When share markets crash, it becomes clear that shares are only ever a potential claim on resources. They have to be converted into money before they can command the basics of survival. When the music stops, few want to buy any more. Today’s share market crash reflects not just the bursting of a speculative bubble but also a loss of faith in the viability of the underlying businesses associated with tourism and travel.

While housing is a real asset and still gives shelter, its monetary value can also fall steeply and its potential to provide a buffer for retirement spending can rapidly diminish. New Zealand has had the strongest speculative housing bubble in the Western world. What happens next is not hard to predict.

The emerging poverty among older New Zealanders was noted in the RPRC report on fiscal sustainability for the 2019 retirement income review. Much of this poverty is driven by the inadequacy of the benefit system for those aged 50-65, and the way the housing market has become a speculative bonanza for the well-off instead of providing basic healthy housing for everyone.

Housing stress is bound to become a whole lot worse. We also questioned the unscrutinised expansion of the NZ Super fund as if that was going to help us “afford” NZ Super. As share markets crumble, the old adage from Economist Nicholas Barr ( Myths my grandpa taught me) that pensioners ” cant eat pound note butties” takes on a new relevance.

What Barr means is that a store of paper assets including money itself is not always a guarantee of the expected standard of living. The future depends on there being actual “butties” to consume.

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