Rodney Nails it Again

I like a lot of what Rodney Hide says.  He calls it as it is most of the time I reckon:

Mainzeal and the mad men who drive the economy

Rodney Hide | WEEKEND REVIEW |

HIDESIGHT

Mainzeal Property & Construction’s collapse generated the usual and expected kneejerk bewailing and bemoaning.  

It’s as if it should never have happened. We had this big company yesterday. We should still have it today. It should go on forever.

And because it should never have happened, something must have gone wrong. And so someone is to blame.  

The fault is invariably greed or business ignorance or both. The fingers predictably point to directors and the company’s owners. And to the government.

The business failure is reported as an economic calamity. And a sign that all is not well within the wider New Zealand economy.

Rest of Article

 

It’s a pity he can’t say this sort of stuff when in parliament. The media won’t report it.  It’s all the latest scandal stuff that’s all.

Housing Price Rise Causes

Everyone has their own take on why we have really really dear houses in NZ.  This guy thinks it’s because of low interest rates:

Interest rates blamed for fuelling house price rises

CATHERINE HARRIS

House prices might be rising, but the reason is not a shortage of supply, an economist says.

Westpac economist Dominick Stephens says the growing gulf between house prices and rents shows financial factors, not housing supply, are driving prices.

According to the “house price-to-rent ratio”, it takes about 30 years of rent to buy a median house, and that figure is rising.

Stephens says that where there are clear housing shortages, both rents and prices should shoot skywards. This is happening in Christchurch and Auckland, but elsewhere, rents are falling far behind, indicating that speculation or other factors are at play.

“Our finger is pointed firmly at low interest rates.”

In 2002, just before the housing boom, houses were selling for the equivalent of 18 years of rent, but by the middle of 2007, that ratio had blown out to 33 years.

Most analysts expect house prices to rise around 7 per cent this year. The volume of house sales has also turned around. Sales last month were up at least 10 per cent in all regions except Taranaki.

“The implication of all this is that house prices will keep rising so long as interest rates remain low – but they could fall again when interest rates rise,” Stephens says.

Even if house values are rising, it will take time for that to filter down to rents, adds Massey University property expert Bob Hargreaves.

He says rents are generally constrained by wage growth.

Landlords are often dealing with people with accommodation supplements or low incomes and they are “very conscious that if they charge too much they get people moving out”.

Westpac data shows rental yields halved between 2003 and 2007, but investors shrugged these off because of strong capital gains and tax advantages.

– © Fairfax NZ News

And to be fair, I’m sure it’s one of the causes.  But what caught my eye was the last 2 paragraphs.  Where the economist says yields halved between 2003 and 2007 but investors kept buying… wow.

A Sad Statistic

Sad to read this this morning:

US military struggling to stop suicide epidemic among war veterans

Last year, more active-duty soldiers killed themselves than died in combat. And after a decade of deployments to war zones, the Pentagon is bracing for things to get much worse

Source

And in the comments section, some people daring to say out loud why these young men have died:

“What is sickening is the money Dick Cheney and Donald Rumsfeld made on the backs of these young American, not to mention the horrendous costs to the people of Iraq. Now we have to endure Cheney testifying against gun control in America. Rummy & Cheney will presumably die in bed, rich men with nothing on their conscience. You couldn’t make this stuff up….”

They gave (and are still giving) their lives so some old white rich men could get richer.

Interest.co.nz Really Getting into Auckland Council

Wow, David Chaston at interest.co.nz really calls out the council in this article.

A couple of quotes from his article:

“The Mayor’s reassuring rant is political hot air. Almost all Council positions are undermined by Labour/Greens policy who would need to ride roughshod over Auckland Council to get what they are promising. They also undermine what the National government is trying to achieve.”

“Intensification will happen, but it won’t be part of the solution. A quick look at Sydney will show you why – more housing, [much] higher cost. Intensification is a solution for the rail buffs so they can justify spending billions on the inner city rail. It won’t materially add to supply fast enough to rebalance the excessive demand pressure existing now. New fringe housing can.”

Hmmm, I agree totally.