Oh gosh! Do you mean to say we borrowed too much uridashi just to revalue our houses upwards and pretend that we were still a wealthy country as we were half a century ago when NZ was the best country on the planet?
We had not only an enormous GDP per capita but also a splendid country in which to live, with no crime [homeopathic amounts though Henry Wa did steal my bike and Mum had to go and get it back from him] and I was kidnapped by a local gang who decided to kill me but in the end only whipped me with wire. Hmmm, now that I remember details of the past more carefully, it was not a ubiquitously happy place.
Okay, it wasn't Utopia, but it was pretty good.
To keep up appearances and continue to live in the manner we had become accustomed, we [not me but those others], have borrowed big, bought bigger houses and cars, and used the spare change to buy coffees from each other and jaunt around the world in 747s.
Japanese, not earning a lot in their local banking facility, were tempted by signs in their banks offering 7% interest. NZ has a reputation for being a real place, reliable and maybe even better than the USA.
The NZ government was collecting huge taxes on the "profits" of all that borrowed money which was being swapped around the country. Having huge cash flow, the government did what governments do - poor it down the drain and more suffocatocracy rules.
Now, there is a glitch in the Matrix.
Borrowing has come to a bit of a halt. Loan repayments are turning out to be a significant issue for borrowers. Jobs are not as available. $1 Billion a month is the hole in the government's cash flow. That's real money in NZ. Tax revenue has fallen. Capital gains on houses have evaporated and returns on residential investments depended totally on capital gains. Now the government is bringing in capital gains or wealth taxes on real estate. Oooops... not so good for all the residential real estate investors. But the welfare mobs demand their pound of flesh and that the "rich" tax payers be fleeced yet again. "Rich" in NZ means anyone who is not actually receiving significant amounts of cash from the government.
The NZ has fallen a bit as the dead cat bounce turned out to be NOT a V shaped recovery to eternal prosperity based on borrow and hope. Apparently production, sales and profits are still part of economics. Merely borrowing and spending seems not to generate enough economic activity to keep the economic machinery humming along like a 21st century perpetual motion machine.
The government is spending mightily, but that too does not seem to be doing the trick though governments around the world, and many economists, seemed to think borrowing and spending on white elephants and digging holes and filling them in again were good ways to make things better. Hope and Change sound great, but so far, it's not working. Swarms of people would be grateful for spare change, let alone Change. Hope springs eternal - until Despair.
Mqurice |
