Here some other stories that are worth noting this week, plus a summary of key data.
The sunbeam solution
California's state government may be close to bankruptcy, but it's private sector is still a key center of innovation. A major effor is underway to harness and store sunlight, in much the same way chlorophyll works. If it is successful, it will change our world.
Two halves
The stunningly low January house sales data - an all-time low - possibly marks a turning point in other ways as well. In 2010, the market did not clear - sellers held on and many rented their places out. Median prices held up despite low volumes, because the higher-priced end of the market kept selling. In January 2011 however, it was lower-priced houses that started to sell more, while the higher priced end saw sellers withdraw. Nationwide, there were only 73 67 houses that sold for $1 million or more.
A social revolution
A stunning new technology is about to be a major economic game-changer - probably rendering the advantage of "low-cost manufacturing" - indeed much industrial manufacturing - obsolete, at least for many consumer products. Advances in 3D printing are compounding quickly. Current notions of designing, marketing, and distributing are in for very major disruption. Millions of manufacturing jobs are under threat.
Be who you are
"Be who you are and say what you feel, because those who mind don't matter, and those who matter don't mind."
- Dr. Seuss
more below ...
| end of | end of | --- 52 week -- | ||||||
| Week | last week | high | low | |||||
| -------- | -------- | --------- | --------- | |||||
| FX rates | NZ$1=US$ | 0.7598 | 0.7682 | 0.7964 | 0.6584 | |||
| NZ$1=AU$ | 0.7669 | 0.7583 | 0.8212 | 0.7408 | ||||
| Gold | in US$/oz | 1,356 | 1,355 | 1,421 | 1,082 | |||
| in NZ$ | 1,785 | 1,764 | 1,877 | 1,546 | ||||
| Copper | in US$/t | 9,921 | 9,986 | 10,145 | 6,091 | |||
| in NZ$ | 13,054 | 12,999 | 13,171 | 8,951 | ||||
| Crude oil | in US$/bl | 85.44 | 88.84 | 91.91 | 69.89 | |||
| in NZ$ | 112.45 | 115.64 | 121.36 | 101.30 | ||||
| US Treasuries | 30 yr bond | 4.75% | 4.73% | 4.78% | 3.61% | |||
| Dow | DJIA 30 | 12,272 | 12,089 | 12,275 | 9,688 | |||
Economics for grownups
Worried about the national debt? Don’t be. “If Oriental protectionists are foolish enough to send us TV sets in exchange for green pieces of paper, wonderful." What is missing from most economic discussion is the importance of Bourgeois Dignity - it is why economics can’t explain the modern world.
Happy with no growth
There are major changes going on in the New Zealand mortgage market, but they are happening quietly. Borrowers are abandoning fixed-rate mortgages quickly, probably because the interest rates on variable mortgages now give a lower weekly repayment cost - and the rate curve steepens. This shift to floating results in fatter mortgage margins for banks, which is why the majors aren't competing on price, and seem happy for their overall mortgage books to not grow. In fact, losing a customer - usually to Kiwibank - results in Kiwibank having to fund the big bank for the transfer. The moribund housing market also means far fewer mortgages are being transferred, or new ones written - and the low January levels are carrying over to February. The Nelson Building Society, and Manchester Unity were the only two institutions to change rates in the past seven days.
Up and down
On the term deposit front, RaboDirect raised its 6/9/12 month rates by about 0.15%, PSIS lowered a whole bunch of rates for terms 6 months through 4 years (all down between 0.10% and 0.15%, and putting them under the RaboDirect equivalents), and NBS did some minor trimming as well.
No chart with that title exists.
10 Comments
Thanks, some interesting pieces....
Sunbeam tech, thats interesting stuff, ethanol etc is useless, the only tech that can be viable for us with our style of economy is a tech with a 10 : 1 ratio at worst.....12 or 15 : 1 a lot better....trouble is it neds to be commercialisable today and not in 5 years....
Two halves....the housing market looks dire...all I can say is JK should employ the RI's spin doctor(s) for his re-election campaign.....those boys have no shame.....
3D printing bringing manufacturing home......but asia can still compete....the issue is (for asia) transport cost....somewhere do we have the price of a shipping container from China to the US, 1, 2, 5 and 10 years ago?
That might be informative on the impact of rising bunker fuel costs.....
For instance Chinese steel is no longer price competitive with US steel when its shipping costs across the Pacific are considered......(apparantly)
The other interesting point on 3d printing is the reduction in waste....materials are getting scarcer, a technology that can greatly reduce total energy and total waste in a process and thats materials and the cost of buildings to house a productiu\on line and the energy consumed is what we need....now that looks like a place to put investment into. Hopefully that also means less pollution and toxic waste, of course we need to look at the total picture....
Happy with no growth....the key line "As interest rates are low on the floating side people are taking the advantage, as well as more flexibility with the floating rate, to repay debt," Park added."
So sure their margin is up now.....but when there is little activity and debt is being paid down....that's not good long term.
regards
Re: the link to the graph in "Two Halves"
thats a great graph. There seems to be a rather strong correlation, as one would expect, between the trend in sales of sub $400K properties and the overall median
It will be interesting to see if the big tick up of those properties sold in January continues.
If it does then that does not bode well for the overall median
Median, average, whatever. Matt, there is only one price that really matters. That is the price the current owner of the house you would like to move your family into will accept on the day you want to buy it. Everything else is just noise.
Hope you continue to keep us posted on your quest. Buyers market and low interest rates, must be time to strike soon.
Matt, there is only one price that really matters. That is the price the current owner of the house you would like to move your family into will accept on the day you want to buy it.
The good news is that there are a lot more sellers than buyers these days. Those buyers and their families have a hell of a lot of choice.
For every ten sellers who kid themselves that it's still 2007, there will be one too desperate to stick to the asking price.
As time marches on, the ratio will change, as more and more sellers become desperate, because potential buyers will become harder to find, and those buyers pay whatever they feel like paying, rather than the La-La-land prices many sellers fantasise about receiving.
On another note, it's been many months since I last posted and am amused to see how little things have changed, other than the ratio of drooling property shills to intelligent people.
New Zealanders will always be low-paid serfs as long as the overwhelming majority consider their job to be the only thing in life that really matters.
How many of you here have a hobby that doesn't include alcohol, television, cars, or your job?
How many of you go to dinner parties, or BBQs, or other social gatherings and talk about your job?
How many of you take a "holiday" and sit on the hotel balcony with your laptop doing work stuff?
How many of you are utterly stuffed for anything to talk about once you've exhausted every car, sport, TV, and work-related topic you can think of?
Too many. Probably almost all of you.
Good nurse, maybe you should change your circle of friends or change your attitude if you are looking for enlightening conversation. If this post reflects your personality people might be finding you a tad self righteous and judgemental. People are having great parties all the time, shame you just manage invites to the crappy ones.
Actually, no, Vera F. It doesn't matter who wants to do what, if the buyer can't afford to pay what even both parties 'would like'. Only the buyer's capacity to pay can effect a transaction. And as credit ( debt) contracts and savings are exhasuted by increasing day-to-day living costs, that capacity diminishes, as time goes on.
"And as credit ( debt) contracts"
Just curious, Nick, do you forecast the world money supply shrinking for any lengthy period? Even during the Great Depression, money supply only reduced for a period of around 5 years before taking off again.... in fact, the only decade when money supply didn't dramatically increase was 1930 - 1940. I'm guessing you see a repeat of that?...
No matter how you look at things, if you do it honestly it's pretty obvious that times are going to get tougher for the majority.
Those with some cash and no debt will find it easier than others who have been living on credit for the past few years.
Having no debt and a bit of money in the bank is a good way to be these days, probably the best way to be.
Actually I do., Murray I soon see contraction of money supply as an on going situation ( after the futility of the Fed. et al has run its course). Debt levels in the Western World in the private sector were much less elevated in times past, including those you quite rightly note. Money can be 'printed' all you like, but without the capacity to circulate it ie: more private sector debt assumption in aggregate, it won't be used on consumption. Have a look at where the current supply of money is going - to repay debt. Until private sector debt has been reduced to a level from which it can expand, deflation of asset prices must occur. Future debt expansion will only happen when people 'feel' that they can again afford it. That will be after it has 'overshot' on the bottom side. Perhaps when we regain those hosuehold debt levels of the 1930's?
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