Bill : Plant your size 10 boot firmly into JK's butt , and ask him , is he serious about doing some good for NZ and it's citizenry , or is he merely cruising , not wanting to create ripples , 'cos he has the 2011 election in his sights .

Despite the fact the PM used to be a currency trader, and no doubt traded the kiwi heavily, no mention is ever made of how the NZ dollar is the international speculators plaything. Until some effort is made to reduce the attractiveness of the kiwi to big speculators using the carry trade as funding, our currency will swing wildly back and forth. Its got very little to do with the fundementals of the NZ economy which we all know suck!

How right you are, stevek.
"John Key and the 1987 attack on the NZ dollar."

http://aotearoaawiderperspective.wordpress.com/2008/08/04/john-key-and-t...

Bill English: On the challenge of convincing the peasants of the govts sound planning and what he's doing about it!

The facts are through persistent current account deficits since 1971 we have stacked up appalling gross foreign debt of over $ 300 Billion and still growing at an ever increasing $ 1 Billion per month.

We have an overvalued exchange rate - and right now it's even more overvalued than it should be.

Forget all the crap about long term averages - the exchange rate should be at a level
that stops us racking up debt.

Bill - claiming you can do nothing about the currency is incorrect:

http://asianinvasion2006.blogspot.com/2009/10/thats-it.html#links

based on what you say here:

http://www.stuff.co.nz/business/market-data/2996279/English-relaxed-over...

You could:

http://www.interest.co.nz/news/opinion-why-new-zealand-needs-follow-sing...

http://www.interest.co.nz/news/top-10-10-us-bank-fears-grow-obama-plonke...

Why can't you?

Bill,

I will donate 20 hours of consulting to you pro bono. Just ask.

I find it fascinating how people here slag Bill about his article saying he is wrong, BS, etc. Bill is the minister of finance and one of the most qualified people in the country on this topic. What are your qualifications people? LOL

Isn't it ironic that the Labour Party wanted to cause Bill just enough damage over his expense claims so as not to move him on because they are not so keen as to see Joyce take over.
So apart from anything else BE is possibly a weak link.

Well Selwyn, I'm with you on that gaping hole in Mr English's argument - I am mighty tired of being taken for a fool.

But perhaps even worse is this quote;

"... the New Zealand dollar's rapid rise over the past six months is unhelpful for exporters, local producers who compete with imports and economic growth as a whole".

Exporters and local producers who compete... with economic growth as a whole? What exactly does the use of the word 'compete' mean in this context, Mr English?

The export sector is all that holds up this country's ability to survive, let alone compete in the global economy. Do you think we can "compete" by an internal consumption-led economic recovery? Or, do you imagine the re-balancing will come about through both public and private sectors selling off more NZ owned assets, so that we can have this internal consumption-led recovery?

We cannot "buy" our way out of recession - we have to "sell" our way out of recession. The export sector does not "compete" with the import sector and the economy as a whole. The export sector IS the economy as a whole.

I am ashamed. You got my vote last election. I was duped. Your government is either stupid, or dishonest, or delluded ... and I don't think you're stupid.

I would really appreciate it if you stopped treating me as if I am.

Can we have a Poll please Bernard??...

Who would change the Government if they could?.

Kate & We are stuffed..

Couldn't agree more! Ditto regarding votes here as well!!

Dave,
What about a combination of CGT, Land Tax, remove benefits of LAQC, remove negative gearing etc.... Isn't that better, not to mention about effectiveness on cooling the property market, but at least a fairer tax system that govt could also get some additional tax collected on this front. Isn't that also a relief to the govt so probably they would end up borrowing less with the help from this tax collection. Otherwise, is property gains so different from other businesses out there? Any comment?

Trudy,
Negative gearing only happens because tax law makes it so.
It is not the difference between property and other businesses (except that most other business borrowing incurs a much higher interest rate)
My beef is the difference between investor tax relief v. none for the owner occupier (not that there should be).
The other problem is that banks capital requirements for property lending makes it so much cheaper to gear up their lending, so that is just what they do. That would be easy for RB/Gummint to fix.

I was also going to comment on the love of property investment by Jack and Jill Public but "when ignorance is bliss etc...."

Dave,
There is no shortage of ideas here. Let's hope that it can be considered favourably for the betterment of the country's future.

Dave, I agree with your comments, tax is a tricky thing with alot of money going into this area to evade or "minimise" tax at the personal and corporate level, but I don't believe its impossible to increase the tax burden for property investors. It may not be a silver bullet but the government's plan of doing nothing shouldn't be an option. From my understanding, most advanced countries have CGT, if it truly did not work, add to the tax base or create negative distortions in investment, surely these countries would have eliminated CGT by now.

Bill, listen to this guy:
"Waterboarding our economy"
http://www.youtube.com/user/InflationUS#p/a

Good night !

Oh and Iain http://www.interest.co.nz/ratesblog/index.php/2009/09/22/english-reinfor... at the bottom of the page

Good point David. The damage Labour have done is inestimable. Bill English could never be worse than Cullen, however, he does have a mortal wound of his own making, as explained so well by Cactus Kate in her blog of today:

http://asianinvasion2006.blogspot.com/2009/10/english-on-ropes.html#links

Quote:

Bill English HAS to go. There are no two ways about it.

The more I think about his comments about tax and trusts the more I am convinced that Bill English is the National Party's largest liability. That they can control. He's already lost the election for National once as leader, he has the potential to do it again as Deputy.

The Labour Party can complain all they like about TVNZ apparently running advertising for Bill English, but the best advertisement for the Labour Party currently IS Bill English. So their argument falls over on its tits right then and there before I even research into what happened. They should encourage him to be in front of the public more often.

As a proven trougher, rorter and by his own description a "legitimate" tax avoider, Bill English cannot speak with any authority about trusts, taxation or apparent "rorting" or avoidance of the system. But he does, and now even the left's best blogger in New Zealand history and my new biggest fan, Trevor Mallard agrees with me.

Bill English fails politics largest test. He is a hypocrite. He wants you all to pay your taxes like good little blue smurfs so he can blow your money by borrowing $40 billion more of it to fund his spending plans. Because Bill English knows how to spend your money better than you. Yet he uses systems himself and for his family that he now calls a "rort".

This is a complicated issue.

The religion in New Zealand is that we need a lower dollar to help our exporters.

Why?

I have watched our dollar fall from 1.3000 to the USD down to 0.4000.

Were our exporters any better off? They should have been the most profitable in the world.

They weren't.

All a low dollar does is teach everyone to be price takers and to sell on price, not value.

And it makes us all poorer.

What they are therefore saying is that this export (whatever it is) is a piece of shit and the only reason you will buy it is because it is cheap.

That is the path we have been on for 50 years and it is WRONG.

It is wrong to sell on price because eventually China and India will eat us because of it.

We need to sell on value, have a brand and sell our products at the highest price because they are the best.

NZ lamb and beef and butter should be the most expensive in the world. Because it's the BEST.

Would you rather buy meat that has been grown in a natural state in open fields in NZ or from some some concrete cell, fed on god knows what from Europe?

If the exchange rate goes up then you PUT THE PRICE UP.

Germany and Japan had the strongest currencies for 50 years after the war. They were also the greatest exporting nations. How?

They branded.

Rolls Royce, Chanel, BMW, Mercedes, Prada, Porsche, Toyota, Honda, Mitsubishi, Sanyo, Sony, the list goes on.

People expect it to be expensive because it is the best.

We need this thinking in New Zealand and a higher dollar will help bring this so necessary change to our wrong headed thinking.

I want the NZD to go above 1 (where it used to be) and get our exporters to change the way they think.

Because a lower dollar is a path to ruin in the long run.

Bill English is exactly right!!
And FINALLY we have a Finance Minister brave enough to say it!

Kiwi Trader : Excellent blog . In my lifetime the Japanese Yen has appreciated from 400 to the $US , to 100 . And they kept trading , superbly well , and getting richer . And over that period their products gained in quality . And they gradually shifted production upscale , as technology advanced . And they cast off those products that could be done so much cheaper elsewhere . ( I made this very point several weeks ago , but got an indifferent response , from my fellow bloggers . They think that I'm a gummy bear obsessed fool.........Not all that obsessed . )

Roger - I should have asked you too, same questions I asked of Kiwi Trader at 1.19pm. A gummy bear for your thoughts. Cheers, Les.

Roger - gummy bears are in the post...... Anyway, I think Dr B. having a complementary tool to the OCR that directed more principal to be paid off in place of similar cash amounts via OCR increases alone, would have:

better controlled inflation,
led to reduced individual and national debt,
restrained the property boom,
meant NZD was not as attractive to carry and fx speculators, meaning,
NZD value better reflected trade flows of real goods and services,
NZD would have followed a lower track and volatility would have been reduced,
productive enterprise would have increased, been sustained,
we'd not have bought so many plasmas, DVD's (thrifty huh?)

among other things.

Just think of all those benefits, who would not want them? (Apart from people like Kiwi Trader, property 'investors', the banks, and it would seem a good many NZ parliamentarians.)

Cheers, Les.

Roger - re. entrusting one individual, I agree, #6a, of my long, windy comment I often refer back to on this thread, 'How tourism creates a low wage, low productivity economy':

"Number 6a "“ Isn't it about time we had a committee like BOJ, BOE and FOMC, setting rates, not just one individual? As good a person as an RBNZ Governor is, and I know they take advice before making the final calls, a committee would be seen to be less influenced by outside interference?"

Having said that Greenspan was part of a committee and as you say, look what happened. My point is, that one of the most useful things we could do is give Dr B. another tool. The one I'm suggesting benefits the individual debtor more than many of the other options and doesn't impact on those not causing the debt/credit problem, eg. fuel excise tax (Don Brash, but it gets us all); mortgage tax (Dr, B); variable gst (it gets us all), or mortgage levy. Plus, no more compulsion than exists now with the present arrangement - if you have a debt, you service it, I don't have to be in compulsory savings scheme soas to throttle my spending/investment choices, because you chose to be in debt. (More thrift huh?)

So hear what you say about Dr B, etc, but I was really after your expert opinion on those questions in relation to my latest invention the 'Principal Repayment Rate' idea - and so far you've not earned a single gummy bear!

(Can anyone help Roger earn a gummy bear or two?)

Cheers, Les.

Roger - they are in the post. Plus, with that PRR thing, less of the repayment will be expensible, so a double-whammy on crimping credit orginated inflationary cashflow from property investment - I think Bill might be pleased with that.

Go on Bill, give Dr. B the PRR for Christmas - make his day.

Cheers, Les.

Any currency denomination exchanged into Kiwi can not be exchanged back for a minimum of 30 days. Complexity is where corruption hides, make it simple, there is no where for it to hide. The people of this nation are looking for simplicity, sick to death of some hood winker trying to sell them more complexity.

Kate and others that voted for Nats, dont be to hard on yourselfs, the few people that inhabit this site on a regular basis are among the few in this nation outside the "commissioned" ones that have been through the "official education" that have any clue just how much international monetary policy, as handed down by the privately owned International Financial Institutions, contributes to their being not a damn bit of difference between any political party that currently exists in this nation.
The common folks cant be blamed for bouncing from one to the other in blind desperation as generation by generation this nation is stolen out from under us by predatory lending.

Fred, until Im able to get back tonight, have a read of link below and, you will be able to give me the solutions, because I promise you will far better understand the core problem and, will then be in a position to never have the wool pulled over your eye's again and, officially remove yourself from the "Mushroom" classs:

http://publiccreditorbust.blog.com/2009/10/23/1956-report-of-1955-new-ze...

Page 87
362. Even a perfect monetary system could not prevent some instability or insecurity in a world where new or improved products, services, and techniques are constantly being devised, and where individuals and firms are allowed a large degree of freedom to choose how they are going to dispose of their money. The implications of this freedom of this freedom of choice do not seem to be fully appreciated by many people. When these implications are examined, what is surprising is not that the economic system suffers from fluctuations from time to time, but that the fluctuations are not more severe.

Page 89

368. The most that can be expected from the monetary, banking, and credit systems is that they should certainly not aggravate these natural instabilities; and that they should be capable of being used to assist in the economic adjustments which are necessary to enable society to reap the benefits, while countering any drawbacks, of technical and economic changes.

375. Nevertheless, we believe that the authorities have permitted spending to expand unduly from time to time, with the result that there has been excessive competition for limited supply of labour and resources available, a greater rise in cost and prices than was justified by external factors alone, and recurrent balance of payment difficulties despite large current earnings of overseas exchange and improved terms of trade.

378. Variations of the statutory minimum reserve ratios and the interest rate on advances to the trading banks, the major methods of control available to the monetary authorities, have special limitations arising from New Zealands banking and economic system. We outline later in the report some of these limitations. But we are convinced that the failure of the monetary policy to prevent an undue expansion of advances in recent years has not been due primarily to weaknesses inherent in the reserve ratio system. The main reasons for failure have been:

( a ) Tardiness in making use of the reserve ratios while direct controld were being relaxed a few years after the war.

( b ) Reliance by the authorities:

( 1 ) On voluntary co-operation from competitive trading banks which was not fully forthcoming; and

( 2 ) On the theory that leaving the banks with only a narrow margin of free cash would induce them to restrict lending.

( c ) Insufficient speed and resolution in effectively applying the reserve ratio controls to changing conditions.

( d ) Lack of co-ordination between policies designed to control bank advances on one hand, and fiscal, capital issues, interest rate, and housing-finance policies on the other.

Pages 105-6;
Creation of Money and the Public Interest
434. Apart from the historical and legal aspects outlined above, the next question to be considered is whether it is in the public interest that the power to create and destroy money or credit should be withdrawn from the trading banks and reserved to the state or to institutions owned by the state.

435. The burden of the contentions of those who sought to deprive the trading banks of the power to create or destroy money was that the trading banks for their own profit sometimes expanded the money supply to an undesirable extent and so cause inflation, and in other circumstances, such as in times of economic depression, cause an undesirable reduction in the money supply by reducing advances.

41. But the creation of the Reserve Bank and its subsequent complete nationalisation in 1936 left no doubt not only that the Government could issue additional money through the Reserve Bank, but also the amount of money put into circulation could be controlled by the State authorities in the public interest.

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