NZ Initiative still not impressed with what RBNZ have been doing lately
WALKING THE PATH TO THE NEXT GLOBAL FINANCIAL CRISIS
https://www.nzinitiative.org.nz/repo...s/walking-the/
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NZ Initiative still not impressed with what RBNZ have been doing lately
WALKING THE PATH TO THE NEXT GLOBAL FINANCIAL CRISIS
https://www.nzinitiative.org.nz/repo...s/walking-the/
I had read that the real cause was again Bill Clinton but it was the repeal of the Glass Stegall Act that really got thing moving. Banks stopped being solely lending institutions.
The banks didn't need to worry about lending to bad borrowers, they were cutting the loans up and putting them in CDOs and selling them to insurance companies, pension funds and any other mug that bought them. Also rampant gambling with credit default swaps exacerbated the situation.
Fortunately by then the left leaning Obama Govt was in power and was able to bail out the banks with taxpayer dollars so they could pay themselves huge bonuses for being "masters of the universe" and the "smartest men in the room"
I guess you are comfortable with profits going to the smart investor but losses being socialised.
Sad thing is that higher interest rates bring with it a higher NZD. Which is bad for NZ.
Who do I believe, Adrian Orr or John Key. If I read this right John suggests Adrian could have a huge influence over the housing market to quote from the article.
https://www.stuff.co.nz/business/ind...-boom-john-key
“The interesting thing I think for New Zealand will be that I think [Reserve Bank governor] Adrian [Orr] holds in his hand now the biggest wand that any Reserve Bank governor has ever held in New Zealand’s history.
And I think the reason for that is the level of private sector debt is so great, particularly in housing, that I think far smaller movements in those interest rates now on the upside will have a much greater impact on housing and on the economy than ever in our history.”
Adrian Orr has just explained that the OCR only plays a "bit" part in house prices. I normally would instinctively disagree with John as he sold us an increase in GST but one of these guys is wrong or lying about the effect of interest rates on house prices. Not hard to pick who I think is a big fat liar. More importantly why is he lying? What does Adrian know that we don't or does he want to delay the tough calls for someone with a back bone. I think we all know a rise in interest rates could possibly set off something in the financial markets, that is not a reason to shy away from the important decisions.
https://www.stuff.co.nz/business/300...stakes-forever
Although she is an economist I am starting to like Sharon Zollner.
Zollner said, while this was a necessary part of a business cycle, central banks had tried to avoid it for many years. “But it’s impossible to save everyone from their investing mistakes forever. There’s a chance some people have started to think central banks are omnipotent and can always step in and save them. Whether you’re talking about house prices in New Zealand or equities in the US, central banks have done that quite successfully since 2000. But it's just too good to be true that central banks can somehow save you every time.
The true test is if asset prices fall and Adrian takes interest rates negative to save everyone from their investing mistakes as prophesized on this very thread by a God like poster.
Grant Robertson has already done that. Not so long ago in fact.
https://www.rnz.co.nz/news/political...robertson-says
Although Grant Robertson did say he would like to see house prices rising, just not so quickly. So I guess Adrian doesn't have to give it too much thought.
I do want targeted inflation to be scrapped or at least lower the targets to around 0%.
How should I approach campaigning for that? What is most effective? Should I write letters to my local MPs? Or stand on a street corner with a placard? I could join a political party and run for office but no party has this as their policy and I am not very likeable so would struggle to get elected. Any suggestions most welcome.
They will most likely let the housing market take a sharp punch in the nose causing a nose bleed before stepping in.
ANZ and other retail banks hold the securities on these mortgages, they don't want it falling into negative equity/I mean they have there annual bonuses to think about.
GOD I'm good.
Time will tell and based on recent history this is the most likely result but as we know predicting the future is not an exact science.
It is unusual for a bank economist not to be cheerleading the housing market. Maybe they are worried that at 30% per annum rises in house prices they will run out of people to lend too. Or maybe the lending gets too risky. Possibly TeslaGod and a few large landlords will have a lot of power when negotiating with the banks when they monopolize the housing and finance market as the plebs slowly drop out of home ownership.
That initiative looks like a good idea.
Though eric crampton on the board is a concern.
Here's a plan for the initiative.
Increase contributions to the NZ super fund when debt funding costs are low.
It may even appear on NZ's balance sheet as an asset and not "debt".
Brian Fallow much more diplomatic than myself and I would assume he is much smarter and more informed as well.
https://www.nzherald.co.nz/business/...OXE5HT5DQQ6CA/
The conclusion of the article.
"But I am not avoiding all responsibility." The Reserve Bank's monetary policy committee does set shorter-term interest rates and hence determines the shape of the yield curve. But "the role of the Reserve Bank is a bit part". How much house prices have reacted to changes in housing demand is mostly related to the ability of housing supply to respond, he said.
"Houses have been scarce at a time when demand was strong." But now the reverse situation is evolving, with building at record levels while population growth has been throttled back by the closed border.
All of this is a rather different story from the bank's line when it was easing monetary policy.
Then, the emphasis was on the wealth effect as a channel for transmitting lower interest rates into economic activity, via a boost to asset prices and thence into consumption growth.
Now that the focus is on unsustainable and unaffordable house prices and consumer price inflation is running hot, the story is: "Look, there are lots of influences on house prices, and okay interest rates are one of them, but they are mainly driven by global factors, so don't blame us".
A more edifying message would be that house price inflation has been an unfortunate side effect of monetary policy needed to fend off the danger of a nasty, deflationary, job-killing recession.
Brian doesn't say liar, just implies Adrian is weak person who does not have the cajones to take responsibility for his actions. Which is concerning as he has a lot of power as head of the RBNZ.
Bank of England/Reserve Bank of Australia/Federal Reserve have all left there rates negative and unchanged.
They are expecting as I am inflation to pass through late next year once supply chains free up.
The RBNZ isn't the problem, it's what we pay for property is the problem/All my realestate that I have purchased over the years has been positive cashflow from day 1/
New investors today have no idea what there doing/FHBs are overpaying for property.
Kiwis are creating the problems themselves/bureaucrats are adding fuel to the fire.
Rents are beginning to increase dramatically in my centers/not by greed but by stupidity of everyone pushing up house prices and increased government regulation.
Seriously thinking about selling down atleast half my real estate portfolio and putting millions into the US economy/New Zealand just doesn't get it/we are so small minded.
https://youtu.be/_xNnPXsWX1M