Building Levels Slowly Improving

Well it looks like residential building activity is slowly starting to increase.

This article from the Herald has the numbers:

Building consents jump to two year high

11:50 AM Monday Apr 30, 2012
Photo / APN

Photo / APN

New Zealand residential building consents rose to their highest monthly level in two years in March amid growing demand for new housing in Auckland and Christchurch.

Building consents rose by a third to 1,394 worth $415 million in March, excluding volatile apartment figures, Statistics New Zealand said.

That’s the highest monthly number of new consents issued since March 2010. Including apartments, the number of issuance rose 43 percent to 1,559 worth $430 million, the highest total since September 2008.

So this is good for a number of reasons:

  1. It will employ more people, especially young men who are over represented in the unemployment stakes.
  2. It generates all sorts of economic activity.  Just think of all the businesses that depend on building.
  3. It will help alleviate the increases in prices and in rents we’re seeing at the moment.  Which is good for most people, but not so good if you’re an investor I guess!

 

 

How to Steal a Billion Dollars and Get Away With It

I really enjoy Matt Taibbi’s column.  I’ve linked to it before.

In this article he exasperately explains how if you’re white and rich you can basically steal people’s money and then throw your hands up in in the air and say “I don’t know where it is!” and most likely not serve any jail time.

 

Jon Corzine Is the Original George Zimmerman

POSTED: April 24, 8:37 AM ET

jon corzine
Jon Corzine is sworn in before testifying to the Senate Agriculture, Nutrition and Forestry Committee about the demise and bankruptcy of the company of MF Global.
Chip Somodevilla/Getty Images

So the Senate Banking Committee is beginning hearings today on the MF Global scandal, hearings entitled, “The Collapse of MF Global: Lessons Learned and Policy Implications.” Apparently the government has already moved to the reflective, introspective, South Park-ian, “You know, I learned something today!” stage in its examination of the scandal, despite the fact that the government’s official “response” hasn’t even started yet, i.e. authorities have yet to arrest a single person in this brazen billion-dollar theft story.

To make an obvious comparison: Much like the Trayvon Martin/George Zimmerman case, the outrage here goes beyond the fact of the horrific crime. An equally profound insult in both cases lay in the fact that that serious crime obviously had been committed, and yet authorities refused to act for months. This situation with former Goldman chief and U.S. Senator Jon Corzine and the officials of MF Global involves a less physically savage offense, but the authorities’ refusal to act is every bit as incredible.

Nobody disputes the fact that MF Global officials dipped into customer accounts and took over $1.6 billion of customer money. We not only know that company officials reached into customer accounts, we know they brazenly lied to bondholders, ratings agencies and investors about the firm’s financial condition (“MF Global’s capital and liquidity has never been stronger,” wrote the CFO of MF Global’s holding company, on the same day Moody’s downgraded it to junk status).

Financial Markets Authority Doing it’s Job

Interesting article from the NBR:

Court rejects convicted man’s bid to be financial advisor

Conor O’Brien | Wednesday April 25, 2012
FMA chief executive Sean Hughes

FMA chief executive Sean Hughes

The Wellington District Court has dismissed Sean Floyd Wood’s appeal against a Financial Markets Authority (FMA) decision declining his application for authorisation as an authorised financial adviser.

The FMA declined his application after Wood failed to disclose previous convictions under the Building Act, which led the FMA to determine “he was a not a person of good character”.

Wood’s City Link Properties had building consent to build an upstairs bedroom with an ensuite and four-car garage.

Instead five upstairs rooms and a two-car garage was built and in June 2008 Wood was fined $30,000 for unconsented building works.

It is not the first time Wood has drawn the FMA’s attention, in October last year the FMA issued a warning to potential property investors about ad’s run by his company Property Tutors.

Newspaper ads run by Property Tutors invited people with “no or minimal income” to attend seminars where they will “learn skills to obtain loans for the purpose of property investments”.

The FMA encouraged people being targeted by Property Tutors to seek legal and financial advice.

At the time FMA CEO Sean Hughes says investors needed to understand fully the costs of property ownership and debt servicing, market fluctuations, and the risk of losing assets used as security.

I find this interesting because here is a government based regulatory authority actually doing it’s job.  And holding up in the face of an appeal.  This is so rare!

Normally these guys get a slap on the wrist, which usually lasts a very short time or is greatly reduced on appeal or what have you.  In most parts of the world actually regulatory bodies are pretty loathe to actually prosecute anyone.  Take for example the SEC in the states who time and time again have made very soft decisions around banks like Goldman Sachs.  Usually they are convicted of a crime (like ripping off their own clients),pay a very small fine, don’t have to admit liability and then basically just carry on doing what they were doing.

And how many bankers in the states have gone to jail?  Anyone? Anyone?  Basically no one and yet billions has been ‘lost’ by the public.

So anyway, good on the FMA for standing it’s ground, we have to be tougher on these guys.

 

Building Products Prices

Some time ago I wrote this post about how building products are very expensive in New Zealand.

So it was interesting to see this article in the Herald this morning:

Fletcher rivals ‘attacking our market’

By Anne Gibson

5:30 AM Monday Apr 23, 2012
Fletcher Building chief executive Jonathan Ling. Photo / Richard Robinson

Fletcher Building chief executive Jonathan Ling. Photo / Richard Robinson

Fletcher Building is facing new threats from German, South African, Malaysian and other overseas businesses pouring cheaper products into here and Australia.

Fletcher, with a market capitalisation of $4.2 billion, is under attack from firms undercutting prices by up to a third and aiming at Christchurch’s post-quake rebuild.

Stephen Hudson, Macquarie Equities Research analyst, said new import-based competition had emerged in cement products, insulation, wallboard, laminates and steel categories.

Now this might be bad news for Fletchers, but it’s probably good news for just about everyone else in the country.

I worked for Golden Bay Cement years ago and every now and then they’d face competition from someone importing bagged cement.  It’d never last. The competition would always fold pretty quickly for various reasons.  Cement is very heavy so distribution is a big part of the cost of getting the product to market.

But the fact that an actual cement grinding operation has set up here is quite interesting. Grinding clinker into cement consists of taking marble sized bit of clinker (which is essentially manufactured cement in lumps) and grinding it into a fine powder with a big machine and then distributing it via trucks or bags on pallets etc.  It’s quite a big investment for an overseas player to make and probably means they’ll be here for a while.

However it is only 5% of the cement market as the article says, so won’t have a big effect on price.  Still, it’s a start.

And it’s good to see products like wallboard and insulation being imported.  We pay a premium for these sorts of products in NZ and so imports can only help with prices to the average punter.

 

Christchurch City Council Take a Back Seat

The government has done what many have predicted, they have taken over the rebuilding of Christchurch from the council.

See the Herald article on it.

Now it’s being portrayed as a partnership between the council and the government, but basically the government have taken over and the council will have to do what they are told.  They’ve shown themselves to be basically useless so far.

So this should be good.  all the things which normally hold everyone up like building consents and resource consents should be so much quicker to get.

Time to Reward Elderly?

One thing that very seldomly gets mentioned in all the discussions about the GFC and all the world’s other financial problems is this: Those with savings in the bank are getting screwed.  And many of these people are elderly.

When the GFC hit, all the reserve banks around the world (USA, Canada, Australia, UK, New Zealand and many others) all dropped their equivalent of the official cash rate (OCR) we have here in New Zealand.

And this is done to protect from a crash and stimulate growth.  It helps a lot because everyone’s mortgage payments go much lower and borrowings to start up new businesses etc. becomes a lot cheaper.

But it also means term deposit rates paid to savers go way down as well.  This leaves these savers with 2 options, 1) Just wear it and try to ride it out i.e. wait until the respective reserve bank raises rates again and term deposit rates go back up, or 2) Take your money out of the bank and put it somewhere else where you can earn a higher return – which usually means taking on more risk.

And this is something the reserve banks want also.  Instead of that money sitting around in the bank not really doing anything, they want it used more productively.  So for instance, in the sharemarket or used to start up a new business, or as funding for an existing business or anything else that produces jobs and adds to GDP growth.  So this is a second way the reserve banks are stimulating the economy.

Back in early 2008, I had a decent chunk of cash in the bank and I was getting 8.75% per annum paid monthly.  This was very sweet!  It was easily enough to live one, I didn’t have to worry about tenants in properties or any other business type hassles.  And the tax on the interest was deducted before I saw it, so I didn’t have any tax to save up for, or any GST, FBT, PAYE or provisional tax issues to worry about.  Life was good.

But then our reserve bank, in it’s infinite wisdom decided to reduce the OCR from 8.5% to 2.5% which mean term deposit rates fell to around 3%.  So my income had been more than halved overnight in a totally unprecedented move by the reserve bank.  Thanks guys.

Never before have the rates been reduced so much.  And it was done very quickly too.  And this happened around the world.

Everyone with a loan cheered and everyone with savings in the bank looked like they had been whacked in the face with a wet fish.  Essentially what happened was that those who were profligate, spent all their money on consumerist crap and added it to the mortgage, were rescued by the reserve banks and those who were sensible and saved money away for a rainy day –  or even more sensible, had a little nest egg they were living off in their retirement after decades of work and saving, were basically shafted.

Now what sort of message does this send?  That’s a rhetorical question but whilst answering that, consider the messages coming out of various government departments around the world.  Which were along the lines of “People need to spend less and save more.” and “We all need to learn to live within our means.” and so on.

So hang on, we’re supposed to save more, but if we do, all we’re being treated like fools because we can’t earn anything much at all on that money – because the reserve banks around the world have basically said to them “Oops, sorry, you’re term deposit rate will go to near zero but we have to do this.”

And as I said earlier many of those savers are elderly people who have worked their whole lives to build up a little nest egg which they can live out their days on.  Well in Britain, 4 years after this was done, they are starting to talk about this.  This article in the Telegraph is quite interesting.  They are discussing the elephant in the room.

 

Time to reward elderly, say MPs

Pensioners and savers who have been ‘penalised’ by the Bank of England’s money-printing operation should be compensated by the Government, MPs to announce.

Pensioners count the money in their pocket for a general picture to illustrate the pensions crisis.

Saga, a campaign group for the over-50s, estimates that more than a million pensioners have retired with permanently lower incomes because of the impact of the Bank’s emergency policies Photo: Ian Jones

By James Kirkup and Christopher Hope

10:00PM BST 17 Apr 2012

The Treasury select committee warns that “quantitative easing” (QE), a policy that has led to the creation of £325 billion of new money, is “redistributing” money from savers to borrowers.

Bank Rate has also been at a record low of 0.5 per cent since March 2009, with interest payments to savers reduced by more than £470 billion as a result.

Saga, a campaign group for the over-50s, estimates that more than a million pensioners have retired with permanently lower incomes because of the impact of the Bank’s emergency policies.

The Bank insists that its measures are necessary to prevent Britain slipping back into recession, and claims that pensioners have benefited from the wider effects of the policy.

 

Now if what I’ve said above isn’t bad enough for the poor retired folk, the money printing that goes on in countries like the UK, USA, Japan etc. is even more detrimental to these savers.

Because what happens is that the value of the currencies in these countries is being reduced as well.  More money added to the system makes each dollar, pound etc. worth a little bit less. So your nest egg is actually devaluing at the same time the return from your nest egg has been slashed.

So basically savers are being absolutely screwed! What a stupid, untenable situation.

 

 

Some time ago I wrote this post about how we are setting up free trade agreements  Russian and China, both corrupt totalitarian regimes who are supporting Syria and massacring their own people.

Well now we’re trying to buddy up with Indonesia as well, see this article from Stuff.

The Indonesians are also a corrupt totalitarian regime.  They have a very bad track record on human rights, animal welfare and environmental issues.

There have been shocking stories recently about the live cattle exports from Australia to Indonesia. If you saw how they treated their animals, you’d be sick.  And of course they invaded Timor.  Environmental degradation stories abound.

Basically it’s a country where you do anything you can to make money for yourself and your crony mates, too bad about anything else.

And so of course we want to do business with them!  I dunno, I despair ab0ut this.

Edit: And this is the sort of crap that goes on there: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10799405

Man, This is Getting Silly

Just read this story from the Herald:

Four-month battle to find a home

By Michael Dickison

5:30 AM Tuesday Apr 17, 2012
Gareth Berry finally has his weekends back after nearly 'losing it' looking for a house. Photo / Steven McNicholl

Gareth Berry finally has his weekends back after nearly ‘losing it’ looking for a house. Photo / Steven McNicholl

A four-month battle through Auckland’s real estate auction rooms stretched Gareth Berry’s budget from $400,000 to $880,000 before he finally landed his first family home.

Mr Berry, a 35-year-old technology entrepreneur, was spurred by the birth of his second child to visit more than 200 open homes and bid on dozens of houses, wading through a crazy housing market that has surged to record highs.

Well this sounds very much like a property bubble doesn’t it?  Especially bits like this:

Armed with that cash he had a new top limit of $900,000 – but the search did not get any easier.

And

He lost, but an agent saw him at the auction and learned his budget. The agent later contacted him about a Mt Albert house about to come on to the market with a valuation of $630,000.

Mr Berry put in a conditional offer before the first open home. After a builder’s report, he put in an unconditional offer, one of five offers on the first day of open homes. “They came back to me and said, if you can pay this much, you can have it.”

And finally after paying $880,000 he had his weekends back.

He pays $250,000 more than the valuation???  And he needs close to $900k to find a decent house in the central Auckland suburbs? Wow.

Housing Shortage in Perth Too

There’s been a lot in the newspapers recently about how we have housing shortages in Auckland and Christchurch.

Well in Perth, it’s a similar thing.  Driven by the mining boom I guess.

Just check out this line for a place for rent:

Renters offering significantly more to secure a home

Courtney Trenwith

April 13, 2012

The most desperate renters were even offering $20-30 above the asking price to secure a property.Perth renters are on average paying $50 per week more than the asking price for a unit or townhouse and $25 per week more for a house.

Official data has shown for the first time the extent to which Perth renters are having to dig into their pockets to bribe landlords and secure a home well above the asking price.

When and How will America Leave Afghanistan?

And what will they leave behind?

Well according to this story, it’s basically inevitable that the Americans will just have to leave at some point and then Afghan society will break down completely and various civil wars will rage until one of the factions (probably the Taleban) take control.  Again.

What a total waste of time.

And this report is from a patriotic career minded American soldier.  He’s just had enough of the lies.