Anz Blog

Trim debt load with the savings we make for you

sntech.nz — Sun, 20 May 2012 10:05:05 +0000

Last week I recommended that readers ring their bankers to demand a lower floating mortgage rate.
I’ve been swamped with tweets and emails from readers saying it worked. Many report getting their floating rates reduced from 5.75 per cent to around 5.3 per cent. So what to do now?
Certainly avoid a conversation that involves taking on yet more debt.
The prospect of even lower floating mortgage rates, if, as markets expect, the Reserve Bank cuts the Official Cash Rate later this year, appears to make a bigger mortgage more affordable. Those who have stayed floating will get the advantage if the OCR is cut.
But it’s worth thinking before loading up on more debt or using the lower rate to reduce your payments.
Reserve Bank figures show household debt, which is 94 per cent mortgages, is still 141.7 per cent of disposable income. That’s down from a 153.8 per cent peak in the September quarter of 2008, but well above the more “normal” 100 per cent of 1999.
The interest costs on NZ’s households is, however, down substantially at 9.3 per cent of disposable income from a high of 14.4 per cent in that September quarter of 2008. That’s because average mortgage interest rates have dropped from over 9 per cent to around 6 per cent.
This is the crux of the decision. How lucky do you feel about interest rates? Could your finances cope if you or your partner lost a job when interest rates are at 10 per cent?
Most doubt rates will return to the 20 per cent level of 1987 but 10 per cent is a possibility if the Reserve Bank is forced to hike hard to control inflation. Most economists are forecasting a rise in the OCR to around 4 per cent in a couple of years, which would imply floating mortgage rates of around 7 per cent. That is just below the long-term average of 8 per cent and the least borrowers should plan for.
These low rates are low for a reason: the global economy is in trouble and there’s a real chance of higher unemployment here. That increases a borrower’s risk of their income reducing. Or house prices may fall.
The simplest, safest thing to do is keep payments at the previous 5.75 per cent rate and repay the mortgage faster. Anyone with a $500,000 mortgage who chose to keep repaying a 5.3 per cent floating mortgage at their old 5.75 per cent repayment rate would repay it 15 months early and save $52,425.By Bernard Hickey

Facebook falls flat in public debut

sntech.nz — Sun, 20 May 2012 10:05:04 +0000

After all the hype, Facebook’s first day as a public company ended where it began.
In its much-anticipated debut on the Nasdaq Stock Market, Facebook’s stock closed on Friday New York time at US$38.23, up 23 cents. It had been priced at US$38 per share on Thursday night.
After an anxiety-filled half-hour delay, its stock began trading on the Nasdaq Stock Market for the first time as investors were finally able to put a dollar value on the company that turned online social networking into a global cultural phenomenon.
The stock opened at 11.32am at US$42.05, but soon dipped to US$38.01. By noon, it was up again at US$40.40, a 6 per cent increase. It fluttered throughout the afternoon, but it never hit the double-digit jump that many Facebook-watchers had expected. By the end of the day, more than 500 million shares had changed hands
The closing price means Facebook is worth about US$105 billion, more than Amazon.com, McDonalds and storied Silicon Valley icons Hewlett-Packard and Cisco.
But as many people looked for a big first-day pop in Facebook’s share price, the single-digit increase was somewhat of a letdown.
“It wasn’t quite as exciting as it could have been,” said Nick Einhorn, an analyst with IPO advisory firm Renaissance Capital. “But I don’t think we should view it as a failure.”
Indeed, the small jump in price could be seen as an indication that Facebook and the investment banks that arranged the initial public offering priced the stock in an appropriate range.
It’s also a supply and demand issue.
Facebook offered nearly 20 per cent of its available stock in the IPO, so there was enough to meet demand. In comparison, Google offered just 7.2 per cent of its stock when it went public in 2004 and rose 18 per cent on day one.
To IPOdesktop’s Francis Gaskins, it means mum-and-dad investors are becoming “much more educated and careful” about not buying into hype. And he said the banks taking Facebook public have learned from the 10 IPOs of social media companies in the past year and are better able to gauge how much stock to make available in an initial offering.
It might not have been possible for the social network to live up to the hype that led up to its IPO. It’s Facebook, after all, a place where people are emotionally invested in endless online diversions and rekindled friendships, an endless depository of baby photos, favourite songs and fleeting memories.
“It’s probably one of the first times there has been an IPO where everyone sort of has a stake in the outcome,” said Gartner analyst Brian Blau.
- AP

Facebook $16 billion float one of world’s biggest

sntech.nz — Fri, 18 May 2012 09:05:04 +0000

Facebook’s initial public offering of stock is shaping up to be one of the largest ever. The world’s definitive online social network is raising at least $US16 billion, a big windfall for a company that began eight years ago with no way to make money.
Facebook priced its IPO at $38 per share today, at the high end of its expected range. If extra shares reserved to cover additional demand are sold as part of the transaction, Facebook Inc. and its early investors stand to reap as much as $18.4 billion from the IPO.
The IPO values the company at around $104 billion, slightly more than Amazon.com, and well above well-known corporations such as Disney and Kraft.
The $38 is the price at which the investment banks orchestrating the offering will sell the stock to their clients. Facebook’s stock is expected to begin trading on the Nasdaq Stock Market sometime tomorrow morning under the ticker symbol “FB.” That’s when so-called retail investors can try to buy the stock.
Facebook is the third-highest valued company to ever go public, according to data from Dealogic, a financial data provider.
Only the two Chinese banks have been worth more. At $16 billion, the size of the IPO is the third-largest for a US company, squeezed between No. 2 power company Enel and No. 4 General Motors, according to Renaissance Capital. The largest US IPO was Visa, which raised $17.86 in 2008.
For the Harvard dorm-born social network that reimagined how people communicate online, the stock sale means more money to operate the data centres that hold the trove of status updates, photos and videos shared by Facebook’s 900 million users. It means more money to hire the best engineers to work at its sprawling Menlo Park, California, headquarters, or in New York City, where it opened an engineering office last year.
And it means early investors, who took a chance seeding the young social network with start-up funds six, seven and eight years ago, can reap big rewards. Peter Thiel, the venture capitalist who sits on Facebook’s board of directors, invested $500,000 in the company back in 2004. He’s selling nearly 17 million of his shares in the IPO, which means he’ll get some $640 million.
The offering values Facebook, whose 2011 revenue was $3.7 billion, at as much as $104 billion. The sky-high valuation has its sceptics. Google, whose revenue stood at $38 billion last year, has a market capitalization of $207 billion.
“There seems to be somewhat of a hype around the stock offering,” says Gartner analyst Brian Blau in somewhat of an understatement.
There are a few reasons for the exuberance. One is the IPO’s sheer size. Investor appetite for the stock will likely propel Facebook’s valuation above other well-known companies such as Kraft, Disney and even Amazon.com.
Secondly, it’s personal.
“It’s probably one of the first times there has been an IPO where everyone sort of has a stake in the outcome,” Blau says. While most Facebook users won’t see a penny from the offering, they are all intimately familiar with the company, so it resonates as something they understand.
And then there’s CEO Mark Zuckerberg, who just turned 28 on Monday. He has emerged as the latest in a lineage of Silicon Valley prodigies who are alternately hailed for pushing the world in new directions and reviled for overstepping their bounds. He’s counted the late Apple CEO Steve Jobs among his mentors and he became one of the world’s youngest billionaires at least on paper well before Facebook went public. A dramatized version of Facebook’s founding was the subject of a Hollywood movie that won three Academy Awards last year, propelling Zuckerberg even further into the public spotlight.
Though Zuckerberg is selling about 30 million shares, he will remain Facebook’s largest shareholder. He set up two classes of Facebook stock, building on the model Google co-founders Larry Page and Sergey Brin created as part of the online search leader’s 2004 IPO. The dual class structure helps to ensure that he and other executives keep control as the sometimes conflicting demands of Wall Street exert new pressures on the company.
As a result, with the help of early investors who’ve promised to vote their stock his way, Zuckerberg will have the final say on how nearly 56 per cent of Facebook’s stock votes.
True to form, Zuckerberg and Facebook’s engineers are ringing in the IPO on their own terms. The company is holding an overnight “hackathon” Thursday, where engineers stay up writing programming code to come up with new features for the site. On Friday morning, Zuckerberg will ring the Nasdaq opening bell from Facebook’s headquarters.

NZ dollar slides after Greece calls new election

sntech.nz — Wed, 16 May 2012 08:05:04 +0000

The New Zealand dollar fell 1 US cent after Greek politicians called for new elections after crisis talks failed and dairy product prices declined for the third straight sale in Fonterra’s global auction.
The New Zealand dollar fell as low as 76.77 US cents overnight, a 5-month low, from 77.76 cents yesterday at 5pm. It traded at 76.82 cents just before 8am. The trade weighted index decreased to 69.62 from 70.17.
Investors were temporally upbeat after the Eurozone narrowly avoided a second recession as gross domestic product for the region showed zero growth in the first quarter.
That came just before Greece’s three main political parties announced they have been unable to reach an agreement after nine days of talks. A fresh round of elections will now be held early next month.
“The kiwi nearly got back up to 78 US cents on the back of Europe’s GDP data – it means the European Union as a whole was kept out of recession,” said Stuart Ive, currency strategist at HiFX.
“That was followed by a slow drop off as Greece came back into the forefront – that sent the usual jitters through markets.”
The New Zealand dollar fell as low as 60.28 euro cents overnight from 60.62 cents yesterday. It recently traded at 60.37 cents.
The New Zealand dollar continued its downward slide after dairy products fell 6.4 per cent at Fonterra Cooperative Group’s GlobalDairyTrade auction. The average sale price has now shed 41 per cent in the past 12 months.
The decline reflects a broader slide in commodity prices as traders’ factor in weaker demand from China and uncertainty in Europe that has helped drive up the US dollar and increased supply.
In the US, the world’s largest economy, retail sales increased 0.1 per cent in April, the slowest pace in a year, according to Government data. That matched the forecast predicted by economists in a Bloomberg survey.
There is no significant New Zealand data set for release today.
The New Zealand dollar decreased to 77.39 Australian cents from 77.92 cents and dropped to 48.04 British pence from 48.33 pence. The kiwi slipped to 61.66 yen from 62.11 yen.
- BusinessDesk

RECESSION AND DEPRESSION

sntech.nz — Thu, 10 May 2012 12:05:05 +0000

The New Zealand dollar extended its loss after weaker-than-expected US jobs data and electoral leadership changes in France and Greece sapped investors’ appetite for higher-yielding assets.
The kiwi dollar traded at 79.33 US cents just before 8am, the lowest since January 18, down from 79.54 cents at the close of trading in New York on Friday. The trade weighted index dropped to 71 from 71.08.
Traders sold down higher-yielding assets such as equities and the kiwi dollar after American employers added the fewest number of jobs in six months and wages stagnated. The US economy added 115,000 workers last month, falling well short of estimates of 160,000. The jobless rate unexpectedly dropped to a three-year low of 8.1 per cent as more people stopped looking for work.
“It all started with nonfarm payrolls on Friday evening as the headline number came in a lot lower than the market had expected which has led to questions about the global recovery,” said Stuart Ive, currency strategist at HiFX. “Obviously, the New Zealand dollar has fallen along with that.”
Investors are also concerned that general elections in France and Greece will raise questions about those nations’ commitment to already-agreed austerity measures across the Euro-zone. Defeated French President Nicolas Sarkozy has handed control of Europe’s second-biggest economy to socialist Francois Hollande, who won about 52 per cent of the vote, according to Bloomberg.
Greek voters have cast doubt on whether the two main parties, New Democracy and Pasok, can form a coalition. The latest count suggested a bailout-supporting the coalition could just scrape together a 1-vote majority, Bloomberg reported.
“Greece’s elections have disappeared a little under the umbrella of the French elections – no-one really knows what’s going on yet,” Ive said.
Greece’s two major parties formed a caretaker government last year to implement severe austerity cuts in return for a 130 billion euro bail-out and the biggest debt restructuring ever.
There is no significant data set for release in New Zealand today.
The New Zealand dollar fell to 60.68 euro cents from 60.77 cents at the close of trading in New York. The kiwi was little-changed at 78.07 Australian cents from 78.11 cents. It slipped to 49.13 British pence from 49.23 pence and declined to 63.29 yen from 63.47 yen.
- BusinessDesk

Pest could cost fruit industry ‘millions’

sntech.nz — Thu, 10 May 2012 11:05:04 +0000

The discovery of the world’s most destructive fruit fly species in Auckland could cost New Zealand’s horticulture industry millions of dollars, says the group representing the industry.
The Queensland male fly was collected from a trap in the Auckland suburb of Mt Roskill on Tuesday and formally identified late yesterday.
Queensland fruit flies cost the Australian economy around $160 million a year and are considered the most destructive fruit fly species in the world.
They attack about 100 different species including pip fruit and breed very quickly.
New Zealand’s horticultural industry is worth about $6.5 billion a year, and Horticulture New Zealand chief executive Peter Silcock said if the fly were to establish itself in New Zealand there is a potential impact of “millions of dollars”.
“It’s certainly very concerning to the industry,” he told ONE News.
“It’s absolutely critical we get out there and right away and sort this problem out.”

Reserve Bank hunts for better weapons

sntech.nz — Sun, 06 May 2012 09:05:04 +0000

A chink of light broke through the clouds over our economy this week.
The Reserve Bank seems finally to be talking seriously about adding a few extra weapons to its rather bare arsenal. This week Deputy Governor Grant Spencer, who is widely seen as the likely successor to outgoing Governor Alan Bollard, revealed the bank is considering adopting so-called Macro-Prudential Policy tools to add to its main tool, the Official Cash Rate.
If adopted, this could break a Catch 22 that the NZ economy has been stuck in for much of the past decade. The Catch 22 goes like this:
1 A booming property market fuelled inflation and economic growth.
2 This forced the Reserve Bank to push up the Official Cash Rate to keep inflation within its 1-3 per cent target band.
3 This, in turn, pushed up the New Zealand dollar and reduced the competitiveness of exporters.
4 This reduced export employment and increased New Zealand’s reliance on foreign borrowing to service its foreign debt.
5 The increased inflows of foreign funds pushed the New Zealand dollar higher.
6 Any attempt to cut interest rates simply fired up the property market, sucking in more foreign debt.
7 Rinse and repeat.
Breaking out of this cycle has seemed impossible.
Governments from both sides of the spectrum have tried to increase domestic savings, which would reduce the reliance on foreign borrowing and, in theory, reduce interest rates in the long run. The National-led Government’s moves to make rental property investment less attractive by reducing the ability to claim depreciation on buildings was one of the attempts to break this cycle.
The current strength of the New Zealand dollar, despite weak commodity prices, shows the Catch 22 is still operating with a vengeance.
The Reserve Bank has been so frustrated by this that the outgoing Governor has even suggested in recent months he might cut the Official Cash Rate to try to drag the currency lower. This has only increased the heat in the property market.
Labour and the Greens have tried to spark debate about how to break this Catch 22, but until now the Government and the Reserve Bank have been reluctant to break away from the current inflation-targeting regime with the use of the single tool of the Official Cash Rate.
Now, the Reserve Bank is looking at tightening regulations for banks that would make it harder for them to lend heavily against property during booms. These suggested Macro-Prudential Policy tools include loan to value ratio limits, a counter cyclical capital buffer for banks and changes to the Core Funding Ratio.
Let’s hope this study goes a lot further than the one that petered out in 2005 and 2006. By Bernard Hickey

NZ dollar falls below US80c

sntech.nz — Sat, 05 May 2012 00:05:06 +0000

The New Zealand dollar fell below 80 US cents for the first time since January after weaker-than-expected US data and a surprise gain in local unemployment stoked bets the Reserve Bank may cut interest rates.
The New Zealand dollar fell as low as 79.83 US cents overnight, the lowest it has fallen since January 17. The kiwi traded at 79.91 cents at 8am this morning, down from 80.58 cents at 5pm yesterday. The trade weighted index decreased to 71.25 from 71.79.
For the first time since early February, traders are betting the central bank will cut the official cash rate in the next 12 months – by 10 basis points based on the Overnight Index Swap curve. Government figures yesterday showed the jobless rate climbed to 6.7 per cent in the first quarter.
Globally investors are awaiting US non-farm payrolls data for clues to American growth after figures showed the services sector weakened though jobless claims also fell.
“If we see a solid non-farm payrolls number then the kiwi will remain under pressure,” said Stuart Ive, currency strategist at HiFX.
“If we get a non-farm payrolls number that is particularly weak this may put more pressure on the Fed to apply quantitative easing.”
Economists in a Bloomberg survey are predicting Friday’s payrolls report will show that US employers added 160,000 new jobs last month. The US Institute for Supply Management reported yesterday that its service index fell to a fourth-month low, dropping to 53.5 in April from 56 in March. Economists polled by Reuters expected a 55.5 reading. Separately, the Labor Department reported that new claims for jobless help fell by 27,000 to a seasonally adjusted 365,000, its biggest weekly decline in almost a year.
Fed policy makers have said they will hold off increasing monetary accommodation unless US economic expansion falters or prices rise at a slower rate. In January, it pledged to keep interest rates near zero until at least the end of 2014.
The New Zealand dollar fell to 60.78 euro cents from 61.33 cents. Europe’s interest rates will remain at 1 per cent after the European Central Bank President Mario Draghi told reporters policy makers didn’t discuss cutting rates at their latest meeting.
That comes ahead of this weekend’s general election in Greece, where the Euro-zone will be watching to see whether the next elected government will ratify the austerity measures the Mediterranean nation needs to implement to secure its International Monetary Fund bail-out.
France will also go to the polls on May 6 where it is expected that President Nicolas Sarkozy will lose his job to Socialist challenger Francois Hollande.
The kiwi slipped to 77.87 Australian cents from 87.19 cents. It decreased to 49.39 British pence from 49.81 pence and slide to 64.06 yen from 64.65 yen.
- BusinessDesk

Facebook to raise US$10.6bil in mega IPO

sntech.nz — Sat, 05 May 2012 00:05:05 +0000

SAN FRANCISCO: Facebook Inc aims to raise about $10.6 billion in Silicon Valley’s largest IPO, dwarfing the coming-out parties of tech companies like Google Inc and granting the world’s largest social network a market value close to Amazon.com’s.
The eight-year-old social network that began as Mark Zuckerberg’s Harvard dorm room project indicated an initial public offering price range of between $28 and $35 a share on Thursday, which would value the company at $77 billion to $96 billion.
The valuation reflects the company’s growth and bullish expectations about its money-making potential as a hub for everything from advertising to commerce.
“We certainly haven’t ever seen a tech IPO on this grandiose a scale,” said Lise Buyer, a principal with the IPO advisory firm Class V Group.
Buyer, who worked on Google’s 2004 IPO, said the question about a company “that’s already this big and that is raising this much money is how many of the glory days of growth are in the past versus how many are ahead.”Facebook stands to raise as much as $12 billion at the upper end of its planned range. If an over-allotment or “greenshoe” option is triggered, the company could sweep up a maximum of $13.6 billion, according to a Thursday prospectus.
Facebook is only getting about half, or $5.6 billion, of the estimated $10.6 billion that it would raise at the midpoint of its planned IPO range. About $4.9 billon will go to some existing shareholders.
The offering’s price range can be adjusted depending on Wall Street’s response.
Investors are expected to flock to the highly anticipated IPO, though there have been growing concerns about the social network’s longer-term growth and Zuckerberg’s majority control.
“People are going to be very comfortable with this valuation,” said Sam Schwerin of Millennium Technology Value Partners, which owns Facebook shares worth roughly $200 million. The firm is not selling in the IPO.
“A price range of $28 to $35 will be a relief to some people who are concerned that they may try to take the highest possible price because of high demand.
“The amount being raised is noteworthy. Selling stockholders are raising about $5 billion in the IPO, which is a lot,” Schwerin said.
Facebook executives are due to hit the road on Monday, presenting their investment case to audiences. They will start in New York, go to other major cities such as Chicago and Boston, and end up on Facebook’s home turf in Menlo Park, California, according to a schedule obtained by Reuters.
Zuckerberg is expected to participate in the two-week road show, a source has said, though Chief Operating Officer Sheryl Sandberg and Finance Chief David Ebersman will lead the briefings.
TANTALIZING WALL STREET
Zuckerberg’s involvement in the road show will be key for investors with concerns about the company’s long-term strategy and money-making potential, said Brian Wieser, an analyst with Pivotal Research Group.
Last week, Facebook reported its first quarter-to-quarter revenue slide in at least two years, a sign that the social network’s sizzling growth may be cooling just as it prepares to go public. Its stock should begin trading in about a week or two.
In a 31-minute road show video posted online on Thursday, Zuckerberg predicted that in five years almost every software app would be integrated with Facebook.
Facebook, which plans to list its stock on the Nasdaq under the ticker “FB” , has long tantalized investors with the prospect of a mega IPO.
Its capital-raising target far outstrips big Internet IPOs that came before it. Google raised just shy of $2 billion in 2004, while last year Groupontapped investors for $700 million and Zynga raked in $1 billion.
At the maximum end of the range, Facebook’s value would be close to $100 billion. That would rival Amazon.com’s and Cisco Systems Inc’smarket values of just over $100 billion, while surpassing the combined market value of older technology companies Hewlett-Packard Co andDell Inc .
In its prospectus, Facebook said the “lock-up” period, during which employees cannot sell shares after the IPO, would range from 151 days to 181 days.
Among existing shareholders, the largest seller in the IPO will be venture capital firm Accel Partners, which will make about $1.2 billion assuming the shares sell at the $31.5 mid-point. Zuckerberg is selling the next largest chunk of shares, worth a little under $1 billion.
Some investors think Facebook, which touts 845 million users worldwide, is setting itself a fairly conservative target.
“The price range may be tactical. They will likely walk the range up,” Schwerin argued. – Reuters
Factbox: Facebook’s IPO: who gets rich?
SAN FRANCISCO: The rich are going to get richer when Silicon Valley’s biggest IPO starts trading.
Facebook is only getting about half — or $5.6 billion — of the roughly $10.6 billion it plans to raise via a mega IPO. The other half, or about $4.9 billon, is going to a handful of inside investors — many Silicon Valley notables.
Chief among them are co-founder and Chief Executive Mark Zuckerberg, venture firm Accel Partners, early investor and PayPal co-founder Peter Thiel, Russian tycoon Yuri Milner’s DST, and investment bank Goldman Sachs.
And Mark Pincus, co-founder of the gaming company Zynga, is set to get his second payout in six months. He stands to make almost $32 million, on top of his take when the social gaming giant he co-founded went public last year.
Those holding onto their stakes — for now — include: Napster co-founder and Facebook founding president Sean Parker; co-founder and Zuckerberg’s Harvard roommate, Dustin Moskovitz; various Facebook executives; and venture capital firm Andreessen Horowitz.
The largest seller is Accel Partners, which will make about $1.2 billion if the shares sell at the $31.50 mid-point of an indicative price range. Zuckerberg, who started Facebook in 2004 from his Harvard dorm room, is selling the next largest chunk of shares worth a little under $1 billion. – Reuters
Facebook execs tackle mobile concern in IPO video
SAN FRANCISCO: Facebook Inc executives tackled concerns about the company’s mobile strategy during a video presentation for its IPO road show.
The company plans to raise $10.6 billion, making it the largest initial public offering ever in Silicon Valley.
On Thursday, Facebook released a 31-minute road show video featuring founder and Chief Executive Mark Zuckerberg, Chief Financial Officer David Ebersman, Chief Operating Officer Sheryl Sandberg and Vice President of Product Chris Cox.
Investors have expressed concerns over how Facebook will increase advertising revenue as more people access the social network through small mobile devices.
During a presentation on advertising, Sandberg said mobile is a key area of growth for Facebook, and that the company would use sponsored stories to generate more advertising income.
Advertisers pay Facebook to highlight certain stories. These sponsored posts recently started running on the News Feeds of Facebook mobile users.
“Today only a small fraction of our ad impressions are sponsored stories, which gives us room to grow,” Sandberg said, adding that these paid posts were a “natural part of the Facebook mobile experience.”
Facebook Chief Financial Officer David Ebersman said the company would invest heavily in mobile, even if the payoff takes a long time.
The road show, which is intended to persuade investors to buy Facebook shares, starts on Monday – Reuters
Facebook adds two new underwriters
NEW YORK: Facebook Inc has added two new underwriters to its $10.6 billion initial public offering, including electronic broker E*Trade Securities, according to the latest IPO prospectus.
The world’s largest social network also added Itau BBA USA Securities, the U.S. subsidiary of Brazilian bank Itau Unibanco, as an underwriter. Facebook now has 33 underwriters for its IPO due later this month. – Reuters

Baby boomers’ wealth explodes

sntech.nz — Mon, 26 Mar 2012 08:03:04 +0000

This week Roy Morgan published its annual State of the Nation survey showing a stunning rise in the wealth of New Zealanders aged 55 and over.The survey of 5000 older New Zealanders asked them how much they were worth and how much debt they had compared with the broader population.The report confirms an extraordinary shift in the structure of wealth in New Zealand, raising important questions for politicians, policy makers and voters. Anyone aged 30 or lower should look away now. It may prove too painful to read.The gross wealth of those aged 55 and over has risen from $188 billion in 2002, or 37 per cent of total wealth, to $525 billion, or 47 per cent of total wealth. This growth was only partly due to a rise in the proportion of the population who are 55 and over to 24.7 per cent from 19.5 per cent.That period from 2002 to last year was dominated by the housing boom from 2002 to 2007 when house prices virtually doubled, even after accounting for inflation.Anyone owning property early in that period is now much richer, given many had leveraged investments in their properties because of their mortgages.Most of the property owners through that period were aged over 30 and therefore made the bulk of the gains.This shift in the proportion of the wealth to the aged will intensify further as that “lucky”generation of mostly baby-boomers retire over the next 20 years.The picture becomes starker when looking at net worth. Those aged 55 and over added just $21 billion in debt to $32 billion over that 2002-2011 period. The unlucky ones were those that took on massive debts in the last five years to buy houses at the newly inflated prices. They were mostly below 40.This structural shift in wealth to the aged and a loading up of debt on the young is obviously not sustainable, particularly when combined with the current promises of universal superannuation from 65 and publicly funded healthcare.With the current policies, New Zealand faces the bizarre prospect of either higher income tax rates on the increasingly indebted young to pay for pensions and “free” healthcare for the increasingly wealthy old, or huge amounts of government borrowing, which would of course have to eventually be repaid by the young.New Zealand needs to have a conversation about how to transfer this wealth back.A land tax, a capital gains tax, higher income taxes, a later retirement age, means testing for New Zealand Superannuation and means testing for public health care will have to be considered.Or the Baby Boomers will face the ultimate sanction. They will have to watch their grandchildren grow up by Facebook and Skype.