Opinion: Bernard Hickey says the High Court ruling against the Crafar Farms sale may be just the intervention NZ Inc needs to confont its addiction to foreign debt and asset sales

Opinion: Bernard Hickey says the High Court ruling against the Crafar Farms sale may be just the intervention NZ Inc needs to confont its addiction to foreign debt and asset sales

By Bernard Hickey

Finally, someone has staged an intervention to confront New Zealand Inc's addiction to living beyond its means through selling assets to foreigners and borrowing money from foreigners.

For decades we have spent more than we earned as a nation and funded the difference by borrowing foreign money through our banks, or directly in the form of companies borrowing offshore or the government borrowing from foreign funds and banks. If we couldn't borrow the money, we would sell assets, be it companies, land or state assets.

We've been kidding ourselves for decades that, like the L'Oreal ad, we were worth it. We have run chronically high current account deficits for most of the last 30 years. We believed, and have been encouraged by our leaders, bankers, and asset buyers, that New Zealand could afford it and we deserved it.

But in our bones we knew we couldn't, and it's great to see Justice Miller at the High Court now tell us in this decision it has to stop, even if the government can't or won't do it. His ruling that any foreign buyer has to prove a bigger benefit to the nation than a local buyer sets a very high threshold.

It effectively says that any buyer has to invest an awful lot more, create a lot more jobs and pledge to reinvest dividends here, otherwise there is an inevitable drain on the nation.

In the last decade we have reached the limit of how much we could borrow and sell. For any chronic overspender, there is a point where they can't borrow any more because they can't afford the interest payments and they don't have anything left to sell. Just before that moment comes, they accelerate their asset sales and borrowing to pay the interest on the previously borrowed money and to pay the dividends on the previously sold assets.

In April last year I wrote this article showing how this foreign drain of interest payments on foreign debt and dividends on foreign owned assets meant our income per capita had actually been falling since 2003.

I've taken the view since then that somehow, someone, needed to stage an intervention to stop it.

Our government surely isn't. It is in that desperate last stage of accelerating the borrowing and asset sales to allow us to keep the living standards to which we believe we are entitled.

The government itself has been the heaviest borrower through the bond markets. It doesn't matter who we have borrowed it off, but again China is the biggest creditor through its sovereign wealth fund. Our state owned enterprises have also been borrowing heavily overseas and the government is about to start selling the jewels in the crown, at least some of which will go offshore.

The irony is that this frenzy of last minute borrowing and asset selling accelerates the process of making our economy unsustainable, because it pushes up our economy currency and hampers our ability to export our way out of this mess.

Just in case you question the logic, here's the chart showing how New Zealand's Gross National Income per capita, which is what we get to keep after we have paid the interest and the dividends, has been falling since 2003.

And here's the chart showing how much of our economy is now dedicated to servicing the foreign debt and shipping dividends offshore to the owners of assets here.

(Updated with correction for NZ dollar in second to last paragraph)


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One can but hope, but this just may be the light at the end of the tunnel that may not be an oncoming train, though I won't hold my breath. And if this does mean that it becomes harder for foreign purchasers of farm land, awesome, then we can move on to seeing how foreign ownership of rental properties are skewing values there. Gotta go, high horse is champing at the bit for gallop

It's the pain of withdrawal that scares any addict.  Our leaders are determined to ruin the country.  Most people I know have gone full retard and are living beyond their means with no hope of ever changing that.  The optical illusion that saving $750 per year plus govt and employer contributions is somehow going to fund a retirement.  Disregarding the fact that the savings cannot truely be called savings when you have debt, and that the govt is borrowing at 4.5% to give to funds, who recieve 3% (The anti carry trade).
You are right Bernard we have dug ourselves a hole, and the common answer seems to be "keep digging".
(edited for rude language)

Some good points there, Bernard, about New Zealand living chronically beyond its means. But how do you reconcile the imperative to get New Zealand to live within its means with today’s article in the NZHerald about the solo mum and DPB beneficiary who says she’s being forced into prostitution to pay for her studies, becuase she doesn’t get enough welfare to do so?
The Greens are flying her to Wellington.
The last time an article like that appeared in the Herald, Helen Clark gave us Working for Families.
And that’s the issue the government has to grapple with, isn't it? 
What would be your solution on breaking New Zealand’s addictive behaviour to spending?

What would be your solution on breaking New Zealand’s addictive behaviour to spending?
Regrettably the damage has already been done, as Bernard points out. We are now, like Greece, borrowing money and selling assets to fund the current account deficit. A deficit that is entirely due to interest payments from previous borrowing (thankully at historicly low interest rates) and profits paid to the overseas owners of "our" assets. We are in fact managing to eke out a small trade surplus thanks to good prices for our commodity exports and lowish imports. The current account deficit is expected to blow out once interest rates rise.
Further selling of assets to overseas owners and more borrowing seems to be the Government "solution" , kick the can down the road somemore. They have no solution and in a world where everyone else is also desperate to get into surplus there are no easy answers.
My 2cents: tighten up hard on foreign asset sales, cut government spending, tax breaks for savers (first $20k bank interest tax free?), raise taxes on luxury imports (why do we tax a litre of milk and a lamborgini at the same 15%), introduce a capital gains tax, increase royalties for our minerals (we are a stable country, leverage off that, there is no reson our royalties should be among the lowest in the world).
Encourage savings and discourage spending. 

No welfare reform then?

Welfare reform... ah, sweet painful sound. Something has to be wrong in a country where you can live off a benefit, and i'm not referring to chronic illness or disability. DPB is a joke, but when families are not valued, what else could we expect? Taxed at the same rate whether single male or with a family, get more money if a mum fakes her address on the winz form, why wouldn't you?

reform to what?  If there are no jobs do you really think ppl will sit there and starve?  So they steal food, get caught and you'll lock them up?  riot? Need a lot more prisons then...
Kind of self-defeating....now I agree it isnt working too well, but Ive not seen anything better suggested.

You're right steven, no easy answer to years of the same. Maybe this is too idealistic: train and employ cops at increasing rates for couple of years, then slash unemployment benefit in half. turn infrastructure hard labour work over to prisoners to basically work for their crimes, and increase recruitment of cops and overseers for prisoners (means no more borrowing for labour of infrastructure anyway). people who can no longer live on dole will :
 - move overseas
 - steal (and be put to prison to work)
 - find they have skills that people want after all.
maybe too harsh in the short-term, maybe more sustainable long-term though?

no easy fixes, that is for sure.
The libertarian view really amuses me, because they never think through what might actually happen in reality if welfare was dismantled. If libertarians are happy to live behind barbed-wire fences, and carry guns with them, then fine!
But I think most of us would rather avoid this.
Look, I think there are certainly benefits that could be tweaked here and there. WFF entitlements should be pulled back a bit, for a start. And this would be less painful too if the govt pulled their act together and actually reformed our housing / planning system. The longer that housing supply fails to keep up with demand, the more upward pressure will be exerted on rents, and there will be even more need to keep WFF entitlement or even increase them.
The RMA reform seems to have gone on the back burner     

Welfare reform included under "cut Government spending".
One of the best ways to discourage saving is the "cradle to grave" modern welfare state. It needs to be pruned back.

Ha, I thought, "introduce a capital gains tax", would be reforming the "welfare" subsidy enjoyed by some ....

As long as you keep a monetary system in place that creates money from thin air then there is NO escape no matter what taxes you impose. 
The debts NEVER go away because the system relies on debts, on consumption of more and more debt FOREVER 
There is no fixing a ponzi scheme, the ONLY solution is to get rid of it

If you accept that prostitution is a legitimate form of work, and arguably has been around as long as agriculture.  Then you can read "forced to work to pay for her education".  Not so bad is it?  Seriously, does everything need to be free, and without any personal cost? Her income ex rent is higher then my personal drawings for a family of 5.  Something is wrong, very wrong here.  Learn to live within your means.  $720 pw = $37,500 p.a.  (equivilant of net earnings after tax so around 42k gross).  Tell me she will be making more then 42k after she has her qualification?
IMO stick to the prostitution if thats what you want to do, keep the DPB, and you'll be on over 50k pa, I'd be surprised if you can get more then that in the private sector.

Good point about that type of work - only if we didn't stick those negative connotations then it's just another job earning damn good money..  better than mining really

Yep, some people have to have sex for free.

How much better off after qualification is a good question;
Diploma grad in Vet Nursing can expect $19.00.hour = $760.00 per week before tax ($39,520 pa), or $16.00 per hour = $640 per week ($33,280) if the Certficiate course;
As far as I can see throughout NZ there are 9 vet nurse jobs currently advertised on TradeMe - not promising.
I think study via correspondence, preferably in a qualification in higher demand would be a better budget and career choice.  No travel costs, able to study with children at home (no/lower childcare costs). Might be able to sell the car (possibly borrow father's when one is needed). No car = no petrol costs, no maintenance, no WOF/Reg costs and lower insurance costs.  Will need PC and internet (which doesn't look like she has at present based on the telephone costs) but freeing up these other expenses might negate the need for a student loan for course fess - and I think there is still a one-off course costs (smaller loan) available for equipment purchases.
This mum needs to also contemplate that once finished the study, if she has a student loan, auto deductions of 10% of earnings will be taken to repay the loan as well.  In my opinion, too many people take up study in fields that are not in the long run ideal investments from a monetary perspective.  One must also be realistic in anticipating that WFF tax credits are likely to be unavailable in future as Government reduces spending.  So choosing a profession based on pay is relatively important for future studiers. 
Comuting from Franklin to Mt Albert is perhaps just unrealistic - the commute time alone  adds to time away from her children (and hence childcare costs).

She is spending over 150 dollars a week in transportation costs. Something is very very wrong there. How can she use all that petrol after already buying a 72 dollar train pass? Get rid of that chrisco christmas club nonsense. 5 dollars a week saved. Sounds like she is eating way to much preprocessed and brand name foods as well. Pukekohe has loads of cheap produce - potatoes etc.
Also the "income" section of her budget looks like it is missing the child support money. She is actually getting over 700 dollars a week BEFORE child support.

She doesn't receive any child support.  Child support is a tax on the so called absent parent.  Only once she no longer receives the DPB will she be entitled to receive whatever it is the father is paying.
Nobody mentions the fact that she split with her partner three years ago but has a 20 month old child (in addition to the almost 5 year old).  If you can't afford your 1st child why have more?  If she didn't have the second child she might be able to continue working on a stud farm while the 5 year old is at school.

Thanks for the info I wasn't aware that was the case. I still think there must be some poor choices going on in that household though. 720 dollars certainly isn't a small amount of money.

I'm having a laugh because why the hell would you complain about that, let alone want to get a job.  I assume the only thing unique here is that she wants to be a prostitute, and that there are many other people in a similar situation.  Many people have a goal of early retirement, and passive income.  Why work?
I do believe as a society, we need to take responsibility for our society, but there has to be some kind of real incentive to work.  Unless you get to keep all these benefits if you start working, at which point my head explodes.

Taxman: she may be doing home-visits only. Can't use a rail pass for that.

I was surprised to hear on National radio this morning that the Overseas Investment Office criterea is to only consider the positive aspects of the sale of farm land to overseas buyers and ignore the negative aspects.  So they would pass a proposed sale where a cobled up  argument shows some small advantages but it still has very large negative consequences also.  Incredible!  What sort of fools are runing this country?

Well if we are talking razor gang time to sack useless public employees, there is one entire department that looks like it can go.
The Q should be asked who will take the blame and lose their position over this fiasco...

I am all for reducing the public servant overhead in Wellington as opposed to the usually over worked front line staff eg nurses.  The OIO is a servant of the government and as such will function as the government requires, ie produce the answers that the elected representatives requires.  So the fools that are to blame are the ones we elect, not just the current lot either.  Heaven knows how we fix that problem as we seem to get idiot governance no matter who we elect.
Taking the cynical view I imagine that the OIO will rearrange the boxes to be ticked as set out by the judge and tick them as required by the Govt.  (If that is what the Govt want) 
Superficially It all seems a bit of a silly processs, why doesn't the minister just sign it off or not, and dispence with the charade.  What is the value of the OIO therefore? 
A sheild that the Govt can hide behind and deflect applicant and public critisisim? An expensive luxury at our expense!
Somebody is required to research applications at some point;  and fair enough they did turn down the previous application.  This could be perhaps done with less staff and does it need to take 9 months?

The High Court decision over-ruling the Crafar farm sale is a disagrace.
Quoting my last two paragraphs:
In the case of the sale of a business, including a farm to foreigners, that is net good to our economy. The price paid for a business is the net present value of its future cash flows, so the Chinese here have simply paid all the future profits of these farms into New Zealand today, to be spent here, while employing Kiwis, and buying inputs in the local economy. That's good. And you answer me how is that 'worse', in your terms, than a New Zealand farmer borrowing $200 million from an overseas bank to buy these farms, and then paying their interest to a foreign country?
Anyway, this is rambly because it's such a big topic, so I will end by saying that also answer for me who pays to the vendor what they have lost, and vendors will lose in the future, due to the regime uncertainty this decision now puts into every future farm sale? This decision destroys value. At the very least, I guess you will be happy paying a higher interest rate to your bank, because this decision, by possibly denying the best price for these farms, meaning a bank may take a scalping, and must factor this, and regime uncertainty into its rates? It's called a risk premium, and this Judge sitting in the High Court, who I bet knows NOTHING about economics, and is probably a mercantalist himself, further just raised risk considerably for business people wanting only to transact on a voluntary basis.

"This decision destroys value. At the very least, I guess you will be happy paying a higher interest rate to your bank,... etc"
irregardless of whether the ruling is a disgrace or not, I would appreciate some value destruction... may push down prices on all property, even urban following your thinking? Surely the earlier a bubble bursts the less painful it is in the long run. Higher interest rates, great, more mortgagee sales, falling prices, might make homes more affordable to people who want to live in their own house rather than people who borrow to invest to borrow more? Higher interest rates promoting savers rather than borrowers (crazy i know)... After all, with everthing including the currency we use losing "value", properties coming down is not such a bad thing... for the record, I am a homeowner with a mortgage, not a disgruntled renter wanting to buy.

Meryn King, chairman of BOE says "higher interest rates cause recession" you don't want that do you ??
Think of all the unemployed you will have to support..... : ) 

I think a recession and hopefully the destruction and reform of the fiat currency system that currently exists is inevitable, just a matter of when. When debt escalates exponentially and currency is "devalued" (printed out of thin air) exponentially, the ability to repay surely decreases at the same exponential rate? Personally it doesn't look like we're out of recession yet anyway...

"I would appreciate some value destruction"  I tend to think of it as illusion destruction.....same with shares, when a P/E ratio is simply silly then for me its not something to be in.....income needs to be robust, and the capital value reflect that...  So much I see as a ponzi bubble, speculators borrowing dirt cheap with the view to sell quick later to someone else....
Savings, to me you save in order to protect yourself....so dividends / interest is sort of a bonus....the problem is the risk and quantifying it.....I sometime sthink savers get un-reaslitic they expect to lend out their money and get a good return to someone else who does all the work and takes the risk.....and then those same ppl moan about the margins some businesses have.....the ame businesses who have borrowed to supply a good....wierd...
Properties coming down is exceedingly bad for ppl with high LVR's.....for myself I'd just lose a a paper prfit I never earned so Im not going to get upset about it....and I expect the drops to be big...50%+....

Agreed. This ruling makes no sense at all...other than put him in the news !!
In the first place only foreigners needs OIO approval, NZ citizens don't require OIO approval.
To say that any investment /improvement would be the same if bought by somebody else (whether foreign or local) makes no sense because there is "no other buyer" that is willing to pay the same price as this buyer !!
Fay and Co could have bought the farm if they had offerred a similar price to the receivers. (who I am sure will accept a small discount for administrative convenience) But they wanted it cheaper by $40million....
The owners (Banks and Creditors) now has no right to sell to the higher bidders to recoup their lending (poetic justice ??). Property rights law is now diluted or useless. 

Tribeless: "Chinese have simply paid all the future profits of these farms into New Zealand today. That's good".

Oh really. Crafar Farms began what? 30 years ago? and went into receivership with bank debt of $216 million. So the fruits of 30 years of farming and accumulating capital amount to zilch. The Chinese astute negotiators have merely offered to get the banks off the hook for the sum of the debt owing. But even worse is MF's opportunistic attempt to offer a distressed price even $30 million lower. Bottom feeders.
Using your NPV model where is the net present value of all the future streams of profits?

kind of thinking on this....my initial reaction was I agreed with the court.  Sleeping on that however, if the farms cannot make enough money to re-pay that 200million debt I think the court is right to question but should it care?  So should the court be looking at some assurance that the obligations of owning these are met?  So for me its basically not worth say 1/2 that.....In saying that if the Chinese buy them and are forced to comply with NZ law and it costs them a huge amount to do so whos the fool? or they sell at a huge loss at a price that makes a going concern...is that such an issue?
The reality is $200million it too much......so if the chinese run it and lose huge amounts of $.....at some stage they will have to rectify it....

Where have the big surpluses during Clark-Cullens reign gone ?     they blew it on consumption spending and  the Kiwirail joke investment.   IMHO   the PM might as well tell us  right here and now the real situation,  which is if we dont sell some assets to slash borrowing costs we will never climb out of this mess .Unless Justice Miller got some better ideas !

Borrowing costs have been slashed.  The amount of borrowing has reached the handle on the hockeystick.  The best way to get yourself out of a hole, is not by selling all your income producing assets.  You work hard, put in as many hours as you have to, find ways to increase revenues, find efficiencies, look at costs and work out which are good and which are bad, in some cases it may be possible to spend money to make money.  You gut it out, survive, and once you work your way out of the hole you will be far better for it, more profiable, more productive, and will be far better off then those that sold out, at a loss for a quick buck to buy the groceries.
I knw people who have done the hard yards, and now they are living the life of luxury, because the kept what they had.  I know others that sold out when times got tough, and now they are looking for part time work when they could've been retired by now.

Thank you for posting this. People NEED to know the truth. 

Sore loser
Please don't use capital letters to shout.
It hurts my eyes.

Thanks Sore loser for reducing the frequency of the capital letters.
See if you can use them for maximum effect. One or two.
There are diminishing returns as use increases.

This level of control-freakery is getting ridiculous.
P.S. Your headline is missing an 'r'.

I agree - use bold instead - if what you're saying is worthwhile people will read it. 

Bernard, this ruling is not a "dawning" moment for New Zealanders, but a "dawning" to foreign investors and lenders....New Zealand can change its goal post as it suits them and your investment and all the rules that you based your investment on is of no value.
I suppose if foreign investment and lending into the NZ economy is to become more restrictive and expensive, it would be good for us in the long run ?? Hurrah for a higher risk premium !!
NZ problem is not foreign investment and borrowing, it's what we do with those investment and borrowings...Most of our borrowings goes to consumption ....that is the problem. 

kin - changing the rules to suit the pollies has happened before. Fonterra was set up under DIRA which originally said that when Fonterra took less than 90% of the milk, DIRA  raw milk no longer applied.  Fonterra got to 89% and the government went and changed the goal posts to make the percentage as low as the corporates wanted - knowing the revised figure is never likely to be reached.

Yep Bernard.  Addiction is a good analogy.  And no addict wants to do withdrawal.  But if you are going to avoid doing a Whitney or a Michael.  You just gotta.
But maybe it's also just selfishness.  We squander what our ancestors built up.  And we burden our children with an unneccessary poverty.  But hey,  it works for us here right now.  So screw the kids. 

Where will the money come from if the Fay consortium are successful? It won't be local and and may ironically even be Chinese. Interest payments and a lot of any dividend will still be going overseas regardless who purchases them. 

As much as I dislike asset sales to foreign buyers, is Michael Fay really a worthy alternative? The same man who along with his mate David Richwhite raped and pillaged our national rail system, underinvesting (if at all) and then milking it for everything they could before leaving it run-down and in need of a bailout by the government? Surely no one can believe that he's a changed man? He's in it to make a buck just like the Chinese though I'm sure the Chinese won't leave the farms in the state he's likely to after taking all he can milk from it (pardon the pun).    

My theory is MF can easily buy all 26 farms without any restriction and then re-sell one by one to someone else (Chinese) without much OIO involvements once all the hypes had gone.  He has the time on his hand and milk price can only goes up.  frankly, I don't trust the guy.. Leopard never change its spots.

Why is the reciever not doing this?  They have made it very difficult to sell, which is great if you charge per hour.  Korda Mentha will be loving this Judge.

Michael Fay will only be taking two farms, not all 16. He's apparently  liked by his current farm staff for the way he farms the farm he already has.

Liked in the sense he's out of mind out of sight, and only flys inin the helicopter from time to time??

A major root cause behind this affair seems to be imprudent lending/borrowing. Now, remind me, which government organisation is responsible for regulation in this area?
If stuff suggested here:
had been implemented 10 years ago, would this problem exist today? If so, would it be likely better or worse than what we see now? I think at least better.  

"major root cause" ` imprudent lending/borrowing......
also the lack of a CGT means it makes sense to borrow to the hilt so you avoid paying tax.....but can cash out at the end tax free....
Regulation, the Government...successive Governments IMHO. I dont think the RB can just impliment a LVR....? I would assume that the Govn of the day would have to pass legislation and devolve the responsibility for this to the RBNZ?
Also I think Texas has a LVR of 80%?....and yes it seems such a level helps/helped avoid the worst of the borrowing madness, you are preaching to the converted on that.  I read a piece on this (steve keen?) suggesting that the ideal would be for the RB to have this as a tool. So no hard 80% but a nominal 80% and the RB can vary it depending on whether it wants to quieten an over-heated market or heat a cooling one...instaed of or as well as the OCR....
And yes should have been put in place 10 years ago....so I can happliy blame the Labour govn for doing nothing (mind you ditto Nats).  However bear in mind this is a tool to deal with the borrowing of cheap hot money from the US where the OCR is 0.25%....So if the US in the form of Greenspan hadnt done his puts to keep the US economy going such a regulation wouldnt have been needed....
So in some ways its careful whom you blame.

Steven - RB implemented the general CFR and specific capital adequacy regs (post-Crafar mind you) for lending into the dairy sector, as prudential measures. LVR is one such measure and suffers no more or less from the oft quoted objection of circunvention and disintermediation, than do the likes of the aforementioned two measures. 
Yes, varying LVRs is what we call for and that too is possible even under the current Act, to support monetary policy, so long as it doesn't adversely affect "financial effciency". So something like an LVR is even less prone to this problem than CFR and capital adequacy requirements, because the equity is outside the loan funding system - where a bank doesn't have to worry about ROI on funds not being used for lending.  So the main objection seems to be, "Hey, we can't go back to the Muldoon days etc, etc".
However Texas do have such regulation, albeit they don't vary it. Here is what it says in their constitution:


So in the end it would come down to treating the evasion of such regulation in the same way that we treat evasion of tax. I guess there would always be be some who would try to circumvent, but over time people would get used to things (and get caught) and it's the whole net effect that would lead to the kind of benefits we are suggesting.

Cheers, Les.

Bernard, i clicked on the link to read the decision by Justice Miller at the High Court.
What first stuck and shocked me was how a company is called a person here in NZ.
Read the article as follows
(2) Milk New Zealand Holdings Ltd ("Milk NZ"), an overseas person, has agreed to buy.........
(13) They may also determine which overseas person is making the overseas investment and which individuals control such overseas person
Clearly then a company is a person here in NZ, just like in good old USA,
As the Crafar farm saga has gone on for so long why has'nt the  media been investigating the OIO

Investigating the OIO, couldnt agree more....some hard Qs should be asked, like why so incompetent and can we sack them all would be my first 2.

And I had the impression there was a skill shortage in wellington of just 1

Time to call in the recievers for New Zealand LP yet?

On first reading of the decision, the obvious response that occurred was "government" will/can just amend the Act and sure enough here they go
They can get their skates on when it suits. So who is the beneficiary here

If these farms are being sold to fund the deficit, then there is a case for not doing so. They are being sold as a commercial decision by the Banks who had lent money. Recovery of those loans is good for NZ. The source of funds from China should not be a worry, in this globalised age, where mega-funds move across borders to be invested...the world thrives on that movement..Why should NZ not take advantage of it ?
However, asset sales being contemplated by the Government is a bigger worry, because there are no unrecoverable loans on them, and once sold, it would be difficult to establish ownership, etc..
Crafar farms is small chicken feed, compared to what is being contemplated elsewhere.

Could this be to the Key Nats what the Court of Appeal's foreshore & seabed ruling was to the Clark Labour Govt?

And the cries of 'racism!' surrounding the Crafarms deal ring hollow. The usual suspects who pin the xenophobe label on opponents of the Crafarms deal won't hesitate to invoke Orewa and whinge about 'PC gone mad' when it comes to 'closing the gaps', refugees and 'affirmative action'.

So when is a racist not a racist? When it's a golden goose, it seems. This kind of thinking is reminiscent of when the former South African apartheid regime, in the 1960s, granted citizenship rights to Japanese steel tycoons, in exchange for the RSA exporting huge amounts of iron ore to Japan - this scheme was officially known as 'honorary whites'.

Bernard, when Justice Miller at the High Court said that "Milk New Zealand Holdings Ltd" was an "overseas person"
If a company is a person under NZ law and if the law does not clearly identify a person.
Then as it is lawful to own a person (company) it must also be lawful to own a person (human) which is slavery.
So, slavery is alive and well.
How many "persons" do you own Bernard?

I totally agree with Bernard, NZ is living beyond its means, along with many other Western Countries. There is no easy solution. Individually we can get our houses in order, so to speak. Pay down debt, save for retirement, stop spending on the nice to have's that we really can't afford.
NZ does have a bright future with Agriculture, thats why the chinese are here. We can get on board the agriculture boom not by just supplying our produce but by investing ourselves, you need not have big pockets either.
I am investing myself as a way of security from the coming big economic correction thats almost certain now, as a result of the metrics Bernard has higlighted above. These type economic data is rife across countries like the UK, many European Countries and the USA, all of which have unpayable debts and no easy solution too.
Here is one way to protect your wealth.

I guess most of you have seen this this morning...game on...Kinda feel sorry for JK now, he's trapped between a rather large rock and a very hard place...

NeilD the information being withheld by the media would detail the losses to the bank or banks that created the bubble of credit that bloated the crafar land price.
One of the puppets is not dancing to the right tune.
No way will Fay's mob fork out the full bloated price when all they need do is show they offer 'equal or better' in the eyes of the judge.
Somebody in the 'stonecutters'camp found the judge was not for sale!
It is the land bubbles and parasite balance sheets that are the real issue. The judge just dropped a very large spanner into the NZ parasite property lending rort.

Wolly - correct. But never forget that this is the fight scene in the penultimate reel, not the major plot.
What must get reconciled still, is that nobody can accrue the income to repay current mortgages. It follows that (on average) nobody can expect income from 'investment', from here on. It would follow that land prices would drop, if there wasn't a concurrent trend: A global population demanding more food than arable land can long-term supply.
Given that you have to eat, even if it means getting poorer daily, relative prices paid for productive land have to outpace most other 'investments'.  Relativity to lowering incomes will be the yardstick, folk who track dollar numbers won't get the picture.
The problem is that the HughP-type  comment is half-right; property prices are still in bubble mode, mostly throught those who hold it being in mass denial. Where his appraisal falls down, is in assuming that incomes will remain as they have in recent times. The only statistical thing you can say with confidence, is that the longer something is in place, the shorter a time it has left. The bigger bubble-pop will take down many - including o'seas 'investors'. Large amounts of that which invests in Crafar, is backed by the assumption that Amerians will repay their debt. T'won't happen.

I agree.

Yet there may still be a get out of jail...what I dont understand is it looks grossly over-priced so why would anyone want to buy something at this price? because where is the return...?

The thing is steven, Fay is not dumb...he now knows the judges will look for benefits to NZ...and he has an opening to shove a huge piece of trouble up the nose of the parasites at the lower offer...Fay holds the rural land bubble in one hand and a razor sharp needle in the other....watch carefully as the banks boost Fay's purse at no cost to Fay et all just so they can get the price reported as sale price to be exactly what they want. It is just created credit and will not cost Fay et al a brass dime..they will not have to repay it...they will not sign debt instruments...the sale price will rise like magic and banks will have determined the market value for the vast number of properties they "own"

I find it very strange that with all this discussion about farm prices  etc is in a bubble and yet we don't take this opportunity to unload it onto an unsuspecting Chinaman...and buy it back from him when his investment becomes a dud ?? 

Wonder how any NZer will finance the purchase ? Will they get loans from the banks here or overseas ? If from here, would it not amount to just transferring the n on-performing loan to another person and treat it as performing from here on ?
Isn't it better for the funds to come from overseas without any cost, present or future to our banks here ?
I think that is what matters..the source of the money to buy these impaired assets..as a commercial decision.

Hi Bernard,  I agree that living beyond our means is a dead end.  What can be done?  It will be painful, but the spending addiction needs to be dealt with, by REDUCING spending. How can this be done?  One simple way to reduce spending is to increase the prices of consumer goods by increasing taxation on imported consumer goods, namely petrol, cars, ipods, ipads, TV's and and other consumer products which add nothing to productivity. Speaking as one from 'middle NZ', I have a smartphone and my children have ipods, so I know we CAN tighten our belts in various ways and learn to accept a lower standard of living, a simpler less consumerist lifestyle if you like. So far people have not done this tightening voluntarily, and so it needs some incentive/intervention, namely higher prices through taxation on a good number of consumer goods.  What do you think?