Saturday, May 17, 2008

Australia has fared subprime crisis well: RBA

This is the second article saying roughly the same thing. What the article is really talking about is that the banks have fared well. This doesn't imply the economy (and Australia) has fared well.

It is far too early to say if the economy has fared well - we have to to wait for the fallout from the tighter lending criteria for businesses and individuals. Will it be a soft landing or a hard landing in Oz? Can we make a comparison with NZ?
A few months ago the RBNZ was still talking up another rate rise later in 2008 with concerns about inflation even though the housing sector was cooling. In the last month they have completely switched and yesterday's headline was lowering of interest rates coming soon. Indeed the banks have already started lowing their fixed interest rates. All on the concern of the unexpected poor employment figures. Yet inflation is still at the high end.
What the RBNZ failed to comprehend is that while consumers were happy consumering away over Xmas indicating that the economy was still boiling away, in the background businesses have been unable to get credit - from any lender - in NZ. No credit -> contraction -> loss of jobs.
It just takes a while for the data to show up on the radar. In fact, those seemingly unaffected by the credit crunch are still busily consumering away.
Interesting times for both countries.

Friday, May 16, 2008


This blog will be some rambling about our efforts to sustain a presence in the property market in the current credit crunch and manage our daily lives in the meantime.
To set the scene, most of our property is in NZ, some in Australia. We moved temporarily to NZ in October 2007 to better manage the situation occurring with our lenders in NZ and stimulate some sales. We are now in the process of moving back to Oz. While we have been working hard, there is not a lot to show for it.
The best part of staying in NZ is the location. A great house on the estuary in Maungatapu, Tauranga in the sunny Bay of Plenty. The summer has been brill. And here we are 5 weeks out from the shortest day and the sun is streaming into the office just like the last few days and judging by the forecast will be for at least the next week.
And since we still own some sections here and keen to sell, this introduction is also an unashamed plug for the sections