The NZ economy fundamentals vs the NZD is in bizarro land and what is happenning is way beyond risk appetite.Therefore the investors we will assume, are not insane, therefore they, or their fund managers are in control of the situation , which would require collusion at unprecidented levels. I site Allan Bollard RBNZ using rhetoric to talk the NZD down but fiscally doing the exact opposite using the veil of inflationery concerns. And so what is to be gained here? Avoiding being dowgraded by the rating agency. I don't just smell a rat here, it reaks I mean has nervous banker stench all over it. We currently have the third largest debt per capita in the OECD and yet Australasian banks(the largest in NZ) claim we are insulated from the worst of the credit crunch. THE FUNDAMENTALS ALL SAY THIS CAN NOT BE SO!! Is there a tipping point ? I am sure if the yen lambs come head on to reality wall , their appetite will be corrected by the Lemona! By the way was that really Bernard on the telly this morning with Corrin Dann pleading the Banks position for NOT reducing interest rates further, come on, tell me he was "taking the sample" no come on really? Lancelot may yet turn out not be trusted.

The American unemployment numbers are typically skewed. April figures showing 530,000 new unemployed may sound optimistic, but once you acknowledge the 60,000 temporary census workers the government hired, and the 65,000 seasonal adjustments, we return to a loss of 655,000 jobs. Add to this the typical monthly readjustment, and now we're looking at about 680,000 jobs lost in April. The U6 figures (which includes laid-off workers who have given up finding a job) are pointing towards 15.8% unemployment. That's depression level unemployment. Lets not forget the May and June College and High School grads that will soon be flooding the job market.

I agree with Christov. The information being fed to the public does not reflect reality. New Zealand is far worse off than we are being led to believe. A bond dislocation or a debt default by America is a very real possibility, which will have disastrous global implications. New Zealand will not be insulated from the ensuing global monetary collapse.

Ric - excellent post, you summarise well a lot of data which has emerged in the past few days about what is really behind those unemployment figures.

Neil - the rise in the NZ$ is just emphasising that Bollard has not only lost control over most of the mortgage rate spectrum, he has also lost control over the exchange rate. I would maintain this is at least partly because markets no-longer attribute any value to his actions/pronouncements beacuse he has been so wrong/so often. The FX market frankly thinks his comments about keeping rates low to miid 2010 is so much poo.

Ric,
Not forgetting the way the US Bureau of Labout Statistics Business Births/Deaths model has added 226,000 jobs in. See http://www.bls.gov/web/cesbd.htm

This is 50,000 MORE jobs than were added by the model for April 2008. Ask yourself. Are hiring conditions in the US better in April 2009 compared to April 2009?

For those wondering what the BLS is counting in its Births and Deaths model the folloiwng is quoted from the BLS website

"There is an unavoidable lag between an establishment opening for business and its appearing on the sample frame and being available for sampling. Because new firm births generate a portion of employment growth each month, non-sampling methods must be used to estimate this growth."

Chris Martenson puts it this way
"Translation: The BLS is impatient and wants to include jobs that it assumes have been created (due to a net gain of new business "birthed" or started) without waiting for those jobs to actually show up in its regular sampling exercise. "

It could last- even go up. The US$ is losing its strength not only against major currencies "“ first sings of collapse ??

http://www.forextv.com/Forex/Commentary/ShowStory.jsp?id=17271

Nick - We have been partying for the better part of a decade with easy money. In today's "no pain" world, we are supposed to lower rates to zero to keep the party going until it all collapses in a heap. This is nonsense to any rational person. Rates should go into double digits in my opinion. This is heresy to most mainstream economists, but they've been on watch to see the entire economic system on the verge of collapse...so their credibility is shot as far as I'm concerned. Rates over 10% will bring house prices back to realistic levels and will not lead to more residential lending in my opinion. I think most would agree on that. Sound businesses would survive I believe, and there would be an incentive for people to save again (again, heresy to today's "just borrow and spend" economists). This would reduce our need for foreign credit and build the base for a stronger economy going forward.