Tuesday, 21 August 2007

NZ's credit boom

Bernard Hickey seeks an explanation for where the credit is coming from to buy all those houses, and why the NZ dollar lost fourteen cents last week.

One graph tells the story of where the real capital has come from, and when and why it needs to be either repaid or rolled over, but I note he fails to point out that at least some of that credit will have been used productively, and he overlooks in his all-too neat story the fifteen percent year-on-year expansion of virtual credit by the Reserve Bank . . .


  1. This bond Armageddon thing is trotted out every time they mature. How many years have we been hearing this?

    He assumes the bonds are not going to be rolled over - given the interest rate differential most of them will be.

    The spreadsheet behind this chart shows that $3.47 billion was due to mature in August. Westpac market strategist Michael Gordon reckons about $2.9 billion has been rolled over so far this month, meaning there’s about $600 million that might need paying back pronto.

    Like we are supposed to be worried about a piddling $600m when we have daily TO of up to 8bill a day? The media hysteria is so irresponsible. A few weeks ago the high dollar was a crisis. Now it is down ... and guess what? It's still a crisis!! Crisis, crisis, crisis. Just like global warming.

    What is more worrying is the abject ignorance/denial regarding the systemic problem with finance coys as displayed in the comments on Farrar's blog. Ignorant people are at the mercy of any self-interested lie that is put in front of them in an attractive format. THAT never changes.

  2. Still think it is, to quote Krugman "The Great Unravelling"?

    What a laugh Peter.

    It takes many years in the markets to realise what is important in the big picture and what is not. And NZ is a very small cog.

    You have a lot to learn, grasshopper.

  3. And just in case you hadn't noticed this is one of the quickest sharemarket rallys in history.

    BTW you tell that guy on SOLO that I may be able to put him onto Mai Chen as an advisor. Except I suspect he would have to sell the trailer to pay for 15 mins. There are many of these types on the market fora - frauds all of them.


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