The New Zealand Property Council has issued a call for the government (taxpayers) to give them money. Why? Because they say, due to the uncertain economic outlook about 60% of all planned (get that; “planned”) construction projects are now at risk. Cancelation they argue, will decimate the construction industry.
Just over a month ago they began this clamour asking the government to “underwrite construction projects of commercial buildings, high-rise apartments, hotels, malls and office blocks”. Note, they’re referring to intended, not started developments.
This is self-serving nonsense. Here’s some interesting background.
The Property Council is part of a world-wide organisation, originally known as BOMA, that is Buildings Owners and Managers Association. About 1990 some institutional building owners, back then mainly Insurance companies, gained consent to start a New Zealand branch. Together with some of the Banks they approached me to be their first President. I demurred but under pressure from a close friend, the late Royce Baigent, who was also on the founding committee, I reluctantly agreed.
Royce, an accountant, was a former President of the Master Builders Association, a deputy mayor, boss of one of our largest construction companies and much more. I was forever teasing him about wanting to move a motion, forming a sub-committee and so on. I prevailed in the end and he dropped all of these activities and became quite a free spirit, sharing offices with me.
Anyway, we duly had the inaugural meeting with me at the head of the table. The then New Zealand AMP commercial property boss, a terribly nice Australian bloke who didn’t have a clue about commercial property, rose and began spouting the most appalling nonsense.
I listened for a couple of minutes and could stand no more. I interrupted the speaker, said I’m terribly sorry but simply have to leave and then fled. Royce, knowing what was upsetting me, quickly stepped in and took over, explaining to the puzzled others present that I wouldn’t be back.
Commercial property has always been notorious world-wide and since the 1920s, for attracting free spirit cavalier types. The New Zealand Property Council puts that history to shame with this bludging overture on specious grounds, specifically to put their hand in your pocket. I’m sure you will find their membership mainly comprise institutions and not the loner doers and shakers who rise and fall with economic cycles, then inevitably re-emerge again.
The next two years will be noted, as always following recessions, for spectacular bankruptcies by building and land developers, plus a lesser number of over-indebted investors. The smart ones, few in number to be sure in this activity, profit hugely from cyclical economic collapses.
But make no mistake, the call from the Property Council is disgraceful and should be ignored by the government.
It’s also ignorant. While some developers may have been caught holding a site they bought for their development and incurred architects fees, they should be grateful that they weren’t already under way.
No-one’s to blame for the virus. In its wake will come a massive depression during which there will be no takers, whether lessees or buyers, for their projects. To want to box on with your money is simply ignorant and a path to ruin. But note it is not they, asking for this, but instead an Association supposedly representing building owners who certainly will not want to see a surplus in supply. You can understand why my company is not a member.
16 Comments
The number of business groups demanding to be subsidised by the taxpayer is disgusting. They all pretend to be capitalists until the gravy train arrives in the station and then their snouts are in the trough with all the other usual suspects.
On Thu, 14 May 2020 at 12:25 PM, No Punches Pulled wrote:
> Sir Bob Jones posted: “The New Zealand Property Council has issued a call > for the government (taxpayers) to give them money. Why? Because they say, > due to the uncertain economic outlook about 60% of all planned (get that; > “planned”) construction projects are now at risk. Cancel” >
There is however a point to be made that the governments response caused far more economic grief than was necessary. They therefore have an obligation to spread the economic pain more fairly rather than spending vast amounts on wage subsidy which just makes employers feel safer until they become unemployed.
“The New Zealand Property Council has issued a call for the government (taxpayers) to give them money. Why?”
You don’t seem to understand how this works.
Those who spread the Covid want governments to spend wildly, the more wild the better.
Then their “compassionate” banks loan trillions to said governments to cover the wild spending.
Then these “magnanimous” banks collect the interest on these loans forever.
http://preearth.net/phpBB3/viewtopic.php?f=23&t=1175
Funny, I was just rereading chapter 8 of ‘My Property World’ the other day.
I predict property will eventually go up in value substantially on average, as a consequence of money printing. The NZD should grind lower, for the same reason.
Inflation for goods and services, but particularly asset price inflation, should be high medium term.
I’m probably an enemy of the State on many levels, because of my occupations, who I’m sure Ms Ardern would like to ruin.
Alas, her policies are likely to enrich me, and make her constituents poor.
Let’s hear it for Leonard Cohen:
“Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows”
[Everybody knows]
The Chinese are to blame for the virus which either came from a biological weapons grade laboratory 25kms out of Wuhan or a wet-market. And the wet-markets haven’t been closed. Add to this they – the CCP – kept the outbreak under wraps for a couple of months before announcing it while at the same time controlling the WHO. They, the Chinese Communist Party, are to blame.
Never seen a bunch of people so happy to have been robbed.
Grant Robertson is the new God.
The people’s God leads them (and their children) happily into (debt) slavery.
Look, the people are singing and dancing while the robbery continues.
Btw, I just heard that now we are at level 2, Ms Ardern says it’s now okay to pat a dog. WTF?
I’m in a bit of a panic, because I missed the announcement of whether I’m allowed to wipe my bottom after having a dump, and I don’t want to break level two rules…
NZ had the most extreme lockdown in the world. The infantile rules were absurd, but concerningly, a good proportion of New Zealanders seem to love to be controlled.
Why would any rational government vandalise the economy like they did? The insane policy was certainly nothing to do with combatting this flu.
The riddle is solved by the opinion polls – government support is off the charts.
The reason the government continues with these absurd measures is New Zealanders are obviously predominantly masochists.
The average Joe loves being whipped like a slave by Ms Ardern.
The government wants complete control – and most citizens want to be whipped harder!
Perhaps an economic depression will satiate our masochist friends. Surely, this will be enough pain for anyone?
You’ll have to excuse my ignorance, but can someone tell me what basic economic principle allows global borrowing. Where does all the money come from? I am no economist but how can most (all?) of the western (or is it every countryeastern, western, southern, northern?) world be constantly in debt?
Is it the world bank that prints money for us to indulge our consumerism?
Do the communists actually own the world?
Does god run a bank? Now THAT would explain religious zeal.
Cunningham’s law welcome to set me straight if needed.
What is money?
Money is an abstraction of value, in essence labour, used as an exchangeable IOU.
There are basically three methods for governments to finance their expenditures.
1. Collect taxes
2. Borrow
3. Print new money
There are tradeoffs to each these.
Taxes are unpopular and constrained.
Printing, especially since the advent of fiat currency, risks debasement/becoming uncredit-worthy.
Debt leveraging by borrowing ends up often the best option.
Borrowing money creates proportional credit/debt, which is the bulk of the economic system.
Credit is like an economic lubricant, but with credit comes interest rates.
Interest grows, and has to be paid back on top of the original sum owed.
This is one of the things that feeds into inflation.
Debt can be either internal (owed to lenders within the country) or external (owing to foreign lenders).
There are some countries like China that save, and give a lot more credit than they take.
But even for them credit is so cheap, especially recently, that it is attractive to use anyway.
Owning a nation’s debt is only as good as the nation can be trusted.
Using debt as a leveraging tool can be very effective when the upside outweighs the downside.
If you can borrow at 5% and use that to gain 10%, you are 5% better off roughly speaking.
But obviously this doesn’t always pan out.
The engine of economic growth initially is based on labour creating value.
Labour to create goods and technology, which creates/frees more goods/labour, and so on.
This can be a positive sum game, but only when real ‘value’ is being created.
Countries, like people, take on debt because they think they can pay it off eventually (hopefully by growing).
Some would argue at a certain point this can detach from reality.
In the long run, outside of cases like defaults etc. future generations will have to pay for today’s spending.
Most nations now create and use sovereign fiat currencies which they control the amount of, not the world bank.
The USD is special as the reserve currency of the world.
This probably precludes them doing what Japan has done since its decline.
Printing money is the option many governments are picking.
We are in novel territory in many respects, and there are indications of nations maybe inflating as much as ’necessary’ to finance things.
The brick wall of debasement will loom, see Venezuela.
The one obvious way to avoid such things is to get our fix by growing again, but easier said than done right now.
No one owns the world.
God could be running a bank.
Inflation drives up assess prices, and creditors dislike inflation because it reduces the absolute value of debt, which governments buying are buy up large droves of as a bailout, but probably not enough.
But, speaking of Japan, this is been done because a spiral of deflation is actually the bigger risk right now in many places. Some would say a certainty.
This is because of onset of mass joblessness and thus reduction in consumer spending makes the perfect storm.
As consumers don’t buy, vendors become desperate and drop their prices.
Thus begins the spiral, as businesses lose profits and fire employees (or close) there’s less liquidity moving through the system, so less buying.
Deflation increases the burden of debt, as the practical value of money rises, with everything else stagnant or collapsing.
People stop investing, borrowing is more expensive, and money is hoarded for an uncertain future.
The Great Depression is the eminent example of all this.
A great period of unemployment, inequality, and instability.
In a sense it ultimately comes down to very skewed supply and demand imbalance.
(Tidied up)
Inflation drives up assess prices, and creditors dislike inflation because it reduces the absolute value of debt.
Governments are buying up debt in large droves as a bailout, but probably not enough to achieve what they are attempting.
Why? (speaking of Japan) this is being done because a spiral of deflation is actually the bigger risk right now in many places.
Some would say a certainty.
This is because the onset of mass joblessness and thus reduction in consumer spending makes a perfect storm.
As consumers don’t buy, vendors become desperate and drop their prices.
Thus begins the spiral, as businesses lose profits and fire employees (or close down) there’s less liquidity moving through the system, so less buying.
Deflation increases the burden of debt, as the effective value of money rises, while everything else stagnates or collapses.
People stop investing, borrowing is more expensive, and money is hoarded for an uncertain future.
The Great Depression is the eminent example of all this.
A period of significant unemployment, inequality, and instability.
In a sense it all ultimately comes down to very skewed supply and demand imbalance.
But who is the lender? Who gets the interest? Who finances the world’s blind consumerism?
There’s no single entity, though China is a big one. Lots of lenders, lending all over the place. like I said before, lenders are often internal, banks etc. or lenders can be external, often other nations.
Some people characterise it that we are basically borrowing from ourselves.
Here’s another take.
https://www.interest.co.nz/news/104644/brian-fallow-looks-where-government-getting-money-its-dramatic-increase-spending
My question is serious and literal not philosophical… I am ignorant of how global lending works.