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Keep Calm and Carry On

Written By: - Date published: 9:13 am, January 25th, 2016 - 135 comments
Categories: capitalism, debt / deficit, Economy, economy, Financial markets, Globalisation, International, Media - Tags: , ,

Crashing stock markets!
Record low oil prices!
The collapse of the Baltic Dry shipping index!
Death by deflation!

Not heard of all of this?

Well, if you are a resident of Aotearoa, you could be excused for not knowing the full story behind the crashing stock markets round the world and the start of the second 21st century Global Financial Crisis.

With the New Zealand mainstream media now firmly under corporate control, either directly or indirectly, its owners and managers are able to ensure the New Zealand people don’t get too much news about the economic tsunami that is starting to impact on the world. Instead, we continue to be swamped by news about Lorde, Max Key, emotional wedding hakas and whatever else the Stuff and the Herald’s jonolists can source from their Facebook, Instagram and Twitter feeds. Bingo, indeed!

When the news media’s owners do actually decide they have to make some comment on the ongoing collapse of oil prices and the world’s stock markets, ironically, it is often simply to put a positive spin on the whole story. Don’t worry New Zealand, keep calm, its good news, there’ll be cheaper petrol tomorrow!

I’d expect such dross from the corporate media, but what is depressing to witness is how our only state radio broadcaster, Radio New Zealand, has swiftly followed the party line. The National Party have swamped the RNZ board with on message toadies and it shows. The business section of Morning Report is now an embarrassment, where spokespeople from banks are treated as oracles of all wisdom that cannot be rigorously questioned. For example, on Thursday, as a sop to the news, Lynn Freeman wheeled out Brian Gaynor from Milford Assets to discuss the world’s economy.

In response to questions from Freeman about oil and stock markets, Gaynor’s disingenuous analysis could be summarised as ‘Keep Calm and Carry On’, which is in complete contradiction to the facts coming out of China, the Middle East, Europe and the U.S.A. The reality is the world is again on the brink of a financial meltdown and this time it can’t be blamed on dodgy real estate deals. Certainly, NZ will not be able to afford to paper over the economic cracks by massive borrowing. Not this time.

The fact is that New Zealand is highly vulnerable to any world economic slowdown. Our government debt has skyrocketed since Key and his crew have taken over. It’s over $120 billion. You can watch it grow here. In addition our private debt has soared. We Kiwis are slaves to mortgages, rent and credit cards.

One bright light in the gloom that is NZ’s media is Rod Oram, who provides more realistic and independent analysis and has talked more about his negative outlook in an interview on Stuff. In addition, if you want a really great summary of what’s actually going on, read Raúl Ilargi Meijer’s Why This Slump Has Legs.

Why isn’t big media informing us about what’s going on with the world’s economy? Are the owners and drivers of our media that shallow, that bound to their class interests, that they can’t bear to tell the truth?

Have we learnt nothing from 2007/8? Don’t trust big media to educate you. Do it yourself, check out some of the links in this post and learn about what’s about what’s going to happen.

Then buckle up, people, it’s going to be a rough landing.

 

Paul

135 comments on “Keep Calm and Carry On ”

  1. pete 1

    I always like to come on this site for a good laugh. Its like talking to evangelical Christians, endlessly searching for any blip and then interpreting it as a sign of the End Times.

    Crashing oil prices bad? Yeah, for some multi nationals for sure. But for the last 20 years we have had those other fundamentalists, the Greens, telling us the End Times were near due to Peak Oil and oil prices going through the roof. That we were destroying the earth by searching for more and more oil. Well with crashing oil prices that is not likely to happen for a while again. Good grief, crashing oil prices is great for the worlds economy.

    Every crisis has winners and losers, and markets rise and fall. This is no different. We will survive, and, like Evangelical Christianity, the followers will still be waiting for the End Times even as they lie on their death beds. Still interpreting everything as The Sign.

    Keep it up guys. It is always good to have a laugh, and this is cheaper than Private Eye magazine!

    • Lanthanide 1.1

      “Good grief, crashing oil prices is great for the worlds economy.”

      Oil prices are crashing due to a lack of affordable oil.

      Most producers can’t make a profit at less than $100/barrel. Most consumers can’t afford to buy at more than $100/barrel.

      The reasons for the oil price crashing seems to be enormously complex, but the consequences aren’t: oil projects are being delayed, frozen or cancelled, and oil companies are about to start defaulting on their debts (in fact Schlumberger has laid off 30,000 employees…). This in turn will make it difficult for banks to lend any more money to the industry.

      Once the supply side falters further, if demand keeps up, prices will spike back up.

      • pete 1.1.1

        Ok, so $100 is the magic number. Not $90 or $110. Yeah right, the world will grind to a halt should oil become more than $100.

        Of course some sectors will suffer enormously, but the worlds largest economies and the rapidly rising economies of China, India and Brazil will now surge ahead, as these economies are all manufacturing based, and oil forms a huge part of their costs.

        And lets remember, these three economies comprise the bulk of the worlds population.

        And NZ? We are one of the remotest countries in the world, dependent on international trade for our economic survival. We, more than anyone, will benefit from an oil crash, as now the world has just become a whole lot smaller, as transport costs will shrink enormously.

        • BM 1.1.1.1

          When I took peak oil seriously(been a while), the magic number was $45 per barrel, that was supposed to signal the start of the end times.

          • Colonial Viper 1.1.1.1.1

            Uh the “end times” started with peak conventional oil production in 2005/2006, and will play out between now and the 2040s/2050s when oil availability becomes highly restricted.

        • Lanthanide 1.1.1.2

          No, $100 isn’t the “magic number”, it’s what is actually required for oil producers to be profitable:

          https://gailtheactuary.files.wordpress.com/2016/01/global-breakeven-prices-vs-daily-global-production.png

          You can see from that chart that US Conventional is around $95, it’s only the Canadian tar sands that are well up over $100/barrel to produce. But if you take the Canadian supply out, then production from everyone else combines to 82.5 million barrels per day. The IEA says the world is currently consuming 96 million barrels today.

          Note that the shortfall is made up by alternative liquid fuels and refinery gain, while that graph is just showing crude oil production (which is already failing to keep up with global demand).

          “We, more than anyone, will benefit from an oil crash, as now the world has just become a whole lot smaller, as transport costs will shrink enormously.”

          Not really, because fuel is actually a very small component in most forms of transportation. It’s probably most applicable in airfares. But global shipping is *incredibly* fuel efficient, which is why the “fuel miles” and “buy local” debate is wrong-footed. By far the most fuel miles for any grocery product is the final trip from the supermarket to the customer’s house, not all of the transportation that got it from the farm to the supermarket in the first place.

          • weka 1.1.1.2.1

            Really appreciating your explanations here Lanth. Nice and clear.

          • Draco T Bastard 1.1.1.2.2

            By far the most fuel miles for any grocery product is the final trip from the supermarket to the customer’s house

            And that could be seriously cut down if supermarkets did free-delivery. Which is just another example of how the drive for profit makes our society uneconomical.

        • Draco T Bastard 1.1.1.3

          We are one of the remotest countries in the world, dependent on international trade for our economic survival.
          Only because the idiots in both National and Labour have made us that way. If we’d actually developed our economy rather than trying to be an ever bigger farm trade would be a ‘nice to have’ rather than a necessity. Still, it’s still not a necessity – we’d actually become more economical if we didn’t trade.

          We, more than anyone, will benefit from an oil crash, as now the world has just become a whole lot smaller, as transport costs will shrink enormously.

          More delusion. The world really hasn’t gotten any smaller and it still costs the same amount to ship across the world which means, in real terms, that it will still be cheaper for other countries to produce for themselves what we sell. And there’s nothing stopping them from doing so.

          In real terms, trade is uneconomic.

          • Once was Tim 1.1.1.3.1

            “Only because the idiots in both National and Labour have made us that way.”
            That’s very true @ Draco.
            If NZ looked into things a bit more deeply, we’re actually be self-sustainable (in terms of food, shelter, education, health) – firstly by ustilising the resources we have locally, then regionally (by which I mean our Pacific Island neighbours).
            As a region, we could be self-sustainable BUT for oil. But as for oil – we’re looking in all the wrong places – we look for that commodity based on what the American Empire dictates.

            It’ll be a bit of a bugger (at least for the status quacks) when the collective mind wakes up and realises the oil problem could also be solved.

            I often wonder whether the best option might not just be to prey for a gigantic crash – except that ‘once was’ a #8 wire solution and Kiwi ingenuity has now almost been lost.
            I certainly don’t worry about a second GFC – I almost HOPE for it.
            Just like the Ummerikuns – we’re ekshully now about as ‘EXEPTIONAL’ as the poverty stricken Indian in a place such as Bhopal. That place, or slightly further north is where I’d be headed when the shit hits the fan – but then I’m lucky in that I have that option.

            (we might have to tolerate the Okkers for a while, however)

      • nadis 1.1.2

        “Most producers can’t make a profit at less than $100/barrel. Most consumers can’t afford to buy at more than $100/barrel.”

        You may be confusing the budgetary breakevens in oil producing countries with marginal costs of productions. Two very different things.

        i agree with you that there will be a supply response but given the structure of the oil industry this won’t get us back to $100 oil anytime soon. And in the US for instance, the oil industry only makes up around 5% of the stockmarket and oil industry capex around 0.5% of GDP – so in reative terms its not a big impact on the USn economy – low energy prices hav a much greater impact than the negative impact from stress in the oil industry.

        There are very few sources of oil that cost more that $100 per barrel to bring to market. The chart on this page (about halfway down titled:

        “Figure 3.3 – Oil cost curve including technological progress: availability of oil resources as a function of economic price”

        explains the problem. There is no peak oil. If you look at this chart, and still believe in peak oil in our lifetime, then you are refusing to acknowledge facts that you don’t fit your world view. And bear in mind, this analysis is years old (2006) and breakevens for technical oil have dropped significantly – much of north american shale oil now has a breakeven cost of production below $40 per bbl. The graph shows extractable reserves of 4.5 TRILLION barrels of oil at a price of less than $70 per barrel, 2 trillion barrels at less than $30 per barrel. So do the math: Lets say oil demand is 120 million bbl per day (its currently about 94 million), then at $70 per barrel the world has enough oil for 102 years. This analysis by the IEA was done in 2004 – in the years since you can assume reserves have increased by somewhere between 255 and 100%, and the cost of technical oil has dropped by between 25 and 50%. And bear in mind oil demand growth is low due to a combination of both slow growth and efficiency improvements.

        Explain to us again where your lack of affordable oil is please?

        Just because the concept of peak oil fits nicely with a personal belief system does not make it true, no matter how hard you wish.

        What may be confusing you is the fiscal breakeven in oil producing countries, for instance:

        http://finance.yahoo.com/news/fiscal-break-even-cost-top-060417282.html

        but this quite literally has nothing to do with the oil price. It is more accurately described as a measure of how inefficient and corrupt most oil producing economies are.

        And the baltic dry index has for many years been a really poor indicator of global trade. Again, those commentators who follow these things closely would describe it more accurately as an indicator of greek shipping tycoon ship construction, purchase or sale intentions. There is a good laymans description of the index here:

        http://www.economist.com/blogs/economist-explains/2015/03/economist-explains-7

        Its a very narrow index looking at a very small subset of freight (iron ore, grain and coal) – we all know what is happening to iron ore and coal.

        • Lanthanide 1.1.2.1

          There are very few sources of oil that cost more that $100 per barrel to bring to market. The chart on this page (about halfway down titled:

          Unfortunately you failed to link to the page, so I can’t see what you’re talking about.

          Explain to us again where your lack of affordable oil is please?

          Firstly, whatever you’re talking about seems to be total extractable Resources. That’s not nearly the same thing as Oil Reserves.

          Peak oil is about the rate of extraction, not the total resources. After all, there are plenty of hydrocarbons located on the moons of Saturn and Jupiter. If we were merely looking at total resources, surely we’d include those in our figures.

          But we’re not interested in Resources, we’re interested in Reserves. It takes a lot of infrastructure to produce oil, and that infrastructure often has lead times on the order of 5-10 years, and requires technical know-how and funding, as well as a fairly stable geopolitical environment to be implemented.

          What may be confusing you is the fiscal breakeven in oil producing countries, for instance:

          http://finance.yahoo.com/news/fiscal-break-even-cost-top-060417282.html

          but this quite literally has nothing to do with the oil price. It is more accurately described as a measure of how inefficient and corrupt most oil producing economies are.

          Peak oil is about the rate of production. If the rate of production in Saudia Arabia drops to 0 because of a revolution (because they weren’t able to continue their expensive domestic policies to keep the local population happy), then the oil price will go up.

          • Thom Pietersen 1.1.2.1.1

            Saudi Arabia has opened the taps mainly because of security issues and their deal going back to Nixon to replace the gold standard with the petrodollar in return for security and are running in deficit now. Peak oil was always about affordable oil in the current market – unfortunately for the planet there is a shit load more oil lying out there (like submerged zealandia reserves) so this will play out for a long time.

            Deflation will carry on with the transfer of wealth to the 1% – note we are not seeing an equivalent return at the pump, this transfer of wealth is being moving to the asset markets which governments like ours are encouraging as a way to inflate GDP reporting, and placate debt responsibilities.

            What we are in the middle of at the moment, is a global struggle over banking control (oil is now the underwriter – rather than gold), this is why the major banking economies like the US and UK (which pulls in a lot of the rest of the closely related english speaking nations).

            Ask yourself why NASA finds it easier to gain funding for asteroid exploration – there is a deluded belief in economic circles that this future mineral resource will continue growth once we have used up everything on planet earth – basic supply and demand.

            Ego we need billionaires to finance the dream in other words.

            So shut up in your little middle class struggle of diminishing salaries, and for the poor? Well there are just plain lazy, right?

    • Once was Tim 1.2

      Ekshully @ pete, I think the evangelism might reside with you.

      • pete 1.2.1

        That’s your opinion but seriously, just browse back at random sample of Greens dogma over last 10 years. It truly is like born again Christianity. Well meaning but based on faith and insularity

        • Once was Tim 1.2.1.1

          You’re too gorgeous for me @ pete. I can’t cope. I defer to your exceptional powers of analysis and your opinion – you win – I’ll be your bitch even
          Btw – you’re not too hairy are you? Just I need to stock up on a few pills if you are

        • Once was TiM 1.2.1.2

          BTW (that’s by t h e w ay) – I don’t expect a reply – but you should consider your opening line that indicates your PREdisposition:
          “I always like to come on this site for a good laugh.”
          Seriously though …. you’re not too hairy are you? – or fat? – I just need to know. I need to know how numb I should be in order to service your ego.
          But @ pete – you really are gorjiss

        • vto 1.2.1.3

          pete “but seriously, just browse back at random sample of Greens dogma over last 10 years. It truly is like born again Christianity. Well meaning but based on faith and insularity”

          Always follow the hippies pete, always follow the hippies.

          solar power
          organics
          living on waiheke
          living anywhere good and not bad
          climate change
          the list is long…

          the greens always lead pete, always. It is just that conservatives are so slow – typically by a generation or two. Conservatives are too wed to faith and ideology. It is conservatives who don’t think fully about things.

          always follow the hippies

  2. I’d be interested to know how you think our current government will handle the coming crunch, Paul and what the opposition parties should be doing. Any thoughts?

    • pete 2.1

      By exploiting the opportunity presented to us by lowered transport costs. Ie, increase our international trade. But wait, they are. Its called TPPA

      • Macro 2.1.1

        🙄
        You are aware that the projected increase in GDP for NZ as a result of the TPPA (calculated by the World Bank no less) is a whopping 0.2% increase per annum?

        • Stuart Munro 2.1.1.1

          From the same guys who calculated a surplus in 2011 and every year since, always two years ahead, like the donkey’s carrot on a stick.

      • Lanthanide 2.1.2

        Yeah, it’s those high fuel costs that have been hamstringing our international trade all this time.

        Oh wait, no, it’s all the political reasons that prevent us doing trade.

      • Colonial Viper 2.1.3

        By exploiting the opportunity presented to us by lowered transport costs. Ie, increase our international trade. But wait, they are. Its called TPPA

        LOL man you are really reaching (and failing)

    • Paul 2.2

      Key himself will know from his own Merrill Lynch days that the stock market can implode.
      On the whole, I think our government will do nothing before it happens. That includes telling the public the truth. Once the crunch occurs, expect the government to back the big players before it supports ‘mum and dad investors.’ The recent signing of the TPP shows where the government’s money is. If it gets really messy, there won’t be much of a public appetite for another bank bail out in the US and the UK, so expect some banks to go down. I think Key would try to bail out the Aussie banks. The people with savings in this country are his supporters.
      I don’t think this government handled the Christchurch crisis well, so I expect to see the same level of incompetence if the economy goes belly up.

      The opposition parties, as they have no power, can do little to avert the crisis. However, they could be honest with the New Zealand people and inform of the risks we face.

      • Ch-ch Chiquita 2.2.1

        “The opposition parties, as they have no power, can do little to avert the crisis. However, they could be honest with the New Zealand people and inform of the risks we face.”
        But when doing so they are accused of being doom-and-gloom. I’m sad to think people will only understand the road to distraction after it occurs.

        • dave 2.2.1.1

          there is nothing anyone can do the debt wave has already engulfed NZ its there in house holds consumers ,companies ,government and housing its ticking
          all needs is the trigger and that trigger started with the dairy collapse

  3. northshoredoc 3

    What next ?

    Opinion pieces from Eve on 9/11 and the illuminati perhaps ?

    • Colonial Viper 3.1

      You’re welcome to move your investment portfolio heavily into equities and commodities, if you’re that confident.

      But you’re not actually, are you.

      • BM 3.1.1

        You must be short everything (hopefully not oil).

        • Colonial Viper 3.1.1.1

          In this environment I believe one of the best investments is in yourself and your family. Staying fit and healthy, learn new practical skills, reconnect with friends and family, meet your neighbours and get involved in your local community.

          This central banking game of debt based interest rate manipulation extend and pretend is finally at the red line (although the final engine blow up may still be some ways down the track).

          • pete 3.1.1.1.1

            That’s the best investment at ANY time! But of course, we can do more than one thing at a time. That’s why we are top of food chain

            • dv 3.1.1.1.1.1

              “That’s why we are top of food chain

              Met a hungry lion lately pete?

            • Colonial Viper 3.1.1.1.1.2

              You’re a fool, pete. The banksters and the oligarchy are the top of the food chain; you’re just a serf.

          • vto 3.1.1.1.2

            Agree completely CV. Dump the debt and the ‘system’ and then localise/personalise investment (financial, personal, home, business, social). Rely only on yourself and those close. Do not trust establishment. Not one bit.

            • pete 3.1.1.1.2.1

              And you have done this? If not, why not? Nothing to stop anyone opting out.

              That’s why I always greatly respected Rod Donald, Greens. He did not just talk about change, he practised it. Biking everywhere possible.

              • vto

                To the limits of ability and circumstance yes.

                You? What are you doing?

                • Colonial Viper

                  forget about pete. He is trying to make this a competition when the new paradigm must be local co-operation.

                • Grim

                  Quit my job, selling my house, buying a little farm.

                  Can I totally insulate myself from the system?

                  I still need to have at least $100K in the system or generate roughly 100hrs of wages to cover rates, regardless of whether anything crosses into my bubble.

                  I would gladly give-up any perceived advantage citizenship affords me, but alas even buying a big boat and living in international waters is becoming tricky with recent proposals to change maritime laws and pirates, don’t forget the pirates, taxman of the sea they call them.

                • pete

                  Working as a Chartered Accountant. But never again in public practice. That’s a life worse than hell I think

              • Colonial Viper

                And you have done this? If not, why not? Nothing to stop anyone opting out.

                I say again, you are a fool. There are entire systems in place to stop individuals from “opting out.”

                The Empire is even willing to destabilise and destroy entire nations in order to stop them from “opting out.”

                What an idiot.

  4. Justme 4

    The worst thing people can do is to stop spending. But the best thing people can do is to stop spending.

    That is the paradox of the whole situation.

    • Colonial Viper 4.1

      That paradox comes from a world that is forced to run on a debt created money supply.

  5. Stuart Munro 5

    Buy a sack of rice. Good thing to have in the cupboard if everything goes pear shaped.

  6. weka 6

    Have we learnt nothing from 2007/8? Don’t trust big media to educate you. Do it yourself, check out some of the links in this post and learn about what’s about what’s going to happen.

    Then buckle up, people, it’s going to be a rough landing.

    I will follow some of the links, but to be honest most of what is going to be said is too dense and onerous for most people, myself included, to get through or understand.
    Interestingly I just watched The Big Short and that’s the first time I really understood what happened in 2008. But it was about the US, not NZ. It’d be great to see some lay person level detail of what’s going to happen in NZ. And by that I mean things like are we going to have a spike in unemployment? People not paying mortgages? etc. Then, what we can do. The ‘what should Labour do’ conversation is interesting, but I’d also like to talk about what the rest of us should do too.

    btw, when I was watching The Big Short the thing I thought about NZ was how sheltered we were from all that. I know that some people lost jobs and the flow on effects from that, but for the most part the sight of large numbers of people in the US losing their jobs or living in tents seemed to not really mean much here. So I don’t think we did learn much from 2007/2008.

    • alwyn 6.1

      “when I was watching The Big Short the thing I thought about NZ was how sheltered we were from all that”
      Well, Weka seems to have developed an appreciation for our current Government.
      Aren’t you grateful that we changed the Government at the 2008 election?
      We got rid of an incompetent bunch of idiots, who had managed to put us into recession a year ahead of the rest of the world, and replaced them with a competent team who have managed to keep us clear of the worst of the GFC.
      Are you going to think about that fact or do you prefer to keep your blinkers on?

      • dv 6.1.1

        Noticed debt is now 120 billion alwyn.

      • One Anonymous Bloke 6.1.2

        This sick parrot bullshit again?

        “This is the rainy day the government has been saving up for.”

        Bill English.

        Successive governments have done a good job of getting the New Zealand economy in a position where it can respond well to economic shocks. Low levels of public debt allow freedom to look through short-term cyclical fluctuations and there is room to adjust monetary policy to support demand.

        Treasury.

        Why does Alwyn tell so many lies? Fuck all personal responsibility on display from that quarter.

        • weka 6.1.2.1

          tells so many lies and is a nasty little creep to boot.

          Alwyn, I can’t stop you taking my comments out of context again or distorting them for your own fucked in the head agenda, but I can name it for what it is. I don’t have a problem with people disagreeing with me or having vastly different politics that I can debate, but there really is something quite wrong with you on an entirely other level.

          • alwyn 6.1.2.1.1

            There, there diddums.
            Have a nice cup of tea and a lie down.
            I suggest you offer one to OAB while you are at it.

            • Colonial Viper 6.1.2.1.1.1

              What do you care? You seem to believe that the oligarchy is going to look after you and your family. (LOL)

              • alwyn

                I plan to look after myself and my family.
                Wherever did you get the idea that I think anyone else is going to care?

            • One Anonymous Bloke 6.1.2.1.1.2

              @Weka, would you like a cuppa? I’ll put the kettle on eh. Then maybe we can make up some jokes about Alwyn’s involuntary exhibitionism.

      • lprent 6.1.3

        Well, Weka seems to have developed an appreciation for our current Government.

        I doubt it. And you’re a fool if you think that National had anything to do with it.

        That is because the ability to ride out the GFC in NZ was completely established by Labour.

        Virtually no government debt at the start of 2008. Now it is 120 billion under this wastrel National government who have barely managed to get a balanced budget after 7 years – and only then by cooking the books.

        Labour also managed to establish the Chinese FTA which helped us immensely in the balance of payments side. As our traditional export markets fell away under the GFC, the Chinese market took up the slack. That was a useful free trade agreement – unlike the restraint of trade TPPA.

        Basically National have spent that last 7 years doing bugger all. They haven’t even managed to drop the government spending.

        Aren’t you grateful that we changed the Government at the 2008 election?

        Nope. Just think how much better off we would be if we’d had an intelligent government over the last 7 years. Mostly National have simply put in short-sighted and stupid measures that constrain future development. Look at their housing and education policies for instance.

        National are DUMB… Mind you it appears that you are as well. Good fit.

        • greywarshark 6.1.3.1

          I’m glad you emphasised the advantages of opening our minds to Chinese trade LPrent. We need to remember the upside, and at the same time try to manage the downside.

          Also we need to remember that dairy prices have been high for many years. How come the country is still in the borrow and spend on high salaries mentality now, when those years should have led to a well functioning society, which would not have enabled executive-preening and selling state assets to private equity individuals? In fact the economy has been mismanaged with too much splurging by the shysters in the good years, and now unwillingness to accept difficult times.

          So obviously there needs to be cutting back on the low income people who have been locked out of worthwhile manufacturing jobs because of no tariff protection from low priced goods from low income nations. Though at the same time executive salaries must remain high to match overseas levels!

          Those on the wealth path hold hands around the world and create a watertight barrier to stop the money seeping through to the mass of the people. And now they threaten us with new shiny toys for themselves, robotisation.

      • greywarshark 6.1.4

        The disgrace that you are Alwyn is that you write here with a tone of superiority and don’t read all, or understand the meaning of, the comments so carefully written.
        I don’t know where you are appreciated, but you should spend more time there because you don’t add to the discourse even as an example of what the concrete mindset is of your cohort.

        • alwyn 6.1.4.1

          I was not aware that there was some sort of rule that required anyone to read anything at all that I might comment on here.
          I suppose you might have to but if so I would suggest that you should get another job.
          Make things easier for yourself. Don’t read, or comment on, anything I might say. You will be so much calmer and less stressed I’m sure. You don’t really seem capable of reading anything that differs in any way from your cast iron beliefs without it causing a rush of blood to the head.

    • vto 6.2

      “when I was watching The Big Short the thing I thought about NZ was how sheltered we were from all that”

      Way off there me old amigo – did you not notice the huge numbers of people that lost money in finance company collapses? South Canterbury Finance and the $1,700,000,000 Bill English fraudulently gave to his supporters who foolishly invested in that outfit? There was carnage weka, carnage.

      This time is looking way worse. Debt is higher.

      • Draco T Bastard 6.2.1

        South Canterbury Finance and the $1,700,000,000 Bill English fraudulently gave to his supporters who foolishly invested in that outfit?

        They didn’t foolishly invest in that outfit as they knew damn well that the government was going to pay out all the projected profits as well as the capital that they’d ‘invested’.

        • greywarshark 6.2.1.1

          I wondered if indeed much of the money for the southern irrigation schemes was coming through SCF. That would have been a massive reason for the gummint to prop us the finance house.

          The southern councils had signed an agreement to co-operate in a carefully worded way, everything was falling into place to make this long standing ambition a reality. The wealthy southern farmers’ whole scheme of water grabbing while it was available, which they probably learned from the USA, which has dried up and reallocated natural water flows to benefit the powerful, would have been at risk.

          The power base of Gnats would have been gnashing their teeth and with lots of late night meetings and phone calls. Environment Canterbury had to go under urgency and democracy be bypassed and on it went.

      • weka 6.2.2

        I don’t mean to minimise what happened to people here vto (my parents lost money in one of the other finance company collapses), but my point was that we didn’t notice it hugely here. It’s one thing for people to lose their retirement savings, it’s another to have people ending up living in tent cities. I’m not talking about the relative amount of pain and suffering so much as NZ didn’t appear to take on board what had really happened. At least the US got the Occupy Movement.

    • Paul 6.3

      I agree with your comments about us not learning since 2007/8.
      However, government and private debt has exploded since then, so we are a lot more vulnerable.
      People without jobs cannot pay for the massive mortgages in Auckland.

      I also saw the BIg Short. It was interesting timing for this film to come out.
      If you found the Big Short educational, may I suggest this film too.

      https://www.youtube.com/watch?v=bw6OD76EInU

      • weka 6.3.1

        Thanks, will have a look.

        I noticed at the end of TBS they said that the greedy fucks had started doing the same shit again in 2015.

    • Lara 6.4

      Generally this is what we may expect is most likely to happen:

      Unemployment will increase. Particularly in finance and in luxury areas. The NZ property market is a massive bubble which will burst. Those in the property field (including builders, real estate agents etc) will be hit hard. People in luxury fields such as personal assistants, massage therapists, retailers of luxury goods will fare worse.

      Sectors which may do better would be security, liquor, cheap entertainment, basic essentials. Jobs in these areas will probably be less likely to be cut.

      In NZ our household debt is too high, over 160% of disposable income. In conjunction with our property market charts showing a massive spike in price (typical end of a bubble) the huge risk is in a massive crash. And when people can’t pay the mortgage it goes to mortgagee sale. Too many sales with not enough buyers due to people losing jobs and not having money means falling prices. Price can fall on light volume; it requires only an absence of buyers to force prices down.

      What can we do? Our property market needs correcting. Prices are too high. Those who have over leveraged will suffer, but then, they took massive risks. They may not have seen it that way, but it was fuelled by greed so I have no sympathy for them. Borrowing against the house to buy an “investment” property, jetski to BMW is not a prudent financial decision.

      What can you do? Reduce debt. All of it if possible. Save something (probably too late, but if you can, do). Grow veggies. Set a few bags of rice aside (worst case scenario it takes you a while to eat it all). Maintain networks of friends. Help out and be a decent human being. And when the shit hits the fan wait it out. This too will pass.

      And when it has passed if things are stable buy cheap property and shares at fire sale prices for your retirement fund.

      And if it’s not stable? We’re all fucked then anyway.

      • weka 6.4.1

        Thanks Lara. By saving, do you mean in the main banks as opposed to investments? Does that mean you think the main banks are relatively safe? What do you think will happen to welfare? Or do those fit into the we’re either stable or fucked categories?

        • Lara 6.4.1.1

          Our banks in NZ are exposed to the property market bubble exactly as banks in the USA were exposed to their property market bubble which burst in 2007.

          Plenty of banks failed.

          I expect it won’t be our government in NZ that comes close to failing (like Iceland) because our debt to GDP ratio is still not too high… we have increased our public debt but compared to other countries it’s not extreme. Thanks to Michael Cullen who reduced debt significantly prior to National coming to power actually. That was prudent management (within this system we have).

          And so I expect our banks will be in trouble. And I am expecting when things get really bad part of depositors funds will be frozen. And some may well be used to pay debts, after the bank owners have given all they have in the enterprise to pay debt. And so I’m not going to be keeping my savings there.

          As for welfare, it depends on who we vote into power. If its National then expect it to be cut. If its Labour I’d also expect them to cut, but not as severely. I view them as National Lite. The Rogernomes are still in charge of Labour and we all know what line they take.

          If its Greens / Mana / NZ First (as long as NZ First isn’t propping up National again that is) then something different. TBH I just don’t know what that would look like. I would hope they realise that pumping money into the poorest sectors of our society and specifically creating jobs in that sector would work. Like our government did after WWII and the Great Depression. Creating money to employ men to build state housing, and other infrastructure.

          Right now, and since 1984 TBH, NZ has been swinging ever further to the right in terms of political and economic ideology.

          These things over decades tend to swing from one extreme, and back to the other.

          And the guard changes when the economy is at its worst. Which is why Labour lost the election, it was during the GFC. And why National have won three, all during improving economic times (overall growth, unequally spread but still growth).

          So if the next election is held during a crash expect a change.

          But most of the NZ electorate are hoping Labour to be a change. And really they’re not. If they win and don’t offer change then they’ll be a one term government. And maybe the electorate will finally learn they’re just National Lite and finally ditch them.

          • weka 6.4.1.1.1

            Thanks Lara, that’s very helpful. Where will you be putting your savings?

            • Lara 6.4.1.1.1.1

              I’m looking at government bonds. I expect the NZ government may be a safe bet. But this comes with the caveat that I need to do some further research on this first before I decide.

              I’ll let you know what I find Weka 🙂

              And I think holding some cash on hand is a good idea too.

  7. Draco T Bastard 7

    Iain Parker: My message to New Zealand First & New Zealand Labour & New Zealand Greens – of you really want to stop John Key and his foreign financial free raiding mates – is below;

    Mass counterfeiting of credit by the global banking system is starting (Feb 2016) to crash the global economy again. As it unfolds and if you want to fully understand why its happening please take the time to take on this information below documenting how the citizens and businesses of honest enterprise of New Zealand are being eaten alive by con-jobs of criminals that lurk within high finance and you all need to get it together to stop it.

    Of course, National and Act and the Peter Dunne party are actually there to enhance and protect this fraud.

  8. Once was Tim 8

    Good call @ Paul.
    I wouldn’t blame Lynne Freeman too much however. The business news is something that’s been infected with lists of ‘go to’ people for quite some time, and unfortunately a number of ‘business journalists’ who seem incapable of any serious critical analysis. It started out with the corporate media, but its infiltrated public service broadcasters globally over time. Even the BBC (perhaps that ‘even’ should be dropped because the whole BBC enterprise has now been captured by the cult of personality and ideology) … the BBC has been captured quite a while ago to the extent that its best have left in droves – to Channel 4; AlJazeera and others.

    How anyone can simply accept that Bob Wideboy from Bullshit Capital Markets; or Kemrun Begry from ANZ; or Tony Alexander from BNZ are simply regarded as impartial analysts is beyond me. Their analysis is usually worth jack shit from what I can see.
    (Incidently, some years back as a systems programmer associated with various folk in the banking sector supporting their technology needs, my colleagues an I used to monitor many of these so-called experts and their various predictions and analysis. To cut a long story short – one could have had better results with a dart board – I’m sure they’re now slightly more competent, but I wouldn’t put money on it).
    I guess NZ’s laid back, unquestioning attitude to all really is a great environment and test bed for these ‘business analysts’ and ‘business journalists’ to practice their faith.

  9. Grim 9

    Musings on the oil situation:

    Reminds me of the kiwi fruit boom/bust cycle.

    Record High prices, Opec losses (price-fixing)control, new producers enter market but with huge debt(secured by projected profits based on record high returns)

    Over supply.

    Prices drop, all parties continue to sell at any price to try to ride it out, hoping enough players go bust before them, which will leave them in a position to buy up the smaller player’s assets/production at fire-sale prices.

    There is also a new alternate product coming on to the market, , renewable energy, the old producers have already diversified and ramping up production of the new product, but this will not replace oil yet, and as oil prices stay low the new product is delayed, if production of oil drops before enough production of the replacement product comes online oil prices will climb, capital rich producers will make a killing, smaller and indebted players will be wiped out, their debt pasted onto investor or tax payers dependent on government interference.

    Those that control the markets or are able to predict markets will have moved their money out of crude oil production just after the last peak, and will be ready to buy back in at the low.

    Would only take one oil producing nation to experience “difficulty” for the supply to be reduced enough to correct oversupply.

    Peak oil, in my opinion is a reality and has been reached, so how does that figure into things?

    It’s a race,

    How to maximize profits?

    The cost of producing oil based energy is increasing( climate taxes etc)
    Like it or not a transition will take years, guessing 20 yrs.

    So 20 years to maximize profit from oil reserves
    1) Kill off the opposition, then hike up prices?
    2) Just go for broke and sell as fast as possible, undercut opposition and hope this results in the above #1.
    3) Use your capital to invest in the new big thing and dump holdings of crude oil.

    Those with capital and no debt can chose, those in debt i.e oil nations reliant on oil income to support their systems will be forced to flood the market and fight to the death.

    • Colonial Viper 9.1

      Peak oil, in my opinion is a reality and has been reached, so how does that figure into things?

      peak conventional oil was reached in 2005/2006.

      A very weak/failing global economy has depressed growth in energy consumption significantly.

      It makes it look like there is a (temporary) excess supply of liquids into the market.

      In reality that “excess supply” is no more than 2% to 3% of daily global demand, and can turn into a shortage again very quickly.

      You have already pointed out how the financial markets (including commodity markets) have been weaponised by the west for use against countries that step out of line.

      • Grim 9.1.1

        Agreed, a temp drop in oil prices doesn’t cancel peak oil and the turmoil this will create.

        I think oil prices are being kept artificially low as economic warfare, The capital rich producers should be able to drop production, causing demand and increased prices, but this is not happening.

        When I said “over supply” I should really have said “engineered oversupply”

        Despite the “Depression” oil demand didn’t significantly drop, but production increased,US crude oil production increased 90% above 2009 levels, hence reduced imports and shipping of crude, not to mention US shale oil production increasing
        ( US can’t export crude oil because of regulations, so only export refined oil, interestingly refineries in US are now using trucks to get crude from wells as the pipeline stuff is mixed with shale and fracked oil which is lower grade and not wanted on the international market)

        Wonder if the drop in price at the US gas pumps could be negated by lower quality petrol? consumers getting tricked?

        Main point,

        Engineered economic warfare, designed to aid those with the power access to the resources needed to survive the coming collapse, a collapse due to resource depletion.

        This will quickly turn into conventional war once the issue is obvious.

        Whether it looks like a war between nations or religions the reality of it is a culling of the herd to allow the elite to survive.

        Not oil, it’s food and water, that is the resource about to dry up.

        with good planning this could be avoided, but those in power have decided on depopulation.

        Hope I’m wrong 🙂

        • Pat 9.1.1.1

          “with good planning this could be avoided, but those in power have decided on depopulation.”

          that thought had crossed my mind as well…..but a strategy like that is risky in terms of selecting the population to be “de’d”.

  10. vto 10

    Brian Gaynor always used to be worth listening to but his piece on RNZ a couple days ago was simply someone with an entirely subjective view and a conflicted position, just like all of the bank economists. Gaynor was bullshit. He has not been like that before – a worry in itself.

    The thesis re GFC2 is one I have had since mid-2000s when I said to my bank manager there is too much debt in the world (just as we were asking for large debt) and that it will collapse. I said to him that governments would step in when it first collapsed in order to preserve government’s own power and position. However, I said, it will be insufficient because governments are not large enough to control this and eventually the system will melt down when the government actions fail.

    This is exactly what has happened and what is about to happen (started already).

    Time though to move onto the next question, which is “what is going to replace the current system?”. “How is it going to change?”

    Meantime avoid debt, banks and anyone status quo.

    edit: and this second time around the corporates will not be saved as the people will not stand for it. Governments will have no option but to listen to the people and let the losses lie where they should – at the corporates and banks feet. Dump your bank shares.

    • Paul 10.1

      I agree that our problem in the world stems from debt.
      Have you seen this?

      https://www.youtube.com/watch?v=jqvKjsIxT_8

      • Lanthanide 10.1.1

        Yes, and then what…?

        All this does is say “wow, isn’t this situation strange and bad?” but doesn’t actually say *why* it’s bad, or what the alternative should be.

        • Lara 10.1.1.1

          Well here’s one idea. Interest free demurrage currency from Margrit Kennedy.

          Or look up Bernard Lietaer. He has some great ideas too.

          The key idea is this:

          How our monetary system is structured is REALLY important but almost never mentioned.

          Because money is the basis of survival for most of us. Without money we can’t buy food or shelter. And left without money accessing food and shelter is problematic to say the least. We can’t build our own shelter (and without owning land hence money anyway that’s another problem) and we can’t grow enough food for ourselves, we just don’t have the skills. Most of us anyway.

          And so for most of us the structure of money affects our behaviour. Greatly.

          Many people do an awful lot of things they’d rather not do for money.

          And how money is structured affects our behaviour on a society wide level.

          So change how money is structured, and you change behaviour at a society wide level.

  11. Colonial Viper 11

    Whose great idea was it to force NZ workers to put their wages into the Wall St casino and the banksters for their “retirement savings.”

    What a scam. As American workers found out with their 401Ks.

    • Lanthanide 11.1

      No one has been forced to sign up to Kiwisaver yet. You can also choose a fund that invests solely in NZ if you want.

      • Rosemary McDonald 11.1.1

        “You can also choose a fund that invests solely in NZ if you want.”

        You can? I’d be interested in a little more info on that Lanthanide if you can point me in the right direction. My concern is the offspring’s contributions…which are (as they describe them) “wussy safe” but who knows? BTW…the offspring perceive Kiwisaver as compulsory….like an extra tax.

        Interesting summation of the situation Paul. Thanks for those links…even I got some of what they talk about.

        Specially the bit about debt being an asset.

        • Lanthanide 11.1.1.1

          There aren’t many, but there is this one: http://www.interest.co.nz/kiwisaver/funds/profile?id=108

          It doesn’t look like there’s any easy way to find them all, but interest.co.nz has profiles for most of the providers and you can click through and check their asset allocation: http://www.interest.co.nz/kiwisaver/performance-ranking

          • Colonial Viper 11.1.1.1.1

            Lanth – billions and billions of NZ wages have flowed into the Wall St casino thanks to Labour and their orthodox economic thinking. Can people opt out? Yes. But the mechanism is there to channel most workers into the financial system and pretend to them that it will be there for their retirement.

            • Lara 11.1.1.1.1.1

              It’s an opt in system.

              I am probably in a minority here, but there’s no fucking way I’m handing my savings over to an idiot who doesn’t know what they’re doing and paying them a bloody fee for the privilege.

              And I just cannot understand why so many people do.

              But yeah. Just me I guess.

              • Lanthanide

                Even though I think the world-as-we-know-it is going to end in 20-30 years time, I’ve still invested in Kiwisaver.

                Two reasons:
                1. I might be wrong
                2. Kiwisaver has a ‘financial hardship’ clause allowing withdrawal of money. This includes facing a mortgagee auction if you can’t pay your mortgage.

                I don’t miss the 3% of my salary that goes to Kiwisaver. I expect I’ll get it out one way or the other in the future, and it might just save my bacon.

                I’ve personally foregone about $10k in salary and have a balance of $35k, for a return of about 250%. Can’t get that sort of return anywhere else. I figure it’s worth it for the future security.

                Also I’m invested in a defensive growth fund – while most growth funds dropped by 50-60% during the GFC, my one only dropped by 20%.

    • Andre 11.2

      The workers that got scammed with their 401k were the ones forced into putting it into shares of the company they worked for.

      The ones that could put it into general investments such as mutual funds did the same as general investors-except that some also got the bonus of company matching on some of their funds. And the money went in pre-tax, grows tax-free, then is taxed when it is withdrawn after age 65, usually at a lower tax bracket.

      I’m curious, CV. How do you think workers should set themselves up for a more comfortable and less dependent retirement than just what the government of the day provides in superannuation?

      • BM 11.2.1

        The worker will be satisfied with their grey onesie and daily gruel.

      • weka 11.2.2

        How do you think workers should set themselves up for a more comfortable and less dependent retirement than just what the government of the day provides in superannuation?

        That’s the problem though isn’t it? That we no longer share the responsiblity of looking after our elders, and instead we expect those who can to build risky assets and those who can’t to suck it up and live in poverty.

        The solution to that problem has to be collective and community based and the govt should be mandating that and supporting it financially from the collective tax take not expecting individuals to provide for themselves in a world where that’s unlikley. Although I’m still not sure what communities should do with the likes of BM.

      • Colonial Viper 11.2.3

        I’m curious, CV. How do you think workers should set themselves up for a more comfortable and less dependent retirement than just what the government of the day provides in superannuation?

        Well, when the most powerful central banks of the world are manipulatively generating new money without limit and manipulating interest rates at will, and large financial players are totally gaming the commodity and equity markets what do you reckon? Just jump right in and pretend that your “savings” are still going to be there in 30 years time.

        LOL

        • Andre 11.2.3.1

          CV, I had hoped that as someone previously active in a political party, and may have future political ambitions, you would have an alternative thought-provoking perspective and proposals to respond with rather than just slagging the current system.

          • Colonial Viper 11.2.3.1.1

            Hi Andre, it’s a work in progress. Needless to say, I strongly believe that the Right versus Left paradigm in NZ needs to be broken.

            Today’s Left Wing outlook is still mired in 20th century problems and 20th century thinking; today’s right wing ‘comfortable/professional middle class’ has been hoodwinked by an elite 0.01% establishment which is ***this close*** to turning on them.

            • Andre 11.2.3.1.1.1

              I’ll keep watching with interest. Neither the “right” nor the “left” in New Zealand has much philosophical appeal to me, although within the constraints of current political/economic systems, the balance Nordic countries have come up with seems “least bad” to me. Can’t say that either weka’s or DTB’s versions of “communism” (as in community-based, not the pejorative sense) holds much appeal to me either.

    • Stuart Munro 11.3

      Yes, I’m afraid it was Cullen’s greatest failing (with the neoliberal limits he operated in). The whole point of a government investment vehicle was to invest in the local economy, creating jobs that can in turn support the retirement of the next generation of workers. We copied the British model, but ignored the key point 🙁

  12. Neil 12

    This is nothing new to me, I’ve been in financial crisis for years on invalids benefit.

    • Colonial Viper 12.1

      Yep, and so has a significant proportion of Kiwis that our politicians either just ignore, or pay lip service to.

      • Paul 12.1.1

        30 years of neo-liberalism has turned New Zealand into a country where most people cannot afford a house.

  13. Colonial Viper 13

    Fact of the matter is that brokers for large investment banks are remunerated on how much of a client’s account they turn into commissions for the firm.

    Re-read that line carefully, and you will understand a lot about the Wall St/Banker mindset.

  14. alwyn 14

    This post has had one good effect anyway.
    The main New Zealand share price index was up by 0.9% today.
    The Australian ASX 200 was up 1.8%
    Why do the left wing moans so often seem to fix whatever it is they were complaining about? The rain in the last couple of weeks for example. Scream drought and the heavens open.
    It would appear that God doesn’t love them.
    I don’t think I am going to regard the pick up in the stock markets as being permanent though. At least not just yet.

    • Colonial Viper 14.1

      Alwyn is pointing out the suckers rallies which happened in some sharemarkets today.

      Very appropriate.

    • Paul 14.2

      The trend is down, alwyn.

      ‘FTSE 100 closes lower as oil price rally vanishes
      Market Report: Lloyds hit by slashed price target
      It was another unpredictable trading session when Asian stocks recorded gains of around 1pc following a rally in oil prices – which saw Brent crude touch $32.81 a-barrel.
      However, the rally in oil was short lived as it plunged by 5pc to $30.57 in the afternoon due to renewed concerns about oversupply, after Iraq announced record-high oil production.
      Stock markets in Europe and the US faltered as a result, with the CAC in Paris closing down 0.6pc, while the German DAX lost 0.3pc. In London, the FTSE 100 closed 0.4pc lower.’
      http://www.telegraph.co.uk/finance/markets/marketreport/12119305/stocks-ftse-china-oil-price-stock-market-dax-dow-jones-bear-market.html

  15. dave 15

    well you know about it if read standard/daily blog listen to international news desks and basically give NZ media the two fingers your right our fellow citizens have no idea and thats there own fault all they want is rugby and john key the tppa protesters know its coming
    personally i payed off the house eliminated all debt and moved as much money as i could out of the banking system and start getting rid of as much paper assets including cash as fast possible while i still can .i am afraid there there going wake up one morning just like Iceland and Greece to find the party is over sad but true

  16. maui 16

    Trump and ISIS, Trump and ISIS, Trump and ISIS, Trump and ISIS, Trump and ISIS, Trump and ISIS, Trump and ISIS, Trump and ISIS, Trump and ISIS, Trump and ice us, Crumpets and ice us. You don’t need to know anything else, honestly.

  17. Paul 17

    Further evidence.

    ‘The world has glimpsed financial crisis. But is the worst to come?

    Plummeting oil prices and fears about China turned screens red in trading rooms around the world. Although things may have stabilised, some fear we are on the verge of another global recession
    But with central banks’ interest rates at historic lows and billions of pounds in quantitative easing – printing money – expended, the institutions charged with breathing life into a flatlining global economy have few weapons to draw on. “I think that the arsenal of many central banks has been significantly depleted and we no longer have many of the options that existed in years past,” said Eric R Peterson, partner at consultancy giant A T Kearney. “My sense is that we have an incredibly complex and challenging combination of short-term and long-term-range challenges to face. When you put it all together, in my view you have a global economy on a hair-trigger. In the short term even the most minor shocks or perturbations can generate very significant effects.”
    Sitting off the coast of Iran in the Strait of Hormuz are huge tankers loaded with an estimated 50 million barrels of oil now waiting to be given their destination. Ship brokers in London are on red alert for new business coming out of Iran as one of the world’s largest oil producers bursts back into life, now that sanctions against it have been lifted. Tanker experts at Clarkson, the world’s biggest broker, said they had already seen one request to charter a Suezmax-sized tanker for a shipment of crude from Iran to a westward destination. “Things are a bit hazy at the moment, and it will take time to get going,” said one broker, pointing out the sanctions deal was signed off only last weekend.
    But already Iran’s re-entry to the oil markets is having an impact. And it could not have come at a worse time. The International Energy Agency is warning that oil markets could “drown in oversupply” this year. The US fracking revolution has meant the world’s superpower is no longer heavily reliant on Middle Eastern oil. But, despite this, Saudi Arabia and other major oil producers are keeping the wells pumping. This is happening at a time when economies are slowing, which means a decline in demand for fuel.
    And it is not just China that is causing concern. The International Monetary Fund’s latest global forecast downgrades the outlook for many emerging countries, notably Russia, Brazil and South Africa. For commodity producers – the likes of mining firms that extract iron ore and steel manufacturers – a global slowdown threatens their profitability. Many have seen their share prices plunge as analysts judge them to be overvalued. And where commodity producers lead, other businesses often follow.
    “I think the concern about the recovery remaining fragile must have increased and that, even if the market is overreacting, the downturn in stock prices could be bad for the economy,” said Wouter Den Haan, an economics professor at the London School of Economics. “We may get a stalling of the recovery or possibly another recession. I don’t see Armageddon, but I do see the risk factors on the downside getting bigger.”
    A chief concern is that the recovery after the 2008 crash has been built on shaky foundations. “We’ve gone through this major recession and lots of these problems aren’t really fixed,” Den Haan said. “I don’t think the financial sector has changed that much. Growth in the UK and US is nice, but it’s really not the kind of growth that we’ve seen in past recoveries.”
    Concerns about these risks are gaining momentum. As Thiam pointed out, large institutional investors have been taking their money out of the markets. Some of the exodus has been driven by the huge sovereign wealth funds that were built up by the major oil producers when the cost of crude was above $100 a barrel, liquidating investments now that oil prices are plunging. But psychology is also playing a part. The herd is in danger of stampeding.
    This is certainly the view of Albert Edwards, an economist at Société Générale and the City’s leading bear. In a recent and characteristically pessimistic note to his bank’s clients, Edwards warned that the world was on the brink of “another debacle every bit as large as the 2008 global financial crisis”.
    “I believe the events we now see unfolding will drive us back into global recession,” said Edwards, who predicts “a trade war not unlike that in the 1930s”.

    http://www.theguardian.com/business/2016/jan/24/stock-markets-world-financial-crisis-oil-china

  18. Paul 18

    This article is about the future crash and the London housing bubble, but it can so easily be linked to the Auckland housing bubble.

    ‘The Big Short: Movie chronicling the craziness that caused the last credit crunch feels uncomfortably relevant now
    It felt like a scene in a film. I emerged from a press screening of The Big Short, the new movie about the crazed American housing market of the 2000s and the resultant financial crash, into a busy West End. I was, like most that will see it, left wondering where the next crash was coming from. The London property bubble naturally presented itself in my head. …………………

    ………………After 2007, the housing crash hit the banks because they had lent too much. But the banks have been more stingy lately; most borrowers have had to put up a hefty deposit, and that, their equity in the property, is the thing that will absorb the losses and leave the banks mostly unscathed.
    The script of the next crash, the “Slump of 2018”, will therefore have different actors – first-time buyers, the Bank of Mum and Dad who gave them or lent them their deposit, “hard-working families” as the fashionable phrase goes: painful, but it won’t bring the financial system down, or the economy with it, and taxpayers won’t have to pick up the bills. But it still will be an uncomfortable watch.

    http://www.independent.co.uk/news/business/analysis-and-features/the-big-short-movie-chronicling-the-craziness-that-caused-the-last-credit-crunch-feels-uncomfortably-a6828346.html

    • Tautuhi 18.1

      Don’t worry the Banks won’t loose, and if they get in the shit the taxayers will bail them out, its a no lose situation.

      We even bailed out the old fella who drove the VW from Timaru for NZ$1.0 Billion who had all his records in an old exercise book?

      • Stuart Munro 18.1.1

        Wasn’t him you were bailing out – his records were straight & all his debtors got paid. It was shonkey’s sleazy mates that was about.

        He was a kulak with no influence, the dictator stole his wealth.

        Only ‘bankruptcy’ in NZ history that was handled by cabinet. The court never saw any of it. Funny that eh.

  19. Paul 19

    Further evidence.

    China Stocks Plunge to 13-Month Low Amid Capital Outflow Concern

    “It’s an issue about confidence and there’s no confidence in the market now,” said Wu Kan, a fund manager at JK Life Insurance Co. in Shanghai. “The depreciating yuan and slowing economic growth have been haunting the market for a while. We are less than two weeks from the spring festival and it seems that most investors are in no mood to trade any more.”
    Thomas Schroeder, the managing director of Chart Partners Group Ltd. who predicted in October that a rebound in Chinese stocks wouldn’t last, says the benchmark index will drop to 2,400. Huang Weimin, whose Chinese stock-index futures wagers returned more than 6,200 percent last year, advised investors to sell shares as the stock market could drop another 15 percent in the first half as slowing growth and a weaker yuan fuel capital outflows.

    http://www.bloomberg.com/news/articles/2016-01-26/china-s-stocks-fall-amid-concern-capital-outflows-may-accelerate

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