Open mike 15/02/2021

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1. Sacha 1

   15 February 2021 at 10:22 am

   Why building more houses will not fix prices – economist Brian Easton. https://www.pundit.co.nz/content/the-sources-of-house-price-inflation

   The inflation driver is financial speculation based on leveraged borrowing. Until that is addressed, house prices will continue to boom.
   • mikesh 1.1

     15 February 2021 at 12:23 pm

     I'm inclined to agree. Shortages are simply an intractable backdrop against which interest, and monetary policy generally, serve to exacerbate the problems that shortages cause.
   • Ad 1.2

     15 February 2021 at 1:44 pm

     Why must house prices be fixed?
     • weka 1.2.1

       15 February 2021 at 1:50 pm

       because people need to be able to afford to live in them.
       • Ad 1.2.1.1

         15 February 2021 at 2:01 pm

         If you had answered:

         Because people need to be able to afford to own them, I would have agreed.

         House price fixing concerns ownership. It certainly has secondary effects, but mostly, the price of the house is the cost of owning it.

         Easton is making some massive correlations, but no useful causes.
         • RedLogix 1.2.1.1.1

           15 February 2021 at 2:06 pm

           but mostly, the price of the house is the cost of owning it.

           As I've said a few times before; if you think the rent is high – try owning it.
           • Sabine 1.2.1.1.1.1

             15 February 2021 at 3:58 pm

             owning and renting are two different things. And renting to use for a while should never cost more then owning does, and currently renters pay the mortgage, the interest, and what ever else the owner wants out of the property.

             btw, my mortgage that i pay currently is 200$ per week.

             you can't even rent a dog kennel for that amount anywhere in NZ.
             • I Feel Love …

               15 February 2021 at 7:58 pm

               I reckon, my mortgage is $210 a week, if I rented the same house it would be double, and with no return. Free insulation, cheap rates, I could also halve that if I got a flatmate (which I may do once my kids leave). I don't take this for granted, I realise I'm one of the lucky few.
               • Sabine …

                 15 February 2021 at 10:50 pm

                 +1

                 ditto here. And the bank don't come to inspect every three month.
           • Adrian Thornton 1.2.1.1.1.2

             15 February 2021 at 6:01 pm

             Have to strongly disagree with you there RL, we are in our first own house (nearly freehold) after renting for 30+years the last 15 of those with three children, owning your own home has for us probably been pretty similar, maybe a bit more expensive but not a lot, and especially when you take into account all the benefits…the main one is not having to deal with Ma&Pa landlords they are generally like spawns from hell, they have made renting a fucking nightmare, it is awful, and no country that has the resources NZ has should let it’s citizens endure that type of life…welcome to free market liberalism I guess, markets operating just as they should…Thanks David Lange.

             Gone are the old days when you would rent a house and live in it for years and hardly be bothered as long as you paid your rent and maintained the property…our last ten years of renting were a disaster (with one exception) as far as landlords went…even if owning a home was/is more expensive, how can you put a price on the endless stress and worry and more importantly the hundred of subtle ways it damages and undermines children having little to no long term home security.
         • McFlock 1.2.1.1.2

           15 February 2021 at 2:12 pm

           Nope.

           Owning a home provides security that no amount of rental law cannot.

           The trouble is that house prices do not reflect the cost of owning a home. They reflect the cost of the expected medium-term capital gains (post bright-line). It wasn't a problem when they reflected the expected gains upon retirement and downsizing, but now who honestly expects to be in that house for thirty years? Or do they expect to flip it in ten years or so?
           • Ad 1.2.1.1.2.1

             15 February 2021 at 2:17 pm

             Agree with the security bit. I've seen the pro's and cons of home ownership debated at length in New Zealand literature. They're pretty even.

             I'd like to see some proper policy work done on the effects of Andrew Little's current extension of the Bright Line test, and the likeley extension to 10 coming up. Doesn't seem to have made much difference to house prices at all – so if it's not working as intended it should be removed.
             • Ed1 …

               15 February 2021 at 2:51 pm

               Perhaps that is a point of the Easton paper – no one issue will solve the housing crisis. After all the current presumption of intent is flawed, but reversing it would mean that gains up to the time legislation takes effect are likely to remain tax free, so most people would not pay much tax for many years; but owners of rental properties may hold for longer to defer the payment. Requiring a bigger amount of real (not borrowed) equity may be possible , but that would be easier if we increased wages so that the government does not need social welfare or Working for Families to enable new home buyers to afford to live with a family.
               • Ad …

                 15 February 2021 at 3:14 pm

                 If he had started with the 1% homeless crisis – which is about as bad as it gets in the OECD, I would have agreed with him. He didn't.
             • McFlock …

               15 February 2021 at 4:01 pm

               Pretty even for people who can afford to choose their housing tenure type.

               For people at the mercy of a speculative landlord, not so much.
           • Stuart Munro 1.2.1.1.2.2

             15 February 2021 at 3:48 pm

             I have a good landlord. Doesn't put the rent up every week etc. . But a batten holder wore out 8 months ago – and it only got fixed last month – no bedroom light all winter. Rentiers are oppressors, even the the good ones.

             And of course the inability of contemporary NZers to afford their own homes is the final disproof of neoliberalism. It was supposed to make us more prosperous if you remember – on the contrary, it has impoverished us. Voters, looking at neoliberals think: "Were you really that stupid that you swallowed the hype in spite of our warnings? Or were you just corrupt?"
     • McFlock 1.2.2

       15 February 2021 at 2:07 pm

       Because their speculative growth is entrenching even more deeply NZ's trans-generational class system.

       Even if a full-time worker can rustle up a 10-20% deposit, I strongly suspect most NZers probably wouldn't earn enough to service the mortgage on a median-priced house.

       For me, it was break-even with no margin for error five years ago. Now? It's a joke. And I have a good job, no dependants, and a retirement fund, but houses are more than twice the price. Almost literally – I looked up that house recently. It's gone from $230k to $450k. Has any actual worker's salary doubled in five years?
       • Ad 1.2.2.1

         15 February 2021 at 2:13 pm

         Absolutely the personal stories are valid.

         I'm kinda waiting for evidence of the K-shaped economy to hit.

         And it's indisputable that salaries haven't kept up with house prices.

         But if Easton had tracked house prices, salaries, and national home ownership, he would have seen no collapse in average ownership at all. Even as prices skyrocketed.

         In fact we're still better than nearly all other developed countries for home ownership.

         Easton calls it speculation. 65% of us call it risk management.
         • Pat 1.2.2.1.1

           15 February 2021 at 2:34 pm

           Might pay to check the stats before making wild claims

           • At the time of the 2018 Census, New Zealand’s homeownership rates were at their lowest since the 1950s.
           • Homeownership peaked in the 1990s, at 73.8 percent of households, but by 2018, homeownership had fallen to 64.5 percent of households.

           https://www.stats.govt.nz/reports/housing-in-aotearoa-2020#:~:text=At%20the%20time%20of%20the%202018%20Census%2C%20New%20Zealand's%20homeownership,to%2064.5%20percent%20of%20households.

           and falling.

           Easton’s analysis is sound and he is not alone with the conclusions….it has been well canvassed and the only major dispute is around to what degree other factors impact.
           • Ad 1.2.2.1.1.1

             15 February 2021 at 3:12 pm

             Oh don't worry I checked. Which is why I stated 65% home ownership.

             And I also checked on the international benchmarks for developed countries.

             It's barely moved downward since the last time they measured. You can check.

             You just have to read beyond the hysteria.
             • Pat …

               15 February 2021 at 3:25 pm

               stating 65% mean sweet FA unless you also state from where it came and what the trend is…as you well know.

               and I too have checked…"and falling"

               "Home Ownership Rate in New Zealand is expected to reach 64.29 percent by the end of 2020, according to Trading Economics global macro models and analysts expectations."

               If youre not already you should be a politician
               • Ad …

                 15 February 2021 at 4:06 pm

                 The home owner percentage has barely moved since 2013.

                 In the site you cite, go into the full statistical report, fig 15 p 28.

                 https://www.stats.govt.nz/reports/housing-in-aotearoa-2020

                 Maybe 2021 changes all of that, looking forward to the evidence.
                 • Pat …

                   15 February 2021 at 5:36 pm

                   You will get your evidence (sadly)…

                   "In 1991, 61% of people aged 25-29 owned their own home, but by 2018 this had dropped to 44%.

                   Ownership rates have also fallen for people in their 30s, dropping from 79% in 1991 to 59% in 2018."

                   https://www.interest.co.nz/property/108312/home-ownership-levels-are-continuing-decline-especially-younger-people

                   figures 17 -20 from the report if I recall correctly

                   And the explanation is glaringly obvious, the inflated prices relative to income
                   • RedLogix …

                     15 February 2021 at 5:39 pm

                     And as outlined below there is more to it than just economics – it's the relentlessly increasing age of first marriage that also means that 20-29 age group just aren't interested in buying homes.

                     Another factor is the rise in divorce rates – usually one partner will finish up renting for a period afterward.

                     This doesn't discount the obvious affordability issue in play – but it does suggest there are often more factors involved than the headlines make out.
                   • Pat …

                     15 February 2021 at 7:06 pm

                     Of course, unmarried people dont buy houses….how could i miss that.

                     And the 20 -29 year olds arnt interested in buying homes….because they increasingly cant afford them….the same applies to those in their 30s…and the ones that eventually can take considerably longer to raise the increasing deposits.

                     Those decreased ownership rates in the cohorts coming through are going to have a major impact on the total ownership rates as the proportionately higher ownership rate cohort approaching 70 move into care/die
             • arkie …

               15 February 2021 at 3:33 pm

               30 per cent of homes are owned by people who only own one home.

               Another 13 per cent is owned by people who have two homes. Six per cent is owned by people who have three homes. Ten per cent is owned by people who have between four and six homes.

               And another 10 per cent is owned by those who have between seven and 20 homes.

               I would argue one can own multiple houses but only one is ever your home but that's an aside.

               To do a real comparison a similar breakdown as above is needed for the historical data.

               https://www.newstalkzb.co.nz/news/business/mum-and-dad-landlords-own-more-than-a-third-of-property/
           • McFlock 1.2.2.1.1.2

             15 February 2021 at 3:49 pm

             And that's households (where homeowners are a member of the household). Only half of individuals own the home they live in, directly or indirectly (same link, p34).

             Additionally, although $value of lending to first home buyers peaked last year at 20%, the proportion of actual borrowers at the time was 12%.

             The longer this situation goes on, the more nailed in the inequity will be.
         • solkta 1.2.2.1.2

           15 February 2021 at 3:04 pm

           "no collapse in average ownership at all"

           Are you serious?
           • Ad 1.2.2.1.2.1

             15 February 2021 at 3:12 pm

             65% is barely moved from the last time they measured.
             • solkta …

               15 February 2021 at 3:53 pm

               You sound like a CC denialist – "oooh look, this part of the graph is flat!"

               A 13% drop in fact.
               • Ad …

                 15 February 2021 at 4:08 pm

                 Go into the full statistical report, fig 15 p 28.

                 https://www.stats.govt.nz/reports/housing-in-aotearoa-2020

                 Maybe 2021 changes all of that, looking forward to the evidence.
                 • solkta …

                   15 February 2021 at 4:28 pm

                   Maybe 2021 will be the start of an ice age.
             • McFlock …

               15 February 2021 at 3:57 pm

               Heck of a change within a generation, though
               • Ad …

                 15 February 2021 at 4:09 pm

                 If by "generation" you mean the peak in the early 1990s, I'd agree.

                 If by "generation" you mean back to the 1960s when everything about New Zealand was supposed to be our egalitarian apogee, no not really it's the same.
                 • solkta …

                   15 February 2021 at 4:31 pm

                   You not only can't read a graph it seems you can't even read:

                   "Homeownership at lowest rate since the 1950s" – the heading of the graph you link to.
                 • McFlock …

                   15 February 2021 at 4:35 pm

                   I thought "generation" generally referred to thirty years or so?

                   But then if 68.9% is "the same" as 64.5%, I suspect we need to find a specific dictionary to agree upon for a common vernacular.
                   • solkta …

                     15 February 2021 at 4:41 pm

                     so not just 1950s but early 1950s.
               • Stuart Munro …

                 15 February 2021 at 4:25 pm

                 Yup – the demographics don't lie. Before Rogergnomics the median age at marriage was around 23. After it was 33. Poverty. The social science folk can give the lie to every pretense of good governance.
                 • McFlock …

                   15 February 2021 at 4:41 pm

                   Not everything is primarily caused by rogernomics. Reducing the social expectation for marriage wasn't just economic.
                   • Stuart Munro …

                     15 February 2021 at 4:45 pm

                     Keep telling yourself that – the old prof that ranted it at me would not be persuaded. He had plenty more too.
                   • McFlock …

                     15 February 2021 at 5:05 pm

                     Data doesn't seem to match his claim.

                     It definitely moved a couple of years in the 1980s, but nowhere near ten years and the median age is still only around 31.
                 • RedLogix …

                   15 February 2021 at 5:05 pm

                   The data here suggests that the more developed a nation is, the faster the rate at which the age of 'first marriage' has been increasing.

                   The best explanation does not appear to be 'poverty'.
                   • Stuart Munro …

                     15 February 2021 at 5:43 pm

                     That would be of course because the data aren't set up to capture it.

                     Measure GDP alone and you could imagine Rogergnomics as something other than a brutal failure. But you would be letting data trickle through your fingers – politically convenient no doubt.

                     The first world nations have been lying to themselves for a good while now – with falling "labour force participation" instead of unemployment and so on. The lies are getting pretty thick. If everything were apples home ownership wouldn't have had to fall, nor would child (the only politically acceptable poverty) be so high.

                     All those suicides blamed on mental health too – same trick the Soviets resorted to. Our governors have no standards at all.
                   • RedLogix …

                     15 February 2021 at 5:51 pm

                     All those different countries – and none of them 'properly' capturing age of first marriage to your satisfaction.

                     Amazing.
                   • Stuart Munro …

                     15 February 2021 at 6:15 pm

                     Hardly – I'm not trying to extend my assertion around the world – it was you that had to reach beyond NZ to grasp at the straw that because other countries experience lesser forms of the same graphic failure, the brutal sham that was Rogergnomics was somehow excusable.

                     We all understand the appeal to the vanity of policy makers of a ‘great leap forward’, and I use Mao’s term deliberately, because Rogergnomics was every bit as hubris-laden, destructive, misguided, and undemocratic.
                   • RedLogix …

                     15 February 2021 at 6:29 pm

                     Typical debating fail – jumping to unjustified conclusions. Nowhere have I attempted to excuse neo-liberalism. Indeed if you'd been paying attention I have explicitly written a post on exactly why I regard it as 'out of bounds'.

                     Liberals when their desire for ‘freedom’ becomes a repudiation of society and manifests as libertarianism and neo-liberal economic theories.

                     So nowhere have I attempted to excuse Rogernomics – that’s a just a figment of your imagination. But to attribute everything bad that ever happened in this country to this singular cause is another kind of fail.
                   • Stuart Munro …

                     15 February 2021 at 7:17 pm

                     The inability to confront and address mistakes is typical of dysfunctional institutions like corporations or corrupted governments.
       • alwyn 1.2.2.2

         15 February 2021 at 4:02 pm

         It isn't the price of the house that is relevant to the person buying it. It is the cost of servicing the mortgage. Here are a few graphs on housing costs. Between 2008 and 2019 the average household income in Auckland went up by about 50%. Thar was from $61.4k to $95.2k. The average weekly payment for people who had a mortgage only went up by about 20%. That was from $384/week to $460/week

         https://figure.nz/chart/0Z1fITz5qe80b2tD-szOL5Pza2PB8N51f

         When you look at the cost of buying a home the most important factor is going to be the mortgage interest rate. First mortgage rates in 2008 were about 8%. They are now, if the ASB quote in front of me is typical 2.29% for a 1 year fixed rate.

         https://teara.govt.nz/files/g-23100-data_0.txt

         https://www.goodreturns.co.nz/mortgage-rates.html

         The second most important factor is going to be the deposit. If house prices go up by 17%, as they typically did last year the deposit will do the same and that is really going to hurt the first home buyer.

         A note. This is not an area on Economics in which I have much knowledge or experience so all the numbers I have reference may be irrelevant. At a first glance though it wouldn't appear that people are much affected by the price rises while interest rates are dropping to the point that in real terms the money is free to borrow.
         • Ad 1.2.2.2.1

           15 February 2021 at 4:10 pm

           The commentary in the Stats NZ work on this supports this cost-of-mortgage issue. But it fails the obvious corollary: as prices go up, so too does the potential equity for deposits from Bank Of Mum And Dad (especially when they downsize, or die).
           • dv 1.2.2.2.1.1

             15 February 2021 at 4:26 pm

             As a sort of comparison.

             Bought house in 1980 with 30% deposit Interest was abt 30% of salary then

             Now a 60% loan would cost about 25% of the same level of salary.

             Having said that the amount of deposit today would be about 300k
         • McFlock 1.2.2.2.2

           15 February 2021 at 4:26 pm

           Even without interest, the average borrowing for a first home loan is almost half a mil.

           That ain't chump change to pay back weekly, by itself.

           People buying their first homes need to be doing damned well.

           Unless you can figure out some way of paying the same price while not borrowing so much, the two figures are pretty good substitutes for each other when it comes to looking at why people can't afford to own their own hovel.
           • alwyn 1.2.2.2.2.1

             15 February 2021 at 4:50 pm

             I am not disputing that it isn't easy. Mind you I can remember when my mortgage rate was 13%. That was back in the 70's and I knew people who were paying more.

             However I had a quick look at payments using the BNZ calculator.

             On an $800k house with a 20% deposit and a 30 year term at 2.29% you pay $1,132,fortnight. On a property at half the price, and half the deposit for the same 30 years loan you would pay exactly the same amount if you were paying 8.5% which would have been quite likely back in 2008. Half the amount borrowed but the same $1,132 at the much higher interest rate.

             On the monthly income for a household at the average number of $$95.2k/year you would be paying 31% of your income on your mortgage.
             • McFlock …

               15 February 2021 at 5:22 pm

               coolcool.

               Where did the first home buyer get the extra $80k for the 20% deposit in 2020? Their income only went up by less than 50%. And their rent payments are through the roof, as well, so their savings might struggle to hit a wage inflation equivalent.
               • alwyn …

                 15 February 2021 at 5:34 pm

                 You did notice I said, in my first comment.

                 "The second most important factor is going to be the deposit. If house prices go up by 17%, as they typically did last year the deposit will do the same and that is really going to hurt the first home buyer."

                 I don't know. I haven't been in the market for a mortgage for 30 years. We did save our deposit for our first house in about 18 months though by living on about half of one of our two incomes. The total furniture we had in a one bedroom flat cost us about $100 dollars. I will admit we had one 10 year old car though. Entertainment was limited to barbecues with friends or going to the beach.
                 • RedLogix …

                   15 February 2021 at 5:41 pm

                   These days families are going to have to start thinking intergenerationally – as the Indians and Chinese are accustomed to doing.
                   • McFlock …

                     15 February 2021 at 5:51 pm

                     Folks know which generation fucked it up.
                   • RedLogix …

                     15 February 2021 at 6:00 pm

                     Well the Chinese especially tend to regard their elders with considerable respect – and not so much of the 'ok boomer'.

                     The point is that if you want to be prosperous it takes more than just a good job – you need to plan ahead and use each generation's capacities and abilities for the benefit of the entire family.

                     And of course rising divorce rates over the period in question also have their impact – nothing destroys family wealth over time quite like it.
                   • McFlock …

                     15 February 2021 at 6:04 pm

                     The point is that if you want to be prosperous it takes more than just a good job – you need to plan ahead and use each generation's capacities and abilities for the benefit of the entire family.

                     Only in a society with entrenched inequity and social mobility that does not reflect individual merit.
                   • RedLogix …

                     15 February 2021 at 6:12 pm

                     It's not a binary choice. Yes merit and mobility are valued highly in the West – but a well ordered and stable family over multiple generations will always have an advantage.
                   • McFlock …

                     15 February 2021 at 7:03 pm

                     Not in a meritocracy.
                   • RedLogix …

                     15 February 2021 at 7:16 pm

                     Why not? And how would you prevent family success from benefiting the whole family? Are parents to be prohibited from helping their children if they can?

                     Insisting on nothing but a pure meritocracy seems an absolutist view to me.
                   • McFlock …

                     15 February 2021 at 7:29 pm

                     In a meritocracy, it doesn't matter if parents help their kids or not. That's the point.

                     But my objection to the current situation isn't that NZ isn't a perfect meritocracy. My objection is that we're becoming less of a meritocracy. You can cloak it in "respect for elders" and "family stability" all you want, it's the simple greed of a previous generation turning into a dynastic problem.

                     I've said it before and I'll say it again: his solutions to the problems he described were bunk, but Marx was a spot-on critic of capitalism and feudalism. They're just two sides of the same coin. The Duke's ancestor hit peasants over the head with clubs, the magnate's ancestor paid other people to hit workers over the head with clubs.
                   • RedLogix …

                     15 February 2021 at 7:40 pm

                     In a meritocracy, it doesn't matter if parents help their kids or not.

                     Tell that to the Chinese or Indians busy building lots of intergenerational wealth in this country – property, businesses, you name it.

                     The simple reality is that a stable family is one of the best predictors of good social outcomes across the board.
                   • McFlock …

                     15 February 2021 at 7:48 pm

                     Correction: the one of the biggest predictors of future wealth is parental wealth, and it's getting worse.

                     BTW, not sure where you're getting your data on household wealth by ethnicity?
                 • McFlock …

                   15 February 2021 at 5:59 pm

                   So today to save a $160k deposit in 18 months from one income, that would be an income of $100k a year.

                   Basically, the govt needs to either build shitloads of affordable homes or build shitloads of state houses and have say a HNZ 5% stock turnover for modernisation in addition to a general increase in stock levels, sold through a rent to own equity deal.

                   Because this is a formalisation of an intergenerational class system. Not the one we've been ignoring and pretending doesn't exist, an actual regression back towards feudalism. Not all the way back, but a definite step back.
                   • alwyn …

                     15 February 2021 at 7:28 pm

                     "So today to save a $160k deposit in 18 months from one income".

                     A minor correction but it wasn't one income. It was one and a half incomes. We lived on one quarter of our after tax income and saved the rest.

                     That was quite common at the time. We were, like all our friends, trying very hard to get to own our own home. We were also willing to live a great deal further out from the CDB than many people seem to be willing to do today and lots of people did not have a car.

                     I found it quite hilarious a couple of years ago to read about a 30 something woman who was complaining that she couldn't afford a first house. Her idea of a first house was 4 bedrooms and 2 bathrooms in Roseneath, Mt Vic or Mt Cook. There was no way she was going out to the distant suburb of Hataitai. If you aren't a Wellingtonian look it up. It would be comparable to refusing to live way out in the wilds of Epsom I suppose.
                   • McFlock …

                     15 February 2021 at 7:41 pm

                     So to do it today, that's still two people in the same household earning well above the median income.

                     You forgot to bring up coffee and avocado smash.
   • Nic the NZer 1.3

     15 February 2021 at 7:05 pm

     This article is in some ways quite good on looking separately at both sides of the housing market. Though I didn't really like Eastons alternative of demand backed by offshore financing, as this doesn't either fit the facts.

     First the banking system doesn't lend out existing deposits but instead creates additional deposits when extending loans. Second the fact that a trade deficit was occuring simultaneously to an expansion in borrowing will mean an expansion in overseas ownership domestically, but a lot of the overseas trades are not in $NZ so in what sense is that supporting lending into a housing market almost exclusively trading in $NZ. This explanation is equally likely to misslead as the explanation it replaces.
     • Pat 1.3.1

       15 February 2021 at 8:16 pm

       The bank may create credit but they are still required to hold reserves and the size of those reserves determines how much credit they can create…..and a glut of international liquidity looking for a safe home and return knows which side their bread is buttered on.
       • Nic the NZer 1.3.1.1

         16 February 2021 at 9:46 am

         Your talking about 'capital' not reserves there (especially in the context of overseas funding), and capital is still not a constraint on lending. It might place limits on the interest rates accessible in some cases.

         But the simpler explanation is just that a lot of those recent house sellers at the time also took overseas trips.
         • Pat 1.3.1.1.1

           16 February 2021 at 10:00 am

           Wrong …the amount of credit a bank can create is directly linked to their reserves and that capital can (and does) come from offshore…the interest rates are a consequence of the ability to service the level of debt (credit).
           • Nic the NZer 1.3.1.1.1.1

             16 February 2021 at 10:27 am

             Still its, not a constraint on lending.
             • Pat …

               16 February 2021 at 10:55 am

               Of course it is…unless the bank wishes to breach its conditions of licence
               • Nic the NZer …

                 16 February 2021 at 11:57 am

                 The country didn't instigate a housing bubble based on money it borrowed overseas. That would be a very missleading claim, and I expect you would not claim it happened either. Yes, the implication is that the country can manufacture as much capital as it needs to facilitate lending for itself.
                 • Pat …

                   16 February 2021 at 1:48 pm

                   the glut of money sloshing around the world looks for a home and preferably a safe one with good access…..where better than backing the banks of open economies, ones with a political class wedded to the idea of free capital flows. The Banks use that increased reserve capacity to grow their loan books and thereby increase their profits, everybody wins,,,except for the poor mugs being milked for every available penny when they try and enter the housing market,

                   And the Gov is trapped because if they seriously try to do anything about housing affordability that capital in the banks reserves will find a new home …and probably not in NZ.

                   Capital outflow equals negative growth not to mention all the associated problems
2. Ad 2

   15 February 2021 at 2:08 pm

   I have no idea what this is going to achieve, but it's hard to fault the ambition. Pope Francis has just

   https://www.prnewswire.com/news-releases/the-council-for-inclusive-capitalism-with-the-vatican-a-new-alliance-of-global-business-leaders-launches-today-301187931.html

   launched a partnership between the Vatican and some of the world’s largest companies, nonprofits and government agencies to reform capitalism.

   The Council for Inclusive Capitalism with the Vatican is led by Guardians for Inclusive Capitalism, a group of officials representing such entities as the Bank of America, BP, Dupont, the Ford Foundation, Mastercard, Merck, the Rockefeller Foundation, Salesforce, Visa and the State of California.

   Under the Pope’s guidance, these “guardians” aim to “reform capitalism into a powerful force for the good of humanity” and create a “more inclusive, sustainable and trusted form of capitalism.”

   https://www.inclusivecapitalism.com/

   Their mission is "to harness the private sector to create a more inclusive, sustainable and trusted economic system."

   Just occasionally I wish Bruce Jesson and Christopher Hitchings were still alive to comment.

   It's too weird for me to even try to comment yet.
   • McFlock 2.1

     15 February 2021 at 2:14 pm

     Should have just called it FaustianPact.com
   • RedLogix 2.2

     15 February 2021 at 2:15 pm

     That's quite remarkable. From your second link:

     Capitalism has lifted billions of people out of poverty, but many in society have been left behind and the planet has paid a price. There is a moral imperative to address this challenge, and we are taking action.

     What a lot of people here have missed is that many boardrooms across the US and EU have been quietly working toward all kinds of social and economic reforms. But because it's 'fucking capitalists' it never gets onto our radar.

     It's a theme I'd have picked up on more – but every time I type the word 'capitalist' a kind of red mist descends. eg McF predictably above.
     • Ad 2.2.1

       15 February 2021 at 2:19 pm

       It's also not unreasonable to look at the Catholic Church's own historical approach to wealth management and go what the actual fuck.
       • RedLogix 2.2.1.1

         15 February 2021 at 2:42 pm

         Well history is tilting in ways never encountered before.

         Basically we've tried three major economic variants – capitalism, communism and fascism – and of the three only the first has shown the necessary evolutionary capacity to adapt to the new world we're heading into.

         It's all about the demographics. Young adults are consumers of goods and services, mid-aged adults are investors in capital and services, and retired adults are consumers of capital. At least in very broad terms.

         For the first time in all of our history our populations are now quite rapidly becoming dominated by late adult to retired aged populations. Fully half of all Boomers will retire in 2022. Suddenly growth is no longer possible or even desirable. And none of the economic systems we've ever attempted have ever been exposed to this scenario – but I'd put my bet on capitalism being the one most likely to evolve to meet the challenge.
         • arkie 2.2.1.1.1

           15 February 2021 at 4:00 pm

           major economic variants – capitalism, communism and fascism

           Could you perhaps explain the differences between these 'economic variants'? Particularly the economic differences between capitalism and fascism.
           Thanks in advance.
           • RedLogix 2.2.1.1.1.1

             15 February 2021 at 4:13 pm

             The other day I found this amazing website …
             • McFlock …

               15 February 2021 at 4:47 pm

               Was Henry Ford fascist or capitalist? Or is it not an "or"?
               • Bruce …

                 15 February 2021 at 10:07 pm

                 He had a pretty good idea of the solution.https://www.financialexpress.com/auto/car-news/forget-electric-cars-henry-fords-cannabis-car-was-made-from-hemp-10xstronger-than-steel-100-green/1384733/ . I think he offered another way, one that may not have had us in our present situation.
             • arkie …

               15 February 2021 at 5:04 pm

               I was asking you RL as you are perhaps the only person I've ever heard claim fascism is an economic system.

               So please back up your statement with some facts or you're the one who needs that site you just found.
3. RedBaronCV 3

   15 February 2021 at 2:52 pm

   I see China are trying to join the TPP as is the UK. Does this mean that a large state actor like China or the UK could sue our government if we don't toe their line with regard to commercial companies. Given that a lot of chinese commercial investment seems to have some sort of state back up how exposed does this leave us?

   I'm pretty confused but is it time that the existing TPP members rolled back a lot of the not actual trading and tariffs parts of the agreement so that the grouping is less attractive to major players. It all seems to reduce our ability both domestically and internationally? Should a trade agreement affect domestic politics that much?

   https://www.interest.co.nz/news/109042/big-japanese-quake-china-targets-nz-over-tpp-application-us-sentiment-waivers-canada

   https://asia.nikkei.com/Editor-s-Picks/China-up-close/Analysis-A-new-Anglo-Japanese-alliance-threatens-China-s-TPP-plans
4. Johnr 4

   15 February 2021 at 5:15 pm

   Dorklander here. Oh the evils of a lockdown. No warning and the bottle store closes. Have to sundown on a 15 year Chivas Regal rather than my ho hum teachers
   • weka 4.1

     15 February 2021 at 7:16 pm

     NZ hellhole.
5. Sabine 5

   15 February 2021 at 6:52 pm

   For the radio listeners among us.

   This link is a big bad rabbit hole to follow, so don't say you weren't warned.

   Essentially every little green dot is a radio station. Have fun.

   http://radio.garden/
   • weka 5.1

     15 February 2021 at 7:16 pm

     lol, fair warning!
   • Drowsy M. Kram 5.2

     15 February 2021 at 9:06 pm

     Thanks Sabine – amazing.
6. Muttonbird 6

   15 February 2021 at 9:22 pm

   Watercare does Watercare, again.

   https://www.nzherald.co.nz/nz/contractors-accidentally-pour-2000-tonnes-of-cement-like-grout-into-auckland-water-main/SURUDLSTLBJU7BDNL4XWMEY52U/

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