90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: British riot over budget cuts, new taxes; US consumer confidence slumps; Dragon's Den star defaults

28th Mar 11, 8:59am by Bernard Hickey

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that more than a quarter of a million Britons marched in London on the weekend to protest at budget cuts and new taxes.

The new coalition Consverative/Liberal Democrat government in the UK announcing swingeing spending and service cuts on top of various tax hikes as it tries to control a budget deficit and borrowing that has been surging out of control.

British voters are angry that their money was used to bail out banks and now they are being forced to pay with reduced public services and higher taxes.

Groups of anarchists attacked police and damaged shops and banks in the wake of the otherwise peaceful marches. More than 200 people were arrested. See more here from BBC.

Meanwhile, the 'Too Big To Fail' banks have carried on paying big bonuses to traders and executives and remain vulnerable to financial market shocks.

This is the political fallout we are likely to see around the developed world as the imblances, the financial innovation and the 'Too Big To Fail' banks that created the global financial crisis are still in place. The risks were socialised and the profits privatised.

Now the public are seeing the fallout in the form of lower public services and high taxes.

Meanwhile, US consumer confidence slumped in March to its worst point since November 2009 after fuel prices rose and the Japanese earthquake and Tsunami dampened the outlook for global growth. See more here at Bloomberg.

Back in New Zealand, the curse of the reality business television show has struck a star of the Dragon's Den. A company part-owned by Auckland property developer Paul Webb has defaulted on a loan to Hanover Finance, now owned by Allied Farmers. See more here on Honk 2's collapse.

Webb is also a part owner of Herbert Insurance, which collapsed leaving thousands without insurance. See our article here on Herbert Insurance.

The New Zealand dollar was firm in early trade. See BNZ's currency report here from Mike Jones.

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30 Comments

by Wolly | 28th Mar 11, 9:11am 1301256687

check this out Bernard...

http://www.marketoracle.co.uk/Article27182.html

"So Thursday evening's short-covering panic in the yen forex markets, and the subsequent panicked response by the central banks, wasn't just a low frequency outlier – the equivalent of an 8.9 event on the financial Richter scale. Rather, it is the predictable result of the lunatic ZIRP [Zero Interest Rate Policy] monetary policy which has been pursued by the Bank of Japan for more than a decade now – and with the Fed, Bank of England and European Central Bank not far behind.

The joint announcement by G-7 bureaucrats of combined intervention dropped the yen sharply and let the carry traders postpone the day of reckoning."

"Why will this policy fail? Because Western central banks cannot create yen. They can intervene to lower the price of the yen only by selling yen. When they run out of yen to sell, the yen will resume its ascent, unless the Bank of Japan continues to inflate. If it does, this will create an inflationary crisis in Japan. For two decades, the Bank of Japan has resisted this"

by scarfie | 28th Mar 11, 11:06am 1301263560

Good read Wolly, particularly where is describes the differences between Japan and China. Remember Stratfor's analysis is that China has to maintain 8% growth for the rulers to sustain the bribes, so bubble is linked with political stability.

John Kicklighter has been quoted on interest.co before, and this video is worth a watch as he describes the pressures he sees on Europe. Interesting is that England seems to be in the exact scenario that Gary North at the Oracle describes, where they need to put interest rates up as inflation rises, but are hesistant to do so.

Here's John Kicklighter speaking.

Some good comments on the S&P 500 around the 14 minute mark.

by Wolly | 28th Mar 11, 11:27am 1301264838

Yes and it explains Bollard's decisions clearly. He follows the grandplan mandated by Bernanke the printer...and bugger the damage.

by Snarlypuss | 28th Mar 11, 10:21am 1301260860

Property buyers strike...."Tax reform group Prosper Australia today (l5/3) called on first home buyers to delay buying real estate ahead of the flip into a falling market, which it described as ‘imminent’.....negatively geared rental property..... investors will flood the market and overwhelm demand. Buyers will step back, making it virtually impossible to sell at any price"

by Muppet King | 28th Mar 11, 10:38am 1301261915

Those people arent taking any crap ay, they are dead serious. If it takes off it will have effects over here, and will probably spwan the same group over here.

by neco | 28th Mar 11, 10:46am 1301262366

State elections in Germany, green party at 24.2% in ultra-conservative Baden-Wuerttemberg and will probably have the first ever green state Prime Minister. Greens also at 15.4% in Rheinland-Pfalz. Mainstream parties (especially those in power) will be having a tough time in western democracies in the next few years.

by scarfie | 28th Mar 11, 11:27am 1301264841

That is really interesting. I don't generally give a toss about politics, because the system we use is dysfunctional and not really democratic at all. We need to overhaul the process not just change the parties every few years.

But if the greens here want to get themselves any credibility they need to move away from promoting dope smoking and dubious social policy.

From a design and build perspective the Germans are light years ahead of us with their sustainable building practices. Not that I like all of it, especially the air tight homes bit where you have to have mechanical ventilation. But their Architecture schools are weighted well to the side of the technical side of design twhereas our are more toward the artistic end.

by steven | 28th Mar 11, 10:17pm 1301303839

I guess they have decided mMech ventilation wins v cost of heat via air losses....I dont see that tight buildings are an issue, you open windows when you need to....its how far you want to go and diminishing returns.........

A lot of design relies on what the ambient is like over the year............and then over the day....and how many hours of occupancy....etc....etc....lots of factors.......

Wellington should be good for passive cooling, low air temp v high sun temp....yes then mass counts.

regards

by Wolly | 28th Mar 11, 1:03pm 1301270594

"The office of Earthquake Recovery Minister Gerry Brownlee told Radio New Zealand News last Thursday that former major general and departing Customs boss Martyn Dunne was in line to be given the job on Tuesday.

He would have deferred his arrival as the new high commissioner to Australia by two months to get the authority working.

The appointment was reportedly confirmed in a briefing to MPs by Civil Defence Controller Steve Brazier on Friday.

But on Sunday Mr Brownlee said Mr Dunne would not become head of the authority, blaming media speculation for the earlier information." radionz

Harrrrrrrrrrrrrhahaha

and these clowns are running the show!......pity the Chch residents.

by prosperopink | 28th Mar 11, 1:36pm 1301272595

Scarfie you can't really mean "artistic" can you? IMO somehow our buildings seem to end up looking ugly as well as technically challenged ( not to mention leaky). Can it be so hard to design and build attractive, sound, functional, thermally efficient buildings in NZ.?

Do we have to have dated themes ie the porthole windows and pointless turrets of the 80's

and now the horrid corrugated iron in trendy grey?

by scarfie | 28th Mar 11, 3:00pm 1301277629

Haha yes I do mean that, but I didn't say it was good. Add the modern trend of mono pitched houses which are in general quite aweful.

The way I understand it is that the modernist movement originating out of Germany in the 20's rejected all historical precedent in design. It was a new architecture for a new age. Until the recently the history are architecture was either minimised or not taught at all, hence an era of design where beauty has given over to other attributes. Building for enfironmental conditions was forgotten in the process.

A lot of designs seem to me to be pure self indulgence.

Germany seems to at least turned the corner, and at least they didn't build leakers. They probably still have too much embodied energy in their building though.

Further, I spent an hour or so with a senior Architect last week that explained to me about the situation in Christchurch. He said there are Architects assessing buildings down there that have absolutely no idea of structural issues. He also said what is not widely known is that recent movement has left another large fault in tension. If it goes it will destroy undamaged parts of CHCH.

I have posted here before about our poor urban design, and how it contributes to social breakdown. It makes me laugh when I see the threads about house prices, because it is all low quality we are over paying for.

by KW John | 28th Mar 11, 5:46pm 1301287609

Coincidentally, a friend in the UK sent me this re: meeting house on their local allotments.

double glazing, cedar weatherboard, oak floors - prefab

The fight drained out of me......

by Wolly | 28th Mar 11, 5:51pm 1301287900

Hot dam that's bigger than JKs office....

by powerdownkiwi | 28th Mar 11, 7:19pm 1301293166

Scarfie - I was lecturing to a bunch of Architecture/draughting/q.surveying students last week - telling them all abour embodied energy and mass vs inertia.

Some of them get it....

by scarfie | 28th Mar 11, 9:56pm 1301302563

You sure about the Architecture students in that PDK? Were you up at Victoria?

Anyway I am pleased that some were onto it, there is hope.

Reminds me of one of my Tech 1 lectures where the Engineer giving it showed a section drawing of an Eco house with skillion roof and solar walls. It also showed a concrete floor that had a space below that didn't look right, so I piped up and asked what it was. It was a hypocaust floor. Lecturer said he has been showing that plan for 10 years and no one ever asked that before.

Tough part to eco housing is the need for mass, but to keep the energy required to build it and to make it resistant to seizmic. I think the answers lie in history somewhere, we just think we can do it better these days.

by steven | 28th Mar 11, 10:26pm 1301304376

Why mass?

Usually mass is used to delay.....black plastic water filled butts have mass...

I tend to ignore mass for a house....aim for high insulation, low air losses and simple to build and maintain.....the key is getting the total life cost down and not get fixiated on one aspect....I find some of the "designs" that are home grown for far out places like siberia interesting.....ppl have had to be practical yet effective (or they die!) and as you say history, dont re-invent the wheel.

regards

by scarfie | 28th Mar 11, 11:11pm 1301307078

Yes capacitive vs resistive is the decision. There is also reflective that can be effective in the right circumstances. They are all forms of insulation, but we get hung up on resistive.

Where my job comes in is to match the practicalities with the physiology, and also psychology of space.

Humans much prefer radiated heat, but also like a range of temperature, humidity and air flow within narrow parameters. Then you also have acoustics to design around.

Mechanical is always a tradeoff between those.

Why bother with working machinery when it can be done passively, I am sure as an engineer you can appreciatet he beauty of simplicity. With orientation and mass it is all possible for all but our bleakest regions.

Yes water is a fantastic medium to store energy, but plastic? My job is also to make it visually appealing.

Don't worry I have a head full of different ideas to try one day. Earth is a simple product that has a number of desireable attributes.

You are right in that different regions have designed appropriate houses for millenia, the problem is the modernist movement has allowed that knowledge to be forgotten.

This should all also be considered on a macro scale. Correct location within the topography and then designing for the local climate can alter the average temperature by a half to one degree. That alone can mean big percentage savings in heating or cooling. Bigger gains are probably likely in more extreme climates than ours. Hard to put it all across as I did a 3000 word analysis of a schools thermal performance last year.

by steven | 29th Mar 11, 7:16am 1301336206

My degree is building services, my interest is/was passive techniques, unfortunatley 10~15 years ago the "height" of engineering design in NZ was install a split.....My degree was mostly wasted here....

Now I do IT....

regards

by powerdownkiwi | 29th Mar 11, 8:01am 1301338893

Scarfie - Seven

good conversation. These were Polytech students.

Water is good - I looked at burying plastic-wrapped 44-gallon drums of it in concrete - if the drums eventually failed you'd still have a membrane.

A friend did a very successful rammed-earth/beeswax floor, but I don't think it was insulated.

I'm keen to try reflective next. I've got a solar column on my East wall to get morning heat in, but a reflector on the Nor'west corner, could reflect that morning sun in through the North wall glass. If it was a series of slightly angled-down stainless mirrors, there's the pad heating up round the corner, 90deg early. Plus which, it's an 'extra' in terms of catchment. Now if I could swing them back in at night as insulated shutters......

by scarfie | 29th Mar 11, 11:28am 1301351308

Earth is insulation PDK, just capacitive:)

While your stainless idea sounds good, don't write off white paint as its reflectivity is pretty good. Low emmisivity also. You could use walls in your garden to effect your goal. There is a whole balance of reflectors and collectors that can be utilised, even within the house envelope. How about a south wall that is a collector, with a reflective wall further to the south. Can work if you are on a north facing slope.

40% of solar energy is non direct.

More below for Steven.

by steven | 29th Mar 11, 8:49am 1301341745

Plastic....yes maybe it isnt the best looking.......however it is or could be a double use, in winter a energy storage medium keeping frost away from plants if not ppl, in summer rain storage for plants/garden maybe grey water storage for toilets etc. The plastic road barriers are interesting....fill them with water but light to move.....so while butts are round and maybe ugly there is nothing stopping you shaping them to something more pleasing.....they are also moveable.....maybe indoors for winter sun capture and outdoors for summer rain capture....given AGW and its increasing instability thinking on how to mitigate those extremes becomes very important....

Moderist movement, more like we had cheap energy which allowed us the luxury to build as we wanted....the disadvantage of that will become apparent to everyone in the next decade.....houses have a 100year plus life.....but most have been built assuming cheap energy forever....its nice to have something that is good looking, but I think if you follow the principle of powering down, which I think there is no choice on, that goes largely out the window first, it has to.

Earth - I think in china? someone was developing a cheap earth press/hydraulic ram to make bricks....shovel soil in get bricks out.....very low energy input.....really cool....

Extreme climates, humans dont like extremes.....I think as our global population shrinks we will have to retreat from areas that need high energy inputs to survive but offer low returns....so alaska for instance I think will be abandoned or at least a far lighter pop density ppl, are only there for the lifestyle offered by oil.....maybe nature will have the last laugh....

3000 word essay? lol......30000 maybe to do it justice....

;]

Anyway thinking along these lines I think is good for a career I think....longer term while some build unsustainable "pretty" buildings others will get it and go the other way.....and these ppl I see are the longer term benefitors from their actions.....

Also we will be moving away from a disposable economy....the energy to keep making something after throwing away the old one just wont make sense/economics....

regards

by scarfie | 29th Mar 11, 11:48am 1301352537

Did I have it correct that you are an engineer? But specialised in services? Is the background of our services lecturer, who has NZCE.

Cinva Ram is probably what you are thinking of, out of India.

Agree about modernist vs energy. Zoning is one of its worst evils.

Different climates have different surface to volume ratios. There are four main climate types. Before commencing a design there is a step by step process to follow. Temp, humidity, rainfall, irradiation and wind are just the start point.

There are actually plenty of solutions for passive or semi passive design, so it is really a matter of tailoring to the site and brief. So many design decisions though, it is why Architecture school is harder than med school.

Biggest point though is that good looking and eco are not mutually exclusive. http://www.ecodesign.co.nz/ . I think there is potential to push this area further, and I hope to be at the sharp end of it. Most Architects don't seem to understand the principles behind beauty, so the pretty you mention are not necessarily so. There are a handful out there though. The question to ask is not how a building looks, but how it feels. In this way you will find 80% consensus of opinion. Check out "A Timeless Way of Building" by Christopher Alexander. I think it will blow you away if you have't read it already. It answers a lot of the problems we hear about on this site. I have recommended it to Hugh on here before, as I think that no property developer has a right to be in the business without reading it.

by speckles | 28th Mar 11, 7:59pm 1301295572

which fault was he referring to.

by speckles | 28th Mar 11, 8:00pm 1301295617

which fault was he referring to

by scarfie | 28th Mar 11, 9:58pm 1301302683

Gee we covered a lot of ground so I don't remember if it was named sorry.

by Wolly | 28th Mar 11, 5:54pm 1301288096

Talking about office space...you reading this Bill?...good....why don't you vacate the lowest floor of offices in the Beehive..pack them into those above with some Rhubarb and cardboard partitions..then rent the vacant offices out to the IMF, Moody's, S&P and Fitch...

Humphhh..............................there's no need for language like that Bill.

by scarfie | 28th Mar 11, 7:54pm 1301295245

When you talk about office space I can't help but think of the offices of a lot of government departments around the country and wonder what the leases cost. In some cases enough room to drive a car down between the desks, of course all completely air conditioned. Add in all the office furniture and staff that clearly aren't short of a lunch, and it is clear that there is pleny of room to slash the budgets.

by Anarkist | 28th Mar 11, 7:44pm 1301294657

"The way I understand it is that the modernist movement originating out of Germany in the 20's rejected all historical precedent in design. It was a new architecture for a new age."

I regard Modernism to be rather horribly austere. We can thank Modernism for today's prefabricated concrete monstorosities have become so prevalent today. I think Napier boasts New Zealand's most beautiful architecture in the form of the Art Deco Style, too bad we can appreciate its beauty only due to the tragic destruction wrecked by the Napier Earthquake in the 1930s.

by Wolly | 29th Mar 11, 8:55am 1301342142

"New Zealand faces two-paced pressure on prices, with surging bills for fuel, utilities and food sucking further dollars away from discretionary spending.

Economists warn that while prices in some sectors are surging, stagnant growth meant spending on non-essential items will likely fall even lower this year, with many businesses having no option to raise prices" stuff

Yes it's our old friend 'Inflay shin'.....back for a longer stay no doubt...should do wonders for the value of the Kiwi$ and for savings and one day...when Bollard stops his cheaper for longer game...he will have to chase Inflay Shin...and that will be sooo good for interest rates...not!

by steven | 29th Mar 11, 10:45am 1301348711

Wolly, uh no.....you are wearing your blinkers again.....though the english of the journalist isnt that hot.

"while prices in some sectors are surging, stagnant growth meant spending on non-essential items will likely fall even lower this year"

Stagnant growth Wolly....ie no more money in ppls pockets, this means if ppl spend more on some things they wont be spending on others.....the next effect should be close to zero inflation....

If businesses have to raise prices then they will either get their $ or go bust and close.....the latter seems quite possible, so un-employment climbs....that isnt inflationary....sure Bollard will have to catch the inflation genie later doing that by raising the OCR...however the timescale could be considerable.....ie a decade maybe more....aka Japan.....

regards