Hickey on Wall Street panic
March 18th, 2008 at 5:59 pm by David FarrarBernard Hickey blogs on what the latest Wall Street panic means for us, and it isn’t pretty.
JPMorgan Chase has moved to purchase Bear Sterns, but for only US$2 a share, which is a total value of just $236 million. On March the 14th the shares were trading for $30 a share, which valued the company at US$3.54 billion. A year ago they were worth $10 billion. Their annual turnover is $16.2 billion so $236 million is almost saying they are worthless.
I got e-mailed this graphic from a contact who got it from a staffer at the International Monetary Fund. I think it may have been in the Washington Post, and it is a useful guide to what happened.
Anyway back to Bernard:
The news coming out of Wall St this morning is simply shocking and is something every New Zealander should understand and care about.
Put simply, panic and fear rule in the world’s financial capitals right now and it will cost us all in one way or another and sooner or later. …
Translation: This is big, don’t think it won’t affect you.
In the last five years since our debt-fuelled consumption and housing boom started in January 2003, we have borrowed around NZ$39.6 billion from foreign investors.
Translation: We owe a lot of money overseas and are vulnerable to anything that may impact what those investors do.
The moment we lose the confidence of these housewives and dentists is the moment our interest rates rise and our currency collapses. This has been referred to as the Uridashi Tsunami. We know it’s coming. We just don’t know when.
Translation: Start getting off the beach now, not once you can see the tsunami about to hit.
All this means that wholesale interest rates are likely to keep rising. That means mortgage rates are likely to keep rising. Maybe not this week, but maybe next month and the month after that. Oil prices are likely to keep rising because they rise when the US dollar falls. The Fed’s desperate moves to pump money into the markets will simply increase inflationary pressures globally. Petrol and food prices are likely to rise further.
The squeeze on disposable incomes for anyone with a big mortgage will get tighter and tighter. Our economy will slow and may even fall into a recession. That is stagflation.
Translation: We may get the worse of both worlds. High interest rates, high prices and low economic growth.
Related posts:
- Hickey on bank margins
- Hickey on Rates
- Bernard Hickey on the desperate and dangerous budget
- Hickey on Economy
March 18th, 2008 at 6:24 pm
Interesting how Elliot Spitzer fits into it all, theres an article here http://cluelessabout.blogspot.com/2008/03/article-linking-spitzer-situation-with.html
Vote:March 18th, 2008 at 6:56 pm
.
Vote:March 18th, 2008 at 7:02 pm
I linked to Spitzer’s WaPo article on another KB thread a few days ago Mike.
And frankly, if you haven’t already you should read the whole of both that thread and the recent Bear Sterns one if you want some good insight from many people.
Vote:March 18th, 2008 at 7:17 pm
When our OCR was first increased late 2005 it brought a wave of money into the country and recall it kicked off our own little mortgage war where the banks fell over each other to lend money. The high OCR has kept our currency artificially high since. See Bernard Hickey’s graph of NZ$ Eurobonds.
Vote:March 18th, 2008 at 7:20 pm
It’s already pushed up yields in NZ and I don’t think if the NZRB cuts interest rates it will NOT have much of an impact on the interest rates charge by banks in NZ.
There is a downside if the NZRB does cut the interest rate they charge that overseas investors will call home the money the lent to NZ and actually cause an increase in mortgage rates to NZders.
My personal thoughts is for the NZRB to leave things where they are until the end of 2008, maybe early 2009.
I think it will take that long before the markets find a new equilibrium here and overseas.
Vote:March 18th, 2008 at 7:41 pm
One thing the RBNZ could do is intervene heavily in the currency and buy as many $ as possible before the Kiwi does take a serious dive. This is an opportune moment to repay foreign debt as it is most certainly going to come at a high price in the near and medium term.
Our local banks are issuing paper like there’s no tomorrow (maybe they know something we don’t?) and with rates above 10% it suggests that they are hunkering down and getting as much cash on the books as possible.
Vote:March 18th, 2008 at 7:42 pm
Good article here from Larry Elliot of the Guardian.
Also look at this video where the former Chief Economist at the World Bank blames Greenspan: loose quote: “he was not only asleep at the wheel… [he actively] looked the other way”
Vote:March 18th, 2008 at 7:45 pm
A simpler explanation of subprime
Vote:March 18th, 2008 at 7:49 pm
I am so pleased that I locked my mortgage in for 5 years about a year ago. (tax deductable in any case thanks to the LAQC). This year as mortgages come up and people start to really hurt, the pinch will go on retailers, cafe’s and tradespeople, as well as home owners. The economy is already in recession. Ask any real estate agent, retailer, resaurant owner, dairy owner. People are already careful with their dollars in preparation for the looming economic winter. The lost opportunities to protect us against the worst of the upcoming recession will become evident and then surely this will be the last nail in the coffin of the arogant and corrupt socialist government.
The only unknown is how bad is it going to get, before things improve.
When the people start really hurting, they will then blame Labour and get to despise the Labour Government. Their inept economic management will become evident.
Vote:March 18th, 2008 at 7:54 pm
All this points to a liquidity problem for our own Banks. Back to the days of “rationed ” mortgages anyone? And the rates will be high. Heck under Muldoon I recall 22%. He even legislated a maximum you could charge, such was the cost of poor liquidity.
Vote:Still, despite this there is still a lot of money around in the world. Let us hope that that money seeks a safe haven and recognises that in the main NZ mortgage practice has been pretty good with conservative rules. (yes we do 100% but not a huge amount) This may in turn make our mortgage debt easier to sell and priced a bit better.
March 18th, 2008 at 8:10 pm
There is no credit problem..
The Reserve Banks of the world are throwing money ( printed ) around like drunken sailors.
It is a SOLVENCY problem.
Vote:March 18th, 2008 at 8:14 pm
Agreed Mark as it may accelerate the unwinding of the trades, however, it might be a good time to remove the preferential tax treatment that they get. Ironic, isn’t it? It’s bad for foreigners to own an airport but 39 Billion of household mortgages/debt is OK (well it’s not clear whether all of this money has found it’s way into housing mortgages). Captain Crab, a lack of liquidity is easily fixed, the problem with most of our banks is that there isn’t much capability displayed beyond housing mortgages.
Vote:March 18th, 2008 at 8:20 pm
Can you please expand on the difference adam?
Vote:March 18th, 2008 at 8:33 pm
I think the problem is more consumption. The US has not made a profit since 1981 apparently it has been borrowing more than it earns every quarter from then. Also from the radio today thieves are having a hard time flogging stolen gear because every one has what they want.
The fact that sub-prime mortgages exist is a sign that the market was saturated with debt, NZ is probably similar.
Nothing is forever and like a garden if you take but don’t return with fertiliser your garden will dwindle.
Vote:March 18th, 2008 at 8:54 pm
Well, if things get real serious, guess what’s gonna happen early on: Kyoto defaults all over the place. And good riddance.
Meanwhile while I’m waiting for adam to expand, I’ve previously diagnosed it as a problem in inter-bank lending confidence. And when banks and other institutions stop lending amongst themselves they won’t lend to others either. That’s why I’ve said since the first time the Fed cut the rate in that emergency move a month or two ago, it’s not going to work. Because it’s not a liquidity problem. The rate cuts undermine support of the dollar, and that is feeding the developing storm, not reducing it.
Vote:March 18th, 2008 at 8:59 pm
Credit is being given to people, companies and countries that can not afford to repay if there is even the smallest hiccup.
They are not solvent.
Just look at our credit card debt.. and still they are exhorted to buy more..
Vote:March 18th, 2008 at 9:02 pm
I agree adam that’s the root cause but I think it’s the flow-on effect of those policies and the solutions to them that are now the main issue.
Vote:March 18th, 2008 at 9:06 pm
there are several websites which provide detailed and informative comments on the current financial crisis but Two of the very best are http://www.calculatedrisk.blogspot.com and http://www.nakedcapitalism.com . Neither will help you sleep at night.
Vote:March 18th, 2008 at 9:14 pm
Actually banks are never solvent. Just look at their balance sheets. The banking system is based on confidence that cash will be there when required. The fact that less then 3% of the toal money supply is cash and the rest is debt is not something that tends to bother people most of the time.
However, as depositors at Northern Rock discovered, cash is still quite important.
The banking system works on a simple premise: profits will be privatised and losses will be socialised and we are seeing that very clearly right now.
Vote:March 18th, 2008 at 10:40 pm
gee dpf..isn’t this all what that guy philu from whoar has been trying to tell you for ..oh..!..about a feckin’ year…
(did you have to wait till you heard the barking dogs following the circus..?
bit feckin’ late..!..isn’t it..?
phil(whoar.co.nz)
is this really all a big surprise to you ..?..dpf..?
i assumed you were just trying ‘not to scare the horses/punters’..
Vote:March 18th, 2008 at 10:51 pm
Hickey overstates the problem. The whole Uridashi issue only has traction because they deliver interest rates in NZ lower than the 90 day bill rate. Yes, things can get worse – but the problem is bounded. Once Uridashi interest rates rise above the 90 day bill rate, then they become irrelevant, and the Reserve Bank is back in control of the economy. After that, interest rates will come down. It’s true there will be a currency effect – which our exporters will love.
So it’s not so bad. It’s not so bad at all.
Vote:March 18th, 2008 at 10:57 pm
Yet again, the reef fish have fucked the world’s economy.
http://www.guardian.co.uk/commentisfree/2008/mar/16/creditcrunch.useconomy
Vote:March 18th, 2008 at 11:09 pm
gee milo..!
how about the fact that most of our banks are australian owned..(hold that thought..!.)
another relevant fact is that the australian banks have their genitals ‘exposed’ to the world..they were greedy little bunnies..wanted some/lots of that finger-licking good sub-prime juice..
and are now in deep doo-doo..
lets also consider the fact that the auckland savings bank..(australian-owned..has a 66% exposure to our retail mortgage market..
when the house prices drop by 30%..
bye bye asb..!
what will happen internationally is that everyone will decide the american economy has to run its’ course to disaster..
and other countries will cut america loose/quarintine themselves as much as possible..
of course ..this all means the dollar is dead-duck ..the euro will probably be the de-facto successor to that role..(if only for theshort-term..
oil producers etc will demand payment not in american dollars..
(does anyone think they wont..?..)
americas’ time of global superpower is over..it will become an economic basketcase..for the forseeable future..
what bush has done..is bring down the american empire..
this milleniums ‘nero’..
(and thanks for the belly laugh there milo..!..
the problem is ‘bounded’..eh..?
you just hang on to that sheet-anchor..eh milo..?..)
phil(whoar.co.nz)
Vote:March 18th, 2008 at 11:15 pm
PhilU: I’m referring to the New Zealand Uridashi problem. But actually I don’t think the world economic crisis will be that bad either. Markets operate. Assets become cheap. People holding cash buy them up. The only thing that would seriously worry me is if the current situation was added to by (say) a nasty civil war in China.
It is interesting, though, to see how orthodox economic theory is undermined by globalisation. Quite amusing, really, as so many economists are such deeply orthodox thinkers.
Vote:March 18th, 2008 at 11:36 pm
should anyone be interested in following the snail trails back to the first warnings of this..
(this is not ‘new’/'surprise’news..eh..?..the signposts were there..)
if you go to whoar..and key ‘meltdown’ into the little search box at the top of the page..
96 stories/links will come up..(read and feckin’ ‘learn’ ..milo..! .)
some other facts to consider..
in all this time..this is dpf’s third story..
dpf takes whoar on rss..
why didn’t he tell/warn you all..?
phil(whoar.co.nz)
Vote:March 19th, 2008 at 12:13 am
and what the fuck has our mainstream media..our ‘experts’/commentators been doing..?
i have been finding (credible) reports warning of this for over a year..
our useless media first even mentioned the word ‘subprime’..just before christmas..
useless feckin’ bastards..!
the lot of them..!
they have ‘let-down’ the new zealand people..
and have set new benchmarks in incompetence/deriliction of duty..
phil(whoar.co.nz)
Vote:March 19th, 2008 at 12:16 am
What’s most disheartening is that Joe Louis, major shareholder of my beloved Tottenham Hotspur, was the single largest shareholder of Bear Stearns with a 10% stake.
It’s alleged he’s just spunked US$1.0b away.
Fuck your inflation and interest rates, there goes our summer transfer kitty.
Vote:March 19th, 2008 at 12:19 am
Everyone knew philu. I have been saying it for the last 3 years. There was a good doco 2 years ago on USAs debt problem. It was quite obvious then it was about to tip over.
And philu, cut down the ramble. Just accept no one goes to your blog… ok?…
Vote:March 19th, 2008 at 1:00 am
It’s times like these that it’s particularly regrettable we don’t have a Prime Minister Brash & finance Minister Key steering the good ship New Zealand.
Instead we have dump’n dumper in charge, laughing away with their academic elite behind closed doors totally focused on the blame game while the average New Zealander is hurting. That’s ‘caring’ socialists for you.
Vote:March 19th, 2008 at 5:28 am
philu-you’ve been predicting the sky will fall for some days/weeks/years now. On the day after the Bear Stearns buyout you predicted a Wall St meltdown that didn’t occur. Rumours flew around that Lehman Bros were next but today Wall St is up 250 and y’day it was down only 20 and Lehmans are fine. Does that mean we are out of the woods? No – but the Fed’s actions have stabilised things somewhat. Markets aren’t happy but they aren’t suicidal. Bear’s stock holders have been wiped out – welcome to capitalism folks. Wall St traders made massive profits on their leaveraged investments and one trading house has been caught short with over exposure to MBS’s and they’ve paid the price. Given all that is happening with oil prices, the dollar and the writing down of any MBS the markets have held up surprisingly.
Capitalism survived 2 World Wars, the Cold War, the great Depression and all its widespread banking collapses, various recessions small and large since WW2, OPEC quadrupling of prices after Yom Kippur war in ’74 and numerous regional conflagrations – it will surely survive this needed adjustment to global property markets.
If markets are left alone to operate as cleanly as possible, assets will gradually revert to their true underlying value. In the end property is the function of available land and the cost to build houses – if market values rise too high above these underlying fundementals for whatever reason, they will eventually fall back to the underlying value. The same is true with stocks/shares – the underlying value of any publicly traded company is its asset base and profitability – if the company has sound management, its utilises its assets as efficiently as possible and its remains profitable it will have value as investors seek to buy a share of its future revenue stream. Buyers of overvalued assets are inevitably stung when events (such as the crisis with MBS’s) bring values more back into line with underlying cost or corporate performance.
NZ’s very high private debt holdings, higher interest rates (made higher by the political risk premium of an over taxing and over spending socialist government) and extremely over valued property market means it is in for a bumpier landing than the US. US households have had the benefit of stronger GDP growth over many more quarters and so have built more real wealth both from rising asset values (now somewhat lower) AND strongly rising incomes. Outside of the property and mortgage markets, corporate profitability has remained strong keeping unemployment low. The latest market adjustments will have an effect – lower consumer spending, reduced corporate profits, higher unemployment and yes maybe even a recession (defined as 2 consecutive quarters of negative GDP growth). Fiscal policy in the US will determine if it is short and shallow (like the 2001 recession) or long and potracted like 1974. But phil’s socialist/tree hugging dream of global capital market collapse will remain a dream.
Vote:March 19th, 2008 at 6:46 am
gee kia..!..
joseph stiglitz is here at the moment..
(have you heard of him..?)
i think you need a (quick) tutorial kia..(you and the other ‘deniers’..)
watch this interview with stiglitz..where he details where/why/how etc..
then get back to us..
and gee..kia..!
somehow..i lean to listening to his news/views..
rather than your latest parroting of ‘yesterdays’ news’/'positive’-spin..
eh..?
phil(whoar.co.nz)
and hey..!..kia..
this is no fucken ‘dream’..
this is a fucken nightmare..
that will hurt everyone..
Vote:March 19th, 2008 at 7:10 am
Phil
Ah yes – Stiglitz – I guess being a Prof at Columbia and getting a Nobel Prize means his every word must be believed. He peddles an ideology that fits neatly with yours ie vehemently anti-globalisation, sock it to the rich environmentalist, 3rd way cheer leader and former Clinton economic advisor. He’s a left wing partisan hack but of course that means all his prognostications are treated as messianic gospel to the likes of you.
I believe your predictions on the world economy will be as prescient and accurate as your prediction that Obama would continue to rise in the polls and be the next US President(oops he’s lost FIVE points in 2 days vs Clinton and Rasmussen has McCain up 8% on Obama in a General election face to face. Looks like I’m going to have to owe you TWO bongs!!
Vote:March 19th, 2008 at 7:18 am
“that will hurt everyone..”Phooool; can you get hurt when you live in a drug induced coma?
Vote:March 19th, 2008 at 7:44 am
Reid, watched the 3 1/2 hr documentary “money masters” that you linked a while ago. It’s long and drawn out and very interesting; I hadn’t realised that the central bank in the US (and many other countries) is owned privately, which is plainly wrong. They blame the 30′s depression on cynical manipulation by the shadowy figures behind the central banks (Rothchilds etc). Back in 1995 they were predicting another collapse so they are out by at least 10 years. Any government that runs a deficit is forced to borrow from the central banks (they love socialists even more) so for these bankers it’s risk free lending at rates underwritten by income tax payers. The solution proposed in the video is to increase the “fractional reserve” to 100%, issue “debt free” currency (like the greenback) and repeal the 1913 act that created the Fed. We don’t have a privately owned central bank but there’s no mandated “fractional reserve” (I still haven’t found a document that confirms this) but to me it doesn’t seem right that the only tool available to manage inflation is the OCR. Phil were you predicting collapse in 1995, check out the video.
Vote:March 19th, 2008 at 7:54 am
you don’t quite understand kia..
this is not some fucken exercise in left/right dialogue/debate..
this will turn into a global crisis of such magnitude..that those left/right chinese-walls will have to be swept away..
and we will all have to work much more ‘together’..
and as for obama..?
i think you need to read this..kia..
(seeing as you have often cited rezko as ‘the reason obama will fail’..
once again..you are shown to be ‘full of it’..eh..?
http://whoar.co.nz/2008/obama-prepares-for-full-assault-on-clintons-ethics/
phil(whoar.co.nz)
and gee..!..d4j..i hesitate to speak for everyone..
but don’t you think your ongoing riff on the shock/horror fact that i smoke pot..
is getting a little..um..!..boring/predictable/’tired’..?
Vote:March 19th, 2008 at 7:56 am
philu, it would be helpful if in your future posts you consistently made actual points rather than constantly pointing out your self-perceived prescience. It just gets a bit tiresome that’s all. As has been said before, you’re not the only one who saw this coming, and the fact DPF has not blogged prolifically on this point means nothing. For example, to my personal regret, DPF almost never blogs on Israel, but I haven’t concluded from that that it means he doesn’t know what goes on there. It’s just his choice and that’s fine.
We all have a human need for significance and maybe some of us get some of that need fulfilled by this real-time ‘letter to the editor’ facility offered by this and other blogs – I know I do. And I think you might find that if you start making substantial and insightful comments your ratings might increase. You’re an intelligent guy, and you’re wasting both your time and ours by failing to share your intelligence with us. And drop the constant ad homina too, it’s pointless.
Vote:March 19th, 2008 at 8:03 am
“..And drop the constant ad homina too, it’s pointless..”
that’s quite funny reid..
unless it is deserved by their actions..most of my ad homina is in reaction to the mindless droolings of the likes of the above comment from d4j(erk-off)..
oops..!
and as for ‘actual points’..?
is 96 stories/links/warnings on whoar..?..
and alerts here..?
..over the last year..?
..not ‘enough’..?
numbnuts..?
oops..!..again..
phil(whoar.co.nz)
and as for me ‘not being the only one who saw this coming’..?
precisely..!..reid..!
(c.f..96 stories/links on/at whoar..of ‘other people’ saying/telling what was coming up/unfolding..)
Vote:March 19th, 2008 at 8:06 am
Philu at the risk of offending you I can tell by your postings that you know nothing of the Fractional Reserve Banking system.
Vote:I don’t debate with stoned up fools.
March 19th, 2008 at 8:14 am
No phil I understand perfectly. What I know is the environmentalist left assumed Soviet hegemony or at worst, continuance and it collapsed, it predicted an ice age that never eventuated, it predicted that the earth’s population was unsustainable 30 years ago and we’re all still here and feeding ourselves nicely, it predicted catastrophe in Iraq and it is edging ever closer to sustainable democracy, it predicted peak oil that has never arrived, it of course predicts catastrophe due now to global warming (not cooling as in the early 70′s) and it has repeatedly predicted the end of the capitalist economy and, as I posted earlier, despite numerous disruptive events, it continues to be the most efficient economic system that delivers the most economic good to the most people. So I take your assertions, predictions and those of your Messiahs like Chomsky and Pilger with lots of grains of salt.
The capitalist economy has flaws and could do a whole lot better. I’m not comfortable with fiat money – long being a believer in the gold standard. I’ve read “The Creature from Jeckel Island” and I’m fully aware of the flaws of the Federal Reserve.
As for Obama, Rezko is but one of his problems. Obama can attack Clinton all he wants – all it will do is further polarise an already deeply divided party. If he beats Clinton, McCain will clean his clock. The 527′s will run the Rev Wright rants ceaselessly and no articulate speech will undo the fact that Obama went to that man’s church for 20 years and knew full well the incendiary and racist nature of his rhetoric. You better believe the Clinton campaign have a tape of Obama’s face in the audience on a day Wright was goddaming America despite Sen Obama’s pleading that he never heard such things the days HE was in church and that they will deploy that bomb at a strategic moment. But yes the sweetheart deal Rezko did with the Obamas will rumble on in parallel – all it takes is Sen Clinton to make a complaint to the Senate Ethics Committee that the discounted price Obama ended up with (as a consequence of Rezko’s involvement in the sale) amounts to a gift that is deemed illegal under current Senate rules and that alone would end his candidacy so go ahead mate – keep hope alive!
Vote:March 19th, 2008 at 8:14 am
blow it out your butt..!..d4j..!
phil(whoar.co.nz)
Vote:March 19th, 2008 at 8:17 am
I rest my case phoool.
Vote:March 19th, 2008 at 8:20 am
“..and we’re all still here and feeding ourselves nicely..”
(you are kidding..eh..?..with that claim..?..)
“..it predicted catastrophe in Iraq and it is edging ever closer to sustainable democracy,..”..(!)
(and again..?..with the ‘kidding’..?..)
“..it predicted peak oil that has never arrived..”
(and again..?..)
“..it (capitalism) continues to be the most efficient economic system that delivers the most economic good to the most people..”
(again..?..)
all..’in your own words’..?..eh kia..?
phil(whoar.co.nz)
Vote:March 19th, 2008 at 8:22 am
what ‘case’..d4j..?
the biggest ‘case’ around here..is you buddy..!
oops..!
phil(whoar.co.nz)
have you considered a partial lobotomy..?.d4j..?
y’know..to still yr anger..?
to ease yr pain..?
(anyway..enough of this..
news needs to be gathered..
later..!..)
Vote:March 19th, 2008 at 8:36 am
phil – you never back your lefty assertions with anything other than ……. and ? or () .Look, the grown ups are talking right now – can you go tend to your budding crop and leave us adults to debate. One of the symptoms of regular marijuana use is trapping its users in the emotional stage they were in at the time they first commenced regular use.
Vote:March 19th, 2008 at 8:51 am
and look what i found..!
the first ‘meltdown-game’..
http://whoar.co.nz/2008/ask-the-ben-bernanke-8-ball/
(i asked the ‘magic ben bernanke 8 ball..’what will happen to the american economy..?”
the reply/answer was ‘learn to shoot a gun!”
(heh..!)
phil(whoar.co.nz)
Vote:March 19th, 2008 at 9:10 am
philu cant debate it because he know he’s wrong. Peak oil hasn’t come. We can feed our selfs quite nicely. One of the last projects at school I remember doing was on food levels. We had heaps if I remember correctly.
Vote:March 19th, 2008 at 9:24 am
philu: and we will all have to work much more ‘together’..
Correction. The taxpayers will have to work together.
philu: “..and we’re all still here and feeding ourselves nicely..”
(you are kidding..eh..?..with that claim..?..)
Do you actually have a counter argument? Or is your accuracy measured by how loudly you can say “No! It isn’t so!”?
Idiot.
Vote:March 19th, 2008 at 9:31 am
stiglitz is on nat-rad..now..!
phil(whoar.co.nz)
Vote:March 19th, 2008 at 9:35 am
This site may be of interest to many of you.
financialsense.com
They have all the figures at their fingertips
Tony Allisons latest Market Wrap ( double click ) is well worth reading today.
Vote:March 19th, 2008 at 9:45 am
I think the talk of recession in NZ is overstated. I think it is politically advantageous to scare-monger. Hard to sell property? yes. less disposible income? joblessness up? interest and fuel rates up? yes.
Vote:However a need to ‘sell state assets’ no.
Lots of surplus to cushion us? yes? adequate welfare provision?
Yes.
On balance and I agree with Cullen on this, times will tighten,, but we will have to tighten with them.
By the by, the single biggest inflationary issue facing us it high interest and high property both of which which must take a fall.
This situation should be squarely laid where the blame belongs however: With Michael Cullen and his $60,000 taxation band, and subsequent villification of ‘rich-pricks’ by suggesting we raise interest rates because of these mum and dad investors who attempted to circumvent his stupidly low threshold by investing in tax-depreciable investments. It was in response to this he brought in kiwisaver, because even he realised that unless there is some kind of alternative, people will continue to buy investment properties as a surety against poverty in their old age.
The other stuff obout international influences on the tax-payers’ pockets and mortgage rates, is , IMO ‘globalony’
March 19th, 2008 at 10:23 am
Just so you know who to blame, here is the front page of the paper I gave to the International Conference on Climate Change in New York on March 2 – 4th.
And in case you think we locals cannot know anything about anything here is a news release from Bloomberg today:
http://www.bloomberg.com/apps/news?pid=20601039&sid=aTGvWJvbonR0&refer=home
MInd you, it is not entirely coincidence. But let us not get diverted from those really to blame – the central planners who have been screwing up housing markets all over the world.
Why Urban Planners Love Global Warming
or
How Climate Change Alarmism has led to the Risk of
World Wide Recession.
A paper prepared for The International Conference on Climate Change, March 2008, New York
By Owen McShane, Director, Centre for Resource Management Studies, New Zealand.
Many of you will be concerned about the future costs that Climate Change policies may impose on the economies of the world. It is easy to presume these costs lie in the future.
Vote:However, over the last ten years, the theory of Anthropogenic Global Warming has been a major driver of urban planning theories which, by constraining the supply of land, have caused a massive escalation in house prices in those jurisdictions where the theories have been applied.
The consequent “housing unaffordability” encouraged many bankers to enter the “sub-prime” mortgage market. When the Smart Growth housing bubble burst last year the sub-prime investors lost billions of dollars, and the loss of value and loss of confidence in property investment rapidly spread from the US to countries like New Zealand, which had also pursued these costly planning theories, or fads.
We do not have to wait to see the costs of climate change alarmism.
They are there to be seen all around us.
March 19th, 2008 at 10:26 am
toms,
The article you link to states “The heart of Keynesian economics was never tax and spend”.
What that means the Labour party is the party you support is the party of tax and spend.
The next part states ‘it was the warning from the greatest economist of the 20th century that a financial system based on free-market principles inevitably destabilised the health and stability of capitalism. Keynes knew his ideas would be contested to the last because he threatened the orthodoxies of laissez faire and the fortunes of the financiers. So it is proving again. For make no mistake – the global economy is under threat.
Really – on what basis is this statement true.
Keynesian economics was based on two principles that cutting interest rates and increased government spending can boost economic growth.
That you could also have low unemployment even if inflation was increasing and there was a trade-off between the two.
The theory failed when you ended up with increasing unemployment and increasing inflation.
The problem in US has ended up in the whole crisis because they a) cut interest rates, b) have increased government spending. Sounds a lot like Keynesian economics.
But being a leftie I understand you do not understand basic economics – it’s just a particular handicap from all lefties.
Vote:March 19th, 2008 at 10:56 am
owen..you were at that (much-ignored/derided) denialist conference in new york..?
and you ‘presented a paper’..?
priceless..!
“..Why Urban Planners Love Global Warming..”
(mm!! sounds conspiratorial..do they gather in clusters..?..
or is all their ‘loving’ done on-line..?
phil(whoar.co.nz)
Vote:March 19th, 2008 at 11:08 am
Philu,
Vote:The fact is that as long as I can remember the far left has been predicting a slowdown/recession every year, the fact is that recessions will come along once every 8-10 years. Probably goes all the way back to Marx and the Crisis of Capitalism
Thats a 10-12% strike rate
Whoppeedeefuck, you guys must all be Nostradamuses
March 19th, 2008 at 11:53 am
philu can never rise above personal insults and ill-informed comment.
I presume he assumes that we locals can know nothing so to reassure him that even some OVERSEAS people agree with the route cause
he can read (if he can) this Bloomberg release at:
http://www.bloomberg.com/apps/news?pid=20601039&sid=aTGvWJvbonR0&refer=home
All I did in my paper was point out that for the last ten years or more Climate change arguments have been the most popular excuse for imposing Smart Growth regulations on housing markets all around the world. Sustainable urban form is now the popular excuse for promoting (forcing) high density living and public transport over private transport even though low density housing and private transport is more energy efficient that the Smart Growth preferences.
I was honoured to be in the company of such honoured speakers as Vaklav Klaus, and Prof David Henderson, former chief economist with the OECD, and of course such famous climate scientists as Fred Singer, Ted Avery, and Bob Carter, and the experts on modelling such as Kesten Green (currently also in NZ and who presented a first class paper on why forecasts by scientists are not necessarily scientific because they have often have no training in the discipline of forecasting.)
Vote:There were 100 speakers and 500 in attendance and the science, economics and policy streams were all first class. Of course you ignored it but then your mind is up and you have no interest in the facts – any facts.
I have been invited to give a similar paper at an Urban Economics conference in Houston in May so It seems other people don’t find my contributions so priceless.
We wait to read some rational contribution from your own mind.
March 19th, 2008 at 12:48 pm
We wait to read some rational contribution from your own mind.
I’ll come and clear the cobwebs off you every 5 years Owen.
No, don’t thank me, we all have to do our bit……eh?
Vote:March 19th, 2008 at 12:50 pm
go on folks..!
google those names owen mcshane trots out..
check their creds..
and hey..!..many/most of them have been paid/funded by the exxon-mobil climate-change denial front-groups..?
btw..mr mcshane..
‘are you now..or have you at any time..been in receipt of monies/’grants’.w.h.y..?
from exxon mobil..?
or any of the front groups they have admitted using..(and mea culpaed for)..?”
do tell..!
phil(whoar.co.nz)
btw..mr mcshane..i am a/the ‘director’..
of ‘the centre for climate-change bullshit artists studies’
(impressive..!..eh..?..)
btw..as for ‘rational contributions’..?
try whoar.co.nz
and..um..!..it’s ‘root cause’..eh..?
but..cheers for the (involuntary) humour there..!
eh..?
Vote:March 19th, 2008 at 1:07 pm
As always, some contrarianism, sourced from well outside of this leetle claustrophobic country, helps:
Spengler on Obama
Vote:Leif Svalgaard threads about climate change – a refreshing refusal to get swept away by fads or ad hominem flapdoodle
And of course the Mocambo Guru, on – well – you decide…but gold and guns do figger prominently.
March 19th, 2008 at 1:09 pm
and what a ‘funny’ little faux-scientific world you inhabit..?
eh..?
you ‘denialists’..
still..it must have been ‘nice to have been with like’..eh..?
but..psst..!..
don’t you think your ‘crew’ is getting a tad..lets be blunt here..
marginal..?
cultish..?
phil(whoar.co.nz)
btw..owen..
piss off with your self-aggrandizing red herrings..!
eh..?
this is (only ) the third meltdown story dpf has done..
take yer barrow..and wheel-off..!
Vote:March 19th, 2008 at 1:14 pm
Can someone organize the White Coat squad to call on poor phoool whore? Thank you.
Vote:March 19th, 2008 at 2:04 pm
Hmm. Contrast if you like:
* an international invitational speaker with a certain amount of credentials to back up his statements along with the ability to write in cohesive sentences
* a dope user supplying a linking service who does not operate in any financial market beyond WINS and who cannot even master simple punctuation
Who inhabits a “funny little faux scientific world”? Who is “marginal”? And who should really piss off? Owen might be right, he might be wrong – but fuck, at least he can communicate his viewpoint and offer rational arguments.
I for one am sick and tired of philu rolling his forehead across the keyboard and calling that a debunking. What a fuckwit.
Vote:March 19th, 2008 at 3:38 pm
huh…
rtm.. but, hey no one…
.reads me… incessance..
.. vege explosion…
..(fist. shaking..)
eh..?
? huh!
if only.. (likely) .. people read me!? (boom)
.. then yer world.. would reach (huh)
.. global perfection..!
“blame exxon mobil”…
.or
..insert capitalist target (here)..
.huh? think of insult..
eh..?
Vote:March 19th, 2008 at 3:47 pm
but hey owen..!
about that funding..?
y’know..!..the exxon-mobil climate-change-denial-front-group funding..
did you ‘get any’..?
of that sweet sweet honey..?
(mmm!!..just let me suck up those dollars..!..)
phil(whoar.co.nz)
Vote:March 19th, 2008 at 3:57 pm
Philu, whilst you’ve not come right out and said so you seem to be insinuating that Owen holds his viewpoint only because he is funded by Exxon / Mobil. It might be wise to stop making potentially defamatory allegations against somebody who uses their real name to post on this blog.
Vote:March 19th, 2008 at 4:06 pm
no folks philu is actually right. Just put the ‘denialists’ / witches on one of those witch dunking boards. Dunk them in the water and if they survive they are clearly a ‘denialist’/witch and should be burned at the stake. If they don’t survive then they clearly weren’t such a ‘denialist’/witch.
That seems to be about the level of his contribution.
Philu is like one of the bores at a party who continually tries to impress people by butting into conversations and making dumb jokes or uninformed remarks. Unfortunately though he is both too stoned or thick to make any sense, and he is alone with few friends.
You’re a one joke wonder philu
Vote:March 19th, 2008 at 4:16 pm
“I for one am sick and tired of philu rolling his forehead across the keyboard and calling that a debunking.”
Great, great line.
I am stealing it.
Vote:March 19th, 2008 at 5:10 pm
Emmess: property crashes happen about every 14 years with a 4 year recovery period. Fred Harrison researched this in his book “Boom, Bust: House Prices, Banking and the Depression of 2010″ which he published in 2005. His went back 400 years to identify the cycles that are now embedded in our economic system. I highly recommend his book especially given what is happening now.
Vote:March 19th, 2008 at 5:16 pm
If you go to the Heartland conference web page you will find their list of sponsors for the conference which come from all corners of the globe including:
Asociacion de Consumidores Libres, Costa Rica
Association for Liberal Thinking, Turkey
Congress of Racial Equality, United States
Doctors for Disaster Preparedness, United States
Economic Thinking, United States
European Center for Economic Growth, United Kingdom
International Policy Network,United Kingdom
Istituto Bruno Leoni, Italy,
Liberty Institute India
Lion Rock Institute Hong Kong
For the full list of sponsors and their details go to:
Vote:http://www.heartland.org/NewYork08/ConferenceCosponsors.pdf
Exon is not on the list and in another statement Heartland has made an official statement that Exon did not fund it and to date has contributed no more than 5% of Heartlands total budget over the years and that was some time ago.
I can assure you that the Centre for Resource Management Studies has received no money from Exon. Our sponsors are mostly private New Zealand citizens who give a few hundred dollars.
Do you really believe that my approach to urban economics is dictated by companies like Exon?
I have been in this arena since the mid sixties.
And I always sign my name.
March 19th, 2008 at 5:27 pm
And just for the record ExxonMobil has granted $100 million to renewable energy research to be carried out by Stanford University in furtherance of its research into climate change science. ExxonMobil Senior Issues Advisor Walt Buchholtz announced November 20 at the American Petroleum Institute’s Conference on Voluntary Actions by the Oil and Gas Industry to Address Climate
Change. January 1, 2003:
“We are convinced the Global Climate and Energy Project will make significant academic and private sector
contributions to the development of practical technologies to address the potential long-term risk of climate change,” said ExxonMobil Chairman and CEO Lee Raymond. “ExxonMobil is proud to work with a university of the reputation, experience, and ability of Stanford, and to be among the select group of sponsors coming together to make this project happen.”
So I presume all those scientists in Stanford are now corrupted by the evil Exxon money. We can now disregard any research into renewable energy coming out of Stanford because all the science is controlled by Exxon and their goons.
Vote:March 19th, 2008 at 7:51 pm
and no money from no/any exxon ‘front-group..?
never..?
y’know..!..one of those ones with ambiguous names..?
like your ‘centre’….?
phil(whoar.co.nz)
Vote:March 19th, 2008 at 7:52 pm
“..I for one am sick and tired of philu rolling his forehead across the keyboard and calling that a debunking.”
(that’s quite good/funny..!..)
an insult displaying some intelligence/wit..
a rare thing in this centre of drooling morons..eh..?
‘intelligence’..
phil(whoar.co.nz)
Vote:March 19th, 2008 at 7:56 pm
“y’know..!..one of those ones with ambiguous names..? (that’s quite good/funny..!..)”
I’ll give you a dollar if you head butt the computer screen dear phooool.
Vote:March 19th, 2008 at 7:57 pm
speaking of ‘drooling morons’…
phil(whoar.co.nz)
Vote:March 19th, 2008 at 8:14 pm
philu – just take a silent moment and look at the negative comments directed at you. I believe in the freedom to be heard and basic human rights. Learn to take criticism, because you could stand above all the other insipid lefty nitwits who push self righteous – I’m never wrong crap. Our economy has been totally mismanaged by Labour, but your moronic stinking thinking will not change. What will it take for you to understand that New Zealand must take a new direction so it can survive in its own democratic right. Read about the depression years and you might understand my angle a bit better.
Vote:March 19th, 2008 at 9:18 pm
owen..i see the latest listener features you bunch of dissembling clowns..
buckholtz is exxon mobils’s pr ‘bitch’..and he works/worked for heartland..(!)
wtf..!..owen..?
and heartland has received just under $800,000 from exxon mobil..(!)
once again..wtf owen..!
you are but a shill for the oil companies..owen mcshane..
and..pray tell how being an architeect qualifies you as a climate-change ‘scientist’/'expert’..?
eh..?
you’re ‘full of it..!’
the listener summarises your work as ‘simply playing into the hands of businesspeople trying to protect their interests..
..at the expense of yours’..
says it all really..eh..?
phil(whoar.co.nz)
Vote:March 20th, 2008 at 8:06 am
um..!..owen..?
consider yourself ‘whoared’…eh..?
(is there a zambuck in the house..?..)
phil(whoar.co.nz)
Vote:March 20th, 2008 at 8:39 am
and d4j..seeing as you have made the special/extra effort to do an (sorta) invective-free comment..
“..insipid lefty nitwits..’..’..crap..’….and..’..moronic stinking..’
is really d4j-lite..eh..?
i don’t know if you have noticed d4j..but i pretty much rail against most political parties..when/if they ‘deserve’ it..
i also hand out kudos to any political party/politician..when/if they ‘deserve’ it..
(and that is not based on my personal view of their personal views..)
(go to whoar..and key in ‘russel norman’.(…whoar..!..)
i sorta like to think i can recognise a good idea..when it comes up and bites me on the bum..
..and i couldn’t give a toss where that ‘good idea’ comes from..
and as for the whole system needing to be re-jigged..and a ‘new direction’..i couldn’t agree more..
our choice of destinations..and routes..would likely vary tho’..
eh..?
phil(whoar.co.nz)
(disclaimer:..i was a member of the green party for some years..
(ahem..!..’till they ‘expelled’/blacklisted me..(..heh..!)
(my ‘crime(s)’..?
as this was all ‘executed’ using a ‘secret dossier’..and a hearing/judgment made in my absence..(with no ‘right of reply’ on my part..in fact..i was not even aware of the dossier/kangeroo court..
my ‘heads-up’ to what had happened/been done..
was when i turned up at the green party office to hear a talk from jeanette fitzsimon..
and was instead delivered the public humiliation of being stopped at the door by the auckland green party convenor..a richard green..(heh..!..eh..?..)
( a major dossier-driver)..and was told i could not enter..
because ‘the party’ had decided they no longer wanted me as a member..
(this all in front of an audience of other greens)
and as far as i can work out..my ‘crime(s)’ was/were one of..
‘ongoing bad attitude’..
(now..where have i heard that before..?..)
i now wear this ‘expulsion’ as a badge of honour…
and value my independance..
and not having to endure the mind-numbing boredom of green party meetings..
(lordy..!..the tedium..!..)
(i can laugh now..but it did hurt at the time..)
y’know..!..after years of selfless dedication..and the like..)
i have never been a member of any other political party..
and..will likely never be a member of any political party..
in the future..
(seeing as you asked..d4j..)
Vote:March 20th, 2008 at 6:59 pm
Wow, 23 odd posts by philu out of 77. Not quite 30% of all comments by one person (and considerably more content wise) and not one relevant or sensible point made. I’d suggest you get your own blog philu and leave the people who want to stick to the point here to discuss it, but you already have one!
You’ve just been (whoared) (er?) ..huh.. ..wtf..
If only.. ..this blog (huh).. was like.. (the) er? Green Party.. (!)
./then.. the (yer) ..big green.. huh.. bouncer.. could stop
..(wtf) you posting.. incescent.. nonsense.
..(badge) of (hon)our.. (!) huh! (seeing as you asked..philu..)
Vote:March 20th, 2008 at 10:33 pm
you counted..!
aww..!!
i didn’t know you ‘cared’..
(24 now..eh..?..)
phil(whoar.co.nz)
Vote: