Five-fold Friday: "Financial no man's land" ; Responsible lending?; Property losing positions; Tiny tax breaks; Fukuyama's search for democracy

By Amanda Morrall

1) Savings and spending

Housing bubbles, over-valued stock and bonds, term deposits that can't keep pace with inflation....our new economic reality is grim news for investors and savers for whom conventional channels of wealth creation are fading fast.

U.S. publisher and investor Doug Casey, in one of his popular reports, describes it as  "financial no-man's land" and predicts the savings environment will become even more hostile with stagnant income under threat by impending consumer cost explosions. So the question on everyone's mind, or at least those fortunate to have any change left over at the end of the day: "What should I do with my money now?

Casey sees potential profit for financial survivalists in five key areas: active business, entrepreneurialism, innovation, “hoarding” and agriculture.  "The years to come are going to be tough on investors and businessmen, but full of opportunity for speculators and entrepreneurs,'' writes Casey whose parting piece of advice is this: "Keep your passports current, your powder dry, and your eyes open."

2) Credit and Debt

Is there such a thing as responsible lending? And who is to blame when debt breaks its owner? The issue was raised this week with the grassroots community group Debt-Free Newtown taking Rugby League player Stacey Jones to task for promoting high-interest loans through one of the more reputable and 'responsible lenders.'

Can lenders operating in a free-market properly be blamed for letting desperate people, with nowhere else to turn, borrow money at 30% interest or more when the borrowers themselves are at least partly to blame for making poor choices?

It's a hard one to call and generalisations are dangerous, but without a doubt the white collar guys in fancy houses make for good scape goats. In any event, the Financial Services Federation (a group representing what's left of the finance companies in New Zealand) recently released some guidelines on responsible lending with an emphasis on making the true cost of borrowing better understood. Now if only there were a test for measuring comprehension..the guideline is so far available only in English, the second language of many borrowers forced to rely on finance companies. FSF head Kirk Hope says a translation is forthcoming.

3) Real estate

We had a lively web-discussion this week with respected investor and financial writer Martin Hawes who maintains rental property is a bad investment. He argues the returns just aren't worth it. Many refuse to believe it but statistics compiled by our in-house data trackers bear this out. On first-quartile rental properties, for those on median incomes, the return on investment is marginal at best.

Factoring in mortgage, rates, insurance and maintenance, most rental properties across the country just break even. Watch this space next week as we'll provide regional ROI's on rental properties across the country.

4) Death and taxes

A rare bit of financial good news landed in my mail box this week. A note from my financial adviser (yes I have one) notififying me that monitoring fees on managed funds (yes for better or worse I have one of  those too) are 100% tax deductible. As my fund has been going steadily down-hill since acquiring it,("remember Amanda's its long-term" I'm assured) I felt a slight lift in my spirits for something resembling a gain. I share this bit of information at the risk of getting pilloried by a core of group of regular readers on our site who rabidly oppose both financial advisers and managed funds.

My intention here isn't to advocate for or against but merely to let others who may be in a similar boat to inquire after a similar break if they haven't received like notices in their mail. This is the first year this tax deduction has been brought to my attention and apparently that of the fund manager who called in a tax expert, presumably in hopes of finding some glimmer of good news to give to investors.

5) Books and Film

In my second year university as an undergraduate student, Francis Fukuyama was top of the required reading list in poli-sci for an article he'd penned entitled, 'The End of History," a contracted version of what would become a bestselling academic title in 1992.  Fukuyama's fame has been unabating. Whether his latest offering "The Origins of Political Order: From Prehuman Times to the French Revolution" will trump "The End of History'' is doubtful but Fukuyama remains a highly respected academic and observer of political life.

In his latest book, he explores the roots of democracy with a view to discovering why some work and others fail. David Runciman, in this Guardian Weekly review, gives the book a mediocre review but the content and theme is nevertheless worthy, now more so than ever.

Here's a video clip of Fukuyama talking about his new book.