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  1. #196
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    ...then you must belong on that camp of those that own lots of residential properties.

    Your % difference does not change the fact, vast majority population in Canada or Australia do not use houses as a vehicle to make their riches.

    Don't try to justify the means why NZ houses are unaffordable to MOST of the general population by saying it's the same in other OECD nations. It's not. Those countries have done far more for the middle working class than NZ has ever done. But i'm not trying to skew and change the topic. It's not a justification that say Sydney is as expensive as Auckland despite they have CGT. You need to look at the struggles of the middle class and low income workers in both parts. When a high % of houses are in rental state, that means more of the population can't afford to own their 1st home.[/QUOTE]


    SBQ.....just settle a little huh. .........You are jumping around with a pumped up chest like an over-excited teenager on their first date. And, once again making wild assumptions. In this case on which "camp" I'm in and my opinions on what is driving the deterioration in house affordability in NZ. If you want to successfully "argue" on a forum site then my suggestion to you is keep your boundaries clear on what is fact and what is your opinion. Dressing up your opinion & assumptions as fact is not going to help you win any solidly principled based argument.

    You may want to pause & consider that I made NO reference to your "landlordism" opinions. I simply held you to account for your glib assertions re the numerical facts regarding other cities/markets.

    Whilst discussing & sticking to the facts, here is something further for you to consider. The MAJORITY of NZ housing stock is still clearly owner-occupied. Yes, the % has reduced over the decades (peaked around 75% in the 90's from memory), but it still sits around 65% today. Meaning up-to only 35% are owned by landlords. When compared to other markets, it's very similar actually. Home ownership figures elsewhere:

    Australia - 67%
    Canada - 68%
    UK - 65%
    USA - 66%
    Denmark & Sweden (supposedly very "progressive & modern" countries) - 61 & 64%

    These facts are a little confronting for you perhaps, but I trust that it makes you pause and reflect a little more on your epistemological framework. Just maybe you will consider that there are some other key drivers to why we are getting the current outcomes in NZ, and just maybe they relate back to the Subject Line of this forum thread. ;-)

    QUOTE: ASSUME - and you will end up making an ASS out of U & ME
    Last edited by FTG; 01-05-2021 at 02:29 PM.
    Success is a journey AND a destination!

  2. #197
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    Quote Originally Posted by dobby41 View Post
    Yes banks need depositors because they can only create a multiple of what the borrow - capital adequacy ratio I believe.
    Yes your right looking at CBA's 2020 annual report deposits are 69% of total assets and debt issues 14%, equity is only 7% of total assets.

    I had better shut up as I don't know what I am talking about. Does anyone know of any good online courses for understanding the banking system?

  3. #198
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    Many thanks FTG I have found SBQ is pretty fast and loose with the truth/facts, good to see someone pointing it out.

    Sadly I am not the only one making s*it up.

  4. #199
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    Quote Originally Posted by FTG View Post

    Dressing up your opinion & assumptions as fact is not going to help you win any solidly principled based argument.

    You may want to pause & consider that I made NO reference to your "landlordism" opinions. I simply held you to account for your glib assertions re the numerical facts regarding other cities/markets.

    Whilst discussing & sticking to the facts, here is something further for you to consider. The MAJORITY of NZ housing stock is still clearly owner-occupied. Yes, the % has reduced over the decades (peaked around 75% in the 90's from memory), but it still sits around 65% today. Meaning up-to only 35% are owned by landlords. When compared to other markets, it's very similar actually. Home ownership figures elsewhere:

    Australia - 67%
    Canada - 68%
    UK - 65%
    USA - 66%
    Denmark & Sweden (supposedly very "progressive & modern" countries) - 61 & 64%

    QUOTE: ASSUME - and you will end up making an ASS out of U & ME
    So the Labour Party is over-reacting for nothing about the cost of housing? The stats Jacinda made were of no interest?

    There are other reasons why Denmark & Sweden have lower home ownership - from what i've been told, they focus their investments towards share ownership rather than holding it all in a dwelling. Perhaps you can be eager enough to fact check this out?

    The 65% ownership figure does not tell the whole story. Try looking at the composition of it such as by age group and if you have noticed (or missed out), the trend for the past 25 years? It's been well commented by the media:

    https://www.tvnz.co.nz/one-news/new-...el-in-70-years

    https://www.theguardian.com/money/20...rship-ons-rent

    and as my architect designer friend told me last week, "Seniors do not like to pay rent for a dwelling they live in". If you have children, what will it be when they grow up trying to buy their first home?

    Australia from what I recall still allows negative gearing so for the wealthy, real estate is still their best game. I would imagine the UK would be similar ; hence similar housing affordability issues. The US is different and you can see up and down home ownership % over the past decades; though their tax approach to owning houses is a lot different. Canada if you missed, had an increasing trend on home ownership for the past 25 years. Again, what's the OECD's view on NZ's housing? A bunch of waffle? Do they say the same for Aus/Can/US/UK ???

    Getting back to the reserve bank making $ out of fresh air. Not all banks are the same. That is larger banks in NZ have the ability to weather more risk and be more competitive on mortgage rates. The better question is, what % of the banks in NZ are foreign owned and how much of the profits they make, goes abroad? Does the reserve bank not care who their $ is lent to and knowingly, the profits are sent abroad if these banks are foreign owned?

  5. #200
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    I heard on the radio this morning Janet Yellen suggested interest rates may need to rise a "little" bit to make sure the economy doesn't overheat.

    I guess the market reaction caused her to reverse course quickly.

    Still zero hedge asks "did she just start the process of thinking about thinking about thinking about normalization?"

    Not a chance, inflation is needed to take care of the debt so owners of assets can keep their gains without making any effort.

  6. #201
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    Janet Yellen's about face on interest rate rises or tightening of the monetary supply.

    https://www.reuters.com/world/us/tre...ly-2021-05-04/

    Yellen said during The Atlantic event the main goal of Biden's programs is to help reverse decades of widening economic inequality.

    Fed policy while she was governor has exacerbated economic inequality and more govt spending isn't going to change inequality while the underlying problem remains the same.

  7. #202
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    Wasn't she only stating the obvious - that interest rates will inevitably rise, sooner or later.

  8. #203
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    Quote Originally Posted by macduffy View Post
    Wasn't she only stating the obvious - that interest rates will inevitably rise, sooner or later.
    She was saying that they may need to rise a bit to stop the economy overheating as in the near future.

    Is it obvious they will rise? A 20-30 year trend down, obviously not straight down but no thought of raising rates in a significant way as the debt becomes too large to deal with an interest rate rise.

    I would have to check but I think the Japanese govt would have to use its entire budget to service debt if interest rates in Japan rose 1 or 2%.

    Obviously she spooked the markets and she isn't even in charge of interest rates.

    Powell has said he is not even thinking about thinking about raising interest rates.

  9. #204
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    Powell knows he can't raise rates.... the bubbles will pop .. he will keep kicking the can down the road talks about normalising rates at some time in the not too distant future
    People don't have ideas, ideas have people

  10. #205
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    Interesting speech by one of Adrian's offsiders

    The Future of Maori
    https://www.rbnz.govt.nz/-/media/Res...7-ee2cd5d14487
    When investors are euphoric, they are incapable of recognizing euphoria itself.

  11. #206
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    Looks like I am not the only one unsure about the outcomes of NZRB policy.

    https://www.interest.co.nz/news/1103...hat-impact-low

    Do low interest rates raise asset prices? hmm tough question to answer Adrian Morron.

    per the NZRB
    “The overall effect of monetary policy on inequality depends on the strength of each channel, which may reinforce or offset each other. Therefore, the overall effect of monetary policy easing on inequality is indeterminate."

    Well we have had 20-30 years of falling interest rates so what has happened to wealth and income inequality in NZ over this time? It would be interesting to know if it has increased, decreased or stayed the same. Even then we can't be sure if interest rates and monetary policy were the reason for any change.

    This from Berl
    "In March, the Reserve Bank dropped the Official Cash Rate (OCR) from one percent to a record low 0.25 percent. Interest rate cuts at all major lenders have followed. The intention is to maintain confidence in markets. However, this has the potential to have a long term impact on home ownership and wealth inequality."
    https://berl.co.nz/our-pro-bono/ineq...nd-new-zealand

    I am unsure if BERL is making stuff up or perhaps have some insights or common sense not available to the NZRB.
    Last edited by Aaron; 13-05-2021 at 03:13 PM.

  12. #207
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    Quote Originally Posted by Aaron View Post
    Looks like I am not the only one unsure about the outcomes of NZRB policy.

    https://www.interest.co.nz/news/1103...hat-impact-low

    Do low interest rates raise asset prices? hmm tough question to answer Adrian Morron.

    per the NZRB
    “The overall effect of monetary policy on inequality depends on the strength of each channel, which may reinforce or offset each other. Therefore, the overall effect of monetary policy easing on inequality is indeterminate."

    Well we have had 20-30 years of falling interest rates so what has happened to wealth and income inequality in NZ over this time? It would be interesting to know if it has increased, decreased or stayed the same. Even then we can't be sure if interest rates and monetary policy were the reason for any change.

    This from Berl
    "In March, the Reserve Bank dropped the Official Cash Rate (OCR) from one percent to a record low 0.25 percent. Interest rate cuts at all major lenders have followed. The intention is to maintain confidence in markets. However, this has the potential to have a long term impact on home ownership and wealth inequality."
    https://berl.co.nz/our-pro-bono/ineq...nd-new-zealand

    I am unsure if BERL is making stuff up or perhaps have some insights or common sense not available to the NZRB.
    Your last link is of most interest and should be a real eye opener on NZ's inequality.

    The problem with monetary policy is it does not discriminate. When the approach to lowering interest rates, with the intent to provide economic stability to businesses does collateral damage. That being it makes the rich get richer. Something so elementary in macroeconomics that I wonder why people never come to that conclusion.

    Anyways about rising asset inflation (particularly residential houses) in NZ. I bring back the question, 'which came 1st, the chicken or the egg?'. Central banks around the world are not at fault for this and instead, I put the blame at "investor behaviour" because they got a free ticket to borrow more cheap $ and buy more and more houses because the banks and the NZ Gov't makes it so easy. All while the reserve bank wanted to maintain liquidity for the financial markets to keep things afloat, at the same time causing more inequality (as the report cites)

    I put it all down to bad gov't policy - such one as allowing no CGT on residential investment properties - yep best game in town. Bring on the inequality band wagon with Kiwi Saver at the working class and houses for the wealthier which is a better ride. The 20% that own 70% of NZ's wealth enjoy rubbing their hands and the wealthier oligarchs love sending their children to private schools.
    Last edited by SBQ; 14-05-2021 at 08:25 AM. Reason: grammar fixes

  13. #208
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    Bank of Canada may have worked out that central bank policy is helping to create inequality.

    Stanley Druckenmiller has worked it out too and he seems pretty smart.

    https://www.zerohedge.com/markets/dr...inequality-fed

    Glaring and expanding wealth inequality is destructive to society. While there will always be inequality and successful capitalism should rightfully reward those that work hard and come up with great business concepts the artificial exponential enrichment of the few by a “government created agency” (Jay Powell) is not in the purview of the Fed’s mandate.

    Same could be said of the NZRB.

  14. #209
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    Quote Originally Posted by Aaron View Post
    Bank of Canada may have worked out that central bank policy is helping to create inequality.

    Stanley Druckenmiller has worked it out too and he seems pretty smart.

    https://www.zerohedge.com/markets/dr...inequality-fed

    Glaring and expanding wealth inequality is destructive to society. While there will always be inequality and successful capitalism should rightfully reward those that work hard and come up with great business concepts the artificial exponential enrichment of the few by a “government created agency” (Jay Powell) is not in the purview of the Fed’s mandate.

    Same could be said of the NZRB.
    Doesn't mean anything and Bank of Canada is saying "It COULD... but we will look into it". BIG difference to what we have here in NZ where it's very clear the wealthy got rich off owning multiple houses. Anotherwords, the low interest rates in Canada does not mean (to the same effect as in NZ) of the wealthy rushing out to buy more houses as i've mentioned before, the taxation and gov't policies in place already discourage the investment into buying multiple houses as a way to excess profits. The statement made by the Bank of Canada is simply a pre-warning "Inequality could be widen more in Canada due to QE". Do you understand the difference and compare it to what's happened in NZ?

  15. #210
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    An interesting alternative perspective from ARK's Cathy Wood:

    US is set up for massive deflation.

    https://nz.news.yahoo.com/arks-cathi...160519316.html

    Though she probably would say that given all her high pe funds.
    Last edited by Panda-NZ-; 24-05-2021 at 07:25 AM.

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