Subprime Crisis explained

While various reputable news organisations have sought to explain the causes of the US subprime mortgage crisis none have come close to the clarity and accuracy of this powerpoint.

Blue Chip Financial Dissolutions

Is there anything about the Blue Chip collapse that doesn’t have a stench to it? 

The circumstances don’t match a straightforward bad business model and/or dumb decisions as we saw in with finance company collapses.   I see four things that stink:

1. ‘Financial Advisers’ selling their company’s products;
2. Suspect valuations and associated high margin deals (7:40mins in);
3. A unusually complex web of companies; and
4. Mysterious thefts.

Also, if Blue Chip associated companies did make large sums trading properties (point 2.) where’s this money gone?  I doubt anyone would put money on the Fair Trading Act being the only law breached.

Mt Vic’s quarry

One thing I wasn’t expecting to find around the central city was a disused quarry.   While it’s currently a dog exercise area, I can’t find any details of when it was closed or where the stone ended up.

Of course, it was also one of the locations for the Lord of the Rings. 

It’s 2004 all over again for housing bubbles bursting!

There’s quite a line of people saying the housing boom is over and we’re into or about to enter the bust phase.   The argument, broadly, is that house prices relative to rents and affordability can’t be maintained.  But many of the reasons for past optimism still exist.

Then again there was a spate of similar comment in 2004 and look what’s happened since.  Interesting a longterm doom sayer says we’ve still got a way to go to a bust (7 mins in).

What’s different from 2004 now, is the current credit crunch and higher household debt. 

New Zealand Pacific Party: Taito Phillip Field’s last stand

On today’s Insight progamme (14mins in) MP Taito Phillip Field stated an intention to stand at the next election for the New Zealand Pacific Party.

Field states it will be a party, “…that represents Christian values and stands for what our people really believe in.”  According to Field, there’s strong support amongst Christian Pacific Islanders.

This is good news for Labour.  It now has two minnows fighting for an identical constituency in Mangere, splitting any potential anti-Labour Pacific Island vote. 

It’ll be interesting to see how much personal support the disgraced Field will maintain amongst Pacific Island voters.

Interesting Times

It’s interesting economic times when you get a story on record low unemployment and in the same newspaper get an ultimate doom and gloom story.  

While drought’s always bad for a commodities exporter like New Zealand, high dairy prices should offset that.  While a fall in house prices could reign in domestic spending and shocks offshore could reduce firms’ revenues, we’ve high employment and the government’s in surplus to cushion such blows. 

What is different from the downturn of the late 90s is how heavily indebted households are. Things could turn nasty for some people.

Money does talk and you don’t need many listeners.

In this week’s Listener, the assertion is made that, “there’s little evidence that big money can sway an election result in any serious way.”   As part of the rationale for this Freakonomics’ Levitt’s campaign spending research is referred to.

Where the Listener article gets it wrong is that while it takes very large amounts of spending to make small differences – halving your spend costing you 1% or doubling it only gaining 1% of the vote – a 2% difference could be the difference between winning and losing. 

The 2005 election results illustrate the difference 2% can make at the margin.

A week in Golden Bay

While it’s a bit out of the way, Golden Bay is hard to beat for getting away from it all.

There are still ‘beach to yourself’ places, with rather picturesque backdrops.  

You can see where Oriental Bay’s sand comes from at places like Totaranui in the Abel Tasman National Park.

There are also lots of interesting places to go wandering.  This shot is in the car-park for a restored 1920s hydro plant. 

Karori residents might want to stay away, however, as the Tuis and Bellbirds are as numerous as they are noisy.