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Speaker 1: Listen, can I give you a positive spin on the

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Speaker 1: recession that we're just coming out of. I mean, maybe

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Speaker 1: it's not so much a positive spin, but maybe it's

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Speaker 1: an explanation for why this recession was harder than it

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Speaker 1: needed to be, but why it actually did need to

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Speaker 1: be this hard. If you've been following the commentary around

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Speaker 1: the Reserve Bank's last two OCR decisions, you'll know there's

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Speaker 1: been a fair bit of chat about the wealth effect

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Speaker 1: and how that has made the recession worse. Now, the

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Speaker 1: wealth effect is the thing that happens when your house

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Speaker 1: goes up in value. You feel rich. You're not rich.

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Speaker 1: You feel rich, so you go out and spend more money,

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Speaker 1: and then, of course when it does the opposite and

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Speaker 1: goes down in value, you feel poor. You're not poor,

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Speaker 1: you just feel it so you shut your wallet. And

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Speaker 1: that is part of the recession. The reason why this

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Speaker 1: recession has dragged because our house prices are not going up,

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Speaker 1: they have gone backwards, and so we're not spending, which

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Speaker 1: means that we're not spending our way out of the recession. Now,

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Speaker 1: the thing about this is that the Reserve Bank has

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Speaker 1: actually done things to deliberately keep our house press price

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Speaker 1: is suppressed right, things like debt to income ratios. Some

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Speaker 1: of the stuff is not their fault, like people leaving

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Speaker 1: the country and therefore not wanting to buy a house,

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Speaker 1: supply demand blah blah blah. But some of it is

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Speaker 1: the fault of the Reserve Bank. Have done this deliberately,

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Speaker 1: and we talk I warned you about this on the

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Speaker 1: show before I said this to you in August. I

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Speaker 1: said I was worried that the Reserve Bank was keeping

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Speaker 1: house prices depressed and that it would drag out this

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Speaker 1: recession longer, which it has. And I've been talking privately

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Speaker 1: to Brad Olsen about it as well, who's been keeping

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Speaker 1: an eye on it two and we've been debating the

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Speaker 1: merits of it. But here's the silver lining. We actually

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Speaker 1: needed to let go of this property recession. It's been hard,

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Speaker 1: a property obsession. It's been hard, but we needed to

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Speaker 1: do it because we have got to stop putting our

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Speaker 1: money into property and we've got to start putting our

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Speaker 1: money into businesses and other productive assets. And this is

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Speaker 1: the breakup that we needed to have. No breakup is

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Speaker 1: nice and this one isn't either. So wen our text

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Speaker 1: Brad Olson this morning. Yet again, he goes on, here

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Speaker 1: we go use a text from Heather. I said, Brad,

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Speaker 1: are you still sure that it was worth it was

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Speaker 1: worth it to break up with our property obsession, given

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Speaker 1: how hard it has made this recession, and he just

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Speaker 1: replied with yes, I do. So. What I would say is,

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Speaker 1: if you're doing the glass half full, at least we

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Speaker 1: will come out of this recession less in love with

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Speaker 1: houses and more likely to put our dollars into stuff

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Speaker 1: that will actually make New Zealand richer. And that's got

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Speaker 1: to be a good thing. For more from Hither Duplessy

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Speaker 1: Allen Drive. Listen live to News Talks it B from

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Speaker 1: four pm weekdays, or follow the podcast on iHeartRadio