The Dominion Post Editorial is showing just the type of leadership we need right now. A pity our political leaders are not saying the same thing. Here is the conclusion
The consequences of Wall Street's blind greed will be felt for years. Here banks have signalled an end to credit for home buyers with little or no capital - no bad thing - but economists are also warning that existing low-equity homeowners will come under pressure to reduce the size of their mortgages as house values fall and that businesses will find it harder and more expensive to borrow money.
Shareholders Association chairman Bruce Sheppard, the gloomiest voice on the local scene, is predicting unemployment will rise from 3.9 per cent to "the teens" and talking of a "1930s Great Depression-style mess rather than a 1980s-style mess".
There are grounds for being less pessimistic. The dollar has fallen against the greenback, giving exporters breathing space, the state's finances are in good order, the tax cuts which took effect yesterday will provide some stimulus to the economy and the Reserve Bank, unlike the US Federal Reserve, has plenty of scope to cut interest rates further. A fall in house values will be welcome. Over time, it should redirect investment to more productive, less inflationary, sectors of the economy and make it easier for young people to gain a foothold in the economy.
Few will shed a tear for property speculators who over-extended themselves in the expectation that house prices would keep rising indefinitely. But New Zealand will not escape the fallout from the US meltdown. "When America sneezes, the world catches a cold," goes the saying.
What we are about to discover is what happens when the US contracts pneumonia.
Now is not a time for panic but it is also not the time to rush out and borrow large sums of money to buy a holiday home. It is a time for hunkering down and paying off debt.
