sometimes feel that I’m living in some sort of a bubble…or an echo chamber..as nearly all of the people around me see that there absolutely needs to be change.
You are living in a bubble,,,a housing bubble without historical precedent. The problem is that nobody wants to label it as such in public. Unfortunately, change will probably occur, but likely outside the power of any govt initiative. The ramifications of housing bubbles are horrendous and attempts to aggressively promote them as an economic pillar results in warped, high-cost economic structures. Australia is a case in point. Since the GFC, average household weekly disposable income has grown by $27, while house prices have exploded and private debt has gone off the Richter.
Talking to people who own bars and the like, it’s often a similar thing here. People who aren’t lifers are more likely to have a positive attitude to the job, precisely because they wont be doing it forever.
Actually it's not explicitly stated, but many small businesses actually rely on "cheap labor" too, regardless if they're from emerging economies or from self-actualizing Europe. That is not unusual in high-cost bubble economies economies. Australia is no different.
It’s not only prices – and let’s be real, Auckland’s housing unaffordabilty has multiple causes – but supply. The numbers are striking. According to Statistcs NZ, Auckland’s new-dwellings shortfall versus poulation growth is running at around 5000 a year. The cumulative shortfall from 1012 to 2016 was more than 20,000.
Demand and supply side factors are all shaped by a political economy that is firmly fixated on rent seeking as the key driver of national wealth and consumer spending. Which is more harmful to house prices and infrastructure: immigration or a retail banking sector which is an extension of Australia’s massive mortgage factory that relies on implicit taxpayer guarantees and monetary frameworks that are ideal for our reliance on perpetual current account deficits and household debt?
Because you cannot quantify each independent variable and model the impact, then the media and the general populace will focus on what they think they intuitively feel is the driver. Personally, I feel that immigration is part of a bigger strategic objective: the transfer of savings from productive efforts in other parts of the world.
Rent seeking is pernicious, even though it is now the foundation of NZ’s national wealth and general aspiration. It is also a virus that afflicts political ideologies on both the right and the left. Economist Cameron Murray’s ‘Game of Mates’ addresses.
And NZ has struggled to monetise its local innovators who could reduce the nation’s dairy industry dependency, because most of the local investment capital has gone into the housing bubble instead of the productive sector.
Commercialize would be far more apt than monetize. But your point is important: The economy is geared towards rent seeking over productive activity.
That's an interesting discussion about Japan. I'd just add that Japan suffered one of the biggest asset price and property busts in history in 1990. It's not easy to recover from economic trauma of that magnitude and I'd be slow to accept that its experience is evidence against orthodox monetary and fiscal policies.
Suffice to say that it's generally a mistake to expose an economy to significant asset price and housing market inflation...
Sure, but the argument that Japanese h'holds are still deleveraging after 30 years is a tough assumption, particularly when h'hold debt to GDP never went past 60%. Compare that to NZ where it is close to 170%. The reality is that the bulk of private debt in the bubble was held in the private sector, but the average h'hold was relatively sober.
The idea that the Anglosphere can promote bubble economics and rely on the govt to step up to the plate when it all turns to custard is fundamentally wrong. While I harp about Japan, I can't really think of a better example of how Keynesian policy has not worked in terms of improving the lot of the family unit. In the case of NZ, there needs to be some strong discussion of what Keynesian policy actually means. For ex, public investment in housing is an obvious departure point, but it has the obvious pain points when the economy is being arguably driven by price speculation and its impacts on consumer spending. This is probably where the lessons from Japan are most relevant.
Spending and debt are not the same.
No they are not the same, but govt spending ultimately leads to public debt. You will not find any economist finding fault with that assertion the Japan's public debt is the result of post-bubble Keynesian policies.
when they have the opportunity; but several factors have been removing that opportunity. The Japanese bank interest rate effectively went to zero more than 20 years ago and some inter-bank rates went negative this year.
Well yes. And the world that Mike Moore has inhabited, interest rates are higher because NZ needs to run perpetual current account deficits.to fund its lifestyle. Much like Australia, the interest rate must be positive in order to attract capital inflows. That's why NZ is regarded as a debtor nation and Japan as a creditor nation. However, that still ignores the point. There is no evidence that Keynesian policies at their most extensive have driven incomes or maintained h'hold savings. Holding onto an idea because you want to believe doesn't stand up to what we know and can to see.
Japan’s economic system has been perverted by “roads to nowhere” pork-barrel politics – much like the US military-industrial complex – which isn’t the same thing as well-managed Keynesianism.
Oh, so you are saying that that the central planning can be better? Do you have any particular examples that you would like to share? And what relevance does it have to Keynesian policy and the financial state of h'holds? Japan has extensive public housing and probably the most advanced public transport on the planet. Has it maintained h'hold incomes and savings? Well no it hasn't. The h'hold savings rate went below 0 in 2014. This in a country renowned for being savers.
It would be good if you could give a source for your assertion about spending relative to GDP, because it did not take me long to find, in the OECD data, some countries which appear to spend more than Japan.
The data clearly shows Japan’s debt to GDP as the highest among OECD countries.
Nevertheless, that misses the whole point that Keynesian policies (at their most generous) have failed to maintain h’hold incomes and savings in arguably one of the most productive countries in the world. That is why Moore and other proponents of public spending as a magic pill to support h’holds financially are speaking with forked tongues.
Well, Keynesianism is still valid. Not totally valid, we have a global market, but if it does work, it works for people on modest incomes. If you give them a break, put more money in their pockets, they’re going to buy local, they’re going to buy couches, not piss off and buy overseas wine or take foreign trips. That’s why the Budget took out two months’ retail spending this year.
Well after time, we know that is nonsense. Case in point: Japan, which has seen more public spending relative to GDP than any other nation in history while h’hold incomes and h’hold savings continue to shrink. Perhaps Moore was envisaging a future of perpetual current account deficits and the wonders of a monetary mechanism that enables the banking system to “lend into existence”. If he were, then he was spot on. But if he were suggesting that Keynesian policy is an option that govts can unleash when needed for the security and incomes of h’holds, economic history shows that he is wrong.
WPP (GroupM) and Vice also have an investment partnership. Sorrell's evil empire expands like a virus.
Yes, your Onkyo receiver does have very good DACs, most likely Burr Brown. In a previous life, I worked for Onkyo HQ in Osaka and one salt-in-the-earth engineer lectured me occasionally on why his team considered the DACs more carefully with the design and output stages than the competing manufacturers.