The PM needing to deny speculation that NZ banks are under stress only reinforces the speculation that NZ banks are under stress.
The OECD is simply the latest alarm bell after the Reserve Bank governor made the exact same warning about the property bubble melting down the rest of the economy and today the Reserve Bank of Australia governor Glenn Stevens sounded the same concerns in Sydney.
Our Australian banks are connected to their home markets, if Sydney pops, it will immediately ignite problems here.
The social housing experiment National are embarking on intends to extend the bubble and manage it rather than solving it and bringing the bubble down as it is their voters interest to keep having the property speculation expand.
Meanwhile Gen Xers, Gen Y, beneficiaries and the working poor are locked out of homes and locked into freezing sick houses.
It won’t be until that group demand change before change occurs.
I wonder what percentage of NZs economy now IS the Auckland property market? I suspect it’s bigger than Fonterra. Wouldn’t be surprised if Wheeler lowers interest rates to get in front of it. They will try and maintain this bubble for as long as possible. Notice how everyone on the MSM is talking it up “it’s not a bubble” and “property prices have never gone down in NZ”. Reminds me of US Fed Chairman Bernanke’s now infamous quotes prior to the GFC:
July 2005
‘We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilise, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.’
Oct 2005
‘House prices have risen by nearly 25 per cent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.’
Feb 2006
‘Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.’
Feb 2006
‘I don’t think that Chinese ownership of U.S. assets is so large as to put our country at risk economically.’
Feb 2007
‘Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low.’
May 2007
‘All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well. Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.’
Jan 2008
‘The Federal Reserve is not currently forecasting a recession.’
No one ever sees it coming, even the so-called “experts”.
They wanted to allay public panic and avoid any run on the banks…but it wasn’t that sort of problem, it wasn’t 1929 and the cause was different.
But they damn well knew it was the ponzi scheme of rotten debt taken on by so many finance houses as a type of commodity …
And it was only afterwards when the shit really hit the fan that we saw the criminality of these corrupt financiers and bankers who bloody well knew exactly what they were doing.
And so the neo liberal dream time took a hit – and they tried Keynesianism techniques to bail out the global economy – except that the hipocracy was – so many large corporate’s received govt bailouts ‘ because they were too big to fail ‘.
So in their efforts to protect international trade and prevent protectionism..and further decline for commodity’s…to keep alive the ‘market knows best ‘ neo liberal dogma … they practiced Keynesianism !!!
The laughable thing is…they deferred constantly to ,… and attained loans from,…. the American Federal Reserve Bank – which is not a govt bank at all – but a collection of private banks . And guess who owns it?
About a dozen private banks in Europe…with the Rothchilds banking family taking preeminence.
So…..feel like playing a world game of monopoly anyone ?
feel like playing a world game of monopoly anyone ?
Here’s one strategy for winning that game, The Grand Chessboard by Z. Brzezinski – written for US players.
When I was younger & perhaps naive I worked with a bloke whose fav quote at smoko, in the days when there was one & overtime was too at 1 3/4, was take the opposite of the “news” & you might be close to the truth.
This and some accurate predictions on his part changed my awareness. The quotes on Nitriums reply demonstrate this.
Now we are faced with potentially the same dilemma as Greece etc & Iceland.
An ex derivitives banker with a blind trust & a ponytail fetish, who plays golf with obama in Hawaii seems to be borrowing NZ into bankruptcy (pun intended) & manipulating the primary industries into the ground(2 in one sentence) (roundeyes got cheap farms for Chinese?). There may not be a default drama, as the TPPA corporate sellout will take care of that. Oh probably at the same time the banks will perform a haircut on our hard earned money/savings for those who are not nouveau poor. Cyprus did at 80%, Denmark has at 10% of balances over $100k.YOUR money is an unsecured creditor in the likely event a bank goes broke & you are at the bottom of the heap. Hard to believe there is still money in bank accounts after 38 NZ finance companies plus have sucked millions into a black hole. But wait there is more. Watch out for a housing price “crisis” to enable the banks to aquire whole suburbs of empty houses like in the us of a. If the mortgage is more than the house value …..YOU LOSE. Get used to living in a tarpaulin refugee camp & still working to pay the rates & mortgage on a house you can’t live in. YOU might even have some empathy left for the people of Christchurch. Maybe our flag of ownership (due democracy in heraldic terms) should go along with the national anthem words that have already. God defend New Zealand.
+100 for the Post…Yes this new generation really has to become ACTIVISTS!…it is their future!…and their future is being sold out by jonkey Nact and banker mates..there is also an urgent need to educate the New Zealand public so what has happened to Greece does NOT happen here.
Look what has happened to Greece!..it has been robbed by the banksters!
http://rt.com/shows/keiser-report/265822-episode-max-keiser-768/
“Every week Max Keiser looks at the scandal behind the financial headlines.
In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss leaving the Troika to gloat over the devastation that is Europe. In the second half, Max interviews Ross Ashcroft of RenegadeInc.com about crowdfunding his own content in order to educate the population about the economic news that the BBC refuses to tell. They discuss the fact that there has already essentially been a “Grexit.” Greece is gone. What else can be done?”
When those Australian banks start to feel the heat locally…they will naturally retract to curb those local conditions…Auckland is …but an extension of that process.
So…it is likely that we too , will feel that retraction.
And when we do…even though pains will be taken to avoid losses by those banks here…it will still be felt. In some ways this will be Keys saving grace ….using the influence of overseas markets that are out of the govts control.
We’ve heard it all before. Classical political deferral of the problem.
But Australia’s a big place and a whole different story to New Zealand. It may very well be the catalyst for a domino effect that starts in speculative housing and starts to reach out and affect other areas of the economy.
Keys dilemma is his popularity rests on such things as this. Defense of economic growth means that he must defend his neo liberal ‘market forces ‘ mantra at all costs .
Any major downturn economically such as that …will undermine that very stance .
And force him and his govt to finally admit the mirage they have been holding up to the public for so long and the actual reality of this country’s out of control social problems.
It is just a shame that it would take our own local ‘recession ‘ to force that out of him. Rather than actually to have been promoting policy’s that were designed to generate wealth across the community in the first place instead of simply for those who were already well off.
My understanding and enlighten me if I’ve missed something is that most houses in AKL are now vastly overpriced. E.G a house that should cost $400,000 in a stable non bubble market now is costing say $900,000.
This is very bad for the economy except speculators because:
a. Huge excess sums have to be borrowed from overseas banks usually Australian to pay the speculator sellers and interest has to be paid on top, meaning foreign money is making a killing out of our economy
b. Couples taking out these mortgages become mortgage slaves to those banks probably for life. The payments take a huge slice of their income away which they then can’t spend in the local economy or on themselves, they are impoverished despite earning large salaries.
c. Many are forced into renting for the entirety of their lives and the rents too are outrageous. The landlords get away with anything. I know a young couple who pay $500 a week for a two bedroom flat.
d. So we have an economy set up to make banks and rentiers and speculators for capital gain rich by parasitism of our young people wanting to participate fully in NZ society without being financiaaly crucified.
e. The destructiveness of this situation is obvious even to a level 101 uni student but English and Key god market acolytes think it’s perfectly ok! Of course they represent the financial predators and rentiers in our economy don’t they. So immense sums of money are siphoned out of the NZ economy into foreign hands and wooden houses.
f. Then only the rich can participate fully in society as they have paid off their abodes and are themselves property exploiters themselves. And I know a few of them! This could all have been nipped in the bud but our but the Mayan human sacrifice market god our leaders bow to wouldn’t have it!
g. Serves to make NZ increasingly unequal as wealth gets skewed ever upwards and those who should be able to accumulate wealth can’t because of the crazy bubble pricing of houses and rents in this country.
I think you have your figures wrong, a normal stable market would see a normal price of under 200k for an average 3 bed hse, the auck market is out of wack by approx a factor of 5
Auckland is about location.
If a family wants a house near good schools in a nice area, they pay for it.
The bubble moves Kiwis out of Auckland and into other areas. Forced Migration.
And the reason its called a ‘housing bubble’ is because bubbles are only temporary… Eventually they burst.
Usury; we have an economy based on usury.
10005 MARTYN YOU HIT THE SPOT HERE.
A FOOLS GAME TO BELIEVE THER PROPERTY BOOM WILL NEVER END!
SO IT’S END WILL COME WITH A BANG!
OVER A WEEK EVERYONE WILL BE RUSHING TO SELL UP AS I SAW IN TORONTO IN 1992.
As I already predicted above:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11463007
They (i.e. the Government and the banksters) will do EVERYTHING they can to keep the NZ (especially Auckland) property bubble afloat. Cutting interest rates in the face of exponentially INCREASING house prices is just about as irresponsible and desperate as it gets, and exactly the wrong thing to be doing… it also makes it crystal clear what they are protecting and how far they are willing to go to do so. Any talk of taking measures to address the unaffordable Auckland property market is just that, talk. This bubble, together with the Christchurch rebuild, have become the foundation and a (faux) road to riches of the NZ economy.
Bring on Global Warming to warm those freezing sick houses.
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