Hard News by Russell Brown

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Hard News: Deadly Exuberance

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  • Kyle Matthews,

    Meanwhile, anyone who does the vege shopping will be noticing the sump in the retail price of produce: I have no figures on it, but it seems to me that January prices have arrived at the beginning of December; driven down, at least in part, by the plummeting price of petrol. Confused?

    In my mind this now means that lots of farms were growing veges in barrels of oil.

    I've got them growing in black 25 litre PVC bags against a fence in full sun - some of them are starting to behave like vines & growing along the fence. It looks cool.

    Planting potatoes in bags this weekend.

    Dude, there's this thing called 'the ground' y'know?

    Since Nov 2006 • 6162 posts Report Reply

  • andrew llewellyn,

    At least on the gardening front I won on broccoli (harvested and eaten while it was still $3+/head in shops. Score.)

    Very good score Lucy, I find growing broccoli does wonders for feeding the local aphids and white butterflies.

    Dude, there's this thing called 'the ground' y'know?

    Potatoes like something you can build up the soil in as they grow - tyres, buckets, I just happen to have a load of 25 litre bags. We'll see how it goes.

    What's left at the end just goes in the compost.

    Since Nov 2006 • 2073 posts Report Reply

  • Paul Campbell,

    Matthew - the US system, which I lived under when I was there so it may have changed, has exemptions for ones primary residence - if you sell it and buy another within some reasonable time and the value of the new one is less or equal to the old one there's no taxable gain - there's also a one time (in a lifetime - think retirement) waiver on selling and buying a cheaper house (yes old people do vote in the US - a lot more than everyone else) - doesn't apply to rental property, or holiday homes or ..... that sort of takes the issues that most people would have with their houses out of the mix (would also make for an easy transition here in NZ) and leaves the tax to speculators

    By default in the US all capital gains are just treated as income - you pay at your marginal rate - if you register a purchase with the IRS and hold on to it for long enough (3-5 years) then you qualify for a lower 'capital gains tax rate' (25% rather than 33% federal) - so there "capital gains tax" is perceived to be a lower tax while here it would be a higher one - which colours people's perceptions

    Dunedin • Since Nov 2006 • 2111 posts Report Reply

  • Matthew Poole,

    Paul, rental property is excepted here, too, because there's an exemption on property bought for the purpose of investment (investment meaning generation of income, not capital gain). However, when you've got people who are serial owners of rental properties for fairly short periods of time it gets a bit distorting. They're technically not subject to the tax, but everyone knows they're actually speculating. That'd need to be closed.

    Also, the "capital gains tax" as it exists here is just that the gain becomes part of your income and is subject to tax at the appropriate marginal rate. Just like in the US. The difference is that there you're pretty much forced to declare it, whereas here you have to be fairly unlucky to end up having to declare it. Other than that, there's no real difference in the tax treatment.

    The pit from whence crawl… • Since Mar 2007 • 3901 posts Report Reply

  • Paul Campbell,

    I'm not sure what the difference here is between "investment" and "capital gains" - in the US buying anything (a stock, a property, art, etc etc) for X$ and selling it for Y$ is a capital gain

    what you want to do is encourage long term investment - in particular investment in things that create real real wealth rather than just making money from moving money around which in the end just makes a bubble

    Dunedin • Since Nov 2006 • 2111 posts Report Reply

  • 3410,

    Don't know that current vege prices are anything special. In my experience they crash very soon after the sun comes out.


    ¿When the OCR gets cut by 1.5%, how come the banks only drop their rates by 0.5% or 0.75% ? (Yes, I'm economically under-literate.)

    Auckland • Since Jan 2007 • 2618 posts Report Reply

  • Rich of Observationz,

    suddenly 7.95% doesn't look like a decent rate.

    That rate included the expectation that rates were going to fall. That's one reason why it was cheaper than a floating mortgage.

    Your house isn't costing you any more than it did on Wednesday. You just aren't getting it as cheaply as people who mortgage today.

    We would be much better off if people regarded housing as an expense of life, not a magical way to make money without working.

    Back in Wellington • Since Nov 2006 • 4439 posts Report Reply

  • andrew llewellyn,

    In my experience they crash very soon after the sun comes out.

    Which irritatingly coincides with growing season. It's just. not. fair.

    Since Nov 2006 • 2073 posts Report Reply

  • FletcherB,

    ¿When the OCR gets cut by 1.5%, how come the banks only drop their rates by 0.5% or 0.75% ?

    The banks will claim they had already lowered their rate in anticipation of the coming drop...

    Whether there's any truth in it, I couldn't say?

    West Auckland • Since Nov 2006 • 794 posts Report Reply

  • Matthew Poole,

    When the OCR gets cut by 1.5%, how come the banks only drop their rates by 0.5% or 0.75% ? (Yes, I'm economically under-literate.)

    At least in part it's because they mostly have to get their funds from offshore, since there's far too little cash sloshing around within NZ bank accounts to cover our prediliction for property. That cash is harder to get at the moment, and must generate a greater return than would be available within its home country/countries, ergo is more expensive. Interest is the cost of borrowing, after all.

    The OCR is the cost of borrowing from the Reserve Bank, and the RB won't lend to banks as a long-term proposition. So the OCR is indicative, not determinative.

    The pit from whence crawl… • Since Mar 2007 • 3901 posts Report Reply

  • Matthew Poole,

    what you want to do is encourage long term investment - in particular investment in things that create real real wealth

    Completely agree. It's this that makes me so stridently against people being able to own 10, 20, 30 rental properties. That's not growing the economy. It's not contributing to the means of production. It's just depriving real wealth-makers of possible funds by tying the money up in unproductive assets.

    The pit from whence crawl… • Since Mar 2007 • 3901 posts Report Reply

  • Paul Campbell,

    well rental properties are not completely unproductive - people need places to live (but rents have been driven in part by the real estate speculation of the past few years - now there's a glut).

    What they don't do is have the multiplying effect that benefits everyone - I invent a cool new widget, you use the widget to make a new product, they buy the new cheaper product and get some new benefit from it.

    Could be worse though - consider the arms industry - governments take tax money and buy expensive armaments ... then they blow them up and buy more

    Dunedin • Since Nov 2006 • 2111 posts Report Reply

  • DeepRed,

    Completely agree. It's this that makes me so stridently against people being able to own 10, 20, 30 rental properties. That's not growing the economy. It's not contributing to the means of production. It's just depriving real wealth-makers of possible funds by tying the money up in unproductive assets.

    Second that. The little Machiavellian in me says that subprime sharks would succeed where a capital gains tax might fail.

    Seriously though, investors still remember Black Monday and Fay Richwhite like they happened last week. Kiwisaver and R&D tax breaks are part of the solution, but they've been raided so that Kath & Kim can buy a new Hummer. It wouldn't be far fetched to see credit cards going subprime, the main difference is we'd be seeing repo men instead of foreclosure signs...

    The southernmost capital … • Since Nov 2006 • 4226 posts Report Reply

  • Shep Cheyenne,

    Another one bites the dust....

    David Kirk resigns! 68% loss of stock value in a year.

    That Trade Me guy must be ROFL

    Since Oct 2007 • 927 posts Report Reply

  • Jonathan Maze,

    The Macys parade in NYC got Rick Rolled by the real Rick Astley:

    http://www.huffingtonpost.com/2008/11/27/macys-parade-rickrolled-r_n_146896.html

    Auckland • Since Jul 2007 • 28 posts Report Reply

  • Idiot Savant,

    The flavour of freshly picked tomatoes tends to be better than that of those bought from shops

    And that goes double for strawberries.

    Palmerston North • Since Nov 2006 • 1639 posts Report Reply

  • giovanni tiso,

    It wouldn't be far fetched to see credit cards going subprime, the main difference is we'd be seeing repo men instead of foreclosure signs...

    Totally unsolicited, the National Bank sent us a pre-approved form for a shiny new pair of Visa Platinum cards (motto: "the world is your concierge"). The copy, the font screaming "prestige!" and the accompanying pictures are all to die for. A gloved hand holds a door open for us: finally I'll get the respect I deserve! And for every dollar spent, we get two platinum points*, redeemable for rewards that at this stage are totally mysterious. (Whereas currently we get a humble but dependable 0.1% cashback).

    I should add, given you're probably not familiar with the financial situation of my household, that this amounts to a SPECTACULAR lowering of the standards for platinum status.

    *Notice the genius of the marketing: you get two points for every dollar spent, but it's not as if there's any other way to get these points, so the ratio is in fact completely arbitrary. It could be a million points per dollar, it'd really make no difference. But it looks like you're going to get your rewards twice as fast this way.

    Wellington • Since Jun 2007 • 7354 posts Report Reply

  • Kyle Matthews,

    And that goes double for strawberries.

    The birds feasting on my strawberry patch just as they turn ripe are evidence of this.

    Since Nov 2006 • 6162 posts Report Reply

  • dc_red,

    this amounts to a SPECTACULAR lowering of the standards for platinum status

    Brilliant. For too long my household has been hamstrung by its lowly gold status (which they practically give free to infants, dogs and serial bankrupts, right?) - finally we can aspire to doors being opened for us at the flash of a card.

    It could be a million points per dollar, it'd really make no difference.

    Don't tempt them...

    Oil Patch, Alberta • Since Nov 2006 • 706 posts Report Reply

  • Steve Parks,

    ...that this amounts to a SPECTACULAR lowering of the standards for platinum status.

    Gold cards were once the 'status' cards. Now Gold cards are perceived to have little to no prestige value anymore, and Platinum cards are the new Gold cards. So you're Golden, Giovanni.

    pre-approved form for a shiny new pair of Visa ...

    Do they have a MasterCard option? If so, always go MasterCard. That's a bit of general, all be it unsolicted, advice*.

    *Made in good faith but with absolutely no responsibility whatsoever on the part of this poster. But I'm right.

    Wellington • Since May 2007 • 1142 posts Report Reply

  • Matthew Poole,

    I should add, given you're probably not familiar with the financial situation of my household, that this amounts to a SPECTACULAR lowering of the standards for platinum status.

    Hey, I got an ANZ Qantas Platinum card a couple of years ago. While a full-time student. With no job. The delicious irony was that I'd applied for the predecessor Gold card when I did have a job, and got declined. Twice.

    Unless it's an American Express Centurion Card it's really not worth getting excited about.

    The pit from whence crawl… • Since Mar 2007 • 3901 posts Report Reply

  • Steve Parks,

    which they practically give free to infants, dogs and serial bankrupts, right?

    Don't be silly!

    They would not give them away free.

    Wellington • Since May 2007 • 1142 posts Report Reply

  • Blake Monkley,

    Am I missing something, these massive rate cuts we're seeing all over the world can bring some benefit in the short-term, in the long-term they will only recreate the conditions that brought about this mess in the first place. Lowering interest rates will have the same effect as a dose of smack would have to someone who's already overdosing on the stuff.

    Auckland • Since Jul 2008 • 215 posts Report Reply

  • Grant McDougall,

    Still not as scary as Richie Benaud in HD. Nothing may ever be.

    Back in September I was having a beer at the Admiral Nelson pub (I highly recommend their inhouse beers), in The Rocks, Sydney, when, lo, and indeed, behold, the mighty man himself walked.
    The greatness of the occasion was enhanced by the fact that he was wearing a cream leisure suit.

    Dunedin • Since Dec 2006 • 590 posts Report Reply

  • giovanni tiso,

    So you're Golden, Giovanni.

    I've been waiting so long to hear you say that...

    Wellington • Since Jun 2007 • 7354 posts Report Reply

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