Financial Armageddon!!

[Bluekiwi]

These comments are interelated.
House price inflation and NZ growing its debt, cant be blamed just on demand.

The marginal cost supply side of the equation, due to Govt policy and council policy, are just as reponsible.

Ask any builder developer (all doing maintenance and reno's now) how much profit he can achieve after build costs, section cost, council contributions.

[Realist]

People don't need to buy a house if it is too expensive

I wasn't giving a break down of what adds value to a house price anyway

[Austrokiwi]

Whats your view on the fix / float debate AK, and if you did fix (assume you had debt to fix) what term would you fix (assumption that you want to just have lowest interest bill over next 7 years)

Realist is correct I pulled my money out of NZ. I have an extremely low level of risk tolerance. Realists comments about a munted Euro are amusing the Euro is still valued by the markets much higher than it was when it was issued.
In NZ I used Fixed rates until my mortgage was paid off......but in Austria we only use floating rates. There is an interesting difference, That I understand to be normal outside of New Zealand, Floating mortgage rates, for at least the last 10 years, have remained below fixed rates. I recall once enquiring with our bank (Bank Austria) about shifting to fixed rates We got an amused response ( as in "Bist du verrucht?" ie:"are you nuts?") fixed rates at that time were 2% higher than floating. I understand the difference is in the way fixed and floating are funded by banks. In Austria Fixed rates are funded by long term deposits ( which pay higher interest rates to the depositor) while Floating rates are funded by short term deposits. I believe NZ Has been different because of the access to cheap foreign deposits. Fixed rates are only attractive to those who want to lock in their monthly repayments its great for those who have borrowed to the hilt and would be punished by any rises.

[eri]

As many as 100 million Americans live in households today that are earning less than their parents did at a similar age.
And this is happening well before we feel the full impact of global economic integration with rising economies like India and China.

......Younger Americans don’t realize they’re coming of age in an era in which both parties have pre-committed virtually all public resources to seniors.
They’ll inherit a government without the cash or flexibility to address emerging non-elderly needs—choices that should be every generation’s birthright.
Want to help a poor child or fix a bridge? Sorry, kids, the till is empty.

In 1995, when I was a (younger) generational equity worrywart, I asked then-Sen. Alan Simpson how to fix what was clearly coming.
Simpson told me nothing would change until someone like me could walk into his office and say, “I’m from the American Association of Young People.
We have 30 million members, and we’re watching you, Simpson. You [mess with] us and we’ll take you out.”Simpson was right then.
He’s still right now

http://www.economist.com/blogs/democracyinamerica/2012/06/generational-decline?scode=3d26b0b17065c2cf29c06c010184c684

[Davo36]

In 1995, when I was a (younger) generational equity worrywart, I asked then-Sen. Alan Simpson how to fix what was clearly coming.
Simpson told me nothing would change until someone like me could walk into his office and say, “I’m from the American Association of Young People.
We have 30 million members, and we’re watching you, Simpson. You [mess with] us and we’ll take you out.”Simpson was right then.
He’s still right now

I like that.

So where do we sign up?

[Austrokiwi]

For those who want lower interest rates this is good news for those who expect the economy to get to pre 2007 levels its bad:

http://www.bloomberg.com/news/2012-06-25/central-banks-commit-to-ease-as-threat-of-lost-decades-rises-1-.html

I guess Eri can say told you so!!!

[Realist]

Realist is correct I pulled my money out of NZ. I have an extremely low level of risk tolerance. Realists comments about a munted Euro are amusing the Euro is still valued by the markets much higher than it was when it was issued.

You pulled the funds when the euro was high and are now earning a negative real return

[muppet]

Moody’s Downgrades 28 Spanish Banks on Sovereign Risk

By Charles Penty - Jun 25, 2012
Moody’s Investors Service downgraded 28 Spanish banks, citing the country’s sovereign debt and rising losses on real estate loans.
The lenders’ long-term debt and deposit ratings were cut by one to four notches, Moody’s said today in a statement. The New York-based rating company also downgraded 16 Spanish banks on May 17.
Moody’s issued a three-step reduction in Spain’s credit grade on June 13, citing the nation’s increased debt burden, weakening economy and limited access to capital markets. Spain was lowered to Baa3, the lowest investment-grade rating, from A3 and remains on review for a further cut after announcing plans to borrow 100 billion euros ($125 billion) from European Union rescue funds to recapitalize banks.
The latest downgrade of banks reflects the government’s reduced creditworthiness, which lessens its ability to support the lenders, as well as Moody’s expectation that losses linked to commercial real estate will keep rising.

More at http://www.bloomberg.com/news/2012-0...eign-risk.html

[eri]

i seem to remember realist predicting a couple of years ago

that the wonderfully resilient usa economy

would pull us all through

Politicians might be about to voluntarily put the world's largest economy into a double-dip recession.

The United States is headed for what economists are calling a "fiscal cliff" at the end of this year, when huge government spending cuts are due to kick in at the same time as a big jump in tax rates.

http://www.nzherald.co.nz/world/news...0815196anytime

any time america

anytime

[Perry]

The USA still has an economy of any real sort?
(Apart from printing money, I mean)

[eri]

another july

that kills off the hopes of new year?

Billionaire George Soros has told Bloomberg in a TV interview that the EU's leaders basically have three days left to resolve their differences. Soros said Merkel is leading Europe in the wrong direction.

The deteriorating conditions in Europe are clearly taking its toll. Credit Suisse is to cut senior staff in its European investment banking department by up to a third

http://www.nzherald.co.nz/economy/ne...ectid=10815545

[eri]

So while cash rates aren't likely to go much lower - because for many countries they simply can't - they're so close to zero that the current low growth, low inflation and low interest rate environment may last a lot longer than most of us have been assuming.

That's what investors in US 30-year bonds are now telling us.

http://www.nzherald.co.nz/monetary-p...ectid=10815457

[Realist]

i seem to remember realist predicting a couple of years ago

that the wonderfully resilient usa economy

would pull us all through

You seem to remember but where's the link?

The United States is headed for what economists are calling a "fiscal cliff" at the end of this year, when huge government spending cuts are due to kick in at the same time as a big jump in tax rates.

I already mentioned the fiscal cliff and that the US dollar strengthens when credit crunches

[Realist]

Only a natural disaster which required a $100-200bn override by executive decree could save the global economy from being totally credit clunked come Novermber etc.

Tropical storm Debby drenches Florida

" ..US National Hurricane Center expects the storm to dump an additional 6-12in (15-30cm) over the area in the next few days...Florida Governor Rick Scott declared a statewide emergency on Monday. The move allows the state to suspend certain laws as it responds to the storm, and access federal funds "

[Perry]

and access federal funds

Which, decoded, means help increase the deficit.