tests in Pennsylvania, where state officials view its activities as unnecessary meddling.

Additional over-reach and over-regulation would be hugely detrimental to US and global well-being. Fracking could help create numerous jobs and provide a far more secure, affordable, dependable and lower-pollution future than would ever be possible with wind or solar power.

By expanding oil and gas development, it could make North America the world’s new energy hub. Middle East sheiks, mullahs and OPEC ministers would lose economic, political and strategic power. Threats of Russian pipeline closures would no longer intimidate Eastern European countries. Politicians everywhere would waste less money on “renewable” energy T-Boonedoggles.

Unfortunately, though, fear campaigns are preventing some of America’s poorest counties and families from enjoying the economic benefits of Marcellus Shale development.

Baltimore’s Sage Policy Group calculated that fracking in western Maryland could reduce energy costs, create thousands of jobs, and generate millions of dollars annually in revenue for the state and Allegany and Garrett Counties. Similar studies in New York and elsewhere have reached similar conclusions.

Hydraulic fracturing technologies are proven. Regulations to protect drinking water are in place and improving steadily, as cementing and other legitimate concerns are recognized and addressed.

North Dakota, Pennsylvania, Texas, Poland and Israel are showing the way forward.

Communities that have not yet opened their doors to responsible drilling, fracking and production need to replace anti-hydrocarbon agendas and fears with facts, optimism and science-based regulations."

 
http://townhall.com/columnists/pauldriessen/2012/03/28/fracking_an_exist...

That kind of bullshit

That kind of bullshit wouldn't be needed if the hypothesis it is based on it were true.
 
The fact that they need deep-sea, fracking, gas/coal-to-oil, says that the days of Beverley-Hillbillies gushers is over.
 
Which means that the days of high EROEI are over.
 
Spin and belief won't change that, despite your screaming.
 
The question is: are you lying to the public, knowingly? or are you lying to yourself?
 
 

He's a fanatic.......paid, no

He's a fanatic.......paid, no I think PhilB does it for free, like my fundie nutter family they are doing gods work...it takes a special kind of loopy to give small children nightmares, this is another one.....I think he sees it myself, just he cant accept it due to his uh commitment to his point of view......
And yes if fracking was so great they would be busy abandoning the middle east and deep offshore....I mean with "centuries" of gas the USA could simply close its borders while the rest of the world falls into the dark ages.....Mean while the real outputs are dodgy to say the least....border line fraudalent from what I can read....
Even the fact that a large company like say shell is prepared to make a plant to convert such small quantities say volumes for the desperation....
regards

LOL, you really have no

LOL, you really have no clue.....what a load of rubbish.....if nothing else "centuries" is defeated by expotential growth....
All I can say is go the USA, its hell bent on destroying itself, I hope it gets what it deserves.
regards

Paul Driessen is like someone

Paul Driessen is like someone with "the light", you Malthusians are the vampires here.
No-one on here is defending gouging and racketeering like you guys. If we followed the money, it would be running between a bunch of racketeers and you guys, not between me and anyone else.

The Moa were hunted, from a

The Moa were hunted, from a starting-point of 'the first one killed'. Then the killing escalated, presumably exponentially. At some point, the take must have dwindled, even though there was probably more effort being put into the chase. Then there were none.
 
According to Phil Best, there should be millions.
 
What he is doing here - and on at least one other site - is screaming at length about the post-peak price of Moa-meat, and blaming everyone else (including those of us who saw it coming and switched diets) for it.

Well put sir. regards

Well put sir.
regards

To the "comments

To the "comments adjudicator". Comment of the month. Clicked the thumbs-up 50 times but it didn't help.

An excellent argument in

An excellent argument in favour of private and legally enforceable property rights

MsDeMeanour said it before I

MsDeMeanour said it before I did.
Under YOUR argument, Mr genius PDK, we should have run out of sheep decades ago.
I am the first to argue that primitive hunter gatherer societies, along with Communist economies, are the worst possible for resource exploitation and environmental destruction. I even suspect that if Australia was once covered in forest, the Abbos probably burned it off. They tended to live this way; burn down a forest to drive prey into the open, kill the prey, eat it; move on to next forest.
Global capitalism is the answer to this kind of thing, not the problem per se.

yeah

yeah right.....
regards
 
 
 
 

By Steven :..All I can say is

By Steven :..All I can say is go the USA, its hell bent on destroying itself, I hope it gets what it deserves.
regards.

You know Steven ,.......sometimes it's you that shows an inability .. to think...before making collective statements ..such as your post above....it is the stuff of spiteful children.

No, I think you mis-read me,

No, I think you mis-read me, not spiteful, resigned....I think now that the only valid way to show ppl they are wrong is let them get on with it and let them see for themselves the mess they make. Its experience it seems that is the best teacher.....they rae convinced that the US is the best country on the planet, like I said let them get what they deserve..if they are right....or if they are wrong....who am i really to say?
Looking at the US's politics and corruption I think it will take a second revolution and blood on the streets to get them back to a real democracy by the ppl for the ppl ....Meanwhile there seems to be a lot of ppl who will vote republican and yet this to my mind anyway isnt the moderate party they think it is....or maybe they really see it as it is and want that.....whatever.  The US is corrupt and dilusional IMHO....so from my perspectiveit will take major pain for them to get right.....something that their own ppl have to do and want to do.
regards

Out of respect to you Steven

Out of respect to you Steven ,I'll respond.....I have, over the last few years read many of your posts....so no, I don't think I mis-read you at all.
Resignation... implies no judgement of contempt nor spite.
By your own words..get what they deserve...implies a judgement on your part to a detriment on their part which you feel is deserving of their error /errors.
 To apply that type of thinking collectively to a race of people is usually called bigoted opinion. 
 I can, if you would like, scroll a selection of your posts over a given time period and demonstrate the the language you often use in relation to the U.S.( which I think you have confused with American people) is of a very consistantly bigoted nature.
If you just generally don't like yanks...that's fine, but there is often little need to include "that fact" in what are generally worthwhile posts by yourself.
Where the U.S. has gone with foreign policy over the last 50 years has been the error on their (large U.S. interests and the Govts supporting them) part.....
Coming up short and selling out the interests of the American people  has been the consistant failure of successive administrations...the root of most failures has been linked back to foreign policy and what it dictates America should involve itself with, a great cost to it's citizens.
 That said Steven you have to realize sometimes U.S. interests are interwoven with a number of Key global interests...once again a great cost to American citizens.
I, for one ,would welcome a return to innovation and more inward focus in rebuilding the U.S. economy.
 I for one would welcome a drastic change in U.S. foreign policy for the betterment of the American citizen.

No,  I think you are

No,  I think you are partially correct in that its the successive American adminstrations/congress that I feel has shown complete contempt for Americans. Yanks, no I dont dislike yanks I play a lot of games on line with them. However note that they have voted in rather extreme Republican adminstrations for decades rather than swap to democrats and today we see that result, a 2nd Great Depression looms. So in effect yes I have contempt for any voter who votes blindly for a particular party that isnt restricted to "yanks".... Spite no, sorry cant agree on that....it certianly wasnt how it was intended...poor wording on my part maybe, yes.
regards
 
 
 

I'd rather be a

I'd rather be a Yankee-doodle-dandy , living in the good ole US of A , than a long suffering European struggling under the austerity yoke , ....  a yoke  thrust upon them by a bunch of unelected officials in Brussels ....
 
...... America still has democracy ..... as time goes by , Europeans are gradually losing the power of their vote .....
 
DOW to infinity , and beyond , my friends ........ or at the very least to exceed 15 000 by year's end , a tidy 25 % gain from Jan 1 ..........
 
Go go America , go you good thing !

BTW, read "The New Road to

BTW, read "The New Road to Serfdom" by Daniel Hannan, the USA has a lot going for it that we don't, and Europe doesn't. We are stupid to despise, for example, US democracy with its PRIMARY processes. Do WE get to pick the CANDIDATES  we will get to vote for when the election comes along........? DUH?

".poor wording on my part

".poor wording on my part maybe, yes." ...Steven.
You will not feel bad if I am pains to point out the odd poor choice of words at some future point then I take it.,.........as that is not my intention.
Tell me your thoughts on our own people voting in a two party mindset for fear and loathing of tails that wag dogs.
The problem Steven is that Democracy where ever you go comes with a "qualification" that in itself is probably undemocratic.i.e.
Here is a list of options of which none are suitable, please tick the option you find least offensive, or you can live with.
You will note there is no option labeled.."none of the above"...as it will only defer to the Quad.

No, you made me re-think what

No, you made me re-think what I wrote.....I dont feel bad as I didnt intend spite.
Our own ppl, oh yes I agree......too many ppl fail to try and even think.....I think, same in the UK....."my dad voted labour/tory all his life, I will also"  Yet there was a Griffiths report (I think it was) that showed that in the hard core labour strongholds both successive Labour and Tory Govn's "starved them" of healthcare funding for decades.  Instead spending healthcare money in the marginal/swing seats where elections were won and lost.....from then on decided that only the stupid voted like that.
"No option labeled" - LOL
yes very true....however the US does have independants and we have several parties....
regards