Bernard,

The NZRB economists and financial comentators need to take time out and hastilly study Chaos Theory (also links to Quantum Theory) Chaos Theoery is real, unlike the virtual finance created by Wall Street (dont overlook that, NZ's financial institutions with the help of the Real Estate Industry and TV programmes also created a hyped vitual market where the bulk of the population were enticed into chronic debt).

In short, Chaos Theory applies when the parameters of control are exceeded and the outcomes are increasingly difficult to predict (often as the energy dissipates), they become somwhat unpredictable and ultimately go beyond calculation or reliable prediction. In the physical world examples are when aircraft exceed their VNE (velocity not exceed) or weather systems that wind up.
Unfortunately, Chaos Theory equally applies to economics and psycho/social systems. I built a large twin armed Chaotic pendulum for a science museum that physically,and visually demonstrates the little understood Theory, yes it is often not visible but it is a reality. I shoiuld build a chaotic pendulum for the NZRB to ponder!

If the NZRB and Bank economists think they have their finger on the pulse and think ...'they are used to dealing with long term economic circumstances', then I predict thei complacency will lead to some nasty surprises Chaos Theory factors will go beyond their glossary of hackneyed cliches, clever acronyms, eco$speak bleatings and number crunching based on known computer generated systems. After listening to Gareth, I suspect he may agree? As my posts (an Iain's) have previously mentioned economics is not just a numbers game.. don't forget the phemonological factors (they stumped Henry ) and human ethos that is at the basis of all them current problems.

Sadly, my prediction is that Allan will end up standing with Henry (or is it Klink?) and the UK's Darling vocalist, loudly singing ...My buckets got a hole in it dear lLiza dear Jane .....if you don't know that tune and lyrics check it out for relevance to the financial situation before spending a few days reading up on Chaos Theory.

Keithw,

Economics is social science, Wall St commandeered "virtual reality" as a money printing machine . At the present time all, including NZ Banks , are faced with intractible problems - in other words the current escalation of melted down debris (deleverage of the mirage) is beyond mathematical calculation or current bank cloned eco$peak.

The Chaos Theory phenomena was noticed in the last 1800's - they had another term for which I can't remember (ergo theory??) . Skinner's Behaviorism (phenomenology, statistical dsescription,positivism) calculating human and animal behaviour... its not just a new 20th century theory where people wrongly thought ethos was to be solely calculated as a science .. back in the 1800's this behaviourist notion was named Reflex Arc Theory ..many now look at constructivism (a past evolving theory renamed too) as being more realistic as ethnomethodological reasoning that can only attempt to define multiple realities...we only can build on what we know and we can't really fathom what we know or what anyone else knows or believes or make categorical predictions of the future!!! .

If you do try to set up a system to cope with wildly escalating problems by the time you enact it.... new problems have compounded beyond your current remedy or prediction (Also called Murphys Law!!!!). As I said in another post.. the Tarp 700bUS is only a band aid...it won't fix the deep wound and it might fall off from what oozes out of it as it festers!!!!Is Henry going to post Allan a packet of bandaids?

We do not have a controlled laboratory model operating with the economic meltdown that finds fit with any one ideology. You will remember, when you study theory (philosophy) the theories concerned may be only temporary as another with more grounded theory that thinks it can control extraneous variables (all research has bias and flaws) will supercede it. Einstein once said, it is the understanding of many theories that allows you to gain different perspectives on a problem (or word to that effect).He also said most of his discoveries were the result of rather vague play. Yes, tinkering with the OCR is rather vague play.

If only bankers would admit they can't predict but stop and take notice of previous historical patterns rather than their crystal ball hypothetical models they expound in positivist eco$peak.

Check out what happened in Japan when there was no State financial bailout of Banks in the 1990's..the remaining banks are now well stocked and the citizen's are not in chronic debt...but who knows Japan may not remain as a safe financial haven but they are having a big spend up on the Wall St debris. Last month their car sales to the USA dropped 3.5% in one month and that is not the ensuing months! The USA is Japan's largest trading partner.Perhaps, the Nihon Banks should not be bargain hunting but saving for the acid rainy day.

Keith, I don't think anyone can I can make accurate predictions as Chaos theory rules when energy dissipates...a bomb has been dropped...the reality is hitting home ...money isn't really money unless it is in hard cash or gold under your mattress.The banks don't want you to collect your hard earned cash and put it under the mattress, they actually have not really much cash in their vaults, it melted down inside the computer.

NZ Banks but can only ponder based on limited information as did Lorenzo in 1960 about his weather models that went upside down..he discovered chaos theory or what is now uttered as butterfly effect (Lorenzo's graphic representations looked like butterfly wings !!!)

Perhaps the NZRB has a reputable soothsayer as well as a crystal ball ...as well as their penchant to rely on numbers and eco$peak.

Pendula calculations.....the Mars probe recently detected snow falling!!!! Will it snowball? Not sure about on Mars but I predict the Wall Street fiasco will certainly snowball? And snow turns to MUSH (Thanks Andrewj)