victoria24
30th September 2008, 07:47 PM
the worldwide economy crisis? my cousin in oz says she hasnt heard of any banks going under etc.
is NZ sheltered from..
Mickstim
30th September 2008, 07:56 PM
Well. it's all over the NZ news that we are in a recession/heading for a depression, but haven't heard of any banks going under yet!!
Bx
Bx
kanatakiwi
30th September 2008, 08:00 PM
No. Its not just about banks going under. When the US sneezes the rest of the world gets a cold. the NZ economy is reeling today as a result of the US market meltdown. For example the world markets have affected the value of the NZ superannuation fund which has lost $881 million in recent months.
I am reminded of that other thread elsewhere on the forum where many people were urging Americans to get out as soon as possible and escape to NZ to weather the storm. I think that's pretty unrealistic.
Here is a story from today's NZ Herald: (which talks about the damage to NZ economy from the US economic failure
http://nz.news.yahoo.com/a/-/top-stories/5049384/bailout-failure-damage-nz-cullen-key/
I am reminded of that other thread elsewhere on the forum where many people were urging Americans to get out as soon as possible and escape to NZ to weather the storm. I think that's pretty unrealistic.
Here is a story from today's NZ Herald: (which talks about the damage to NZ economy from the US economic failure
http://nz.news.yahoo.com/a/-/top-stories/5049384/bailout-failure-damage-nz-cullen-key/
M-Squared
30th September 2008, 08:48 PM
There's better risk management in NZ as there's no deposit insurance. All the banks, with the exception of Kiwibank, are owned by Australian holding banks. However, they all, without exception, report first and foremost to the Reserve Bank of New Zealand, and must have a certain amount of cash deposited with the RBNZ. Some exceed their obligations, e.g. BNZ has more money than is required deposited with the RBNZ. :nice1 Because NZ banks haven't delved into the sub-prime market, we are, to a certain degree, sheltered from that.
Today stocks dropped 4.5% on the news of the failure of the bail-out package, however unlike in Australia, the stock market did rally before the closing bell. :nice1
Today stocks dropped 4.5% on the news of the failure of the bail-out package, however unlike in Australia, the stock market did rally before the closing bell. :nice1
wilson182
1st October 2008, 07:45 AM
We have lost a fair few Finance companies though - I googled it and I think its 21 that have gone under.
nellyt
1st October 2008, 10:00 AM
However, they all, without exception, report first and foremost to the Reserve Bank of New Zealand, and must have a certain amount of cash deposited with the RBNZ. Some exceed their obligations, e.g. BNZ has more money than is required deposited with the RBNZ.
You may of answered the question I was about to ask.
There seems to be a lot of talk in the UK about he 35k UKP protected amount in deposit/savings accounts.
We have a large amount with a sinlge bank here in NZ (HSBC), before building a house and were wondering if we should split it between a few banks.
Are you saying that all NZ accounts are underwritten by the RBNZ?
Surely there must be a limit on any one acocunt they will guarantee?
You may of answered the question I was about to ask.
There seems to be a lot of talk in the UK about he 35k UKP protected amount in deposit/savings accounts.
We have a large amount with a sinlge bank here in NZ (HSBC), before building a house and were wondering if we should split it between a few banks.
Are you saying that all NZ accounts are underwritten by the RBNZ?
Surely there must be a limit on any one acocunt they will guarantee?
CJ22
1st October 2008, 10:43 AM
They're talking about guaranteeing ALL savings in the UK in the future.
victoria24
1st October 2008, 08:02 PM
its the really rich that should be worried. where is a "safe" place to put all your money? i cant think of one apart from cash under the bed
thewoodies
2nd October 2008, 01:40 AM
They're talking about guaranteeing ALL savings in the UK in the future.
JUst watching the news - talk of 1st £50,000 - someone told me - so not sure if true - be careful where you spread it because some banks are linked so it would only be first £50,000
JUst watching the news - talk of 1st £50,000 - someone told me - so not sure if true - be careful where you spread it because some banks are linked so it would only be first £50,000
ant7jen
2nd October 2008, 01:58 AM
:laughAnyone want to sponsor an American family of 3?
CJ22
2nd October 2008, 06:07 AM
JUst watching the news - talk of 1st £50,000 - someone told me - so not sure if true - be careful where you spread it because some banks are linked so it would only be first £50,000
Turns out I mis-heard - it's the Irish gov that's planning on it, and Europe is whinng about it because they say it gives Irish banks an unfair advantage. :uhoh
Turns out I mis-heard - it's the Irish gov that's planning on it, and Europe is whinng about it because they say it gives Irish banks an unfair advantage. :uhoh
cowtown#2
2nd October 2008, 09:02 AM
I'm no economist, but I think everyone around the world will be affected.
I also saw this article a few days ago http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10454821,
it's old but reflects how the NZ housing market could head down a similar path.
If people lose money on investments, banks toughen their lending criteria, and interest rates increase, it's bound to cause house prices to drop. Now it may not cause as hard of a hit as when entire lending sectors collapse, but could still cause a lot of grief to people ending up with a mortage worth more than their house.
On the other hand, this may be good news for those of us who are thinking of buying a house in a couple of years....provided we qualify for the mortgage.
I also saw this article a few days ago http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10454821,
it's old but reflects how the NZ housing market could head down a similar path.
If people lose money on investments, banks toughen their lending criteria, and interest rates increase, it's bound to cause house prices to drop. Now it may not cause as hard of a hit as when entire lending sectors collapse, but could still cause a lot of grief to people ending up with a mortage worth more than their house.
On the other hand, this may be good news for those of us who are thinking of buying a house in a couple of years....provided we qualify for the mortgage.
nellyt
2nd October 2008, 10:05 AM
You may of answered the question I was about to ask.
There seems to be a lot of talk in the UK about he 35k UKP protected amount in deposit/savings accounts.
We have a large amount with a sinlge bank here in NZ (HSBC), before building a house and were wondering if we should split it between a few banks.
Are you saying that all NZ accounts are underwritten by the RBNZ?
Surely there must be a limit on any one acocunt they will guarantee?
Reply from our manager at HSBC-NZ :
"There is no such scheme in New Zealand."
There seems to be a lot of talk in the UK about he 35k UKP protected amount in deposit/savings accounts.
We have a large amount with a sinlge bank here in NZ (HSBC), before building a house and were wondering if we should split it between a few banks.
Are you saying that all NZ accounts are underwritten by the RBNZ?
Surely there must be a limit on any one acocunt they will guarantee?
Reply from our manager at HSBC-NZ :
"There is no such scheme in New Zealand."
Gar1
3rd October 2008, 10:06 AM
IMHO no it not.
While most of NZ trade is farming/food and there will always be a demand for these products, this may soften the blow, but there are other things that may not be so good. NZ trades in the world economy; if things get tight in this economy then all trade slows. If America and Europe go hard in to recession then IMHO NZ will eventually follow, and will probably be one of the last countries to come out the other side.
Also if there is a reduction in visitor numbers this will have a massive effect on the NZ economy.
While most of NZ trade is farming/food and there will always be a demand for these products, this may soften the blow, but there are other things that may not be so good. NZ trades in the world economy; if things get tight in this economy then all trade slows. If America and Europe go hard in to recession then IMHO NZ will eventually follow, and will probably be one of the last countries to come out the other side.
Also if there is a reduction in visitor numbers this will have a massive effect on the NZ economy.
b&k
3rd October 2008, 10:20 PM
NZ has little direct exposure to the US sub-prime problems but is exposed to its own housing downturn. People failing to pay their mortgages will have their houses repossed which the bank will sell on at possibly less than the outstanding mortgage causing the bank to make a loss.
NZ is also exposed to the global economy as stated above so trading partners will have less to spend.
On the upside, high interest rates have dampened the property market more than in other countries and NZ is a big trading partner with Asia which is not in recession.
How bad and how long the recession is in NZ, only time time will tell.
NZ is also exposed to the global economy as stated above so trading partners will have less to spend.
On the upside, high interest rates have dampened the property market more than in other countries and NZ is a big trading partner with Asia which is not in recession.
How bad and how long the recession is in NZ, only time time will tell.
Moorf
4th October 2008, 12:47 AM
It's okay, the NZ recession has been avoided - the price of cheese is coming down :D
victoria24
4th October 2008, 02:09 AM
i love cheese :-)
Mrs Pony
4th October 2008, 09:28 AM
Oh I love cheese too!!! ... but not swiss... always thought there was something missing ... :o
I think I heard that with this new bill here in the US all funds up to $250K will be safe if anything happens...
I think I heard that with this new bill here in the US all funds up to $250K will be safe if anything happens...
TJH
4th October 2008, 12:07 PM
I think you are talking about the FDIC insurance on accounts. I know it is at least $100k but it may have been raised to $250k with this new bill. However, the fund that this insurance is paid out from is running low.
http://news.yahoo.com/s/ap/20080916/ap_on_bi_ge/bank_deposits_safety
http://news.yahoo.com/s/ap/20080916/ap_on_bi_ge/bank_deposits_safety
BkyMonster
5th October 2008, 11:05 AM
NZ maybe heading into a recession but people at least in ChCh are still shopping and presumably spending far far more than I have seen in the US in 7 or more years.
I really haven't seen such active shops since the 1990's.
I really haven't seen such active shops since the 1990's.
Super_BQ
9th October 2008, 10:54 PM
Things are going to get very bad. Mark my words. Not often when all major continents are in financial crisis. Europe may follow suit of the US credit crisis. Asia is fully dependant on exports to the west so when they're in depression, then Asia will for surely feel the pain.
Warren Buffet called it right many years ago. Don't blame the banks for getting into this mess. The key problem (and is an often accepted worldwide belief), is that housing prices only went UP. So when you create an environment where anyone can buy a home (rich or poor), then you create a huge housing bubble no different than the dot.com bubble 10 years ago.
In a recent interview with Warren Buffet (from Charlie Rose Oct 1st, 2008), he used the example of the "3 I's" - The Innovators, The Immitators, & The Idiots. You have a common situation where the husband and wife looks at their neighbors to see what they're doing. They think they are smarter than their neighbors but what they see is that the neighbors have gone out to buy a new house or some rental properties. The guy doesn't want to be left looking like an 'idiot' because he sees everyone buying property. So instead of becoming an 'idiot', he becomes an 'immitator'. How could he/she not resist the temptation of going to the bank and easily getting a loan.
Then on the other hand, you have the banks which are the 'innovators' that managed to find a way to give $ easily to the likes of couples with 5% down or less. Even worse, to those that are classed as NINA - "No Income No Assets". The banks had a clever way of re-securitising these mortgages on Wall Street that after these debentures were passed on by several hands, the firms that hold these papers had no way of knowing what assets they were tied to.
Bernard Hickey (NZ journalist blogger) insists NZ houses will drop 30% from it's high. I'm glad my $ isn't in a house.
Warren Buffet called it right many years ago. Don't blame the banks for getting into this mess. The key problem (and is an often accepted worldwide belief), is that housing prices only went UP. So when you create an environment where anyone can buy a home (rich or poor), then you create a huge housing bubble no different than the dot.com bubble 10 years ago.
In a recent interview with Warren Buffet (from Charlie Rose Oct 1st, 2008), he used the example of the "3 I's" - The Innovators, The Immitators, & The Idiots. You have a common situation where the husband and wife looks at their neighbors to see what they're doing. They think they are smarter than their neighbors but what they see is that the neighbors have gone out to buy a new house or some rental properties. The guy doesn't want to be left looking like an 'idiot' because he sees everyone buying property. So instead of becoming an 'idiot', he becomes an 'immitator'. How could he/she not resist the temptation of going to the bank and easily getting a loan.
Then on the other hand, you have the banks which are the 'innovators' that managed to find a way to give $ easily to the likes of couples with 5% down or less. Even worse, to those that are classed as NINA - "No Income No Assets". The banks had a clever way of re-securitising these mortgages on Wall Street that after these debentures were passed on by several hands, the firms that hold these papers had no way of knowing what assets they were tied to.
Bernard Hickey (NZ journalist blogger) insists NZ houses will drop 30% from it's high. I'm glad my $ isn't in a house.
Moorf
9th October 2008, 11:20 PM
Apart from under the mattress.. where should our money be, then?
ourquest
10th October 2008, 12:20 AM
Bernard Hickey (NZ journalist blogger) insists NZ houses will drop 30% from it's high. I'm glad my $ isn't in a house.
I've written a post on another thread commenting on your attitude to housing. This quote confirms for me that you don't live in your own house so again your scathing attitude towards people who rent out property to others should be reviewed in light of the fact that you yourself have chosen to rent a house from somebody (that is unless you live with your mother or share a flat with flatmates in which case I am a bit less likely to listen to your advice).
Some points about housing. If you "own" a house through a mortgage then it provides a place to put excess cash where it can effectively earn the same rate of interest as the mortgage, which is always higher than other bank based options.
If you buy a property to live in, then it is no longer only an investment vehicle, and that makes it a far more attractive proposition. And while you live in it, statistically over a long enough time period it will be both an investment due to capital gain, as well as security allowing financial gearing to purchase additional assets.
And property is the only true investment to which you yourself can add value through thoughtful modification.
Owning a house is a problem when you cannot afford to service the loan and are forced to sell in a depressed market where your mortgage liability exceeds the market value of your house. If the investor/home owner buys below their means and has a sound repayment plan then this risk is largely removed and then panic selling is not required.
"time in the market, not timing the market"
"you never pay too much for a house, only too early"
"the best time to buy property is now, the best time to sell is never".
And remember that the most successful investors are not putting their money into property, they are putting other people's money into property to which they have the right to the capital gain.
I've written a post on another thread commenting on your attitude to housing. This quote confirms for me that you don't live in your own house so again your scathing attitude towards people who rent out property to others should be reviewed in light of the fact that you yourself have chosen to rent a house from somebody (that is unless you live with your mother or share a flat with flatmates in which case I am a bit less likely to listen to your advice).
Some points about housing. If you "own" a house through a mortgage then it provides a place to put excess cash where it can effectively earn the same rate of interest as the mortgage, which is always higher than other bank based options.
If you buy a property to live in, then it is no longer only an investment vehicle, and that makes it a far more attractive proposition. And while you live in it, statistically over a long enough time period it will be both an investment due to capital gain, as well as security allowing financial gearing to purchase additional assets.
And property is the only true investment to which you yourself can add value through thoughtful modification.
Owning a house is a problem when you cannot afford to service the loan and are forced to sell in a depressed market where your mortgage liability exceeds the market value of your house. If the investor/home owner buys below their means and has a sound repayment plan then this risk is largely removed and then panic selling is not required.
"time in the market, not timing the market"
"you never pay too much for a house, only too early"
"the best time to buy property is now, the best time to sell is never".
And remember that the most successful investors are not putting their money into property, they are putting other people's money into property to which they have the right to the capital gain.
victoria24
10th October 2008, 03:31 AM
with ourquest totally on this one.
in answer to moorfs question and referring to the UK currently.. under the floorboards is fairly safe :-)
in answer to moorfs question and referring to the UK currently.. under the floorboards is fairly safe :-)
thewoodies
10th October 2008, 03:40 AM
with ourquest totally on this one.
in answer to moorfs question and referring to the UK currently.. under the floorboards is fairly safe :-)
Or unscrew the bath or toilet and screw it back up - will take them along time to get it ....he......he.....:laugh:laugh
in answer to moorfs question and referring to the UK currently.. under the floorboards is fairly safe :-)
Or unscrew the bath or toilet and screw it back up - will take them along time to get it ....he......he.....:laugh:laugh
IanR
11th October 2008, 06:54 PM
Was shopping around the electrical stores in Westgate (Auckland) today... asked three assistants in seperate stores how things were going...
Bad, badder and worse were the replies... sales volume at around 50% of this time last year (and they've got some aggresive sales on)...
As for the 'discusion' on property... like any other asset one should try to buy when no one else wants them... unfortunately for many that wasn't in the last five years... though it may well be for the next five or even more... the UK now will certainly see 30% off of last years prices... as for NZ prices they seem even sillier when compared to average earnings but Kiwis do seem to sacrifice an awful lot just to 'own' property...
Bad, badder and worse were the replies... sales volume at around 50% of this time last year (and they've got some aggresive sales on)...
As for the 'discusion' on property... like any other asset one should try to buy when no one else wants them... unfortunately for many that wasn't in the last five years... though it may well be for the next five or even more... the UK now will certainly see 30% off of last years prices... as for NZ prices they seem even sillier when compared to average earnings but Kiwis do seem to sacrifice an awful lot just to 'own' property...
Super_BQ
11th October 2008, 11:54 PM
If you "own" a house through a mortgage then it provides a place to put excess cash where it can effectively earn the same rate of interest as the mortgage, which is always higher than other bank based options.
So what you're saying is that any excess cash can return the same % interest as the going mortgage rate? Please enlighten me on how this can be done. The only way I can see it being done is by taking any excess cash and invest it into something with considerably more risk than what the banks offer. Something like Hanover Financing which has still frozen all term investors funds as we speak.
Whether i'm renting, or mortgaging, or living with parents should have no meaning to this discussion. The key point i'm addressing is that the reason why the whole world economy is going to bust is because of the housing bubble. Yes I hold no shame of my previous posts regarding multiple land ownership by landlords ; I suppose i'm the 'idiot' by Buffet terms. He knew banks were being highly leveraged as far back as 2002, and a statement back then by Wells Fargo CEO, "Banks have found new ways of losing money when the old way of losing money was effective enough".
As we see now, it's the de-leveraging of these financial institutions that is killing the world economy. People with perfect credit rating are finding it very hard to impossible to even get a loan. Even a simple student loan. All because of the real estate bubble (worldwide!).
"time in the market, not timing the market"
"you never pay too much for a house, only too early"
"the best time to buy property is now, the best time to sell is never"
Again, this is the kind of thinking that has got us in trouble. I can understand your enthusiasm of being a landloard. But we all have to understand that with that kind of thinking, houses become a commodity no different to say coffee beans and rice. The critial factor is that not everyone drinks coffee and eats rice - so when these commodities crash (or go sky high), it will only affect those that consume these products. But in the case of house (where everyone needs a roof over their head), the 1st time single home owners too will suffer as their home equity drops.
And remember that the most successful investors are not putting their money into property, they are putting other people's money into property to which they have the right to the capital gain.
So the successful investors would be the guys that run Blue-Chip and Hanover Finance? They use the mom&pop $ and invest it into real estate development and after the bubble bursts, they still walk away with a hefty pay package.
So what you're saying is that any excess cash can return the same % interest as the going mortgage rate? Please enlighten me on how this can be done. The only way I can see it being done is by taking any excess cash and invest it into something with considerably more risk than what the banks offer. Something like Hanover Financing which has still frozen all term investors funds as we speak.
Whether i'm renting, or mortgaging, or living with parents should have no meaning to this discussion. The key point i'm addressing is that the reason why the whole world economy is going to bust is because of the housing bubble. Yes I hold no shame of my previous posts regarding multiple land ownership by landlords ; I suppose i'm the 'idiot' by Buffet terms. He knew banks were being highly leveraged as far back as 2002, and a statement back then by Wells Fargo CEO, "Banks have found new ways of losing money when the old way of losing money was effective enough".
As we see now, it's the de-leveraging of these financial institutions that is killing the world economy. People with perfect credit rating are finding it very hard to impossible to even get a loan. Even a simple student loan. All because of the real estate bubble (worldwide!).
"time in the market, not timing the market"
"you never pay too much for a house, only too early"
"the best time to buy property is now, the best time to sell is never"
Again, this is the kind of thinking that has got us in trouble. I can understand your enthusiasm of being a landloard. But we all have to understand that with that kind of thinking, houses become a commodity no different to say coffee beans and rice. The critial factor is that not everyone drinks coffee and eats rice - so when these commodities crash (or go sky high), it will only affect those that consume these products. But in the case of house (where everyone needs a roof over their head), the 1st time single home owners too will suffer as their home equity drops.
And remember that the most successful investors are not putting their money into property, they are putting other people's money into property to which they have the right to the capital gain.
So the successful investors would be the guys that run Blue-Chip and Hanover Finance? They use the mom&pop $ and invest it into real estate development and after the bubble bursts, they still walk away with a hefty pay package.
James 1077
12th October 2008, 04:17 AM
So what you're saying is that any excess cash can return the same % interest as the going mortgage rate? Please enlighten me on how this can be done.
This is relatively simple - you use the cash to pay off your mortgage. Said cash therefore decreases the amount of mortgage interest you pay and therefore gives the same percentage return as your mortgage.
As a simple calculation say you a $1000 mortgage at 10%.
Currently you pay $100 of interest per year.
You come into $100 of cash and pay off some of your mortgage. You now have $900 outstanding and therefore only pay $90 in interest. The $100 has therefore earned you a return of $10 - or 10%, the same as your mortgage rate.
Nothing fancy and, provided your mortgage is flexible, you can still get your cash back if you need it for something else.
This is relatively simple - you use the cash to pay off your mortgage. Said cash therefore decreases the amount of mortgage interest you pay and therefore gives the same percentage return as your mortgage.
As a simple calculation say you a $1000 mortgage at 10%.
Currently you pay $100 of interest per year.
You come into $100 of cash and pay off some of your mortgage. You now have $900 outstanding and therefore only pay $90 in interest. The $100 has therefore earned you a return of $10 - or 10%, the same as your mortgage rate.
Nothing fancy and, provided your mortgage is flexible, you can still get your cash back if you need it for something else.
ourquest
12th October 2008, 08:29 AM
This is relatively simple - you use the cash to pay off your mortgage. Said cash therefore decreases the amount of mortgage interest you pay and therefore gives the same percentage return as your mortgage.
And...you don't pay tax on the interest, as you would if you kept this money in a cash account.
And...you don't pay tax on the interest, as you would if you kept this money in a cash account.
ourquest
12th October 2008, 08:31 AM
So the successful investors would be the guys that run Blue-Chip and Hanover Finance? They use the mom&pop $ and invest it into real estate development and after the bubble bursts, they still walk away with a hefty pay package.
Not specifically. I was actually thinking of fairly ordinary people who gear their investments by borrowing money from the bank to purchase true assets. Like getting a mortgage, for example.
Not specifically. I was actually thinking of fairly ordinary people who gear their investments by borrowing money from the bank to purchase true assets. Like getting a mortgage, for example.
ourquest
12th October 2008, 08:40 AM
People with perfect credit rating are finding it very hard to impossible to even get a loan. Even a simple student loan. All because of the real estate bubble (worldwide!).
Well we just got one. And it was from the first bank we approached. On good terms. With money towards legal fees thrown in. That makes the use of the term "impossible" seem a little extreme.
Again, this is the kind of thinking that has got us in trouble. I can understand your enthusiasm of being a landloard. But we all have to understand that with that kind of thinking, houses become a commodity no different to say coffee beans and rice.
Property is recognised as one of the major asset classes, and therefore one of the major investment vehicles. This has been the case for a very long time. Suddenly now that its value is going through a correction (not for the first time) you are seeing it as driven by investors, meanwhile it was all along.
Well we just got one. And it was from the first bank we approached. On good terms. With money towards legal fees thrown in. That makes the use of the term "impossible" seem a little extreme.
Again, this is the kind of thinking that has got us in trouble. I can understand your enthusiasm of being a landloard. But we all have to understand that with that kind of thinking, houses become a commodity no different to say coffee beans and rice.
Property is recognised as one of the major asset classes, and therefore one of the major investment vehicles. This has been the case for a very long time. Suddenly now that its value is going through a correction (not for the first time) you are seeing it as driven by investors, meanwhile it was all along.
ourquest
12th October 2008, 08:52 AM
But in the case of house (where everyone needs a roof over their head), the 1st time single home owners too will suffer as their home equity drops.
Their equity is on paper. If they are borrowing on their equity to finance their passion for toys like boats and cars then so be it. But for most people they just stay where they are, pay their mortgage, and in 10 years time their house's equity has grown again despite corrections like the one happening now which results in unsophisticated investors panicking and selling, when they should rather have been in a position to buy more.
I do actually think it is relevant where or how you live, because like it or not you are currently in a material world and you are demonstrating a lack of understanding of investments, and trying to influence readers of your posts negatively by prophecies of doom and gloom. I also notice you are quick to blame others for the state of the economy instead of just accepting it as a natural cycle and making sure that you are in a position to benefit from it (with there being no need to take anything away from anyone else in the process...they are giving theirs away for those that want it).
Their equity is on paper. If they are borrowing on their equity to finance their passion for toys like boats and cars then so be it. But for most people they just stay where they are, pay their mortgage, and in 10 years time their house's equity has grown again despite corrections like the one happening now which results in unsophisticated investors panicking and selling, when they should rather have been in a position to buy more.
I do actually think it is relevant where or how you live, because like it or not you are currently in a material world and you are demonstrating a lack of understanding of investments, and trying to influence readers of your posts negatively by prophecies of doom and gloom. I also notice you are quick to blame others for the state of the economy instead of just accepting it as a natural cycle and making sure that you are in a position to benefit from it (with there being no need to take anything away from anyone else in the process...they are giving theirs away for those that want it).
Alex40
12th October 2008, 06:15 PM
But for most people they just stay where they are, pay their mortgage, and in 10 years time their house's equity has grown again despite corrections like the one happening now which results in unsophisticated investors panicking and selling, when they should rather have been in a position to buy more.
We are in a good position too. We have paid a lot of mortgage over 15 years, and have seen ups and downs of interest rates and housing prices over that time, and even though prices have dropped here too, we are still in a better position than renting.
We lived through the last recession, and will again. Ebbs and flows of life.
We are in a good position too. We have paid a lot of mortgage over 15 years, and have seen ups and downs of interest rates and housing prices over that time, and even though prices have dropped here too, we are still in a better position than renting.
We lived through the last recession, and will again. Ebbs and flows of life.
kanatakiwi
12th October 2008, 07:04 PM
The Labour government just offered total coverage for NZ bank deposits. Its an opt in scheme.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10537093
KK
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10537093
KK
sweetpea
16th October 2008, 03:02 AM
the worldwide economy crisis? my cousin in oz says she hasnt heard of any banks going under etc.
BusinessWeek doesn't seem to think so: http://www.nbr.co.nz/article/businessweek-claims-nz-risk-financial-crisis-36511. They've named New Zealand as one of the 13 most likely countries to follow Iceland into trouble.
BusinessWeek doesn't seem to think so: http://www.nbr.co.nz/article/businessweek-claims-nz-risk-financial-crisis-36511. They've named New Zealand as one of the 13 most likely countries to follow Iceland into trouble.
James 1077
16th October 2008, 08:11 AM
The carry trade (which is what ended up putting Iceland under) is pretty prevalent in New Zealand too. The basics of it is that companies and banks borrowed in Yen at 0.5% and invested in New Zealand at 10%.
The problems are caused by Yen rates going up, NZ rates going down and the NZ currency weakening. At this point the banks and companies can no longer finance payments on their yen loans.
The problem is, however, less severe in NZ as the interest rates were never as high as Iceland's and NZ companies didn't spend huge amounts of money overseas on acquisitions. Add this to the fact that NZ banks are mainly owned by strong Australian parent banks and it shouldn't have the same end result here as it did in Iceland.
This is one of those situtations when it is nice having a big, mineral rich country owning your banks! :)
The problems are caused by Yen rates going up, NZ rates going down and the NZ currency weakening. At this point the banks and companies can no longer finance payments on their yen loans.
The problem is, however, less severe in NZ as the interest rates were never as high as Iceland's and NZ companies didn't spend huge amounts of money overseas on acquisitions. Add this to the fact that NZ banks are mainly owned by strong Australian parent banks and it shouldn't have the same end result here as it did in Iceland.
This is one of those situtations when it is nice having a big, mineral rich country owning your banks! :)
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