The United States is not the only nation confronting a household debt crisis. We, too, have a subprime lending market and it is managed by our collective bag of finance companies. The collective sum of savings at risk in this sector is reported to be $16 billion.
Put another way, that’s nearly a third of the total value of our stock exchange, just over 10 per cent of annual gdp, and $4000 for every man, woman and child in the country. The US situation is nearer US$500 billion.
On every measure that is significantly less than our own problem with subprime debt. New Zealand’s position is four times worse than the American situation which has brought on a global confidence crisis. Work out for yourself what that means for our domestic economic outlook.
How did we let this sector get so big and so badly run?