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Junior Member
Originally Posted by OldRider
My dad had a saying he often repeated, and I think it is relevent, "Whenever someone get something for nothing, someone
else gets nothing for something." In my opinion we have have too many that get too much for too little, right through the
economy from top to bottom.
Agreed.
One thing that is also worth mentioning is the favourability of housing as an investment. Quite clearly investment properties are not treated as investments in the same way as equities are, and the resulting speculation drives up prices.Now I must admit I don't know the full details of the possible AMI rescue, but I believe it highlights this exact point.
What is going to happen to investment properties that are insured with AMI (lets assume that AMI can't pay out in the end)? Will the government end up bailing out these property investors? My guess is that they will be greeted with a smile and a fat cheque.
This would be a travesty, and would just cement the "no losers capitalism" ideology that has run rampant in this country.
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Originally Posted by rpcas
Agreed.
One thing that is also worth mentioning is the favourability of housing as an investment. Quite clearly investment properties are not treated as investments in the same way as equities are, and the resulting speculation drives up prices.Now I must admit I don't know the full details of the possible AMI rescue, but I believe it highlights this exact point.
What is going to happen to investment properties that are insured with AMI (lets assume that AMI can't pay out in the end)? Will the government end up bailing out these property investors? My guess is that they will be greeted with a smile and a fat cheque.
This would be a travesty, and would just cement the "no losers capitalism" ideology that has run rampant in this country.
Property investors do not get any different treatment than any other investors, and never have done. There would be very few first world countries that would allow an established insurance company to fail in similar circumstances. If they did fail (and they probably won't) the big losers without govt. support would be the banks, as mortgagees - and the most undercapitalised bank in godzone is .....you guessed - Kiwibank, so the taxpayer might have to prop up the taxpayer. Heads you lose, tails, you don't win..
Last edited by fungus pudding; 18-04-2011 at 07:54 PM.
Reason: typo
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Junior Member
Originally Posted by fungus pudding
There would be very few first world countries that would allow an established insurance company to fail in similar circumstances. If they did fail (and they probably won't) the big losers without govt. support would be the banks, as mortgagees - and the most undercapitalised bank in godzone is .....you guessed - Kiwibank, so the taxpayer might have to prop up the taxpayer. Heads you lose, tails, you don't win..
Two wrongs don't make a right.
The fact that other countries bail out financial institutions is a testament to how corrupt and inequitable they are. Too big to fail? Not anymore - its now too BIGGER to fail. If you want to know why the the developed economies of the world are hurting, start by looking at the deregulation, bailouts, and the 'rigged game' that is the financial sector - AMI, SCF etc all included. Capitalism without losers is like catholicism without hell. Oh, and don't pretend it's not true - property investors are a protected breed here in New Zealand, and the special treatment they receive has far reaching consequences.
On a side note, if you want to think about the other reasons why NZ is in an economic hole (perhaps inescapable), look no further than government budget surpluses and the excessive property market. When I get time I may write a post and explain the link between these two factors, and explain how destructive they both really are.
Last edited by rpcas; 18-04-2011 at 09:05 PM.
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Originally Posted by rpcas
Two wrongs don't make a right.
The fact that other countries bail out financial institutions is a testament to how corrupt and inequitable they are. Too big to fail? Not anymore - its now too BIGGER to fail. If you want to know why the the developed economies of the world are hurting, start by looking at the deregulation, bailouts, and the 'rigged game' that is the financial sector - AMI, SCF etc all included. Capitalism without losers is like catholicism without hell. Oh, and don't pretend it's not true - property investors are a protected breed here in New Zealand, and the special treatment they receive has far reaching consequences.
What special treatment do prop. investors receive? I'm puzzled.
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Junior Member
Originally Posted by fungus pudding
What special treatment do prop. investors receive? I'm puzzled.
Think about the tax that company's and their shareholders pay, and then compare that to what property investors pay. (what they truly pay)
And there are a couple of other small things that irritate me... Terry Serepisos and David Henderson, the fact that there is no law stating 15% of more must be down to take out a mortgage (which would have prevented NZ's credit bubble), and so on.
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Originally Posted by rpcas
Think about the tax that company's and their shareholders pay, and then compare that to what property investors pay. (what they truly pay)
And there are a couple of other small things that irritate me... Terry Serepisos and David Henderson, the fact that there is no law stating 15% of more must be down to take out a mortgage (which would have prevented NZ's credit bubble), and so on.
Companies and property investors both pay tax on their profits - no difference, except that a property investor (who is not a company) pays a higher rate. Furthermore, property is unique as an assett as depreciation can no longer be claimed. There doesn't need to be a law relating to borrowing. That's up to the mortgagee, and most will insist on at least 15% deposit, unless there is clear evidence that the loan repayments can be met. Commercial property requires equity of far more than 15%. I'm still looking for the advantage.
Last edited by fungus pudding; 19-04-2011 at 09:28 AM.
Reason: typo
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A Bank ( not sure which one ) is advertising on the idiot box 5% mortgages.
Here we go again... How can a person who can only scratch up 5% deposit pay in excess of $300 a week in interest.
This is just a way of keeping house prices high.
Thus the banks will not be left with mortgagee sales lower than what is owed.
Absolute madness..
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I think you might find that the lending criteria will be a little bit tougher than last time.
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The accomadation supplement benifit plays a big part in house prices. A typical example of taxpayer transferring wealth to the Landlord.
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Originally Posted by dragonz
The accomadation supplement benifit plays a big part in house prices. A typical example of taxpayer transferring wealth to the Landlord.
More specifically to house vendors. As you point out it feeds straight into the market. Like all subsidies, it usually does more harm than good to the intended beneficiary.
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