Another Prediction!

[eri]

or the councils/rate payers having to pay 25% of leaky homes repairs

and the gov/tax payers having to pay another 25%

so that's 50% of the x billion$ that will be paid by rate/tax paying kiwis

[One]

And drought or flood relief for farmers, bailouts for companies after the Canterbury quake, relief funding for Pike River employees and the West Coast, etc.

I feel very, very sorry for all the people in these disastrous situations, but we definitely have a privatise-profits-socialise-losses approach in NZ. The alternative model would be much more comprehensive insurance. But that would have to come out of those privatised profits.

[eri]

you try removing the consequences of bad choices

you end up removing the need to make good choices

[Perry]

We definitely have a privatise-profits-
socialise-losses approach in NZ.

Don't many "western-style" democracies
do the same, considering recent events
and the too-big-to-fail mantra? It seems
that only small fry can be left to go to the
wall, without compunction.
.

[Perry]

you try removing the consequences of bad choices,
you end up removing the need to make good choices

And so evolution grinds to a halt, via
well-intentioned, mal-guided socialism.
.

[PropertyReturns]

Can you please explain how the
gov't is socialising private debt?
Public debt I can understand.
But private?

Basically this means if an investor makes a profit (or not a loss) he/she keeps the profit but if a loss is made it is shared with all the other taxpayers. It only happens with investments that may make a government unpopular or in their nativity they feel 'it is to big to fail' or they have been sucked in by Keynesian economics. Possibly the best example in NZ is with finance companies. I have never put money with a finance company because they looked a very high risk to me. I am being forced as a tax payer to refund capital to fools who did when the finance company failed. Another NZ example is with leaky homes. This is not as serious as most leaky home buyers will still be greatly out of pocket, but the government is going to force all tax payer and rate payer to also pay. The investor did have a choice if they brought that leaky home or not. If I make a bad buy for some other reason (say what appeared to be a strong tenant goes bust, and I paid to much for the building) the government does not care about my one vote and the few others like me, so will not cover my loss. A similar thing is happening with the Christchurch earthquake. The US government with quantitative easing is giving debt to the tax payer to bail out investors who had to much debt to survive.

[whitt]

. National will surely lose the election ....even with Labour having the weakest Leader it's probably ever had

Am I missing something in the Polls? I thought the Nats were comfortably ahead last time I heard?

[Dean@Massiveaction]

CD to make gold or silver be of any real benefit you'd need to put a truckload of cash in. Buying a small amount will make little difference and if you can't leverage then this will only work for the already rich? Or am I not understanding something?

[LKSteve]

-Property prices will remain flat for another 2-3 years, then take off as inflation kicks in, real prices might stay flat for a while but who cares when you are hedged by inflation and holding hard assets, I certainly don't!

I certainly hope not Dan. Just this evening I have been reading about the dismal Christmas retail environment in Australia. I've also been reading about the rush toward insolvency of many small businesses in the Waikato in the run-up to Christmas.
In 2011, I am anticipating sovereign default in Europe, which could cause a major financial shock similar to or even worse than what happened after Lehman Bro's in the US. It will certainly create funding difficulties for countries such as New Zealand that are borrowing just to keep afloat. We will also have US$100 per barrel oil in 2011. As I understand it, petrol at the pumps in New Zealand is already $2 per litre. Another downgrade of New Zealand's credit rating is also on the books. I mean let's be honest, with borrowings currently at $300 million a week just to keep the 'New Zealand Economic Show' on the road the country is clearly on the skids.
NO, in my view your prediction of Flat Property Prices is clearly wishful thinking. The cat is nearly out the bag as regards New Zealands Property Ponzi Scheme, we are almost at the Zenith. There is nothing keeping New Zealand's inflated property market aloft other than pure optimism by Joe Kiwi who thinks his/her money is safe in bricks & mortar.
Bricks & Mortar on the decks of the Titanic is more like it.
Merry Christmas & A Happy New Year.

[muppet]

petrol at the pumps in New Zealand is already $2 per litre

Actually $1.95.9c/l with the possibility of it going higher as the cold stays in Europe and the NZD vs the USD continues to drop.

[Perry]

Can you please explain how the
gov't is socialising private debt?
Public debt I can understand.
But private?

Thanks for the replies. I'm familiar with the
maxim: internalise profits, socialise losses;
it's the use of the word debt (in place of
losses) that was new to me.
.

[67910241]

Great thread CD - well done!
....even with Labour having the weakest Leader it's probably ever had...and that may not be ideal for us (property investors).

cheers,

Donna

I think you are somewhat mistaken there.

The Nats are more likely to introduce new anti-PI tax regulations (eg. ring-fencing of property investment losses) than the Labour folk are.

Labour love personal income taxes, which are speculation/tax loss engineering friendly. Also, the Labour pollies are at least as frequently landlords themselves as the Nat ones (ie. despicable "Chardonnay Socialists"), and are extremely unlikely to take measures to curb their own personal capital growth. They are arguably the most hypocritical bunch of the lot, even more so than Rodney's Act is.

The Nats are a bit more "actual" business friendly. If they absolutely had to choose between taxing property value speculators and businesspeople, they'd definitely choose the former lot.

Given the NZ's plunge in the risk ratings, some hard decisions will have to be made and chances are, some tax rates will have to be brought up again.

My bet is - Labours taxes-to-come would be more property value inflation friendly than the Nats ones. I doubt the market would have nominally gained 100% or so in the last decade without them at helm.

I do however doubt that Labour can win in 2011. They are utterly useless - useless in every way - post Helen.

[PropertyReturns]

I certainly hope not Dan. Just this evening I have been reading about the dismal Christmas retail environment in Australia. I've also been reading about the rush toward insolvency of many small businesses in the Waikato in the run-up to Christmas.
In 2011, I am anticipating sovereign default in Europe, which could cause a major financial shock similar to or even worse than what happened after Lehman Bro's in the US. It will certainly create funding difficulties for countries such as New Zealand that are borrowing just to keep afloat. We will also have US$100 per barrel oil in 2011. As I understand it, petrol at the pumps in New Zealand is already $2 per litre. Another downgrade of New Zealand's credit rating is also on the books. I mean let's be honest, with borrowings currently at $300 million a week just to keep the 'New Zealand Economic Show' on the road the country is clearly on the skids.
NO, in my view your prediction of Flat Property Prices is clearly wishful thinking. The cat is nearly out the bag as regards New Zealands Property Ponzi Scheme, we are almost at the Zenith. There is nothing keeping New Zealand's inflated property market aloft other than pure optimism by Joe Kiwi who thinks his/her money is safe in bricks & mortar.
Bricks & Mortar on the decks of the Titanic is more like it.
Merry Christmas & A Happy New Year.

You have some very good points there Steve. One reason for if you are sitting on cash you don't let it burn a hole. If you can't find a reasonable deal just sit in a PIE.

[Choc]

It would be interesting to know how many businesses are currently insolvent in NZ - but still operating.
Donna

Wait for the outcome of Christmas trading and then we might get a very public idea of that.

[donna]

Am I missing something in the Polls? I thought the Nats were comfortably ahead last time I heard?

What you quoted Whitt is out of context - the point of my entire post being if there's a run of insolvent businesses hitting the wall (in election year) that will affect the popularity of the party in power e.g. National as the collapse of businesses will surely increase unemployment numbers, and those collecting the benefit -statistics that don't look good etc.

Cheers,

Donna