Forbes magazine columnist Jesse Colombo invites international investors enamoured with NZ’s “rockstar economy” to think again – offering 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster, pointing out among other things the conjunction of historically ultra-low (unsustainably low) interest rates and a mortgage bubble grown by 165% in a little over a decade, with the fact that nearly half of all NZers mortgages have floating interest rates, with mortgages themselves accounting for nearly 60% of banks’ loan portfolios.
So sit tight waiting for the pop when interest rates head back towards reality.
On top of this he sees the industrialised world’s fourth-worst household debt-to-GDP ratio, and a place in which agriculture as a source of wealth is vastly outstripped by “the finance, insurance and business service sector,” a sector in which banks “dangerously exposed to the country’s property and credit bubble” comprise the lion’s share.
Naturally, National Party cheerleader Keeping Stock has a cogent dismissal. “Bubble? What Bubble?” says the blindfolded blogger responsible for a constant election-year refrain of “more good news” delivered by his heroes. “Cherry-picking,” “old news” and basic ridicule are about all the criticism offered however of Colombo’s case– apart from Keeping Stock’s hero Steven Joyce, who offers little more analysis than the word “alarmist” and a suggestion of similarity between Colombo and Moon-Man Ken Ring.
I can’t help thinking that if Colombo’s argument could be as easily dismissed, then they’d actually try to address it.
And then there’s Infometrics managing director Gareth Kiernan, who concedes “If his predictions ever came to pass then the economy would be in trouble, but no one was really forecasting that to happen…”