Oct 1, 2008

What The Financial Crisis Will Mean For You

The Dominion Post's James Weir has a good look at this in a front page article today. His conclusions are summarised as:

Borrowing for a home is likely to get tougher and banks may demand that people with sizeable loans pay some of their debt back or sell their house as the global credit crisis worsens.

It also means that mortgages are going to be slower to fall. Don't plan on buying a block of cheese with your tax cuts. You will need it to pay your mortgage and your higher power prices.

We are very worried about the current rise in both business and consumer optimism. We have a huge problem globally. The global economy needs to de-leverage, and de-leverage it must. This bail out is all about slowing and controlling the pace of the fall, not the fall itself. New Zealand is not going to be immune from the pain that this de-leveraging will cause. Politicians who are trying to reassure are actually risking making this problem worse for business and for the consumer. Not a popular message in the run up to an election - we know. But it is the truth.