The news coming out of Wall St this morning is simply shocking and is something every New Zealander should understand and care about.
Put simply, panic and fear rule in the world’s financial capitals right now and it will cost us all in one way or another and sooner or later.
In previous periods any panic on financial markets affected us most directly through our stock market. When Wall St fell, that hit the New Zealand stock market. Back in 1986 we had a lot of money invested in stocks, proportionate to our total net worth. Reserve Bank figures showed that 50% of household net wealth was in financial assets in 1986, mostly in shares. The other 50% was in the value of our houses. So when Wall St sneezed we caught a cold fast.