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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Gib Bogle who wrote (72325)	2/3/2010 3:43:17 AM
From: Maurice Winn	1 Recommendation Respond to of 74559

I haven't been scared, <This is pretty scary: globaleconomicanalysis.blogspot.com It shows that the housing bubble in NZ is more inflated than almost anywhere else > but for about 5 years I have thought the whole NZ housing scene has been going nuts. But still it kept rising. A couple of years ago, if I didn't have a co-owner of our house, I'd have sold and rented. Amazingly [to me] the price is still the same as then so I'd have been wrong. But with $1 billion per month government deficit and nothing much looking like a big economic boom in NZ to prop things up, and cows, sheep, trees, a spot of mining, some industrial exports, tourism and bits and pieces doing the same old thing [going nowhere fast], the situation still looks untenable. With interest rates having crashed over the last couple of years, people with mortgages are better able to afford houses and prices bottomed out so people think the market is roaring again. But as people who diligently saved their money during their working lives will be learning to their dismay, low to no interest rates are not a great return on investment when the price of petrol, rates, GST, taxes, imposts, duties, fees, parking meters, electricity, gas, water, insurance, doctor fees, fish [good God, try buying Schnapper these days], ... too late, they have already run out of money. Now they can't get the car repaired, but at least the trains are expensive [though they don't actually run]. Mostly they won't get knifed when walking home though, so they should be right. So who is going to be saving money to lend to deadbeat debtors at such ridiculously low interest rates [with the government taxing the interest as though it's profit rather than a defence against dilution and inflation]? As savers and lenders push run out of savings and debtors have to bid up interest rates to get a loan refinanced, there will be a squeeze. Mortgagee sales will become common. They are becoming common already. Mortgagee sales do not result in higher and higher prices. Unemployment is increasing as people run out of money to spend. Retailers are closing in droves. About a third of industrial/commercial properties across Albany and everywhere else are for sale or lease. Imagine what that's doing to prices. City apartment prices have about halved... ouch... many speculators bit the dust. They will be depending on tax payers instead of their savings and investments. That won't make the government's budgets balance any better than the current $1 billion a month hole. Meanwhile, the government is planning to tax all the rich property speculators, such as people you and I know who have tried to save for a rainy day and their dotage by buying rental properties with mortgages = that does not include me of course. "Rich" is anything above the Working for Families welfare payment level. That level is called poverty in the USA and other countries. That might be a slight exaggeration, but we are definitely in banana republic territory these days - heck we even have corrupt politicians and police and other trusted officialdom, like any garden variety pond scum banana republic. If people tell me our house is worth half its current price, then that's okay by me because it's still a house doing the job it does - rain off, warmth in, mosquitoes out, dunny, kitchen, place to sleep etc... My guess is that as with any banana republic, the currency will be diluted like Mugabe has done, so the price of the house could even rise as the economy crumbles. Holding NZ$ is NOT part of any plan I have [other than grocery money and a bit of readies]. NZ$ down from US74c to US40c is about what I expect. The USA is well into the mire but NZ has barely got going and seems unaware that things are not as great as they were when King Kong ruled, Peter Jackson won big, Lord of the Rings too, America's Cup was NZ's cup and NZ was top of the tourism pops. But I still prefer to live here where Helen Clark isn't. It feels better somehow without her glowering bossiness and kleptocraticmania. Mqurice

To: Gib Bogle who wrote (72325)	2/3/2010 4:36:59 AM
From: Maurice Winn	1 Recommendation Read Replies (1) \| Respond to of 74559

In Y2K I was advocating selling California, moving US$ to NZ$ at US43c to NZ$, borrowing heaps, buying a bunch of houses and waiting for the price rise. It came. When NZ$ hit 80c and house prices peaked too a couple of years ago, it was time to bail out and short the lot [also advocated right here in SI]. Amazingly, NZ$ = 70c still with house prices at all time highs. That's because NZ$ is still paying more interest than in Japan or USA so the US$ and yen lenders are foolishly thinking they can earn more here in NZ$ when really, all they are going to get is default and a thank you note for funding the manner of life to which we have become accustomed - sorry about the lack of repayment but we seem to be somewhat bankrupt. Better luck next time. Actually, they probably won't even get the thank you note and apology. Mqurice