How are the PIA's doing?

[LKSteve]

LK Steve - the US, UK and Oz did not have the same tax policies that we had during the boom. It was fueled by cheap lending far above tax policy.

OK, I didn't say that the US, UK & Oz had 'the same tax' policies as New Zealand, I said to refer to those countries for destructive outcomes. Every countries economy is different as are their tax regimes. For several years Ireland's government engaged in reckless tax policies which effectively stoked an already booming building industry to even greater heights. The were repeatedly warned that they needed to reign in the boom but greed got the better of them, there was no such tax incentivized building boom in New Zealand or Australia & I'm not suggesting there was.

In my opinion cheap money was & still is a factor in the Kiwi/Aussie property boom. Real interest rates - the yields savers earn over the actual rate of inflation (not the artificially low numbers provided by government bureaucrats) have been negative for several years now. This will change. Rates will rise as sure as night follows day & that will be what snuffs out the property boom, at least in New Zealand / Australia.

[flyernzl]

Not so sure about interest rates rising.

Interest is the price of money.
Less money around and the greater the demand, interest rates will rise.
The more money around to borrow, and the less the demand, interest rates should drop.

If 'everybody' has spare cash and wants to lend it out then 'nobody' will want to borrow and interest rates will drop to zero. That happened in the UK in the late 1940s.

Right now, individuals and businesses are, and are being encouraged to, consume less save more and pay off debt.

So logically this should lead to static or lower interest rates as demand decreases and supply increases.

[Perry]

I'll go along with the 'destructive' aspect,
in regard to the economy. But it's the
primary cause of that destruction that
seems to be in the blind spot of all and
sundry in the beehive.

I chose a modest tax rate intentionally.
Some will pay more, some less. If the
tax rate is higher, it only exacerbates
the problem I was trying to portray, in
my rudimentary hypothesis.
.

[LKSteve]

Not so sure about interest rates rising.

Interest is the price of money.
Less money around and the greater the demand, interest rates will rise.
The more money around to borrow, and the less the demand, interest rates should drop.

If 'everybody' has spare cash and wants to lend it out then 'nobody' will want to borrow and interest rates will drop to zero. That happened in the UK in the late 1940s.

Right now, individuals and businesses are, and are being encouraged to, consume less save more and pay off debt.

So logically this should lead to static or lower interest rates as demand decreases and supply increases.

I think you are forgetting inflation. With all this easy money sloshing around, prices will start rising, it's already happening in commodities. This will feed into higher prices at the petrol pump & everywhere else. Inflation is a hugely destructive force once it breaks out of 'target levels'. The only way to keep it in check is restricting money supply & raising interest rates. The opposite of what's been happening for the last decade.

[Perry]

Does increasing excise & GST qualify as
a money supply restrictor, I wonder? Or
does that add to inflationary pressures?
.

[Glenn]

To get back to your moan about PIA meetings being all doom and gloom.
Sorry but I must have had my hearing aid turned off at the meetings I held in Nelson. I do not recall one person talking like that.
The last meeting when Mark Withers spoke they moved us to a bigger hall to fit eveyone in. Over 100 in attendance and everyone sounding right on the ball.
The meeting before that was only slightly smaller again with around 100 in attendance. But then Andrew King was speaking.

Sure I and others I know have picked up some good bargains recently.
10% gross for one block of three and a 3 bed house with double garage at 8%. I have not seen returns like that for perhaps 10 years.
Whats more last time they were at that return the interest rates were close to 10%.
That is not doom and gloom it is wonderful with great cash flow.

Those running PIA meetings have to avoid the poverty mentality.
There is no future nor fun in sitting around telling each other how bad the world is. Comparing notes with each other how rotten the tenants have been this week. You may as well go and join a club that does nothing more than share how bad their health is and what they got up to last time they went into hospital.