Editors choice comments
"What if the RBNZ are wrong?"
What if the RBNZ is right?
The cost to society of the RBNZ being wrong is much less than the cost to society of the RBNZ being right.
What are the costs if the RBNZ is right?
Look at what happened to the banking system and consequences of failure of banks due to large asset writedowns, which then required bank recapitalisations:
1) in Ireland, and its subsequent impact on society, and the subsequent impact on the government finances
2) in US, and its subsequent impact on society, and the subsequent impact on the government finances
3) in Iceland and its...by: CN
So basically going from the chart above, the big 4 Aussie banks are creaming it. I'm in full agreement with Orr, the banks should be able to stand on their own two feet and weather any form of GFC and never need bailing out.They are making money by just moving money about, they don't manufacture anything physical and can quickly tweek rates to make profits. I'm all for a stronger banking system where the "Profits" don't disappear but are fed back into the actual business in the form of a "Reserve" for when, not if things turn to s@$t..
"..if Winston fulfills all his promises" LOL. Not to burst you bubble, but Santa and the Toothfairy aren't real either.
by: Brutus Iscariot
A sub-head suggestion:
'Public servants, unused to the notion that Time = Money, devoid of commercial experience, with guaranteed job security and plush conditions thanks to compulsorily acquired funding, misunderestimate capex by 50%. Unexpectedly.'
He's not considering the governments position, vested interests are telling the government that the sky is about to fall and he's just making a reasonable counter argument. I think everything Orr says makes a lot of sense.
by: fat pat
It’s nice to see one of these reports that actually spells out the “irrational” factors that most economists tend to ignore.
Too often economists stick to the assumption that house prices movements are purely based on fundamentals (supply/demand). The reality of the NZ market is that a huge portion of the “demand” is based on the fear of missing out on tax free capital gains.
Once capital gains dry up or turn negative the demand picture will look very different.
Given some of the factors that are set to hit the housing market (FBB, a CGT, RBNZ capital requirements, near record levels of...by: Miguel
Seeing more capitalised banks would not be a bad thing. Having interest rates move away from gfc life support levels will do wonders for the equity of society by making asset based debt farming much less attractive.
National need to come up with a comprehensive housing/urbanisation reform package, anything else is just dribble.
Interestingly, the Conservatives in the UK are beginning to do that. It will be worthwhile watching how much progress they make.
"Liz Truss a UK Conservative junior Minister is a big fan of Tokyo urbanism as a post-Brexit/post-austerity remedy for her country's housing woes and as a campaign strategy for her party to gain political support with young voters. She believes the Conservative party needs to challenge vested interests, in particular NIMBY land owners who oppose new...by: Brendon
Go along the harbour edge ...4 kilometer strip? Around circumference of inlet 8 to 9 kilometres?. By 500 metres of reclaimable land in there.400 hectares gross area. Dredge the shallow mud flats to back fill.develope the land for mixed use harbourside industrial/commercial/ apartments..sell the Leasehold title only on the developed lots. That way the whole 4 billion($1000 m2?) of new land value and its income is retained to the crown(Chinese model ?).Use the income to pay for the road. Build over the road if one wants an additional 200000 sqm of elevated building platform .Make it a quality...by: jimmyH
Does this mean National thinks the housing crisis does exist again? No longer just a sign of our success and a good problem to have?
Shane Jones' comment: “Phil’s a politician and he’s got a track record of letting his tongue run away from him.”
A case of the pot calling the kettle black? ;)
Very informative read Greg, cheers. Would be good to see a graph of Auckland’s estimated shortfall overlaid with median price if we had more data. Also, I agree with what Rodney Dickens wrote last month and I’m not convinced that the Stats NZ model is Kosher https://www.interest.co.nz/opinion/97792/rodney-dickens-thinks-statistic...
Interest.co.nz is the only outlet talking about the current state of play of the Light Rail project. That this is stalling - even at the business case stage - should be an outrage.
by: GV 27
Nice article Guy. I have to listen to urban friends and relatives banging on about "evil" dairy farmers and climate change, while they drive around the city in 4WDs, and jet off overseas for holidays a couple of times a year. I just inwardly roll my eyes and think of motes and beams in eyes.
That is equivalent to a 200 metre cube of sludge. Put it on land and it would look impressive. Taller than the council HQ.
by: ngakonui gold
The answer has to be to cut the dividend payout ratio's of the large banks which are as high as the early 80's, simply inappropriate for highly levered, systemically important institutions. Bring it down to 50% and let them build up capital via retained earnings. Many Australian investors are addicted to the sugar hit of the high franked dividends but this is all part of the adjustment necessary (and likely to come later today) for a more ethical and safer banking sector.
by: Te Kooti
Kiwibuild was one option to a problem that has festered for decades. If it was 'obvious it wouldn't work' in 2012, why wasn't something else done by the incumbent Government back then? And the ones before that?
Because it would upset a vocal minority of the electorate.
When I arrive in NZ I never saw people sleeping in the doorways of shops etc. Now? It's an everyday occurrence, and unless we do something, that problem is not only is that going to get worse, but differently worse...
Adequate social housing is the responsibility of any civilised, developed nation. Are we saying that we aren't...by: bw
If it walks like a duck, quacks like a duck, and looks like a duck......? Debt by any other name is still debt.
But then most boomers grew up with "lay-by" being a reality in their life to get (for my family at least) hard to afford necessities.
I am concerned that some property owners who own high value coastal property are pressuring local and central Government to fund their property protection and therefore preserve the value. I feel that they need to take responsibility for their choices and pay for it themselves. There is some history in Wellington for example where home owners have forced the local government to rebuild damaged seawalls in exiting locations rather than accept a managed retreat.
Central Government and Local need to be reminded that they have a responsibility to all, and if they are taking actions to protect...by: murray86
One gets the feeling that these issues will die with the babyboomers. Lets just keep them happy until they're dribbling into their pajamas at the Summerset Village.
'We are gonna sock youse Ratepayers with Send Munny notices to pay for stuff that might or might not happen, several decades from now, but which needs Lotsa expensive Planners, Consultants and others Who Know Best in order to draft a response Right Now.'
"More for less" sounds like Trump's catch cry. Even the faithful now realise he was living in lalaland.