Tuesday, May 17, 2011

The Reality Sinks In

in New Zealand dollars: $1915.28 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $43.55 per oz
Previous all time high: $48.58
per oz

Special Guest Post from Christine Smith today:

Bit by bit the reality of New Zealand’s financial position is moving out of the Opinion columns and into the Business section of the NZ Herald. How long until articles such as this are upgraded to the main section and in greater number? When it’s almost too late is my guess.

My reaction upon reading this was a silent groan; planning for the worst but hoping for the best has been our plan for a couple of years but I guess I’m always hoping that it would all blow over and it’s “back to normal now folks.”

Most of our peers are behaving and believe that it is, in fact, back to normal. After all, we’ve been told for some time now that the recession is over and recovery is happening. Pretty soon it will be just like it always was – life on credit and investments in property to pay for our retirements and the holiday we take before that.

Apparently you can’t loose with property, the values always go up. Well, what if you can loose and values do go down? What if the recession we’ve experienced so far is the curtain raiser for the real thing?

New Zealanders are well known for their somewhat laid back, “she’ll be right mate” approach to life but we can no longer be complacent. Our level of foreign liabilities is in the company of Portugal, Ireland, Greece and Spain. You would’ve had to been hiding under a rock to not know what‘s been going in those countries, so ungraciously known as the Pigs. NZ looks to be heading to the same sty.

According to Brian Fallow, we will quite likely not be in a good place at all. All it will take he says, is another financial crisis such as Lehman Brothers collapse to see our banks unable to refinance and the flow on effects especially to our house values. Look at the US, UK and all of the previously mentioned Pigs. Why should it be any different here? I suspect it won’t.

The confidence talked by politicians, financial experts for the last three years have convinced people that all is well. I understand that (but don’t agree) because to have the people lose confidence in the market and banking system would have unpleasant consequences. Better to not tell the whole truth and hope like mad all will be well. What will happen when folk realise they’ve been duped with not much time left to prepare for genuine hard times?

I have not believed that we were out of the recession at all. Voicing this has not made me good company. I could not be right because the experts said differently. So I learnt to keep quiet(er).  Most folk don’t want to talk about it because not only could it not happen, they were also scared. Who wants to live like the Walton’s again? The government will protect us etc, etc.  Hence my earlier stated ‘silent groan’.

I didn’t believe it because the debt problem has not been fixed, there is even more. The old system we had for the last 50 years or so do not work anymore but it has not been changed, upgraded, or returned to one that did.

This article is filled with facts which cannot be ignored. Amongst all the facts is one sentence that bothers me more than the rest: “…cause serious economic hardship to many New Zealanders.” It could be because most finance pieces are written by men but the consequences of economic hardship are what hit me as a woman.

People are going to hurt. There will be anguish, fear, depression… I already ache for those I love and care for that have not seen the writing on the wall, would not listen or read or just simply didn’t know. The emotional costs of the financial future will be truly expensive – with no Social Welfare to pay for counseling.

I said earlier what New Zealanders are known for. We are also known for our #8 wire mentality and our resilience. It also helps that we have a lot of land, a good water supply and a terrific climate for growing our food. Nobody will be too far away from someone who can show them what to do.

Unfortunately, it’s all a matter of time. I hope I’m wrong but I might not be.

Articles of interest:

The Good, The Bad and The Ugly

See article here


The Anglo-Far East Company
The Original Private Bullion Custodian
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