Financial Armageddon!!

[speights boy]

I don't really buy the "distract the electorate" line too much.

I think it is clever politicking to help raise the voter turnout from those who may have strong feelings on the issue.
Which demographic could that be ?
Middle aged and elderly.

Ideal National and NZ First target demographic.

[Perry]

So hold on to your hats. The money train is about to grind to a lumbering halt in New Zealand (something it should have done in 2008 or 2009, in my opinion), so it’s long overdue.

I expect a mass exodus of the population to find work. I expect to see mass default on mortgages and a crash in the New Zealand dollar. Also, I expect interest rates fall (which
will be good for those of us who have hung-in there all this time). Dogs will bark in empty streets and babies will cry. Tumbleweeds will tumble, testament to the terrible times ahead.

D-day minus something-or-other and counting.

[Austrokiwi]

I suppose this thread should have been retired some time ago. That said it does provide a place where interesting info can be discussed. We seem not to hear to much about the PIIGS these days. However may be there is a new and different solution: we have bad banks where banks were able to place their bad decisions.......Are we going to see bad countries? In November Catalonia, one of the richest parts of Spain, will vote as to whether it stays in Spain or becomes independent. One might assume that if it managed to become independent it would probably not take a proportion of Spains debts. Even if it did take some of the debt it would likely be able to manage its currency separate to the rest of the EU. Spain of course doesn't think the vote is legal. Interesting starting yesturday (sunday) is an on-line referendum regarding Venice and its hinterland becoming once again an independent state.:

http://news.nationalpost.com/2014/03/15/more-sovereignty-votes-sunday-referendum-may-see-venice-elect-to-secede-from-italy/

This coming Friday we ( if the media even notices) will know the vote. At a guess just as the EU has stated with Scotland and Catalonia a new Venetian republic would also not be allowed to join the EU. So If Veneto comes into being it too might not accept taking some of Italys debts and even more interesting it will be able to manage its currency( perhaps a resurected Venetian ducat?) unlike the remainder of Italy. Its going to be interesting to see what happens. I suspect nothing will happen with Veneto but if it did become independent the next Italian Province that might decide to leave Italy would be South Tyrol.

[Perry]

Well, Austro, if nothing else, does this thread not prove the one thing that the
gloom and doomsayers have in common, no matter when the prognostications
were broadcast: they almost always, if not always, get it wrong.

Nostradamus, Mayan Calendar, Munster of Finance, Bank econo-mists. On and
on the roll of fallacious soothsayers goes.

[Austrokiwi]

.....or get it right with no idea how for example:

http://www.occupy.com/article/south-tyrol-freedom-emerging-europes-next-winning-separatist-movement

[eri]

big ouch!

from forbes

"The popping of Australia and China's bubbles are two other external factors that have a high probability of contributing to the popping of New Zealand's bubble," Forbes reports.

It says when the bubble truly pops the property bubble will also pop, banks will experience losses on their mortgage portfolios, "the country's credit boom will turn into a bust" and over-leveraged consumers will default on their debts

Colombo says stock and bond prices will fall, the Kiwi dollar will weaken, economic growth will reverse and unemployment will rise.

In discussion on why the bubble formed, Forbes says New Zealand has the world's third most overvalued property market.
"The doubling of New Zealand's housing prices in the past decade far surpassed household income and rent growth, making the country's property market the third most overvalued in the world.

"New Zealand's home price-to-rent ratio is 77 percent above its historic average and its home price-to-income ratio is 26 percent above its historic average."

The housing bubble was creating a mortgage bubble with almost half of outstanding mortgages currently having floating interest rates.

"Though New Zealand is commonly thought to be an agriculture-based economy, this couldn't be further from the truth," the report says, noting agriculture accounts for 5.1 percent of New Zealand's GDP, while the finance, insurance and business services sector is the country's largest sector, contributing 28.8 percent to the GDP.

"Furthermore, banks account for 80 percent of the total assets of New Zealand's financial system.

"Not only is New Zealand's banking system dangerously exposed to the country's property and credit bubble, but so is the entire economy," Forbes reports.

http://www.stuff.co.nz/business/money/9959525/NZ-bubble-going-to-burst

[Perry]

big ouch!
from forbes

"Though New Zealand is commonly thought to be an agriculture-based
economy, this couldn't be further from the truth," the report says, noting
agriculture accounts for 5.1 percent of New Zealand's GDP, while the
finance, insurance and business services sector is the country's largest
sector, contributing 28.8 percent to the GDP.

But what is the export revenue share for primary production?
Internal GDP is just domestic churn. It's our indebtedness and
trading relationships with the rest of the world that counts.

[Commercial Dan]

Ha, love how this is still going. I almost forgot about it....still crap out there, still deflation world wide, inflation must come at some point...the economist predicting this stuff is an economist, a euphemism for always wrong!

[Commercial Dan]

In fact bet the opposite, things will probably boom for a couple of years

[JBM]

Lower NZD be great for exporters and not a issue like Forbes is making out
Unless your importer will hurt inflation wise to many already over leveraged

[eri]

Acting Finance Minister Steven Joyce last night dismissed 28-year-old Colombo's theories as "alarmist" and described him as a "bubble-ologist".

"His view on life is that the whole world is pretty much in a bubble and there's no place he doesn't pick on," Joyce said

"I wouldn't be paying too much for that level of analysis.

He's a little bit like [earthquake forecaster] Ken Ring. He's out there predicting catastrophe at every turn."

[Austrokiwi]

OK I was quite cynical about the analysis till I read that the acting Finance minister rubbished it. Remember Murphy is a B******d! It is never a good idea to tempt fate! When do Politicians ever get things right!

[speights boy]

But what is the export revenue share for primary production?
Internal GDP is just domestic churn. It's our indebtedness and
trading relationships with the rest of the world that counts.

20 questions posted here should be answered by the him
ASK ME ANYTHING: Forbes bubble guy Jesse Colombo

Readers can ask the suddenly infamous Forbes contributor Jesse Colombo anything they like.
Leave a question now by placing it in Comments below.
If we come up against our 20 question limit, preference will be given to Verified readers.

[Bluekiwi]

The NZ economy is the strongest it has been in several decades.
Why would it crash right now ?
Unless something really bad happened.

The risk is more that something really really bad happens again, oversease, like 9/11.
And more people and ex-pats flood back.

The risk of not being positioned to take advantage of the sweet spot we are "Currently" in, is greater in my mind.

2014 / 2015 / 2016 looks very good on many fronts.
Late 2016 / 2017 and 2018 is where the potential risk of a problem comes in.
For many reasons.

But even then, if the ramp up can be controlled by GOVT and RBNZ, we could potentially have a smooth ride through these years.
Instead of the boom and bust of the past.

[Leftette]

What was it like working alongside Arnie in the original Predator?