Worrying US data released ahead of Thanksgiving holiday; China raises regulatory pressure; airlines in big trouble; France starts tech tax crackdown; UST 10y at 0.87%; oil and gold firmer; NZ$1 = 70.1 USc; TWI-5 = 72.6

Worrying US data released ahead of Thanksgiving holiday; China raises regulatory pressure; airlines in big trouble; France starts tech tax crackdown; UST 10y at 0.87%; oil and gold firmer; NZ$1 = 70.1 USc; TWI-5 = 72.6

Here's our summary of key economic events overnight that affect New Zealand, with news that any recovery for the world's largest economy is looking increasingly tenuous. Their incoming Administration has been handed a mess.

There is a mountain of American data to report today, a dump just before their long Thanksgiving Weekend. Next week, it will all be about the signals from the retail sector.

But first, US jobless claims for last week came in higher than expected. In fact a small dip was expected but a rise is what they got, to 778,000 new claims. And the prior week was revised up, making matters worse. There are now 6.071 mln people on these benefits, a drop of -300,000 in a week as support levels expire at a fast rate. And without new Congressional action in the next few weeks that ending of qualification will bite millions more. The chance of new or renewed support seems low as Republican senators seem intent of hobbling the incoming Administration.

The recovering in durable goods orders slipped in October from September, but at least there was some small growth. At least that growth didn't slip as much as expected. On a year-on-year basis, they are -1.1% lower. Non-defense capital goods orders are level-pegging year-on-year, and if you exclude aircraft orders (there were none in October 2020 but quite a few in October 2019), then they are up +5.5% year-on-year and that is a good sign.

However, there is no progress to report for the American merchandise trade deficit. It came in at a record -US$86.9 bln for the month with exports down -7.1% on a year-on-year basis, and imports little-changed.

There is good news on one front however - sales of new-built houses is holding at their high level of about +1 mln per month, and that is more than +40% higher than a year ago. That makes it four months in a row or sales at this very elevated level.

Not so good is data for personal incomes in October (-0.7%). They fell more than expected while spending stayed in growth mode (+0.5%). It is not a trend that can continue much longer. In fact, the spending growth is tailing off quite quickly now and this may be the last we see of it.

The latest consumer sentiment readings continue to show lower levels, and lower expectations. In fact, the November levels are now more than -20% below where they were at this time last year.

There will be considerable attention on the release of the US Fed minutes at 8am New Zealand time. If there are important policy insights there, we will update this item then.

In China, regulatory pressure is rising on the many SOE companies that are under bond pressures.

And China has substantially dialed back its criticism of Australia, saying recent remarks by PM Morrison were "positive". It is hard to tell at this point whether this is a reset, or just a test. A more internationally engaged American Administration in the region will be a tougher test for China's relatively hard line policies.

And in Australia, home-building fell to a six-year low in the September quarter, as a combination of Victoria's lockdown, less infrastructure work and falling commercial construction made for a weak result of completed construction.

Global airline trade association IATA is signaling that airline industry losses will be much greater than originally estimated. They now say a net loss of US$119 bln is expected for 2020 (deeper than the -US$84 bln forecast in June). A net loss of US$39 bln is expected in 2021 (deeper than the $16 bln forecast in June).

And France has started its crackdown on Google and Facebook among other major US tech giants for tax avoidance. The US is on record of retaliating if this happened, but the situation is less sure now.

After touching new records, Wall Street is backing off a little today with the S&P500 dipping -0.2% in cautious pre-holiday afternoon trade. Overnight, European markets were mixed, but with London down -0.6%. Yesterday Tokyo closed up +0.5%, Hong Kong was up +0.3%, but Shanghai went the other way closing down -1.2% in losses that grew as their session progressed. The ASX200 ended up +0.6% and the NZX50 Capital Index was up +0.9%.

The latest global compilation of COVID-19 data is here. The global tally is 60,038,000 and a +637,000 rise overnight. It is still very grim in Russia, the UK, and Italy with great stress on their hospital systems. It does seem to be easing in Belgium, France and Spain. Global deaths reported now exceed 1,415,000 and up +14,000 from yesterday.

The largest number of reported cases globally are still in the US, which rose +202,000 overnight to 13,004,000 and at their higher pace of infection. The US remains the global epicenter of the virus and the consequence of a very bad public health response. The number of active cases is surging at 5,073,000 and that level is up +93,000 in one day, so many more new cases more than recoveries. Overwhelmed, many jurisdictions have just given up on contact tracing. Their death total now exceeds 267,000. The US now has a COVID death rate that now exceeds Brazil at 804/mln.

In Australia, they are not getting any major resurgence. There have now been 27,854 COVID-19 cases reported, and that is just +6 more cases overnight. Now 95 of their cases are 'active' (-1). Reported deaths remain unchanged at 907.

The UST 10yr yield will start today -2 bps lower at 0.87%. Their 2-10 rate curve is little-changed at +71 bps, their 1-5 curve is flatter at +28 bps, with their 3m-10 year curve flatter too at just under +80 bps. The Australian Govt 10 year yield is also down -2 bps at 0.91%. The China Govt 10 year yield is down -1 bp and now at 3.32%, while the New Zealand Govt 10 year yield is up another +6 bps at 0.97%.

The price of gold is has recovered some of the big falls over the past few days, up +US$7 today to US$1811/oz.

Oil prices are higher again today, up by another +US$0.50 or so to just on US$45.50/bbl in the US, while the international price is now just under US$48.50/bbl.

And the Kiwi dollar has risen again to 70.1 USc this morning and another 'good' gain since this time yesterday. And it is a 30 month high. Against the Australian dollar we are firmer at 95.2 AUc. Against the euro we are holding at 58.8 euro cents. That means our TWI-5 will start today up at 72.6. We were last at this level in March 2019.

The bitcoin price has fallen overnight after very briefly touching a record high. But is now at US$18,987 and -1.4% below the price this time yesterday. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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TWI (!7 ) at 18 month highs, significantly above the RBNZ most recent baseline forecasts. Needless to say any other forecasts and modelling on a somewhat lower TWI have little foundation The markets care little about New Zealand's housing market ,( until it matters) care less about pass the parcel politics of Ardern and Robertson, ACC hedging positions or Kerr's weekly ramblings . The markets are looking for weakness in the RBNZ dam, indecision, and lack of decisive and independent leadership. Whacking the mole , to plug up small holes lasts for so long.

What does ACC hedge against? Currency fluctuations? I guess if the NZD strengthen and they have overseas investments, they will have less available to fund injury compensation payments.


Because taxing them and putting all that money within the grasp of politicians is going to fix things?
That is a massive assumption, not addressed in that article that politicians are up to that task.

Excuses..can kicking..times up sorry action required and the young will soon leading that charge

It's a valid point. We'd be idiots to think that the people who got us into this mess and have until recently shown little desire to get us out of it - and in some cases, push back against the problems even being measured - will suddenly become competent managers and the type of visionaries we need if we just implement a hugely aggressive tax programme.

Progress can't just be measured in dollars spent.

Yes I don't think boomers realise how quickly they are becoming irrelevant and the resentment that is building against them. They still think the world revolves around them - yet those are the same things they label the younger generations with. The world is changing quickly and they don't appear to be keeping up.

In general they've treated the generations below them rather poorly in a sense that most of the policies they push are self interested ones - yet they will claim they are doing these things for their children. I generally call BS on that one. Their children don't want their inheritance in 20 years time when they are 50 or 60 - they just want a fair crack/opportunity at life now without the stress and strain of buying a house worth nearly a million dollars and a massive mortgage to go with it! Most younger people will damn near have to have their mortgage paid off by the time their boomer parents die (life expectancy stats appear to be quite high - or at least they were when I was doing a financial planning paper years back).

It's a necessary backlash to something that is so fundamental to human prosperity becoming overcommercialised. It's residential housing FFS. If we replaced it with food in the same business model, there would be war on the streets.

Remember in the early 2000s when the stereotypical NZ tosser was a BMW driving Aucklander who had a place in Hahei? Its soon to be the property investor, and no I don't expect the boomers to grasp that.


I am sorry but this is just the idiotic labelling that i get so frustrated with. Boomers are not the issue, there are many Boomers out there suffering just as later generations, and there are many non-Boomers who are getting rich off what has happened. I am a Boomer and am not wealthy by any means. I own my own home and only that. I am mortgage free by dint of hard work and saving, not putting life style and pleasure before basic necessities. And the ills you say that the young wanted, well most Boomers that I knew growing up wanted exactly the same things. True the framework was different then, than it is now and we can look back and it appears different now than it did then, but we didn't know it then. But the boomers didn't control what was going on then or now, it was the politicians. The boomers grew up being told not to worry about retirement, as a portion of their tax was being put aside to pay for it. But then Piggy Muldoon came along and pillaged the fund and suddenly there was nothing for boomers retirement despite Government promises. And while today the equity gap then looks small, it was still very hard to get ahead, but we were taught to save every last penny, provide for ourselves, and time then took care of it as that happened, as opposed to today where people want the OE, the flash phone and car, and have kids at a time when as boomer we would have considered we couldn't afford them. So stupid labels from stupid people who are not capable of analytical thought, if any, are just that - stupid. Look at your political history to see who to blame and then start asking them the hard questions!

'So stupid labels from stupid people who are not capable of analytical thought'

Are you labeling me stupid? Thanks I guess.

And I'm quite capable of analytical thought - but don't let that ruin your argument :-)

I hope your not still stuck in the 1980's like many boomers appear to be? Its now 2020 and to get a job your expected to own a decent phone, have a car and often experience working in international markets (i.e. have an OE) because people doing the hiring want those things. Hiring Sally who has lived at home with Mum and Dad to save for a house, doesn't have a phone or car, and hasn't been overseas isn't a very attractive option for the job.

If the hat fits ... Some perspective though, cars as a percentage of income are a LOT cheaper today than they were when I was young, and indeed I was never able to afford a good car until I was in my 50s. My cars had to fixable by me, I couldn't afford to take it to the garage. Cell phones didn't exist then, and today if a company wants you to have a phone, they give you one while you work for them. The type of experience you talk about is for a very small sector of the economy. The vast majority of the economy does not require that experience or connectedness. And Sally's attitude, irrespective of her life experience will more likely determine if she gets the job, not anything else. This attitude will be reflected in her school results, determination to present herself in the best light, be flexible, adaptable, humble and confident.

The real blame for today's economic mess lies with the Lange Labour Government who did a half arsed job of introducing Rogernomics, what the rest of the world knew as Friedman's Free Market theories, and the following National Government who embedded them deeper, both of whom did not understand the consequences (to be fair neither did the rest of the world) and therefore could not explain them to the electorate. We only knew we had been shafted by Piggy. Since then as the impacts of the Free Market began to be realised not one politician who had both the power and opportunity saw the need to try to roll the policies back to something that benefited all Kiwis. Even today the politicians are talking up a storm, but how many are actually admitting the Free Market doesn't actually work? So no, blaming the boomers is just stupid, shallow thinking.

I guess the future generations will resolve the issues then Murray as yours don't seem to have any ideas. Or if you do, you're not doing a very good job of implementing them. And I don't say that to offend, I simply say that because you've had your shot, the proof is in the pudding. Its time to let another generation to have a go. If you were going to change the system to make it better for people (from a utilitarian view) you would have done so by now. Must be time for some golf and gardening and let the kids deal with the debt burden, the taxes, the global warming, the rising inequality...

OK IO your generation elected JA and her team ( and before that JK and his team) - so how's that going for correcting the current mess? She's in her second term now, what are the results?

Again stop blaming the generations, we are essentially at the whim of the politicians once they get into power. So demanding the answers from them, refusing to accept being fobbed off will be necessary. Maybe a few petitions demanding change? The Government need to be lobbied by people other than those representing big money.

As stated before I am a boomer, but I want what you want. I want the young to have decent choices, not to be trapped into renting for life, not to have a mortgage that puts them into so much debt they'll never be free of it, that if they are not academic they can get a decent job with good conditions (40 hours a week), with decent pay so they can have a reasonable lifestyle. I own my own house but I don't care what the market says it might be worth at th moment because i don't want to sell it, and have not borrowed against it. But I do know that the lower the market for houses in relation to the median wage the better off we all are. And addressing the caps on rents will do more in one hit to address poverty, especially child poverty, than all the other things the Government is doing.

Of all the sectors that our tax dollars are spent on, health takes the biggest chunk by far.
How would we know if we're getting value for that spend? David Clark canned health target reporting pretty early in his shift. And we're still waiting....
(page last updated August 2019)
But sure, lets just add on some more tax and hope for some great results in delivering equality.

I think you will find social security and welfare is almost double the size of the health budget...

The three largest areas of total Crown expenditure for the 2018/19 financial year were:

Social security and welfare: $34 billion (more than half of that National Super)
Health: $18.7 billion
Education: $15.3 billion

The worst value seems education, how come we spend so much but we're always hearing about "skills shortages".

Silly me. Doing a quick grab from a stuff article.

I only chose health as it just baffles me that health targets get binned, the last time they were publicly updated was Q2 of last year (how is your DHB doing? You don't really know), the last time any update was made on an MOE website about progress on new targets was Aug 2019.

If you're not measuring performance, then how do you know you're getting value back? Or if you need more money or less money?
So I'm skeptical as to whether taxing one generation on the premise this will fix inequality to another generation is going to be achieved by our politicians.

Hamish. I worked in health for many years. You can be certain you are not getting value for money.

the harsh reality is in an HUGELY overpopulated world with a straining resource base, it is near criminal to be wasting so many resources on extending the lives of Old people
Yip, cue the screams of I paid my taxes ....

Part of the reason i reckon Trump let covid run rampant... What ages group is this killing... oh good.. the ones that require draw down on pensions

but Boomers were not bought up to think that the Pie was ever limited
that their health "spend" (directly) removes resource that can be put into the generations to follow ..

Between obesity/ diabetes, the constantly advancing tech/treatments (that are expensive) and all of us wanting all available options and the aging pop... its the blue whale in the room dwarfing the elephant.

Pair that with out aging underground infrastructure and increasing expectations around water quality etc.... well...

Start with a tax on the large internet companies. They are the ones getting a free ride from the young people of today.

Property speculators are already taxed - well if IRD does its job properly they are.

Taxing Boomers living in their own homes is not going to do a damn thing.

But there are clues that an over-supply in housing will come. There are 40k+ residential resource consents being issued per annum at the moment across the country. Immigration has gone to essentially zero for at least 12 months, and even at recent high levels that is an over-supply. The baby boomer generation are continuing to sell up and moving on.

Can house prices continue to boom in an environment of over-supply?

I agree inequality and rising house prices needs to be addressed urgently but a capital gains tax is not the solution. It would not stop the rich investing in houses if that is where the profits are compared to other areas of investment. It may give the politicians more tax revenue but how would they use it. The only way to quickly stop the property speculation is to limit the number of properties a person (including property interest thru trusts etc) can own or to deny/limit the tax deduction for borrowing costs/interest. Exemptions would be made for property developers. This puts property investors on the same footing as FHB. It is not a capital gains tax so would not breach the Government’s pledge not to introduce wealth taxes.

Agree. Property is like a drug for this country. Need to limit it or make it less attractive and difficult to own multiple investment properties. (like it is in countries like the Netherlands). Get those investment $ into the productive parts of the economy.

The other piece that would level the playing field is the requirement for actual cash to be used for the deposit vs pulling equity from existing properties. First time home buyers need a 20% cold hard cash deposit. Whereas investors can just use paper wealth and equity.

Cue the boomer meltdown from callers on Newstalk ZB this morning.

Lazy thinking frazzz. Forget the article.
The debunk is here, and close.

A capital gains tax (CGT) was introduced in Australia on 20 September 1985, one of a number of tax reforms by the Hawke/Keating government.

2. https://amp.abc.net.au/article/12852854
After years of dire predictions that Australia's property bubble could burst, national house prices continue to withstand the otherwise devastating impact of the coronavirus pandemic, and once again the doomsayers have been proven wrong.

Becareful what you wish for.

Get the policy makers to focus on jobs and incomes.
Hint: European style progressives & their ideas don't work.

Lazy thinking..what does that even mean? If we are looking across the ditch then as an example compare what 1 million gets you in Australia as opposed to NZ. Article is bang on - bad luck if you think otherwise. As a boomer Henry you can try to deflect all day long - thats a boomer specialty.

Frazzz look at Sydney prices, like Auckland prices. A capital gains tax in place for 35 years, has not stopped the property bubble. - and Oz has stamp duty too.

Why do you think a cgt in NZ will have the opposite effect to a cgt in Australia?
Give us your top 3 reasons.
Just 3.

Henry - all I am asking for is a long period house price stagnation - while incomes catch up (cough cough ..hopefully in my lifetime)?
While CGT is not the full answer it is one obviously missing if you compare NZ to the rest of the OECD.
But lets broaden the argument Henry - rather than expecting the young to look after the boomers till they expire (and pay off student loans/Mortgage/ Boomer lifestyles.
"Our current system is broadly sustainable, but coming under increasing pressure. As our population ages, our workforce will need to support increasing healthcare demands and other associated costs. This could mean more fiscal pressure to tax personal incomes, so that naturally raises the question of how a CGT could potentially add value in this scenario,"
Australia total tax revenue from CGT is 5% - not something to be sniffed at I would say.

Frazz incomes will never catch up with house prices. Government regulation is required. But the Government is too scared.

What they need to do is cap rents for a whole house to 25 - 30% of the median wage, require all landlords to be qualified and licenced, put a minimum standard on rental properties, ban properties being held empty for more than three months (last heard almost 40 k empty in AK alone), ban foreign ownership, address building and material standards to make it cheaper to build higher quality houses. These things will cause house prices to fall, and the target should be that the median house price costs no more than six times the median wage.

"cap rents for a whole house to 25 - 30% of the median wage" does that apply to a 20 bedroom waterfront mansion too? I might have to start renting...

Evidence shows capital gains tax is not the solution. It is the gearing aspect that needs to be addressed. Borrowing costs should be treated as a cost of acquiring capital not as a cost of earning revenue. This applies to all assets.

You don't know what house prices would be like without that tax though. They have had a much better economy than us, so their houses should be a lot more than ours.
Also isn't it possible that their capital gains tax reduces the amount of income tax they need to collect and increases jobs and incomes?

1. Wrong way round, we know what nz prices are without cgt.
Australia has cgt, and also has a property bubble.
The question is, would nz have a bubble with a cgt too.

2. Call the economies same. Focus on with cgt/ without cgt.

3. Here is the tax table
Remember add Medicare and stamp duties.
And road tolls (can be $100 per week).
There are big rules about transferring capital to income revenue and v v.

How big are the relative bubbles, what are the house to income price multiples like between the two countries?

What the cost of a decent house in an Australian city of 1.5m compared to Auckland?

$500,000 gets you something pretty decent in Perth, Adelaide or Brisbane.

I was talking to a mate in Melbourne who said he just bought a detached house 20 minutes from central Melbourne for $550k brand new. Yes, that was turnkey, land/building/fences/driveway.

I thought that was bulldust, then I looked it up... https://www.realestate.com.au/property-house-vic-clyde+north-134688226
You can quite easily do just that.

1) Yes I think we would still have a bubble, there is no one lever that will fix that. But probably a bit less especially if the tax was comprehensive. It isn't a binary yes / no.
2) I don't think you can call the economies the same. And also the population is quite different: Sydney with 5 million people should be more expensive than Auckland with 1.6 million. Can you imagine what Auckland house prices would be with 5 million people?
3) Lets apply simple logic: if they had a comprehensive CGT (which I don't think they do), it would be earning a lot of money based on their increasing house prices, and that money won't just disappear, it would decrease the amount of income tax they pay for the current level of services they receive.

But regardless of whether a CGT works or not, don't you think a lot of hard working taxpayers are going to get pretty pissed off when others make millions of dollars for doing nothing and don't pay a cent of tax on it? The longer that goes on the more the resentment will build. It could turn very nasty. I am neither a boomer nor millennial and I would probably be worse off with a CGT but I still think it is needed for long term political stability.

"Hint: European style progressives & their ideas don't work."

Yeah what a disaster it would be here if our economy was as productive as the Europeans. Why i might be able to afford paying twice as much as the Europeans for basic goods and services.

Yes and wouldn't it be awful if we could spend more of our time relaxing and going on holiday and going to the pub instead of working hard to spend every spare cent on the mortgage?

Back in Europe, were all my friends own their own homes in their mid 20s with high school level education. Somewhat like another group of people I know... (Boomers)...

I brought my first house in the UK, in a city a similar size to Christchurch, at 25. It's currently worth about $300,000 for a solid brick two up, two down semi-detached place with a large garden. If I was still living there my mortgage rate would be somewhere between 1-2%.

London is a different ballgame of course, but there's very affordable housing in smaller cities.

we arent short of "money" or tax
we are short of income / jobs / stuff to plunder ... you need to pass on resource bases, not embedded energy (in the form of houses)
No, the boomers have had a hell of a party

bring in Nick Cave
O children

Forgive us now for what we've done
It started out as a bit of fun
Here, take these before we run away
The keys to the gulag

O children
Lift up your voice, lift up your voice
Rejoice, rejoice

Here comes Frank and poor old Jim
They're gathering round with all my friends
We're older now, the light is dim
And you are only just beginning

O children

We have the answer to all your fears
It's short, it's simple, it's crystal clear
It's round about and it's somewhere here
Lost amongst our winnings

O children
Lift up your voice, lift up your voice
Rejoice, rejoice

The cleaners have done their job on you
They're hip to it, man, they're in the groove
They've hosed you down, you're good as new
They're lining up to inspect you

O children

Poor old Jim's white as a ghost
He's found the answer that we lost
We're all weeping now, weeping because
There ain't nothing we can do to protect you.."

"Yet as Deutsche points out, voter demographics won’t stay the same forever. One day, (around 2030, according to United Nations data), millennials and younger generations will become the biggest voting bloc."
I think the boomers assume they will hold the voting power until they die. But 2030 isn't that far away. A few concessions now (capital gains tax, environment taxes) would no doubt result in less radical changes in 10 years time.

Not so good is data for personal incomes in October (-0.7%). They fell more than expected while spending stayed in growth mode (+0.5%). It is not a trend that can continue much longer. In fact, the spending growth is tailing off quite quickly now and this may be the last we see of it.
Graphic Evidence

I have just twigged to a new thought: given that term deposit rates are so low now, to break a term deposit has very little consequence. I will do that without a second thought once mine have been rolled over to the new low rates.

Now, wotcha gonna do with it

i think if you read the fine print the break fee is a 2% or thereabouts redemption on paid interest during the period up until break.

So if you are getting 3% interest you get to pay back 2/3rd of the interest you received
If you are getting 1% interest then you pay back all of it plus an additional 1%

banks aren't stupid, nothing is free.

I very much doubt that the principal gets reduced! I'll check this but I would very much doubt this.

I know the focus is on interest rates. But the rising exchange rate v USD is going to tighten our economy up just when Orr is trying to loosen things up, going to take away some of his wriggle room on where interest rates go in the short term.
The meat processors love using the exchange rate to justify lowering their schedules to farmers.

Look at all the houses America is able to build. Then look at the FED notes and see that they are purchasing mountains of mortgage backed securities. Over $1 trillion USD since the pandemic kicked off and at a rate of $120b a month, with no desire to scale this back until end of 2021.

While this isn't good, aren't they effectively printing money to buy at risk mortgages? Well if they can do it, Orr will be chomping at the bit...


What an inspirational story from Stuff - an entrepreneurial character who really innovated and added to the economy.

He currently owns 80 properties
He has flipped 300 over 17 years
Article doesn't reveal how much "flipper tax" he has paid

I often wonder if these people have mental health disorders. Be a bit like the way we now view the likes of Jordan Belfort (the wolf of wall st).

Perhaps admired at the time, but in retrospect you think - these creeps are just ripping off the citizens around them.

RBNZ monetary policy and regulatory actions have backed him all the way. Picking winners should not be government policy.

You reap what you sow.....

Sounds like it: "Around the time he set his 2003 goals, he had been learning about the law of attraction, which revolves around the idea that you will attract into your life whatever you focus on, be it positive or negative"

Hilarious, he just happened to be in the right industry at the right time. If it wasn't him, it would have been someone else, it's simply luck. To pass that off as "hard work" is disingenuous at best. Huge amounts of money printing and interest rate lowering has ensured his success, it's go nothing to do with "hard work". If we all had crystal balls that told us the future back in 2003, surprise surprise, we probably would have all invested in housing. Actually, if I had that crystal ball I would have invested in Apple, then Tesla and be a multi billionaire. Some people have done this, they are the lucky few, we cannot hold them up as "this is what we can all do", because it's simply not the case.

"...innovated and added to the economy." You must be having a laugh. There is nothing productive about house flipping. If only he had built a high value business, then he could be called productive.

Sorry Blobbles, my post was complete sarcasm. Agree with you.

Sorry, my sarcasm filter is increasingly turned off the more ridiculous the situation becomes...

Yes as we type this he is a parasite on the labour of those working in the productive economy. Probably sitting in the cafe while his serfs do that work to make the country function.

Dealers know what neither the Fed nor all the so-called money/mainstream repo “experts” seem to be able to: that when the global dollar shortage shows up, leaving FIMA’s to have to liquidate or somehow mobilize their “reserve” assets, it’s really good business to be in the UST auction business even as indirects disappear in it. Profit potential on top of survivor potential. A global dollar shortage is the best time to be holding the best, most negotiable of all repo collateral (see: March 2020).

The story of Solly was really a story of modern (and global) money with repo and repo collateral increasingly at the center of it; at the center of repo is the best collateral, meaning OTR. Thus, at the middle of everything is Treasury auctions.

The first financial crisis in 2007-09 was, in many crucial respects, a repo collateral shortage leading to that first global dollar shortage. Rather than fixing it, central bankers and regulators (same thing) spent more than a decade covering it up (mostly because they had to cover up this gross negligence due to self-imposed ignorance). They hadn’t learned a damn thing from Paul Mozer and the Salomon Brothers episode.

The scam was never inept, it is authorities who continue to be decades afterward. Link

Just be careful Henry. I'm getting fed information from two US friends. One my professor of applied statistics friend, the other an Architect. Not stupid people, although they appear to be behaving that way. The former rabidly anti Trump, the latter a fellow who is a swing voter and split his vote last election. He is pro Trump simply because Trump promised "peace".

In my view Democrats have been down a dark rabit hole for 5 years, the strength of the anti Trump rhetoric just didn't make sense. Trump was seen as an aberration, something that would be swept away once the people came to their senses. Well it didn't happen that way, Democrats were wrong about that and need to adjust their thinking. Now I fear it is Republicans disappearing down the same dark hole over the election result. Might be it was fraudulent, but if so the last half a dozen probably were. What is significant is the growing polarisation, and that isn't good.