What’s really slowing housing markets? A 10 year old birthday present from the GFC

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Lot’s of ’10 years ago today’ stuff last week marking the beginning of the meltdown in global markets as weapons of mass destruction derivatives forced a global market collapse that almost tail spun the entire planet in a steep economic depression.

To stave off another Great Depression, central banks around the planet have pumped the economy with trillions in printed money.

The impact of pumping an addict full of more of the drug they are addicted to as an economic theory is unsettlingly untested.

All that was accomplished by printing trillions is that the day of reckoning in terms of an economic collapse have been magnified while the poor suffer austerity and the rich get richer.

Politically we have seen Trumpism and Exitism expressed as economic nationalism and cultural backlash alongside the rise of Bernie Sanders and Jeremy Corbyn.

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In NZ we are seeing the harvest of the GFC with the political rise of Jacinda and economically the stalling house prices.

China are on cusp of a major banking meltdown due to their stimulus package to ward off against the GFC imploding, their restrictions on capital outflow are what’s impacting NZs housing slowdown.

Currently the American Stock Market is still in the thrall of the belief that Trump will ram through right wing fantasies as tax reform, but Trump’s inability to get health care reform through, his political mismanagement and his toxic culture wars are eroding any chance of Trump being politically capable of getting tax reform through.

The moment the markets suddenly understand that their euphoria of tax cuts is utterly misplaced is the moment they spark a rush for the door. That downturn will spark the collapse in China, that places stress upon the geopolitical fault lines between  the two of them in the South China Sea and on the North Korean peninsular.

When the crash comes, chaos will follow. Winning an election in September seems to be the least of our worries.

 

 

16 COMMENTS

  1. Absolutely Martyn;

    Full points for your insight to raise this “sleeping giant in the room” 2nd coming depression.

    (QE) “Quantitative Easing” was never going to work unless all trading nations were to be given equal amounts of this “printed money” in respect to the size of their own GDP.

    Though at the outset in 2008 when labour/greens and NZ First suggested we also use our own Crown Bank The treasury to print money to cope with our woes, national soundly rejected the option and instead hitched us up to the global money leaders to get funding at an un-disclosed interest rate so we have been placed in the weakest most venerable position against all other trader nations that conducted their own money printing (QE)

    National have made us all as venerable now as Greece was when Germany took that country over and seized their assets of Ports, electricity’ rail and other assets.

    So we in NZ shall see the wholesale loss of all Part or wholly owned remaining assets we hold!!!

    Unless the Government does change on 23rd September 2017 and re-nationalise most assets again as Iceland did.

  2. On the television news a couple of weeks ago they trumpeted a significant drop in house sales. I at first thought they were talking about prices falling but in fact it was just volumes that were falling. However, falling volumes of sales is the first step anyway as it means that buyers aren’t prepared the prices that are being asked. Unless there is a new influx of money into the market, sales volumes will continue to slow. Eventually those who have to sell any way will drop their prices, with the wider market to follow in due course.

    • EXACTLY RIGHT ESOTERIC PINEAPPLES,

      I can speak from experience as i was in our own house in Toronto after we put money into it when the market was heating up during 1984 to 1988 housing bubble.

      By 1992 I had a top paying job and my partner to was earning a good wage but all the money was going into the home mortgage.

      Then the property slump came that you are outlining to happen here.

      We were forced to rent rooms and by late 1992 it was hard to find renters, and one third of Toronto house sales were bank repossessions!!!!

      Toronto real estate prices only began to recover 18yrs later from 2010.

      I fear what will happen in NZ now.

      Bullshit Bill is going around the country saying Business is great, well Bill you will walk the plank shortly for what you have set us up for.

  3. China is still state run and controlled, as private business there is only allowed within strict guidelines and under government limitations.

    They will somehow manage to avoid the worst, but there could be serious issues for the global economy, in years ahead. That though had to happen sooner or later, as the money printing, the feeding of stock exchange frenzy, and the side putting of large debt in some economies would never have been able to continue endlessly.

    So fasten your seat-belts, prepare for social tension going to the maxx, the farmers are readying themselves for a fight against water levies, the real estate investors and speculators are getting ready to protect their loot, and the other business sectors will lament and lobby, to try and force more concessions from any government that will come.

    Finally, the time to occupy and seize hold of capital, and to squat empty and under occupied homes may be coming.

    • Chinese delegates at the Copenhagen climate conference in 2009 and on pushed for “rich-to-poor transfers” (see link below) which is code for the Himalayan ice glaciers are melting effecting the largest rivers in the world either side of the Himalayas that feed billions and billions of people. So they asked repeatedly for lower cost or even free technology, renewables and the rest. And every one including America said nah. So China said if we can’t use renewables to feed a billion people we will scale up Coal fired power plants and develop that way while hacking IP and reverse engineering solutions to chines population growth. And this for me is a conversing argument.

      http://www.economist.com/node/15179774

  4. Traitor john key led his Govt to pass legislation that:

    Allowed banks to ring fence major assets held as securities ( ie large mortgages ) so they will not be available to liquidators should banks go down. They have been assigned to of shore sectors of international banking. National was advised against this in select committee but went ahead facilitating no protection to NZ.
    .
    Traitor john key also led the charge to assign powers for banks to use depositors account to bail them out.

    Your money is not safe in a bank.

  5. Well that summarises the economic status of the world in a nutshell. Martyn is one of the few NZ bloggers who seems to understand that the current economic boom that we are supposedly currently enjoying the fruits of is really nothing more than smoke and mirrors sleight of hand deception that actually has a massive negative impact on those not on its receiving end (which is factually most of us).

  6. ” When the crash comes, chaos will follow. Winning an election in September seems to be the least of our worries.”

    A big double yep to that one good buddy.
    My personal opinion of the elections is one of a quaint custom tolerated by an idle Corporate Global Overlord deigning to allow us to amuse ourselves with the harmless pageantry of it.
    ( Pageantry: Chattering, Gas-Heads excreting gibberish for our hopeful ears to use to fool our amygdala’s for their fun and profits. http://theoatmeal.com/comics/believe )
    The irony will be that the poor, now well used to being poor, are good to go re experience and may , in fact, become an asset I.e. Advice re the best cardboard box, the warmest ventilation grills, the easiest way to kill,cook and eat cats and if they’ve just eaten a rat? Win! Pre stuffed! OMG! Think dog stuffed with cat stuffed with rat stuffed with native bird eggs ! Think of the feast? You think I’m being absurd? I was in a remote coastal Cambodian town not long ago and the owner, a hard working older woman, complained that the workers building a new hotel next door, killed, cooked and ate two of her three pet dogs.
    While at the markets there, I saw cages of tarantulas, nice, big, fat, fluffy puppies, snakes, birds, insects. Yum-yum. )
    The Big Shock will be for those who navigate their Black Shiny Parnell Tractors to the $5.00 a cup coffee houses. They’ll be all a-squeak and a-frenzy as the last pastry disappears from the boutique supermarket as little Mimsie limps home from her private school with a bullet hole. ( Hey! Don’t get precious with me y’awl. Think those little kids in Syria etc? )

    Renationalising our assets, sacking the banks, writing off foreign debt including mortgages, loan shark deals and scrapping absurd ( controlling ) local government restrictions on building dwellings etc, encourage growing foods along road sides/public lands etc and for Gods sake, lets just bury everything orange and reflective. We should be running emergency classes on how to grow basic vegetables, including how to ferment, bottle and preserve. We should also be inviting HRH QE2’s nice new aircraft carrier down for a wee holiday while we’re at it. It’s all very well for some to swat each other with damp hankies when the flat runs out of toilet paper but when the supermarket’s out of basic foods? Out come the AK’s man. You think that’s a preposterous scenario? The planet is in decline re fresh water/ arable lands and the security of distance from mad bastards and here we are. Aotearoa/ NZ. I bet Maori back in the day thought “ Fuuuuuck. No violent neighbours. Sweet! No things/humans that can eat us, enormous flightless chickens, lots of fishes….”
    For how many years ? A thousand?
    Then..? The Big Waka crawling with white lice armed with fire sticks.
    Fucked Bro. Fucked as.
    Look. I’m no dainty type. Don’t get me wrong. I’m no daggy arsed hippy with bangles on my dick. Long gone are the chances of fashioning, on me, a dread lock unless it’s on my back hair. Sitar music to me is a call to extreme violence. Frilly, tie died, man-frocks can be fashioned into a noose, that’s their only use.
    Having stated my credentials, we Kiwis have a golden opportunity to enable our survival in a worse case scenario. We’d come out light years ahead if nothing nasty happened at all, so win-win. If the moron shit does indeed hit the greed fan we’d be ok.
    But as we are ? We’d be fucked. More fucked than a fucked thing on International We’re All Fucked Day. We, all of us, will be under bridges owned by desperate, well armed foreigners who have no patience with pesky locals trying to survive. We’d be in the deepest shit imaginable. Just ask Maori?
    The frustrating thing for me is that it’s all entirely avoidable in my less than humble view. All of it. The wars, starvation, horrors… But how to vaccinate against the virus that are those human-creatures who took a very useful trade mechanism and weaponised it? Money in the hands of mad bastards is more lethal than any A bomb. When wielded by sociopathic narcissist’s money becomes a terrible weapon. The most dangerous and merciless weapon of all. It appeals to the twinkle sparkle receptors in us and that’s what makes us so vulnerable to those others with evil intent. It is indeed like a drug.
    Yeah/nah. I think we’re fucked. Sorry.

  7. The gnats new housing policy is to build more roads because under there watch a car has now become a home.
    So at least by building more roads these people with never be homeless they can drive from one end of NZ to the other (but do be careful of those trucks) This new infrastructure policy kills two birds with one stone.
    And as a bonus and good measure they may be able to use their number plate as a fix abode. ( to help them receive welfare ) Wow!

  8. 1. All money in the modern economic system is created out of thin air. Interest is charged on money created out of thin air on the basis that there will be economic growth forever…..which is obviously absurd.

    2. The global energy system that underpins the money system peaked in energy return on energy invested around 2007, and commenced its inexorable decline. The decline will get a lot steeper from 2018 on.

    3. The so-called GFC was actually an energy crisis, but energy is a taboo subject and is totally ignored by practically everyone.

    4. Manipulation and lies, together with very environmentally destructive energy sources (such as tar sands and fracking) have propped up the global economic system since 2007-2008…..and are now about to go into severe decline.

    5. 99% of the populace are clueless or are in denial.

    6. Fundamental truths are taboo, and delusions now substituted for sound policy in all western nations.

    • “The so-called GFC was actually an energy crisis, but energy is a taboo subject and is totally ignored by practically everyone.”

      care to explain that assertion?

  9. Seems to me that China is poised to maintain its own economy, now embellished with the intellectual and physical capability enabled by the US process of outsourcing it manufacturing to lower labour costs. This should not concern those who are in favour of a perfectly competitive market? Unless it is too competitive so that it is fair?

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