ShareChat News: Opinion: Are we heading back to 1987?

The sharemarket may not be heading for a 1987-style melt-down but Tyndall fund manager Anthony Quirk believes there's a good chance the economy will find itself in similar straits.
"It's not the most likely scenario, but it's certainly a possibility, and the more (Reserve Bank governor Alan) Bollard talks about having to raise rates to get imbalances out of the system, the more risk there is that we get a situation a bit like post '87." he said.

Quirk reckons Bollard "stepped it up a notch" this week when he issued a fresh stern warning about consumer spending and the runaway housing market.

Bollard told banks, homeowners and international investors they could be in for a sharp shock if New Zealanders are allowed to continue their current borrowing and spending.
He said he was willing to "take further action" on top of the eight interest rate hikes since the start of last year. Bollard will almost certainly raise the official cash rate to 7.25% from 7.0% at the bank's next review on December 8 as he tries to tame the 3.4% annual inflation rate.

Bollard repeated his concerns that homeowners were continuing to spend more than they earn and many were "vulnerable" to interest rate rises, a fall in property prices, or their job prospects worsening.

New Zealanders' love affair with home ownership and borrowing money on their sole financial asset was a recipe for disaster, he said.