By Alex Tarrant
A bursting of the Chinese property bubble, or recognition that there is one in Australia, would put New Zealand’s recovery and economy at risk, Finance Minister Bill English said.
Speaking to Victoria University's School of Government, English also reiterated his concern that a banking crisis in Europe would shut off New Zealand’s tap for foreign funds.
New Zealand’s moderate path of recovery was generally dependant on two things staying relatively stable, English said.
“One is European financial markets where we borrow and refinance our NZ$170 billion stock of overseas debt,” he said.
“You don’t have to be a rocket scientist to figure out that a banking crisis in Europe is not completely unlikely. Maybe [a] 10% chance, maybe 20%, but [it is] certainly growing."
The price Spain had to pay to borrow money had gone up “quite dramatically” even just today, English said at the Thursday evening function.
“So a banking crisis in Europe could lead to a sudden stop in our ability to source foreign funds. It happened in 2008. It’s a long tail event, but it’s possible,” he said.
The second piece of stability New Zealand needed was to do with the fact we were hooked to the China-Australia train, English said.
“[It’s the] fastest economic train in the world at the moment, and it has certainly saved us from [a] much deeper recession, and much deeper questioning of our ability to fund public services,” he said.
“As long as they keep growing, and as long as the Chinese economic management is able to manage inflation administratively, which you have to say is a risk, then we’ll probably get on OK.
“But if the Chinese property bubble actually bursts, or we finally realise there is one in Australia, things slow down," he said.
“Well there is one [a property bubble in Australia]. It’s just a matter of people recognising [it]."
“Then we could be at risk,” he said
Interesting 5-10 years ahead
The next five or ten years were going to be a “very exciting time in public policy,” English said, with New Zealand going to find itself walking the boundaries of the geo-political shifts that are “happening on fast-forward right now”.
“We happen to be a debt-ridden open economy of the European-UK sort, but we happen to be also seeing our future as trading with the surplus (and) savings driven economies of the Asia-Pacific area,” English said.
That was very evident in a forum like APEC, where Australia, Canada, New Zealand and the US were talking about economic growth rates of two or three percent, and "rubbing their foreheads vigorously" worrying about how to deal with the middle class welfare that became entrenched during the ‘great moderation’ from about 2000 onwards, he said.
“We’re a minority, small, sad looking group and the other 10-12 members of APEC are all talking about growth rates of eight or nine percent per annum – whether it’s Indonesia, Philippines a bit behind that, Vietnam, Thailand, certainly China, everyone except Japan. If that plays out over the next ten years, we’re going to see enormous shifts."
English said New Zealanders still underestimated the ongoing impact of the global financial crisis on the economies with which we it generally compare ourselves.
“Australia of course [is an] exception, and Canada to some extent, but most of them are going to be burdened with fast rising public debt, and public debt cycles are long – 20 to 30 years,” he said.
New Zealand’s last public debt cycle went from 1972 to 2006.
“That’s how long it took us to get back to where we started. These other economies, their public debt is still growing,” he said.
“Governments in their instinct for the common good, have to a large extent helped fix private sector problems from the global financial crisis, simply by taking those problems over. They’ve yet to be solved.”
New Zealand was fortunate to be able to plot a more moderate path than those countries through the same kind of shocks, English said.
88 Comments
Bernard - maybe he's right, but not for the right reasons.
http://www.chrismartenson.com/blog/economy-set-starve/48474
What he's saying is "any one of these deckchairs may slide into us, and it may hurt".
whoopee.
Why are they sliding.....?
any bubble is surmountable amidst unending growth (averagely, of course, some get themselves in the short-term shit). None are in a permanent downward trend.
I hate to break the news powerdownkiwi, but there's more oil then ever: http://www.nytimes.com/2010/11/17/business/energy-environment/17FUEL.html
If you follow some of the links that have examined this article you find that its a shockingly bad piece of journalism....let alone bad economics, bad geology, bad engineering and non-existant risk management.
"more oil than ever" and just where do you think more is coming from? There is no more, what's in the ground is it....some small amounts left to find, some decent but progressively harder amounts to exploit but at ever increasing cost to our economy....an economy that can only function on not only on "cheap" oil but more of it every year....In terms of cheap not more tha 6% of GDP....$80~100 a barrel...and that is where we are at.....
regards
Here's where it is coming from steven: Tyler Formation could be one-third to one-half the size of the Bakken oil field
http://nextbigfuture.com/2010/11/tyler-formation-could-be-one-third-to.html
Berend....sorry but dont bet on this....its tiny and one.....one of hundreds we have to find per year and exploit....so to give you an idea of scale,
The biggest single oil field in the world produces about 5mbpd....and then the next one(s) are far smaller....even using very conservative figures we can expect 3% drop per year, which is about that 5mbpd.....so every year or at best every 2 years we have to find another of those super giant oil fields Bear in mind in 100 years there has been only one, found in about 1948, the next comparible one has already collapsed in terms of output and was found in the 1970s....
Bakken was found in 1953....it maybe broduces 200,000 bpd....its a terrible field to get oil from because of its geology....
This one you mention here is say 4 billion, total maybe....that will probably give us a few 10s of thousand barrels per day as an extraction rate.....so we need 100 to 200 of these every year....
"The 4.3 billion barrels of oil available in this area must be seen in context. The United States presently uses somewhere in the vicinity of 7 billion barrels of oil each year, meaning that all the oil readily able to be extracted from this formation would last the US less than eight months."
So its big brother even if you could get a lot of the oil out.....would last 8 months...this one is half the size so say 4months.
Here we have 1.....so on the above numbers we have to find 10 to 20 PER month, not 1 in total.
thats awful odds....
regards
I hate to break the news Berend but that NY times article has been widely discredited for it's lack of balance, even the bullish IEA say we're past peak conventional oil, something conveniently ignored by the article.
Any new production is, almost without exception,difficult/problematic/expensive/impossible to produce.
B de B - you've got the same selective hearing that PB does - you related?
http://www.energybulletin.net/stories/2010-11-23/how-not-write-essay-oi…
Please don't tell me you're into 'intelligent Design' too :)
"From Smoke to Mirrors" by Kevin Cudby.
fromsmoketomirrors.com/
About future fuels and transportation in NZ
and a review:
http://hot-topic.co.nz/from-smoke-to-mirrors/
The truth is out there, if you can cut through the chorus of BS from trolls like Powerdownkiwi and Steven.
looks like an interesting read, but how it justifies your last comment is unclear.
As reported,it doesn't mention EROEI, (energy quality) orthe build energy of infrastructure, and the lead-time needed - I'd have to real the whole thing - I will - to see if he mentions that.
And hydrogen is a vector - as I keep saying - not a source.
I liked this bit: “…the only foolproof way to eliminate fossil fuels is to outlaw them”. This is an eminently sensible thing to say, especially when the writer has set out in considerable and thoughtful detail how they can be replaced. But as I read this section of the book I tried to imagine our Minister of Energy engaging with it and failed. In fact he is doing precisely what Cudby says the energy companies will continue to do, pursuing fossil oil to its last drop, holding out a promising future for coal and expressing hope that methane clathrates can be tapped.
Try selling that to the free marketeers. And every day they delay, there's a day less available to morph, already 5 years past peak......
Seems you have a limit to your growth, though. He's given you some numbers - area needed to support BAU. That's not growth, that's BAU. Subtract that from the 'total minus other uses', and you get your urbal limits.
Of course, it won't play out that way. We have no chance of an orderly powerdown, until folk accept the need.
I actually find arguments to outlaw fossil fuels, for a number of reasons, quite credible. The big oil producing nations are playing "silly buggers" with the rest of us, hiking the price of oil periodically well into the territory where substitutes are economically viable, and then pulling the rug out from under it when some brave investors have started new marginal oil drilling and pumping, or invested in substitution technology.
I can see the downside to the USA banning oil imports, at least from uncivil dictatorships, as being that economic rivals would get a powerful advantage as long as they had the lower priced oil to themselves.
I do think civil democracies "pumping our own oil" should be part of the approach. The USA especially should access its own oil. This supply would, at any time, ease the transition to oil substitutes.
Sure, I'm quite happy with the scope remaining for "urban land" under all those authoritative scenarios. Glad you find them useful. We are talking about roughly 1 % of the earth's available land; it would take a population of something like 14 billion to actually REQUIRE land price increases due to REAL scarcity, rather than urban planners "pretend" scarcity. Even then, the price rises would be mild; not the frantic ponzi mania that our "pretend scarcity" has unleashed.
As a good student of F A Hayek, here is how I translate the desire for "orderly" planned outcomes. Humanity has been there, done that. The free market city looks chaotic, and the pro "planning" thinkers despise that, and think it is inefficient. The alternatives, were those oh so orderly cities of Eastern Europe and the USSR, with their apartment blocks stretching out to the horizon, and railway lines converging on the CBD where everybody worked and "shopped" and were educated and so on. Wonderful, orderly - and deadly INEFFICIENT.
For efficient use of resources, the free market won that grand experimental competition hands down. It's just that a whole class of people remains in denial about it. Sure, energy use per capita was higher in the free market economies, due entirely to the level of consumption, not to the efficiency of resource use. Inefficient resource use was the main BRAKE on Soviet intentions to "out-produce the West". Kruschev promised to "bury the West economically". They never intended to achieve around 60% of the energy consumption per capita for its own sake, because they never intended to achieve the approx 15% of "production" per capita that they managed to achieve ALONG with the "60% of energy consumption" per capita. They really BELIEVED that "planning" would achieve superior efficiency to the chaos of free markets, and hence GREATER production levels.
Are you aware of any of this stuff? Why would anyone think it will ever be any different? Where are the "winners" that governments anywhere have picked? Would governments have done a better job than Microsoft and Google and so on; in getting computing and electronic communications into so many people's hands at such a competitive cost as they have? If you honestly think that, I am definitely wasting my time with you. I don't see the provision of energy and transport technology as ANY DIFFERENT.
How about; Not job loses, but wages cuts? I mean, if your boss comes to you and says, "Troy, on ya bike, I can't afford you", would you retort with " But can I stay, and not join the unempoyed herd, at a lesser wage?". That way, New Zealand, like Ireland is trying to do, will become productively competative again. If there's an attempted mass exodus of the disgruntled....where to? Aussie would be even worse off, in that situation!
More likely the boss will see that there is great fear and uncertainty amongst employees and mercilessly and cynically exploit it for his own personal gain. Employers will lie to their employees, telling them that their jobs are at risk unless they accept a pay cut. Only the naive and gullible can believe it will never happen.
You ask - what does Bill know??? I think it's dawned on Bill that "tilting" and the "tax switch" isn't enough to save NZ from a "double dip."
Bill's had a hard week, he's just been reprimanded by Standard & Poors and Europe might increase our interest rates.
He's warming us up to the idea that things haven't gone to plan, and if it gets worse - out comes the chopping block - first up WFF, maybe some sort of property tax etc..
Bill English;
"We happen to be a debt-ridden open economy......."
“We’re a minority, small, sad looking group ..."
"... going to be burdened with fast rising public debt, and public debt cycles are long – 20 to 30 years "
No talk of a property bubble in New Zealand? Only a problem for the others then? Or when he is talking about Oz is he talking about Nz too?
"New Zealand was fortunate to be able to plot a more moderate path than those countries through the same kind of shocks, English said." - Yeah right, as if our deficit was actively managed, the government has no courage to implement any meaningful policy to turn our deficit around.
When NZ's balance of payment is negative even as NZers are supposedly saving more than ever. There is still more pain to come, and if we don't make any changes to our current situation, NZ is next on the default list - the only saving grace is that we have our own exchange rate and dairy exports. At current trajectory, anyone with significant savings/investments should seriously consider diversifying away from Australian/NZ banks and exiting NZD before it devalues (or crash).
No talk of a property bubble in New Zealand? Only a problem for the others then? Or when he is talking about Oz is he talking about Nz too?
True, True, False.
Bill is still hoping to keep the bubbles here inflated, so that effectively means denying their existence in NZ. In government circles bubble is a word only allowed to be used in reference to other economies - and that is a relatively recent change.
The easiest thing in public policy today is to deal with 'middle class welfare'.
Just stop it.
By definition a middle class does not need welfare. Why did politicians ever go there in the first place?
Moreover, why has this conservative government not got the wherewithal or guts to do this one simple thing to reduce the size of Nanny State? The start, stop Working for Families, tomorrow ....
Perhaps John Key should worry less about the photo opportunities and set to the work of slicing great big fatty flabs off Nanny.
New rule: if you own investment property you are ineligible for WFF. And if you lie about owning investment property in an attempt to get or continue to get WFF, you lose your property and go to jail. Also, if you live in a luxury home and earn significant income from any source you are ineligible for WFF. Try to scam and rort WFF you lose everything and go to jail.
That should make the LAQC brigade shriek in outraged horror and toss their Chateaux le Wankeur into the air.
Wouldn't it be easier to just scrap WFF ?
Don Brash was correct that it is middle-class welfare , and he should know , 'cos it was the bribe that Cullen used to defeat Brash in the 2005 election .
More pork to buy the vote of the proletariat ............ With their own munny ............ Silly tits !
Well there are some massive statements in this article and looks like shift in the position of the government, well public position anyway. If a politician states his belief of a 10-20% chance of a European banking crisis then what is the real likelihood? I think 10-20% chance of saving it would be generous odds.
Umm our Minister Of Finance just categorically stated that Australia and China have property bubbles.
"But if the Chinese property bubble actually bursts, or we finally realise there is one in Australia, things slow down," he said.
I actually agree with him, but if I was the Chinese or Australian government, I'd be pretty annoyed about this.
You know when Billy Bob reaches a point of telling an inconvenient truth.....the truth itself is likely to be much worse...........as the politispeak is always softly softly followed by ....we tried to warn you.
Noises out of the RBNZ and now this are dots laid out for connecting....there will be more.
I'm not quite sure of the relevance to this thread but at least understand the differences between the evolutionist and creationist views on the age of the Earth you're referring to.
Evolutionists hold the Earth is 4.5 billion years old which makes perfect sense from their assumptions that the Earth started out as a lifeless hot condensed ball of space dust.
Creationists hold the Earth is 6,000 years old which makes perfect sense from their assumptions that the Earth started with life, fully formed and mature.
A creationist standing on the evolutionists idea of an new born planet would have to admit it has an impossibly long way to go from the Earth we know.
An evolutionist standing on the creationists idea of a new born planet would already believe it was over 4 billion years old
The point is, peak oil is the one thing that changes everything its a paradgym shift of monumental proportions.... While here you are talking about fiddling at the edges when in fact it wont matter.
You cant plan/run a business, you cant plan government expenditure, you cant save, you cant build or grow when the fundimental item, cheap and plentiful energy isnt there....it all falls apart...
regards
The Australian bubble is unlikely to burst before the Chinese one. The mineral exports to China are precisely what is holding it up. When China pops, as it most certainly will, it will take Aus and NZ with it. The question is only how long can China keep growing. I suspect not that long when faced with slow growth in US, big problems in Europe etc etc. Regarding houses, NZ has been quite lucky with the growth curve stopping a few years ago, and paying down at least some of the debt in the intervening period will save a lot of householders from the big one. Growth of govt debt is worrying and that could be a problem going forward.
Tim ...China is taking steps as we speak to put the brakes on the growth factor.....to a manageable level...just how much intervention their "Market" will tolerate is another question altogether....... the levels of corruption and insider trading have reached unacceptable levels and a clampdown is in full swing....it is sure to have some interesting outcomes that were not part of the ...Plan.
The great middle class welfare was an invention of Lady Helen in order to increase taxes. Not quite sure what she was trying to achieve, but people voted for it in the previous election for some reason. My theory is that people were feeling pretty well off with the economic boom and bought the idea that higher tax was a good idea while they could afford it.
The NZ tax system makes this more a place of capital class welfare. For example (don't know if its the case still) but when our kids went through uni - there was an income threshold for parents - once passed - their children did not qualify for a student allowance.
All the farmers as a capital class will know (but may not be prepared to admit) that their incomes never surpassed that amount. True as well for many of the other capital classes.
Quite to the contray, Tim, its the PAYE middle class workers (as Gareth Morgan pointed out) are the ones who fail to benefit from any aspects of our welfare/benefit system.
Yeah NZ doesn't need another 20,000 people with a BA in communications, let alone need to support them through uni to get these worthless degrees. We need some direction with our university programs. I like what I've been hearing lately about more focus being put on agriculture and farming programs at uni.
Reduce which sort of taxes, Tim?
Just curious as I'm assuming you mean PAYE taxes - in other words you''re one of those middle class wage earners who are so unfairly penalised by the present tax system?
If so, what I (and Gareth Morgan) am pointing out is - welfare is not your "enemy" - capital is, because it's the capital class in NZ that reap the benefits of the tax system.
Exactly Kate, if we reduce capital taxation, we'll be paying them! Oh, we do already - by not effectively taxing wealth generation - from land/capital appreciation. A method that is easier with our ineffective monetary policy. However, we are "world best practice" - I guess, for the capital class.
Kate: All the farmers as a capital class will know (but may not be prepared to admit) that their incomes never surpassed that amount.
Beware of sensationalist generalisations. As farmers our income did surpass that amount and our child didn't benefit from any student allowance based on income, when in tertiary study.
The Man is Back: I feel the same about people like Kate making wild statements that ALL farmers fit in to the same box.
You need to learn to read for understanding. Kate is the one who stated NO farmers would have met the income trigger point. I never said that no farmers children would have received the allowances, but then again what is the difference between farmer's child and a retailers child receiving the same allowance. Oh, sorry, I forgot it is only farmers, not any other business sector that gets slagged off on this site by bloggers such as you and Kate.
If you believe we have it so good, come join us. I guarantee you wouldn't last past the first season.
CA is right - I was very wrong to say all. Generalisations are most certainly wrong, so indeed I apologise. I didn't mean to only brand farmers either, and I pointed out;
True as well for many of the other capital classes.
The evidence of capital class welfare however is very strong - all one needs to do is look at the burgeoning growth in family trust establishment. If anyone can come up with a reason to have a trust - other than tax minimisation, allowing for the capital class to take advantage of social welfare provisions and protection of capital assets from creditors and the State - then I'd be happy to hear it.
Tax minimisation is wealth transfer by another name. I prefer tax instruments which avoid the ability to avoid - GST, capital and land taxes for example.
Thanks Kate.
Some farmers who have family trusts set them up primarily for protection in relation to relationship splits - especially in relation to their kids. Rightly or wrongly, there have been situations where 'families have lost their family farm' due to one of their kids marriages/relationships going sour. The driving force is not necessarily tax reduction especially where there may be considerable value in capital assets. It is also a seamless way for intergenerational transfers to take place. However, I don't doubt that there are some Trusts set up for the negative reasons you list.
With capital tax - do you see it as working on the basis of any increase in capital is taxable and any decrease in capital is deductible? If so, in our current economic climate it may be many years before the govt would see a penny of capital taxes.
How do you envisage land tax being applied?
Capital tax - yes, as assets depreciate - I assume less tax would be paid on those assets as their value would have declined. Depreciation is already tax deductable on capital (noting the rather dumb changes recently made by the Government wrt buildings).
Land tax is already calculated and charged under our local government rating system. The question is whether such taxes should be extended to include a central government tax on land.
Generally, I dislike our present system which in the main taxes labour and profit. I like consumption taxes and I believe if we taxed capital and land, instead of labour and profit, it would be a more equitable system of taxation.
Re we like the man who dressed rich but is up to his ears in debt?
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/815829…
Jonlivesy
The thing that Merkel seems to simply not understand is that risk is a calculable thing, and there is no free lunch. There are just no clever accounting tricks, stunts or threats, that will prevent investors doing their homework before investing.
The Euro area enjoyed very low interest rates for a very long time because of an illusion. Europe looked very credit-worthy because it looked very prosperous. How could a continent that was busy building roads and high-speed railways, and exporting like crazy possibly have trouble paying back its debts?
The catch was that a lot of that apparent prosperity was financed by debt. Europe was like a man who dresses well, and looks rich, but turns out to be up to his ears in debt. Some EU countries like Greece and Spain, even concealed the true level of their debt. Greece literally lied about debt, and Spain obfuscated by spreading it around its provinces.
But now the bad news is out and yields today are where they need to be. Despite what you read, there is nothing "wrong" with the credit markets. They are simply pricing EU debt to where is needs to be. And if Merkel now says that investors have to assume even more risk, investors will simply demand more return to compensate.
Merkel needs to be very careful here. The credit markets are not made up of widows and orphans who can be fooled and bullied. They represent very serious investors who have serious liabilities, and who have absolutely no sense of humour about losing their capital. While Merkel is making idiotic comments about these people needing to take haircuts in the future, they are looking at the haircuts they have already taken. Investors who bought Greek Bonds when rates were very low are looking at losses of up to fifty percent and the probability of a total default in the near future.
These people will not argue with Merkel or debate the issue with her. They will simply look around and see that they can make 10% quite easily in the US commercial credit space, and as much investing in Brazil or India. They don't need the hassle of wondering what idiotic stunt the Europeans are going to come out with next when they can earn their returns elsewhere.
If Merkel tries to "control" the credit markets, she will find she is the only one in them.
yawn.
There will always be bubbles - as most folk are followers.
I seem to remember asparagus, deer, restaurants, kiwifruit, grapes, crayfish, land development, timber, dairy. I've probably forgotten others.
You can't have a free market without them, and if you advocate a free market, you must put up with them.
You should also keep clearly in mind that when the detergent runs out, you can't blow them.
The great "asparagus bubble" with a bubble value roughly par with GDP? The "deer bubble", ditto? All your examples I am fine with, as examples of things we put up with because of the the overwhelming overall advantage of free markets.
Only regulatory interference of the most pernicious kind has engineered the land price bubbles that Hugh is talking about. You can't keep denying this and retain any sort of credibility on what is, after all, an economics blog.
I cannot for the life of me understand why a guy who advocates low-energy "beyond the fringe" living, has any truck whatsoever with urban planners who prevent 99% of the public from being able to follow his example; even if he doesn't understand the deeper economic consequences.
Yes, over the years I have noticed that kiwis are 'fad-ists'. We have a small population and we take up and absorb (to saturation point) new ideas quickly (whether they be good or bad ideas) ... I did not notice the same mass behaviour when living overseas amongst larger populations.
Just an observation, it might have relevance to how we compare economically to other countries ... ?
Hugh P is right....English avoided mentioning our very own property ponzi bubble....I wonder why!
This latest load of fluff is just one more line on the list of things to do to soften up the peasants ahead of the shitty December fiscal report and the "Ruthy" budget early in 011.
He should have laid it out like this and mentioned the homegrown property mess 2 friggin years ago....That when the govt should have screamed "NO" to porking the welcome home to greater debt loan benefit.
He should have moved earlier to reduce the waste in the state sector.
He should have moved long ago to roll back the bloated salaries handed out to senior civil service types and to MPs .
He should have axed the higher salaries old boys club commission.
Rest assured folks....English will do feck all until the Market forces him to and by then you will cop a face full as a result. Get out of debt and stay out. Buy only what you need. Understand,the property sector is still seriously overpriced.
One need to appreciate the difference between the Chinese, Aus or NZ situation. Aus and NZ are structurelly different from the Chinese asset class, personal savings and public debts.
See Jim Rogers comment:
http://www.gurufocus.com/news.php?id=115150
Debt to equity ratio among Chinese property investors is very much lower than their NZ or Aus counterparts, and the Chinese government took some very pragmatic measures to curb mortgage lending, strict controls for second and third home buyers including very high "stamp duties", which is in fact a property tax in disguise.
NZ or Aus governments have not taken any of the Chinese approach, fuelling a bigger bubble due to the much higher debt to equity ratio among property investors.
Many properties will be under severe financial stress even with the slightest increase in mortgage interest rates, particularly among those negatively geared investment properties, and owner occupier properties where the owner's income are under pressure from inflation, higher mortgage rates and drop of income through cut back in overtime, unemployment or lost of income from a partner. Current EU's financial situation will no double lead to higher interest rates in NZ in the not too distant future.
Currently banks are holding off putting all insolvent properties under mortgagee sales because the banks do not want to flood the market with too many properties, which can create a "buyer's market" which in turn depress prices.
Housing affordability especially in big cities like Auckland and Wellington are getting worst, the employment situation is getting worst, therefore a bubble is highly likely to occur. It is better for everyone for the bubble to burst sooner than later, this way the damage would be relatively smaller.
As a country, the government and its people need to make some structural changes and sacrifices, such as cutting back on public spending and wastes, produce better educated workforce to move up the manufacturing value chain, remove barriers for those highly qualified migrants for them to participate in productive high value economic activities, import less and export more, work harder, live within our means and save harder for the rainy days. Singapore is a classic example where they have no natural resources, they utilise their people resource very well regardless of colour, nationality, creed or class. To suceed, we need pragmatic leaders with long term vision and planning.
And that's exactly what we'd expect to hear from a fat and sweaty baby-boomer who is desperate to see the house bubble reinflated, because he has enormous debt and everything locked-up in "investment" property.
BBers think only about the "now". It's all "Me! Me! Me! Gimme! Gimme! Gimme! Forget about the kids and grandkids and the future generations!"...
According to www.PerformanceUrbanPlanning.org,
"DEFINITION OF AN AFFORDABLE HOUSING MARKET, For metropolitan areas to rate as 'affordable' and ensure that housing bubbles are not triggered, housing prices should not exceed three times gross annual household earnings..."Can someone tell me the rationale of using the "gross" instead of "net" annual household earnings. Isn't affordability directely related to the net amount of disposable income in your hand?
With regards to Hugh Pavletich's comment about Singapore, why shift the arguement from our discussion about our nation's economy to polititcs and living conditions of Singapore? It seems certain sections of our community only interested in highlighting the negative aspects of "others", and only interested in highlighting the positive aspects of "us". It would make the debate more meaningful if we focuss on all the facts and data.
Personal, emotional and subjective views have no place in a healthy discussion forum such as this one.
I like the way BE kind of implies the average Kiwi is a bit thick and doesn't really understand what's going on the way he does, and if they did they might save more money.
So how bad does that make him, when he supposedly does understand how bad things are, but cuts taxes anyway, that could have gone to reducing national debt, and continues to run it up at a rate we haven't seen for a long time.
With nothing to even show for it either other than a few more roads in ... let me guess Auckland.
Yeah I can see a whole string of riduculous cut backs coming.
My brother is in the army at Linton, the proposal is now to completely shut that camp down.
This comes after they have just spent about 2 million on the camp upgrading various things there.
Bean counters who have no idea will be making brain dead decisions.
But as long as people get tax cuts to go and waste it's all good ay...
I welcome your comments with regards to how different China and NZ handle the property markets with regards to "bubble" prevention measures and their respective economies in general:
http://knowledge.insead.edu/china-economy-outlook-101108.cfm?vid=489
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