Originally Posted by
Logen Ninefingers
There used to be a bloke on here telling me how inflation was only transitory and NZ property was going to keep going bananas. Amazing how things change isn’t it…people adamant that something will never, ever happen….then you wake up one morning and find interest rates and inflation are the only thing ‘going bananas’.
‘A magical thinker caught up in a mass delusion’ is how I would describe that bloke who used to tell me I was in fact the one who was deluded. The cold hard reality is that The Fed in the US is set to hike by another 75 bps, and where they go we follow. Already sob stories are appearing in our media about people who bought at the peak of the market, are on modest incomes, and find themselves in negative equity. I was assured there was no ‘subprime’ situation in NZ, so how did people in this parlous situation get a mortgage? Lots of pain to come for the NZ Property Ponzi Scheme, and we are going to find out exactly how much irresponsible lending has been going on - my feeling is is that it is not going to be a pretty situation. The very worst case scenario will play out if NZ goes into a recession next year and the US doesn’t. This country will then find out exactly why you should not put all your eggs in the property basket and manufacture a bubble with its foundations built solely on an unprecedented credit binge by a populace caught up in a speculative frenzy.