Excellent thinking.

http://www.interest.co.nz/ratesblog/index.php/2009/11/17/opinion-why-wel...

Any problems with policy stem from issues with spending and fiscal policy - not the inflation targeting framework.

Very unhappy

Smart politically - as NZ is definitely looking for alternatives. Exepct National to follow with some kind of similar announcement. Good on Goff for putting the pressure on them.

Now, if only we can get some actions as opposed to just words.

Goff and Labour are idiots the problems with interest rates the currency are a reflection of massive imbalances within the economy including massive excess Govt spending. Its all about debt debt and too much debt.

Oh Goffy, c'mon dude,

"When I have gone into international trade negotiations around the world, it has always been a point of pride for me to be able to stand in front of any audience and say - New Zealand does not subsidise our agriculture.

Our farmers do not want subsidies, and do not ask for them.

Our farmers are so good at what they do, they do not need to be propped up."

WTF do you call no CGT or proper land and property taxation then?

If it wasn't for things like this, we'd not be having as many problems with things like this,

Health cuts loom as Govt refocuses spending

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10610225

Still, it'll not bother those involved in our institutionalised tax avoidance, they'll no doubt have full private cover - because they can afford it as they pay no or next to no tax.

I agree with Kate on this. Politically smart ( I am definitely not a Labour supporter) but more importantly if it promotes more lateral thinking then that is great. We cannot keep doing things the same way. We need the sort of major shift in thinking we saw in the 1980's. What that exact direction is I'm not sure , but I do know it has to be different to the present. All the smart thinking overseas says 2010 is going to be very difficult and a lop sided W "recesssion/recovery" is on the way.

I really don't like that little man!! Why doesn't he go and hide under a rock for a while... to allow us time to forget about him and the Labour Party.

The rhetoric that he comes out with given he was a senior member of the Labour Party and had nine years to implement changes but didn't.

Imagine if Labour were still in power now and what would they be doing... raising income taxes, CGT tax, Increase GST, introducing a Fart Tax....

Malcolm
Still Looks deflationary to me. Unemployment is up,incomes are down (in the private sector at least) Its going to be hard to get the bubble machine going again because the debts are already at record levels. I agree with you though ,debasement of the currency and some kind of IMF management looks likely as the politicians lack the backbone to do what needs to be done. The risk of inflation is several years out still I suspect.

This is a real step change not like the recycled rhetoric from Key. As for the "Labour's nine years" lines, it was English and key who blocked Cullen when he tried to get a bi-partisan approach to a broader approach.

Good for Goff

Well, yes, but its a bit of a weak excuse Berry - as the Labour Government had its coalition partner in NZ First who was all for it.

That said I agree with you, good on Goff.

Our trade rivals are our rivals. They love us the way a cat loves a bird. We need to protect ourselves, our boarders, our currency, our land, our jobs etc etc. The Free Trade mantra is crazy if taken to the extreme. Uninhibited free trade will eventually lead to the entirety of New Zealand being owned by foreigners. period

It is illogical to believe that we can completely open ourselves to foreign investment without any other outcome. It would be like going to the Casino every night for a year with our life savings and expecting to be a rich man or woman at the end. We will ALWAYS end up bankrupt. always

New Zealand is the idiotic 15 year old, positive thinking girl, walking into Mongrel Mob headquarters in a skimpy dress and all made up, hoping to find true love. Good luck to us.

Trudy - as I'm sure Roger T will tell you, Labour are not in gov. What we might hope for is JK and BE dropping the barriers to cross-party discussion, forget the left v.right bs on this and looking purposefully at the range of options we have - and then acting, asap. Here's hoping.

It's time to peg our exchange rate like singapore. NZ is just too small country to have free exchange rate and absorb the external forces.

Secondly, I am truly sick of Labour's potty mouth. They had years of doing nothing and now they are up and arm about what they had set up 9 years ago. Actually I don't mind Phil Goff as my door stopper - would be quite cool, I am tried of the garden gnomes..

Good on you Phil. At last some new ideas. I don't hold it against him personally that none of the changes talked about in the speech were made in the 9 years Labour were in power. I am sure the big decisions in the last Labour government were made by Clark and Cullen- especially Cullen. Phil has his chance now to show what his vision as leader is and there are some promising noises coming from him. Now if he can just get foreign speculators out of our property market...

who is David Cunliffe? Is he mate of Phil?

Kiwitrader - take cover... It's not about being low or high, it's about an appropriate level and volatility, that better reflect trade of real goods and services, rather than speculative and manipulative fx flows, neither of these aims are in your interest, especially if you are a 'carry trader' as well.

David Cunliffe - good on you guys for promoting change and challenging the status quo. Given time is not on our side I hope National start to see sense as well and TOGETHER you effect appropriate change while we still have some time. Well done.

Catch-up stuff from an economically clueless party. Yes, the 'alternatives' on offer need to be broadened. But the talk is (quelle surprise) woefully short on the messy details, and misses the main point: that it is the decade's growth in the non-traded sector that has done the damage in terms of opportunity costs, fostered entitlement attitudes rather than entrepreneurship, and foregone revenue generation possibilities.

And by definition, Gummint cannot fix that itself, in terms of Doing Things. It needs a much more nuanced attention to policy settings from Gummint, and the emergence of an environment which will favour the Tradeable sector V2.0, which will do the actual heavy lifting.

Plus, natch, a determined and none-too-leisurely winding back of the more glaring excesses of the non-tradeable crew. I believe there's a List somewheres....over at PC, too lazy to go find it.

Or, just abolish the RBNZ. Come to think of it, it's on the List, too.

Class of '09: discuss.

@David Cunliffe: Considering how badly Labour did in not fixing the imbalances for 9 years its a bit rich to now say you have or are looking for solutions. To busy with your social engineering polices to worry about economic policies and especially exporters....to busy with keeping the unions, farmers etc happy to worry about the environmental damage done....to busy worrying today when peak oil is going to spoil tomorrow. You failed to look after NZ, you failed to provide leadership...you failed...

regards

David Cunliffe; if you are a true beliver of fixing up the balances perhaps the first step would be to minimise the massive outflow of NZD by trading in your expensive french car to something a bit cheaper (may be australian made). No I didn't vote for national and not belonging any politcal party.

Learn to Social Dance has it right (or os that left?) but the rest of you - including David Cunliffe?

Sorry folks, I think you mostly miss the point. A little country or company, in an open market, gets trashed. That's one truism.

The other is the sinking ship, upon which you're all having the debate.

Mr Cunliffe - get it straight and get it good - when the global supply of energy peaked, so too did the 'work do-able', meanng 'economic growth' (global average) must also cease growing. We can argue efficiencies, but nothing else. When will folk like you get the fact that everything - EVERYTHING - needs energy. Every manufactured item, every transported item, every house, every .......everything.
As long as you tout - like everyone else - 'economic growth' / jobs / pie in the sky, you're as socially bankrupt as Brownlee, in my humble opinion.

Try learning about exponential growth, and 'doubling time'. Prof Allbert Bartlett is a good starting point.

We have one chance to adapt to a post-oil world, and both major parties are squandering it. I expect it of the Nats - there's not a lot of original thinking there - but you lot are a bigger disappointment - in that you purport to care.

I suggest you re-read the Fitzsimmons/Cullen interchange re Peak Oil (Hansard - maybe 04?) and do some homework.

Be very aware, David, that this current rabble are the dying gasp of a line which includes your current leader. The next Govt we have needs to be a new broom - aiming straight for a goal of sustainable chemisrty and physics, so that we can hand on the place to our kids as a 'going concern'.

All else is a waste of time and resources - neither of which are in large supply.

I wonder how Labour is going to live in the new wolrd of a depression...

"Brad DeLong says that the loss of public trust due to the kid-gloves treatment of bankers has raised the probability of another Great Depression, because the public won't support another round of bailouts even if it becomes desperately necessary. I agree "” but I think the bigger cost is that we've greatly increased the chance of a Japanese-style lost decade, with I would now give roughly even odds of happening." (Paul Krugman)

http://krugman.blogs.nytimes.com/?scp=4&sq=liberal&st=cse

So its 50/50 without considering the effect of peak oil...and here we are with Labour worrying about a little volatility...well Labour its looking like its roller coaster time...

regards

At least Labour has brought it up and getting into some action (finally). It is times like this that may highlight weaknesses, but it is important to work things through on a 20 year plan, before jumping to any quick conclusions. I would live in la la land if I though National and Labour could get along, but they've done it before to stop us smacking our kids too much. Well it's often these economic issues that bring out the worst in us and that is why we may yet see the worst of behavioural problems.
NZD does need more stability. Too low and we have skyrocketing inflation, too high and we start importing stuff left, right, and centre (excuse the pun). I agree with some things said above, but I do not believe that imports are necessarily consumer crap. I have been to China and seen product of a standard that we in NZ cannot afford. Not just because of the affordable labour there, but due to the large production outlay. I have seen 20m plants being imported from italy and installed by them into Chinese factories so that they can finish something as good as anyone. I visited China and wanted to buy something as gifts, and found it hard to find anything that they could appreciate from us in NZ, that we couldn't get cheaper there. After my visit, I could think of Whittakers chocolate, Milk powder, or perhaps a stereo amplifier, or a crystal oscillator. We do produce some good things in NZ, too, but we need rimu quality, not pine.

Hi gingerbreadman. I drive a Toyota

just my luck, we get David Cunliffe online and Im stuck in Bulls about to be kicked off the computer at the local library any minute.

David, I hope you will front up more often. Until next time if you want to learn more of the founding ideals of the international Labour movement, study these;
http://publiccreditorbust.blog.com/tag/labours-original-ideals-were-publ...

http://publiccreditorbust.blog.com/2009/09/11/michael-joseph-savage-expl...

If you want to learn more about global public credit in general
http://publiccreditorbust.blog.com/

Iain - there is nothing new here, just a call for the competitive devaluations of the 1930s. The simple fact is that Labour, and National - at the behest of the bankers who really run the show - have run up levels of debt that can never be repaid with currently priced dollars. Hence there are just two options - default some time hence, or repudiate the debt with worthless money. Certainly, option two will let government off the hook but it will destroy New Zealanders remaining wealth in the process.

Probably the most ridiculous observation in the comments reported from Mr Goff, on monetary policy, is the claim: "We battled inflation successfully". Really, that is why huge numbers of Kiwis can't afford a house, why huge numbers of Kiwis lost big in finance companies - because they had to seek higher interest rates to compensate for loss of buying power! It's why people dread the rates bill and a host of other imposts - with inflation written all over them. Its why more and more Kiwis are going ever deeper into debt, as they struggle to maintain their standard of living.

Before falling for this 'New Labour' spin I suggest you consult the latest analysis from my ever incisive countryman Nadeem Walayat - on what the 'ideological masters' of New Zealand Labour - ie British Labour - are in the process of delivering to the U.K:

http://www.marketoracle.co.uk/Article15131.html

One thing is good though, steadily the battle lines are being drawn for a showdown of Byzantine proportions between gold (historic money) and paper (politicians and bankers money). Iain you are right though - if you must have paper money then, for goodness sake, create it for yourselves - not for the benefit of the bankers - sorry, I mean usurers!

Thanks Les : Amazing isn't it , how wise Labour are now . Sobered up after their 9 year spendfest . David Cunliffe , we are broke , bankruptured . You guys led us up the primrose path of big government and all encompassing welfare . And now we cannot afford it . Cullen's policies exacerbated an overheated property market . His 39 % tax shunted $ Billions into rentals , the LAQC attack . ACC expanded to cover every contingency and everyone . WFF gave all tax back to many , but left many of us ( on lower incomes ) footing the bill for their good fortune .

Goffy , Cunliffe , King : Your party ( and the pun is intended ) left our economy unbalanced . Your vision was only 3 years , from one election , to the next . And at each successive election , you exceeded your own bribes to the electorate , to buy your success . Did it never occur to you that you were simply churning our , tax-payers money , through your ever-expanding government machine . And now you want us to listen to you , to your new found wisdom.........Yeah , right !

Goff is a holding-pattern - a Rogernome from way back. He would fail and be replaced, in the two-cycle scheme of things, but we haven't got that window anymore.
We are at a well-predicted crossroads, and worrying about the Reseve Bank at all is kind of obsolete.
The new fiscal system - or the style this one will morph into - will have no credit and no interest - it just has to be so under a sinking lid. Irrespective of all the 'he said/she said's.
Food - which we do well - may well be in demand, but there will be no exponential increase in the underpinning of wealth, so the hungry demand may not translate too well into $ demand.
The morph may simply be from survival of the fattest, to survival of the fittest. From what I'm reading, most folk here seem to think it'll be BAU? That's actually only BA the last 200 years. All based on consumption of resources.
No more 'doubling times' left.
Seriously, the physical world doesn't give a tuppeny cuss what our fiscal relativity is - so why do folk place monetarism on the top cranial shelf?

I'm off the buy tea.....

Bevan - that your english language name? - Why do you place such importance on Phil Goff meeting the Dalai Lama? ... why do you feel insecure toward a man who promotes non-violent resistance to have his country annexed?

Perhaps feeling a little guilty?... or made be your post is a conditioned response?

Les Rudd 2.07

"Kiwitrader "“ take cover"¦ It's not about being low or high, it's about an appropriate level and volatility, that better reflect trade of real goods and services, rather than speculative and manipulative fx flows, neither of these aims are in your interest, especially if you are a "˜carry trader' as well."

Ones mans speculation is another's hedge. We have free and open capital markets. If you want to go back to when the RBNZ was "managing" the exchange rate, then the NZ tax payer would have to underwrite it. Sure, we would have less movement in the exchange rate, but at what cost? The last time Muldoon did that it cost the treasury hundreds of millions of dollars. I was there!

A free market means the government has no exchange rate exposure. The international investors have all the risk. Why should my taxes go towards subsidising the exchange rate through the RBNZ?

Because that is what a "managed "currency means.

If you want to hear a real rant about money check out the link below. Of course, Sir Oswald was a hugely controversial character but, when you consider he made this speech in 1936, the prescience is quite extraordinary. Oh, and if any Labour types are ready with denuciations at the very mention of Mosely, I suggest they take heed of the words of the last true gentleman to lead the British Labour Party - Michael Foot.

"No rising star in the political firmament ever shone more brightly than Sir Oswald Mosley. Since by general assent he could have become the leader of either the Labour or the Conservative Party. What Mosley so valiantly stood for could have saved this country from the Hungry Thirties and the Second World War". - Michael Foot, M.P.

http://www.youtube.com/watch?v=VjI_quv3qFU

The voting public moved Labour alot closer to their roots !........Next election , shape up , or you'll be totally rooted .

Good stuff from Phil Goff!

I really don't give a rats ass about what Labour did and didn't do (yes they missed a great chance and did not deliver, but YES!!!! more of the same will not work any better) so we need to change if outcomes are to change.

Do you think it might be worthwhile looking forward not backwards? Pillory people for the mistakes of the past forces them to waste effort on defending themselves not doing something useful like learning from the past mistakes and changing.

It is interesting to look at the reactions, Federated Farmers release on the speech is:

"Monetary policy works, so why isn't it?"

The little (policy) engine that didn't semantics if ever I saw them. See details at:

http://www.fedfarm.org.nz/n1764.html

Our mates at Business New Zealand predictably worried what the loss of confidence the breakdown in the consensus would mean to investment "“ demonstrating their touching faith in the financial system, their belief that all foreign investment is good, even carry trade speculation. And these people claim to speak for exporters "“ but then again I guess that is what should be expected from those ensconced in the safe (for now) towers of Wellington. See details at:

http://www.scoop.co.nz/stories/PO0911/S00210.htm

A good day.

Kiwi Trader: For every winner there is a loser. At this time all market participants have the same knowledge.

Really Kiwi Trader. I certainly don't as an exporters have the same visibility as the banks. I'm just trying to get my money back home to pay the wages. I can't leave it there for a few weeks or months while the price gets nudged one way or the other. I have to buy Kiwi and pay the wages. That's the real demand.

Just three question FX trader.

1) Why is the Kiwi traded 118 times our GDP (Australia 60 odd and Korea 10)?

2) Why are we referred to as a high yielding currency by off shore traders?

3) High yielding for who?

To all above,

Some months ago I suggesting that Labour (at their conference) really was humble after their defeat and sincere in their desire to do the right thing by the people next time around. I sensed genuine sorrow that they had let the nation down in some critical areas.

More than one person told me that "whats the point of getting into power if you don't know what your going to do" (as I'm typing this I'm thinking this a question for John Key)

Look there has been a changing of the guard in Labour. There year of penance is over and we are starting to see what's been cooking. I like the smell of it and I can almost taste it.

I know both Cunliffe and Goff and they are both decent men with a genuine desire to do the right thing. They didn't have sway under Clark and Cullen and now they have and this is a great start. I think the next election just got a whole lot more interesting..

Ball is with KT show me the hedging policy - put up or shut up.

We all agree, creating better condition for exporters is certainly important, but alone it doesn't help out of our economic misery.
As many times explained, the reduction of imports and less foreign financial & economic dependency is the major challenge.

Walter

John Walley 8:37

I have spent 30 years in banking. I have spent many years advising both exporters and importers on treasury policies all over the world. I have written a number of treasury policies for major and minor companies.

You can tell the companies that have policies, they are not complaining about the exchange rate, because they are hedged.

You can craft policies that "work over a 3 year three horizon, deal with unpredictable and fluctuating sales and purchases".

But the hedging will impact on credit lines, and if hedge accounting will not impact on balance sheet or covenants.

A lot of people do talk to me already, and do not see the need to get the government to "fix" the exchange rate to solve their problems.

Kiwi Trader, I think you owe me 3 answers rather than pitching for business.

Just three question FX trader.

1) Why is the Kiwi traded 118 times our GDP (Australia 60 odd and Korea 10)?

2) Why are we referred to as a high yielding currency by off shore traders?

3) High yielding for who?

Selwyn - that's great to hear that they are moving ahead. The global economy is dynamic and changing too fast. Should they have any constructive ideas, then got to act fast, otherwise any changes might not be able to catch up with the happenings in the region. Cheers.

I will - with respect - throw a question at all you folk:

The Greenland Norse (I did an OP/ED in the ODT a while back - google: ODT Lessons of the Past....) have been where we are - farming and exporting from a place at the end of the world. They dipped out, and I humbly suggest there are lessons to be learned.

Their experience suggests that exporting alone is not an adequate goal.

The problem is that if your exports include your finite local resources, then you are on a time-line to cessation.

It's tantamount to trading down your assets to maintain cash-flow - it can only be a temporary expedient.

So exporting must be properly accounted - in a word, it must be sustainable. One-off windfalls like oil, gas, lignite, minerals and existing native timber, are a legacy to ALL generations, in short, a 'commons'.

Which leaves us essentially with the options of exporting farm and forestry produce using sustainable (maintainable forever) practices, and weaning ourselves from imported energy (particularly) and anything imported which impacts our sustainable chances.

For example, we shouldn't buy stuff made in factory powered by coal, regardless of country of source, because of the resultant impact on our farming (ie East Coast droughts).

The Greenland Norse had a fiscal system, but ran down their natural capital, and collapsed rather quickly.

They presumably had an exchange-rate.........

Just a thought :)

At last the debate directly involves someone who is actually in parliament. That's something. What we really need though is involvement from someone who has some power.

The idea of even discussing the monetary policy is at last in the open. This is meant to be the role of the opposition - so thankyou David. It's a worry that Key's history is in banking because he'll be cursed with their thinking patterns and mates from there giving him advice. However this is a great start.

Poor old KIwi Trader confuses his ability to make a fortune, which presumably he has, with being successful. We do see clearly though his narrow personal vision for wealth creation compared to what the nation needs. The Auckland based employers association with its derisory comments this morning also helps in showing clearly the status quo (local domestic business) versus the vision required to actually get NZ going.

NZ exports far more as a percentage of its economy than all our customers do. Our economy is fundamentally different than all theirs and we need different policy settings to cope with this scenario at this time. Get over it and get away from idealogical dogma.

Dogma is a worry Kiwi Trader. NZ isn't yet ready for a high kiwi. The goods we make are not yet "value added" enough. Japan in the 60's had a low exchange rate and it got them going. We are a very poor country that has maintained a high standard of living by borrowing and we really should be treated like a developing nation by IMF and everyone else.

I export very high value added, very high end electronics equipment to the luxury end of world markets. Export to more than 40 countries, and it's a real struggle to manage the exchange rate fluctuations. I trade in four currencies and comments that NZ$ isn't more volatile than the rest of the world is sheer cobblers. When I show graphs of the movements in NZ$ vs US$ to my distributors they all just about fall over. vs Euro isn't quite so bad and vs AUD is even smoother. Where on earth have you been?

Kiwi Trader - true, we have to compare like with like, one small 'developing' nation with an export trade imperative compared to another, see:

http://www.interest.co.nz/ratesblog/index.php/2009/11/20/opinion-what-ne...

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