The issue remains the money.

And from what little information is offered it seems Labour thinks a $15,000 subsidy per home is enough to make it work.

I don’t think many will be convinced by that.

I recently listened to a radio show that had a very experienced advertising expert on it who posited an interesting theory when talking about his work. Addressing the question that his career was all about encouraging people to buy things they didn’t need he talked about peoples valuations of what they wanted and the history of peoples purchasing.

He pointed out (I don’t know how accurately) that in the 1970′s people in industrialised countries spent considerably more, as a proportion of their income, on unnecessary luxuries than they do today. That the explosion in cheap industrial manufacturing and technological advances had made the cost of the many luxuries we can access today extremely cheap.

And here’s why I’m mentioning this; as a consequence, he opined, those things which haven’t benefitted so much from technology and industrial advances and aren’t such luxuries – such as houses and the land they sit on – have inflated in price to soak up the excess capital freed by the reduction in cost of luxuries.

I think, though he didn’t phrase it quite so, that he was suggesting as prices can be as high as the market can bear advances in industry and technology have allowed the market for housing to inflate into the space created by other efficiences to soak up what should have been a creation of wealth for all.

I thought it an interesting exercise in contemplating the myriad effects of markets.

Norman was criticised by the people who do not even notice these little details – small men in times larger than them.

Printing money is inherently inflationary – it increases the money supply which will result in prices rising. It is also done with the specific intention (under Keynsian theory) to stimulate aggregate demand – to stimulate spending. Increased demand will also raise prices which in turn increases inflation (this demand driven inflation can be more of a spike than a lasting problem or spiral – higher prices softens demand – it is printing money and injecting it into the economy that is the real problem.)

Your recession balance argument is fallacious – printing money is designed to increase spending – there is no balance.

Furthermore, while QE is acknowledged as an option of last resort, I remind you, yet again, that Russel Norman is not proposing QE – he merely deliberately and disingenuously misuses the term. QE is where a central bank buys assets from banks with newly printed money. It is done when interst rates are effectively zero and banks still aren’t lending – businesses are not investing. The action is taken such that the banks will free up lending and businesses will invest. (the central bank will some time later sell down the assets which will remove the money they injected from the money supply.)

Aside from the facts that our interest rates are not effectively zero and our banks are lending, Norman doesn’t want to execute QE as such – he merely wants to print money and spend it on govt funded schemes and largesse ($50/wk on single benefits for instance.) It is deficit spending via the printing press.

It didn’t work in Weimar Germany. It didn’t work in South Amercia. It still isn’t working in Zimbabwe.

Norman is an economic disaster in waiting.

And their new scheme is exactly the same only 1000x larger and they don’t even own the land and will have to buy it (or will they?…). Something has to give: cost blowout or build tiny shitbox sub-NZBC apartments with no land out in Massey/Drury/Whitford as Trev Mallard said or they steal citizens land.

Impressive, but nothing compared to the USA.

Using your methods I calculated that Americans can build a house in 14.4 SECONDS. Holy shit. That is fast setting concrete! 130,000 new homes completed in the 13 weeks of Q3 2012. Do the math. And they are in a depressed market!

We just need to follow USA construction methods and we can get our 10,000 houses in just 1 WEEK!

QE would only have inflationary impact if it was not accompanied by a balancing measure – currently recession is providing that in those countries using QE.

A zero cash rate is also regarded as inflatonary – but there is little in the USA.

Running huge budget deficits and borrowing the money from offshore is regarded as inflationary – but there is little in the USA, UK or New Zealand.

Norman was criticised by the people who do not even notice these little details – small men in times larger than them.

Wise men at the IMF know that indebted nations have an option – QE to replace debt finance and taking the private banks off fractional reserve to balance this (it is the new left vs right, public vs private frontier).

http://www.scoop.co.nz/stories/BU1204/S00910/nz-home-building-consents-rise-to-2-year-high-in-march.htm

10,000 per year with the current level of private sector building only takes us back to the level of 2008. Given there is some house replacement in Christchurch, doubting that such a level is possible is a bit naive.

Your romantic notion that having fiat currency provides some sort of immunity has been refuted repeatedly over the past few days (in particular.)

QE is destructive of wealth, destructive of savings. It would not only see inflation rise and the cost of living along with it, it would also see a credit downgrade as our net savings position would deteriorate as so much of our debt is offshore borrowing. It is a wholly bad idea for NZ – as evidenced by the wide ranging criticism of Russel Norman’s money printing scheme.

I, and others, repeatedly, over the past few days, have attempted to explain to you why deficit spending is not a panacea at the best of times and why, particularly now, it is a very bad idea for us. You are clearly wed to Keynesian economic theory and refuse to accept the obvious – which does not change the facts.

Cameron and Osborne don’t have a choice as they are now heading into a triple dip recession

You miss the point Luc. It is for the very reason that it has not worked – your claim of further recession – that the UK has said it will not pursue further QE actions.

Your borrow and spend ideas are what killed PIGS in the first place. They have failed in the Keynsian efforts to lift the US or the UK out of their problems – the UK have made it clear there will be no further QE as it hasn’t worked. Barack is still to wake up to that reality.

You avoid the central reality I have pointed out to more than once: we have our own fiat currency and we issue debt in that currency.

Prove me wrong on those central points and I have a problem, I admit. But my source is our own government accounts.

The PIGS joined the Eurozone. Three of those four governments ran run of the mill fiscal policies – the exception is Greece, poor buggers – and the government debt problem for those three arose when they took on the debts of the banks after the GFC. Iceland, on the other hand, with its own currency but an even worse bank problem just let the banks fall over and their exchange rate flexibility is slowly picking up the pieces – classic Keynes!

I call your bullshit on the UK and QE. More is coming soon. Cameron and Osborne don’t have a choice as they are now heading into a triple dip recession – only the Olympics saved them in the last results, and then only because all the benefits of that extravaganza were gerrymandered into one quarter!

When I did Economics 101 in 1970 it was classical Keynes, multiplier and all that jazz. Then the Chicago School came to the forefront and I figured Keynesianism was dead and buried. Boy, was I wrong!

Monique raised the double cock thing directed at my good self!

Would you like me to dig up the KB link?

Am I supposed to lie back and accept it?

And don’t worry, my princess can’t read much yet.

I consider advocates of mass slaughter here like PEB much more repulsive than Monique.

Oh, talking of PEB

Glen Innes is the next great buy in Auckland.

Built, and many well built, as you say, by the government, Paul, so what’s your point?

Shall we do it all again?

Sounds good to me!

But don’t give the job to Fletchers!

@Monique

Have you had that threesome yet? You know, double cocks is double fun!

So, Luc, you claim to be 60-odd years old and have a daughter around 4 years old. Quite the example you are setting for her.

What kind of a role model are you trying to be? Bert Potter?

You don’t get it Grasshopper.

It is balance…

The reason the ratings agencies don’t slam us for our high private debt is because our govt debt is comparatively low. Up the govt debt and you upset the balance – our private debt is then too out of kilter and the credit downgrade cometh.

Your borrow and spend ideas are what killed PIGS in the first place. They have failed in the Keynsian efforts to lift the US or the UK out of their problems – the UK have made it clear there will be no further QE as it hasn’t worked. Barack is still to wake up to that reality.

You are in love with an economic theory that has discredited itself – in started to do that in earnest in the 1970s and has finished the job off in then21st century.

Socialism went first, Kensyian theory fell next. What alternative do you have left?

Wonder how long it will last there.

Care to actually point out the maths of how an EXTRA 10,000 homes can be built in the 40 hours of a 48 week effective working year, bad weather not included. (PS Modular house erection erection does not equate to having a house fit for habitation.)

Virtual Chocolate fish to the first delusionist to prove how it is possible.
I will not accept answers such as ” The Hogwarts school of carpentry” or “300,000 migrant Oompaloompas” or ” there are 170,000 ‘builders’ unemployed”

The only explanation of this mathematical brain fade is that someone has tried and succeeded in making Shearer look utterly incompetent. Perhaps it was just a decimal point in the wrong place.
1000 houses would only take 130 minutes each to construct.
100 would take 1300 minutes or 21.6 hours

Don’t even get me started on the shonky cost calculations………..

The Poe during footy season or after golf , Mon during summer. hard to believe that was 30 odd years ago

You have morphed in Phil,.. a statement probably unfair to Phil because every now and then he made a point, you havn’t for days, you’ve been owned on you pet hobby horse and as an economist you suck.

There is shit loads of affordable housing. I am sick of “I can’t afford my first house because Herne Bay is too expensive.”

You buy your first house in Avondale like we did and work hard. If you want to buy a house, buy one in Otahuhu. I know its untrendy and full of Indians and those islander types but you will be able to afford a house there. It s ahouse and an assett.

20 years ago people were mocked for snapping up houses in Onehunga, now Onehunga is bloody expensive.

Glen Innes is the next great buy in Auckland. The waterfront property there is amazing, the houses are well built. The services follow the money, if enough people with money do up an area, the cafes etc follow.

Sho HO in New York, Notting Hill in London. People make the market not governments or bitter socailists

Anyway as an economist you are stuck in the past with no fucking idea about quite alot actually

The only upside was 18000 divorces resulting in an unlimited supply of solo mothers drinking at “The Poe”.

Sad, you forgot the Mon, the GT, the Milford Arena, and the Thunderbird! I met my current partner at the T Bird, she wasn’t a solo mum, the solo mothers club was at the GT thursdays lol

It’s OK mate, just get your IDF mates to flatten them! With illegal white phosphorous shells. That’ll teach ‘em!

@Monique

Have you had that threesome yet? You know, double cocks is double fun!

Even the IMF understands and now accepts Keynes’ dictum that the multiplier effect is at its greatest in recessions/depressions.

I am not advocating an increase in private debt. I personally am deleveraging as fast as I can – a process made much easier by such low interest rates – but government is not a household. What is sensible for the household is not necessarily sensible for government. In this case not adopting stimulus policies is a clear abdication of government responsibility.

Our net debt is still under 30% of GDP. So we do not have a debt constraint. And governments with a fiat currency who issue debt in that currency don’t have a solvency constraint. It has an inflation constraint and that bogey is well and truly off the table.

The example of the US and its QE is instructive. The inflation hawks (eg Niall Ferguson and the entire Republican establishment) insisted loudly that hyperinflation was imminent! That was how many years ago? Fail…

The course this government should follow is clear. It needs to get more tax out of the wealthy – I don’t care how, but thumbscrews should do the trick! – and spend, baby, spend on serious projects, like the billion dollar broadband project, for example, that it is currently rolling out.

We are sorely in need of affordable housing. Just go do it, Bill!

By that I mean 20 thousand couples in their mid 20′s move in and breed, 20 thousand kids hit the school age at the same time, 20 thousand shag each other at the same time resulting in 5 thousand illegitimate sprogs arriving at the same time. 20 thousand get their licence at the same time resulting in 10 thousand cars hitting the same area at the same time.

By cramming them into “estates” the social costs are huge, they are not absorbed by existing infrastructure in a trickle fashion, its “bang all at once, so new schools, hospitals all this infrastructure has to be done at once so even if the houses are “cheap” it will still cost the tax payer billions

The only upside was 18000 divorces resulting in an unlimited supply of solo mothers drinking at “The Poe”.