Governments not Markets to Blame for Crisis

The evidence is quite clear that it is the heavy hand of government interference in the markets by successive US administrations that is to blame for the current financial crisis not free markets. In its desire to increase home ownership the Clinton administration beefed up the 1977 Community Reinvestment Act so that banks were required to meet mortgage quotas. These quotas were overseen by the Department of Justice and banks which failed to meet quotas incurred heavy fines. Another branch of government Housing and Urban Development chose to increase home ownership through the charter of a government sponsored entity, Fannie Mae (Federal National Mortgage Association).

As the government pushed for lower lending standards or demanded greater “flexibility” Fannie Mae no longer required borrowers to provide any down payment. It was only a matter of time before the housing bubble burst.

Furthermore, US local and regional governments enthusiastically follow policies of urban containment – restricting the supply of land for urban development. The unintended consequence of this intrusion in the market has resulted in an unprecedented increase in the cost of land. The worst affected areas in the US are states such as California where land supply restrictions are the most draconian.

It is these various intrusions into the mortgage, housing and land market by governments that has produced the fiscal crisis not free markets.

Getting out of this mire will not be easy but certainly more government intervention is not the answer. To quote Ronald Reagan, “government is not the solution, government is the problem”.

Snow, Snow everywhere

After being warned by global warming alarmists that the ski fields would struggle to provide enough snow for skiing it now appears that there have been record snowfalls this winter. There is so much of the whitestuff in fact that the devices used to measure the depth of snow have proven to be inadequate.

Could it be that the hype surrounding anthropogenic global warming is just that – hype?

However, I suspect that the increased snowfall will be cited as another example of anthropogenic global warming. It is after all a non-falsifiable hypothesis for those who believe.

Land should be released: Commerce Committee

Not surprisingly the number one recommendation of the Commerce Committee enquiring into housing affordability was that land should be released if housing is to become affordable. The Committee noted that the median price of a section in Auckland has increased from $139,000 in 1992 to $443,000 in 2007 an increase of 218%.

In relation to the metropolitan urban limits (MUL) which places an artificial boundary around Auckland the report had this to say:

“We consider that interventions to constrain the supply of land for new housing force up
section prices. We believe that the Auckland Regional Council should carefully assess this
dynamic, taking into account issues such as infrastructure. We believe a more deliberative
approach that focuses on making more suitable land available for new subdivisions would
lead to lower section prices and more affordable housing.”

Many of us such have been saying for years that it is the politicians strangling the supply of land that has led to economic stagnation and the social ills that we see all too often in places like Manukau.

Compare the situation that we are facing in the Auckland region with a dynamic city such as Houston, Texas where land supply is not constrained and housing rises only at the rate of inflation even with the inflow of refugees in the aftermath of Hurricane Katrina.

Hard Questions

I spent an hour or so with Edward Rooney of the "Aucklander" at Xtreme Entertainment in Botany discussing, Manukau City Council, crime, police, Len Brown, sport, John Walker and sending down a few bowls.

Police Problems Continue

The revelation in Parliament by National’s Chester Burrows a former policeman that police solved only five of the 53 aggravated robberies of South Auckland shops in the six months before liquor store owner Navtej Singh was fatally shot in a hold-up will come as no surprise to those familiar with the under-resourcing of the police in the Counties Manukau Police District.

This follows stories of lost files and files left unattended as a result of a combination of low staff numbers and inexperience. The average level of experience in the CMPD is just 5 years compared with 15 years in Invercargill.

In 2005 the then Police Commissioner Rob Robinson admitted that there were 11 “unassigned sex cases” after questions were raised in Parliament by ACT MP Rodney Hide. Police Minister George Hawkins admitted that that of the 11 “unassigned sex cases” 5 were cases of rape complaints. Mr Robinson also acknowledged at that time that there were1000 unassigned criminal complaints.

New Zealand has a low ratio of sworn police officers to population and crime and criminals will flourish unless there are more police on the streets of our cities.

Media beat up Mayor's leave request

Mayor Len Brown in a written request to Council asked for a leave of absence for two months to allow him time to recover from his heart attack. Councillor David Collings (Pakuranga) without consulting anyone and presuming to know more about the mayor’s health status than the mayor himself proposed a six month leave of absence. The Council unanimously agreed to this but one wonders why Cr Collings would choose to second guess the Mayor Brown who presumably made the request in the hope of being back in two months. If at the end of that period he himself felt that he required more time undoubtedly it will be given.

Cr Collings comment that the whole Council “were kind of shocked” and “their bottom lip dropped” is way off the mark. Had I not wanted Len to have six month leave of absence I could have moved an amendment or voted against the six month period. I did neither.

Incidentally, there is no bad blood between John Walker and I. We have been friends for 35 years and in that time including many weeks on tour travelling together and sharing hotel rooms there has hardly ever been a cross word that has passed between us.

150 Violent Crimes a Day

The Prime Minister’s claim that incidents of violent crimes are dropping is just not correct. Over the past nine years, violent offending has risen by 43% across the country, while in areas such as Counties-Manukau it has risen by 64%. Last year alone there were 56,983 recorded violent offences - an average rate of more than 150 a day.

In a short period of just nine days three people within a few miles of each other were murdered.

People are angry and demanding that harsher penalties are imposed on violent criminals. National has stated it will build more prisons. What it needs to consider is whether it will reintroduce private prisons. The one prison in Auckland that was run by the private sector was more secure, more humane had a better rehabilitation record and was cheaper to run. Only Labour’s socialist ideology demanded that it be closed.