Posts by Rich of Observationz

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  • Speaker: A week on from the housing controversy,

    Well, if you won nothing else, you got rid of half of Pagani and Quin's nascent "faction". I'd call that a win.

    Back in Wellington • Since Nov 2006 • 4791 posts Report Reply

  • Speaker: Identification strategy: Now…, in reply to BenWilson,

    Van Gogh’s and the like are Veblen goods – their desirability is based on the price.

    A better example of a market good would be secondhand cars, which rise and fall in price according to supply and demand. If there’s a shortage of cars, the price goes up, but only by a limited degree, as people settle for older and rattier cars and more vehicles are imported.

    In the case of Auckland property, you need to consider whether anyone would buy a tumbledown shack in a semi-ghetto for a million dollars if there was no expectation of substantial future gains. Probably not. Some people would be forced to, but many would rent or move elsewhere – and nobody would buy properties to rent out unless the rent covered the mortgage and other costs.

    (In most countries, most of the time, you can buy a property on a mortgage, rent it out and make a small profit. This hasn’t been the case in NZ for years. Same with farms, even at inflated dairy prices).

    Back in Wellington • Since Nov 2006 • 4791 posts Report Reply

  • Speaker: Identification strategy: Now…,

    I've seen it suggested elsewhere that the Chinese will be zeroing their interest rates in response to their stock market crash. If they do that, then sure, it'll get the stock market moving upwards, along with every other "market" that could benefit from a flood of very cheap money. Essentially the Chinese government will be printing money (there will be no other way to fund the banks other than through QE) and feeding it to the middle class to buy assets on margin.

    Of course, this will have two effects:
    - nobody will bother building up their widget factories when they can make way more money in financial speculation
    - eventually, the governments cash/credit will run out and it'll all come to a juddering halt

    If they do this, I expect we've got 2-5 years before the crash, depending on the level of tolerance international markets have

    Back in Wellington • Since Nov 2006 • 4791 posts Report Reply

  • Speaker: House-buying patterns in Auckland,

    The Manapouri power goes direct to Tiwai and there are no high capacity lines to ship it north when (not if) the smelter closes

    There are lines - the current problem is that they don't have capacity to ship power South, not North. Obviously, power doesn't have to be transmitted all the way from a generator to a user. If Tiwai Point closes, Manapouri will (e.g.) supply all the power to Dunedin and points south, so they won't sink power from Christchurch, which will mean there'll be more power for the North Island, etc.

    There's also a difference between peak power and continuous energy - even if the lines are at full capacity at peak times, they won't be at off peak times and it will be possible to export power north, avoiding the use of water in the Clyde and other dams.

    Also, the system is already being enhanced, both in the lower South Island and the Cook Strait interconnector:

    http://www.nbr.co.nz/article/if-tiwai-point-smelter-shuts-no-problem-getting-power-auckland-ck-138278
    https://www.transpower.co.nz/sites/default/files/plain-page/attachments/LSI%20Reliability%20GUP%20Attachment%20C%20-%20Power%20System%20Analysis_1.pdf

    Back in Wellington • Since Nov 2006 • 4791 posts Report Reply

  • Hard News: Friday Music: Silver and Gold,

    When does Hosking have a not-Alan Partridge moment?

    Back in Wellington • Since Nov 2006 • 4791 posts Report Reply

  • Speaker: House-buying patterns in Auckland, in reply to Katharine Moody,

    all through the Clark/Cullen years the surpluses were mainly due to the influx of overseas capital taking ownership of our farms, forests and houses

    How does that create a * fiscal * surplus, though? The Clark/Cullen administration stayed in surplus simply because they had an efficient public service and ran taxes at a level that adequately covered costs.

    National have cut taxes for their mates, damaged the tax base (it started under Clark, granted) by letting the wealthy convert taxable income into untaxed capital gains and damaged public service efficiency (think consultants replacing salaried staff). Hence they struggle to run a surplus despite lower levels of services.

    Back in Wellington • Since Nov 2006 • 4791 posts Report Reply

  • Speaker: House-buying patterns in Auckland,

    I wouldn't expect a real estate agent to collect statistics. I would expect the public bodies paid to do this to collect decent data on the largest part of the economy.

    Back in Wellington • Since Nov 2006 • 4791 posts Report Reply

  • Speaker: House-buying patterns in Auckland, in reply to David Hood,

    What does "value of NZ houses" mean? Is that the total volume of sales, or a proxy for it.

    Why don't Stats collect proper data in this area, anyway? They could get the transaction data from Linz, you would think, and provide figures for total volume, average price/GV, etc. It's impossible to even track down numbers for total GV in a region or nationally - you have to guess by dividing council income by the rates percentage (which is also a hidden number).

    Anyone would think this data is deliberately obfuscated?

    Back in Wellington • Since Nov 2006 • 4791 posts Report Reply

  • Speaker: House-buying patterns in Auckland, in reply to A C Young,

    It's only the land that has long term value and inflates. The shack you built on it will be firewood in a few hundred years, and the flash kitchen will be in the dump shop in thirty. People forget this as part of their house porn fueled delusions, of course.

    Back in Wellington • Since Nov 2006 • 4791 posts Report Reply

  • Speaker: House-buying patterns in Auckland, in reply to BenWilson,

    The answer would be a scheme where the state bails out the (former) home-owner by swapping their unpayable debt for government bonds, taking ownership of the property and granting them a lifetime, maintaining tenancy. Then put the properties into community co-operatives so that people have collective control over "their" joint properties rather than dealing with the government directly.

    Dancing Cossacks FTW!

    Back in Wellington • Since Nov 2006 • 4791 posts Report Reply

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