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Friday's Top 10 with NZ Mint: NZ's amazing property machine; Bo Xilai's many concubines; The global cancer of tax-avoiding multi-nationals; How increasing inequality reduces growth; Clarke and Dawe; Dilbert

Friday's Top 10 with NZ Mint: NZ's amazing property machine; Bo Xilai's many concubines; The global cancer of tax-avoiding multi-nationals; How increasing inequality reduces growth; Clarke and Dawe; Dilbert

Here's my Top 10 links from around the Internet at 4.30 pm today in association with NZ Mint.

As always, we welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz.

See all previous Top 10s here.

My must read article today #1 on how increased inequality slows economic growth.

1. Income inequality and growth - The is the core issue of our age.

More and more of the income and wealth share has gravitated to the very top over the last two decades, globally and here in New Zealand.

Now much of that wealth is being hoarded in bank accounts and government bonds as investors age and are understandably nervous about investing in the current environment.

But one of the reasons for weak economic growth is much of the middle and low income groups have seen their real incomes drop in the last two decades and they are now awash in debt after those two decades of spending more than they earned by borrowing.

Any economy will struggle to thrive when the bulk of its population are so financially stretched that they won't consume.

It's a vicious cycle that has to be addressed by redistributing income and getting rid of the debt weighing down the middle to lower income groups.

Here's the New York Times with a comprehensive look at income inequality and how it constrains economic growth:

Income inequality has soared to the highest levels since the Great Depression, and the recession has done little to reverse the trend, with the top 1 percent of earners taking 93 percent of the income gains in the first full year of the recovery.

The yawning gap between the haves and the have-nots — and the political questions that gap has raised about the plight of the middle class — has given rise to anti-Wall Street sentiment and animated the presidential campaign. Now, a growing body of economic research suggests that it might mean lower levels of economic growth and slower job creation in the years ahead, as well.

“Growth becomes more fragile” in countries with high levels of inequality like the United States, said Jonathan D. Ostry of the International Monetary Fund, whose research suggests that the widening disparity since the 1980s might shorten the nation’s economic expansions by as much as a third.

Reducing inequality and bolstering growth, in the long run, might be “two sides of the same coin,” research published last year by the I.M.F. concluded.

2. We've done so much better -  For now. Alistair Helm over at Properazzi does a nice job of charting the relative performances of New Zealand's housing market with those of America, Britain and Australia.

What is so clear from this comparable chart is the extent to which the NZ property market since 2007 has staged such a strong recovery, far outpacing the UK and the US to see prices now heading back to the pre-crash levels whilst both the UK and the US have experienced stagnant pricing.

3. Bo Xilai's many concubines - It turns out disgraced Chinese leader-in-waiting Bo Xilai, who faces a show trial in coming months, had many mistresses, as is the fashion with very wealthy men in China.

Here's the Globe and Mail:

For China’s business and political elite, keeping multiple mistresses – and doing little, if anything, to hide it – is as much a part of the package as the bling watches, the flashy sports cars and the offspring attending expensive Western universities.

China’s top sexologist calls it the “emperor complex” and says powerful Chinese men seek to accumulate women the same way they desire money and power. “I think it mainly comes form the Chinese tradition of having concubines. Monogamy has only been around for 60 years. But in history, there was nothing wrong with [having mistresses] at all,” said Li Yinhe of the state-run Chinese Academy of Social Sciences. “Now successful men take mistresses – I would even call it a subculture – as a way of showing off their success.”

When Liu Zhijun, the former Railways Minister, was ousted last year in another corruption scandal, it was reported in state news media that he had been seeing 18 women on the side. Another famously corrupt official in coastal Fujian province once forced his 22 mistresses to publicly compete against each other for his affections.

4. Let's target Google - The global search engine doesn't pay much tax anywhere, including in Britain and New Zealand. It's about time we had boycotts of this company until it paid its fair share of tax around the world. It's not the only one either. Facebook and Apple don't pay their fair share either.

Here's The Guardian on the topic du jour in Britain where the Daily Mail has called for a boycott of fellow tax avoider Starbucks.

Clearly it's time for consumers to take a stand on the great tax avoidance issue – all those companies with vast turnovers and large profits who pay minimal tax in the UK. But the thought of trying to write a survey of what we should boycott is tricky. Because Google is there at the top of the list of alleged tax avoiders. Google paid just £6m in tax in 2011 on a UK turnover of £2.6bn. That fact was, of course, brought to you with the help of Google.

Facebook – £238,000 in corporation tax in 2011 on UK revenue of £175m, according to analysts– is easier. I have no idea what Facebook is or what it is for. So boycotted. Starbucks, the current cause celebre, is also relatively easily bypassed: Costa, here I come. But what about Amazon, which pays its tax in Luxembourg and in 2010 paid just €5.5m on a whopping turnover of €7.5bn? I really like Amazon for its speed and cheapness. Presumably it is cheap in part because it pays its taxes in Luxembourg, and I'm complicit in the deal. Paying double for books and CDs would be a big sacrifice, but maybe it has to be done.

Apple, which reduces its UK tax bill by basing its European headquarters in Ireland, has figured less prominently than the other four US multinationals in tax campaigners' sights, but it has been mentioned in dispatches, with some tax experts suggesting that while its accounts show UK turnover of just over £1bn, a more realistic figure is £6.7bn. I am a little disturbed to be typing this on an Apple computer.

5. Here's the bill - Euro exits could cost the world US$22 trillion, says a new study cited in BusinessInsider.

6. They're lucky - Back in the olden days bankers were beheaded. Bob Diamond from Barclays got lucky, compared to the 1300s...I'm certainly not suggesting this as a solution...maybe we could cut off their bonuses instead.

The team found one parallel to the appearance of Mr Diamond before the Treasury Select Committee when financier Richard Lyons appeared before the Good Parliament of 1376. He was accused of abusing his position to profit from public funds and was subsequently imprisoned in the Tower of London.

However, once the public outcry had died down, Lyons was released from the Tower and a form of poll tax was imposed on everyone rather than a tax levied on goods. The Peasants’ Revolt ensued in 1381 with government ministers executed by rebels and Lyons was dragged from his house and beheaded in the street.

7. No reserve currency - Victor Shih and Susan Shirk explain at Foreign Policy why the Renminbi is nowhere near taking over from the US dollar as a reserve currency.

There are three degrees of RMB internationalization. First, China and its major trading partners transact in RMB; this has been happening since 2009. The next step is widespread third-party usage of the RMB in financial and trade transactions. In other words, only when parties undertaking transactions unrelated to China regularly use the RMB will it truly be an international currency. For the RMB to take the final step and become a global reserve currency, central banks around the world would have to maintain sizable holdings of RMB to insure against their own financial risks. In other words, the RMB would become a so-called safe-haven currency the way that the dollar and the yen are today.

China's limited financial system and its lackluster global reputation -- not U.S. fears of China's rise -- are preventing the RMB from becoming a global reserve currency. The demand is there. Because U.S.-dollar financial markets seized up during the 2008-2009 global financial crisis, businesses in Asia and other emerging economies desire an alternative trade settlement and reserve currency. The U.S. Federal Reserve stimulated recovery in the United States through "quantitative easing" -- increasing the money supply by buying mortgage-backed securities and Treasury bonds, which lowered the value of these holdings to foreigners like the Chinese, weakened the U.S. dollar, and stimulated capital outflows to emerging economies that increased inflation. China and other holders of U.S. debt viewed the Fed's actions as a sign that it would always put its domestic-policy objectives ahead of global monetary and financial stability.

An initial surge of interest in Renminbi deals has faded this year,.

The level of RMB deposits in Hong Kong, a more reliable sign of offshore willingness to adopt the RMB, has declined since late last year. Since both Chinese and foreign investors bank in the economically liberal Hong Kong, RMB deposits there are a bellwether of general confidence in the RMB. Enlarging the pool of RMB circulating outside mainland China, a prerequisite for it becoming a global currency, thus might prove more challenging than first imagined, especially as global economic woes reduce demand for Chinese exports and put downward pressure on the RMB.

So will the RMB ever truly go global? That depends on whether Chinese decision-makers are willing to accept the risks involved in allowing capital to flow more freely in and out of mainland China. One major risk of capital-account liberalization, as this process is called, is that it could engender financial instability. The upside is that capital-account liberalization in developing countries tends to lead to higher economic growth, lower inflation, and higher returns on equity within two to three years after the reform. In the short term, however, it can cause volatility in capital flows, which can lead to deflation or inflation and even economic crises. Chinese leaders might be worried that if they make it easier to take assets out of China, more and more wealthy Chinese will hedge their bets by moving their children's education, their home purchasing, and their savings abroad. Because wealth is very concentrated in China, such a stampede for the exits could drain a substantial amount of deposits from China's banking system.

8. Supply chain problems - The Economist has a useful discussion here about how the diplomatic spat between China and Japan over those silly islands might (or might not) affect global supply chains dependent on Japanese technology being manufactured in Chinese factories.

Stunned as both Japanese producers and retailers are by the outbursts, there may be a sting in the tail for China. In contrast to 2005, the previous time anti-Japanese riots flared, China is not the only fast-growing, well-populated, low-cost market around. Back then, Japanese firms hedged their China risk with a “China-plus-one” strategy, implying that they would find an extra Asian supply hub, such as Thailand. Now, that has grown into a wider “China-plus” strategy, because their options these days have widened to include Indonesia, Myanmar, Vietnam, Cambodia, the Philippines and India.

As China’s wages rise and its economy slows, analysts say the risk that multinational supply chains may find alternative locations is something the government may want to think about the next time it lets vandals loose in the name of nationalism.

9. Inside Foxconn - James Fallows reports for The Atlantic from inside a Foxconn factory just north of Hong Kong that makes iPhones and iPads. It has 220,000 workers.

And suicide nets.

10. Totally Clarke and Dawe on Economic History on the European debt crisis

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40 Comments

Perhaps income inequality is an unavoidable consequence of a knowledge economy?  Back in the capital and labour economy, labour was quite replaceable, so only varied in value by 5-10x from top to bottom.  But in a knowledge economy, there are some high-value workers are like a unique piece of machinery that could produce high value goods.

 

I know you guys like to hate the CEO and financial guys who apparently don't "deserve" their salaries.  But a lot of the people creating the gap between rich and poor actually do contribute a lot of value to the people they work for, so are taking a cut of their added value as wages.  To take a silly example, if you put a well-known actor in a movie, it's gross revenues will be several million dollars more than without - so why shouldn't the actor take a big cut of that.

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Banks and bankers do not operate in a free market, if they did then people would compete and prices would fall. - We have all been taught that is how free markets work.

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This is bigger than just bankers.  If Bernard got a celebrity to appear on Interest.co.nz (let's say for a live chat), his ad revenue goes up.  That celebrity is not going to be paid a wage for their effort, they are being paid what is essentially a profit share for the capital value of their personal brand.  A person operating in that way earns in a fundamentally different way from a person who works for an time-based unit of effort.  Not surprisingly, they earn a lot more than others.  The Gap Between The Rich And Poor is not a moral failing, it's a fundamental change in the way that people are remunerated.  You participate in it when you watch a movie, or see the All Blacks.  It's called the knowledge economy, and it's brutal.

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So what exactly are these guys experts in? Seems to me they specilise in taking money from many and giving it to a few, so I guess it is logical a person like that will be in demand and command a premium.

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Bernard , correct me if I'm wrong , but the proper term for putting money into the bank or into government bonds is " saving " ....... is it not ?

 

..... since when did this admirable behaviour become " hoarding " ...... ?

 

And don't the banks and the government use those monies for lending or for expenditure .... if they're going to pay a coupon rate or some interest , they have to on-loan that money to someone else , at a higher yield ?

 

..... somehow you turn the prudence of  saving into hoarding , which sounds deceptively similar to the word " whoring " ...... is that your goal , Bernard ?

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Many banks are now charging for deposits

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Hence lower rates for borrowers still coming

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National Austalia Bank ( owner of the BNZ ) has forecast a third quarter profit of $A 1.4 billion , slightly lower than last year's .... and they anticipate a flat profit for the whole year , equal to last year's .....

 

...... their stock price ( ASX : NAB ) has plopped 3 % immediately after this news was announced .

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NZers instinctively distrust most form of investment vehicles .... apart from property.

Owning your own debt-free modest home is the best hedge & platform for retirement.

That's why our property market is not going to bubble-burst anytime soon.

 

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http://www.doctorhousingbubble.com/echo-housing-bubble-california-low-in...
 
notes on a Southern California new Housing bubble developing- sounds a lot like AKL to me

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As comments on DrBubble point out - demand to buy homes increases in this time of economic crisis. The world may be spiralling down etc ... but people want to go home (their own house) at the end of the day. Upgrade the kitchen, create a nice cocoon - despite the bad news.....

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No one doubts it's true, people have been doing similar things for years. The problem is that you need to input more energy then you get in return. Essentially a zero sum (usually a net loss) game.

 

 

 

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I'm not sure mining peoples search data is a public service?

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Not sure whether this was already posted here - but well worth the read.

 

Chris Barton at the Herald: Put a tree in your tank

 

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10841322

 

 

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As I read through the Top 10 I was surprised to find that income inequality is "the core issue of our age". More concerning is the conclusion is that the way to fix this is to "redistribute income" and "getting rid of the debt". I could almost feel the beginnings of the Revolution again. Bernard must have run out of ideas and decided to have get some from "Das Kapital". I felt some comfort when I read that the Revolution would relieve the debt of the lower and middle classes. At least middle-class-me would be spared and my debts relieved. But no! I read Gummy's contribution and realised that my savings are now "hoardings" according to Bernard. I can almost feel the knives being sharpened. The people that owe me money will have their debts cancelled, and my carefully hoarded money will be taken from me! 

To top it off, I then noticed that Google et al have not been paying their "fair share" of tax. There are those weasel words again. What is a "fair share"? Have I been paying my "fair share"? I shudder to think. The IRD used to know what was fair because they said "it is our job to be fair", but, for good reason, they dropped that slogan. In order to avoid the mob I will have to stop all my pitiful attempts at tax minimisation. Bernard is obviously trying to assemble something like the Committee of Public Safety, and will show no mercy to those fiends who try to hold on to their property and refuse to spend everything they have to save the nation. OK, Bernardspierre, I will pay more tax, and hopefully the Committee will accept my offerings as a "fair share". Please put in a good word for me. I might be a petit bourgeoisie, or even a kulak, but I always wanted to work on a collective farm, and I am sure the Google guys will be good company. I do not think Gummy will be with us. I think he lacks a submissive attitude and I would be the first to denounce him if I am spared.

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Even if you denounce me to the Bernardspierre Special Secret Tax Police , I still respect your outstanding Austrian writing here in the Gloom Zone ...... bless you , friend ......

 

.....  the good keen men will have their jubilee , and expunge the record of debt ...... poof ! ..... all is well , easy peasy ......

 

From them that have , all shalt be taken ...... to them that labour not , all shalt be given ..... for thine word must be done in deed as it is in blog , St Bernard .....

 

..... and smite the captialist dogs , the curs of industry and profit , smite them and their descendents 70 times 7 generations hence ...... off with the Gummster's noggin ! .....

 

Adieu ...

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GBH... if you despise BH's opinion so much, why do you keep coming back for more and more and more? You appear to be the single biggest contributor on this site and while you critices BH for being a 'gloomster' some of your comments can sometimes be, hmm how do I put this, down right negative too. So am just wondering why you keep coming back to the site? Just wondering...

Personally I don't like ginger chocolate, but I don't keep eating it to have a whinge about it...

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I certainly disagree with much of what Bernard has to say , but " despise " as you say , I think not ....

 

... however , if he's gonna say daft stuff 'like house prices will collapse 30 % in the next 12 months , or that President Barack Obama is " a liar and a fool " , or that Kim Dotcom should be " thrown to the wolves at the FBI " ..... then Bernard deserves all the flack he gets ...

 

And if he thinks that saving money is actually " hoarding " , then he may be an even bigger fool than me , and that's saying something ! ...

 

.. . as for his " need " to redistribute income and wealth , and the incessant " intergenerational financial war " malarky , that cuts him out of being considered a seriously deep thinking financial scribe ..... clearly into the headline grabbing hickeysterical camp , our boy ...

 

.... nevertheless , your point is well made , the Gummster shall seek a secluded nook with a stack of good books and a jug of mango slushie ..... and emerge only when my mind has been  improved ( although that seems scarcely possible , doesn't it ! ) ......

 

Ciao !

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oh Gummy don't be a 'gloomster'... perhaps I was too harsh? I mostly enjoy your commentry, though the 30% comment was almost 4 years ago... And Dotcom isn't just a nice fat jovial fellow, I have movie making friends, both production and front of camera, who have suffered financial loss because of Megaupload, I know they want the bigguy thrown to real wolves...

As for the other comments, you have a point, though I suspect his intergenerational comments are more about the opportunity of age... the age when it was easy to make big bucks, which just so happens to coincide with the gen Boomer...

To be fair (had to throw that in) it's a whole bunch harder by virtue of age and time for young people to get ahead in NZ and we are losing our best and brightest overseas becasue of this... surely there needs to be some middle ground, better leadership and not just bureaucratic bean counters hanging onto their jobs by selling promises to the Kiwi masses... maybe some of that home-grown egalitarinism we are so proud of wouldn't go amiss right here in NZ.

As I said, I enjoy your comments, not quite as much as I enjoy Whittakers Creamy Milk choccie though...  but come back nevertheless.... and bring your sunshine slushie!

 

 

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You are saying that redistribution of income doesn't reduce income inequality? What drugs do you Austrians prefer anyway, they seem awful hallucinagenic.

I think a fare share of tax means paying the same corporate tax rate as, basically every other company in the country. But you appear to hold big and small companies to different standards, and it would appear hold rich and poor to different standards in the same way.

BTW, why are you so against Bernard exercising his freedom to report this? Its not like he had anything to do with it.

 

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Nic, I agree that redistribution of income reduces income inequality. Unfortunately the twentieth-century experiments in communist countries (where they tried the most comprehensive plans of income redistribution) resulted in collective poverty as a side-effect. The equalling of incomes by the state did not seem to be the answer. Some would say that capitalism has now won the day and it too has proven to be inadequate. I think it is more accurate to say that crony capitalism has won the day, and it is just another form of chaos-producing state-intervention as bankers and politicians work together in an unholy alliance. This too produces poverty, as we are now finding.

The issue of fairness in tax takes a lot of space to discuss properly, but what I object to is the normal use of "fair" (meaning what is just), being hijacked to mean whatever tax system the govt comes up with is, in and of itself, fair. What we have may be legal, but I would argue that it is not fair and it is in fact discriminatory.

Concerning Bernard's freedom to report, my reading of his intro to the NY Times article is that the intro is all his own work. If it is not, just replace his name with the true writer and accept my apologies for wrong attribution.

 

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Sounds like you are running from your previous paragraph to me. The article clearly pointed out the context of fair was a context where all companies pay the same rate, basically talking about closing tax loop holes. Sounds like you would be for that in fact.

Its rather unfortunate that you take every tax issue to the extreme. As you said redistribution of income reduces income inequality, so if income inequality is a problem (and it is, its even an issue to the extent it makes the economy function inefficiently, though thats not one of my values), then this is the solution. It is pretty pointless to discuss the experiment in the USSR, especially in the moral context, I disagree that the USSR was founded or functioned on the principals you say it did but that is beside the point. What is the point is that income inequality is a problem, and society has developed ways to deal with this issue and as you said the ones applied we see in pretty much every western country work, at least to the extent that they are applied. If you want to argue that income inequality is a good thing, go ahead, but thats the only argument you are actually making.

Yes, my point is why are you so against Bernard reporting, its not like he had anything to do with these companies or their governments. Surely, if collecting tax is so immoral, you would want it pointed out how morally superior these companies are by avoiding it! If the only problem is nobody agrees with that, then you really don't have a popular argument!

 

 

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You take it as a black and white thing, fully re-distribute money doesnt work therefore some also doesnt work, that isnt the case.  We have had highly profitable periods in the last 80 years, these seem to be when there is considerable "re-distribution".

regards

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The problem with "saving" in our system is that one persons savings is anothers debt (interest payment) rising exponentially. There is the rub and a why income redistribution was a foundation of modern economies. They are man made and a "free market" really is an illusion.

Cheers

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I am glad you get it. All the other talk is about deck chairs.

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Actually I have had this debate in the last few weeks with Don Brash, and I won. I won because I am right and he had no place to go.

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Well the bonus of debating with Don is that he is a linear thinker, so he doesn't try to introduce spurious outside influences. It is actually quite simple math in the end.

 

Try doing this, assume you have stored up some surplus food (savings) then do up a pro's and con's list of keeping that food until you do need it versus lending it out.

 

To give you further insight into the debate there is a smartarse statement that Don threw at me, "no body forces you to borrow", to which the retort was very simple. No body forces you to lend.

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Well since money is just a proxy for food then your argument must be pretty fanciful. See you are still only thinking of one side of the equation. What benefits do you get if you loan your food?

 

Although it is stepping away from the core argument, that mathematically interest causes a redistribution of wealth. Of course the effect compounds.

 

Personally I think you have lost your objectivity because you have skin in the game.

 

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Demurrage is a term I haven't come across before but I certainly understand the principle. It is more or less the opposite of interest. Look up how that has worked as part of money supplies in times gone by.

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Demurrage creates a penalty for saving, encouraging money to be spent rather than saved and thus raising the velocity or maintaining of money. What was that about fool?

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Bernard, the method of finacial reporting is all wrong. They keep saying that property is in a bubble and the sharemarket never goes into a bubble it just has hic-cups. It should go something like this.

Here is the TV news

............................

Let us now turn to our bank economist Richie Greedie,

Richie, how was the sharmarket today?

Well Mike, as i have said in the past the market remains in a bubble and is something like 30 to 40% overvalued. We are expecting a crash to bring down these share prices to a level ordinary middle class people can afford. The terrible problem is that the middle class just cannot afford to buy shares anymore.

What we really need is for the government to take action and increase the number of shares on the market as there are just not enough shares out there.

There has been some suggestion of selling shares in Councils as rates are expected to continue rising by over ten percent forever. However the Chinees are also trying to buy these council shares. JK has hinted at a PPP with the Chinees where the rate payer gets to pay and the PPP gets the money, this is also supported by treasury.

Thank you Richie, now let us turn to our estate agent Ima Speclator

Ima, how is the housing market performing?

Well Mike, the housing market continues to perform very well, investors are happy with their capital gains and so are re-investing.
There were some good gains to be had in both Christchurch and Wellington due to the nice sunny weather they have been having and bringing out those all important investors.

Auckland did see a 1% rise and this was due to an increase of wealthy Asians arriving into NZ this week, the rise would have been higher but some kiwi's left for Ausie.

The Dunedin market dipped slightly when the prime minister said he could'nt remember if he owned a house there.

We believe there are still some quite good bargins out there.

Thank you Ima, and now i return you back to the studio.
 

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i am always amazed that a company can make a profit or make a loss based on someones valuation of a property.

surely this is wrong and misleading as it is a profit or loss of thin air.

but then again not being well educated i could be totally wrong.

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Oh here we go, talk of the "fair share". Probably the most politically loaded terms in history.

All this talk of income redistribution begs the question even if the richest paid all their income to the state, it would still not cover the excessive spending by govt.

At some point the middle class actually has to pay for its middle class benefits almost by definition. Problem is the political system trying to capture the middle class has offered all sorts of bribes over the years, many of these programs and policies make the poorest worse off because of it.

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Not quite 1987 Hugh, but a year later i worked in the concrete caverns of what was left of Auckland CBD, repossessing lifts and controllers etc. Never got paid, but lessons are learnt.

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Ah... Hugh, developers develop until they go broke, investors just keep investing in a downturn - that's the difference.

 

Is Auckland overheated?  I'm not sure.

 

It's not cheap, but there is no supply of what people want - that is freestanding houses on full sections in the leafy inner suburbs.  Indeed current development patterns will see the supply of properties diminish further as multi flat properties are converted to single dwellings, and older purpose built blocks demolished and replaced with fewer units.

 

Is $1.2 or even $1.5m for a small section with a total do-up on it a bubble?  Not necessarily if you consider that these are properties in the absolute most sought after streets.

 

Why should someone be able to buy in top areas for $600k or even $800k?  Maybe $1m should be the entry point for something character on a good site within 7 or 8 minutes drive of the CBD (off-peak).

 

Everything is relative though, $900k in Epsom is about the same as something for $550k in Strowan (ChCh), $1.5m in Remuera is probably about the same as $1m in Fendalton for something character.  For newer homes the prices are closer together.  Given the income disparity that makes Auckland look not unreasonable.

 

Realistically all things considered Auckland prices are probably around fair value considering they have been flat through 5 years of diminishing supply and inflation.

 

Barring a mass exodus out of Auckland prices have little chance of crashing, and the only downward pressure will be slight softening during slow economic periods (which is not what we are in now - we are probably on the verge of a boom rather than a bust).

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Hugh

A number of commentators including Gaynor are talking of a housing bubble in Auckland. I would suggest some of the housing bulls on this website should park their complacency and consider history. 

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I'll let you know when it's a bubble MIA, at the moment values are just catching up with reality.

 

There are a few frothy sales, but there always is - even in a downturn.

 

Outside the desirable leafy inner suburbs, it's not all that expensive.  But if you're looking in a quiet leafy double grammar zoned street or in an inner west hotspot, don't expect much change out of $1m for a character starter home or do-up on its own site.  But then you'd have to pay $800pw for something half decent to rent in the area anyway.

 

In fact most properties would yield close to 5% some maybe more.  With interest rates at 5-6%ish for the foreseeable future and 5 year fixed under 6%, then why would you expect house prices to be any less?

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#5,

Some things in that pdf...

1) Seems its widely expected that greece will exit before 2013.

"However, their budgets are still in disarray, a fact underscored by the statement by Greek Prime Minister Antonis Samaras in October 2012 to the effect that Greece will be bankrupt by the end of next month unless further infusions of foreign capital are forthcoming."

Like who the hell (a privtae investor) would lend to Greece?

I'd guess they are trying to hang on past the US elections...a Greece exit would be good for Romney I suppose.

2) leading up to 2020.....so I take it by 2020 the world's economy will be 17trillion lower than it could be.  The Q is, is that a number or an area under a graph. 

So if its an area under the graph over 7 years its not so bad.  If its a number saying in 2020 the world's GDP should be 100Trillion (say) than its actually 87trillion then that looks a lot worse?

Guess I need to read this more, but it looks like they are talking 5% declines in GDP...

nasty...

off to finish some windows.....yeah for nice weather.

regards

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