Nice piece here from Bloomberg on what a slowdown in migration might mean for the Australian economy. A lower growth rate and higher wage growth is the answer.

That's the worst possible combo for New Zealand, because it depresses demand for our manufactured and commodity exports to Australia and increases demand for skilled New Zealanders to emigrate to Australia.

http://noir.bloomberg.com/apps/news?pid=20601081&sid=asM0velQdmC4

"The consequence of diminished immigration may be a hit of almost half a percentage point to the economic growth rate, according to the Treasury department. With job gains at the strongest since 2006, an end to the current migration program also may foreshadow a spiral of wages that forces the central bank to raise interest rates to contain inflation.

“Once unemployment falls below 5 percent, it’s sort of a danger zone” for the central bank, said Rob Henderson, chief markets economist at National Australia Bank Ltd. in Sydney, who has analyzed the economy for more than three decades and served as an adviser to former Prime Minister Bob Hawke. “Skilled migration forms a very important safety valve in the economy.”

cheers
Bernard

Poor Telecom, just because they were big players in NZ and pulled the wool over peoples eyes here, it did not follow that they could do the same over the ditch

NZMEA says:

'Growth continues at snail's pace'

http://www.realeconomy.co.nz/103-survey_growth_continues_at_sna.aspx

“Many respondents indicated that they were unsure what sort of inflationary pressures the Reserve Bank Governor was reacting to because they do not see much strength in the New Zealand economy and do not foresee any major pick up any time soon. Certainly Alan Bollard’s comment that manufacturing confidence is still elevated has been proved wrong by this survey.” [Doh!]

“It is disappointing to see margins in our tradeable sector being torn to shreds again just when it looked like some rebalancing of the economy was going to occur,” says Mr Walley. A review of the Reserve Bank Act must be an urgent priority for the Government if all the economic rebalancing comments are to be seen as anything more than rhetoric.”

Les says:

Ditto on - "A review of the Reserve Bank Act must be an urgent priority for the Government if all the economic rebalancing comments are to be seen as anything more than rhetoric."

JDI.

Cheers, Les.

www.mea.org.nz 

Wally thats Bullshit.

From Bill Bonner.

Here is where it gets so interesting we can barely sit still. Ben Bernanke is threatening to drop money from helicopters (quantitative easing). In a better world, a banker who threatened to inflate the currency would be punished immediately. People would take him at his word. They would dump his paper money immediately. The price of it would drop. He'd be forced to protect it.

But this time it really is different. As Ben Bernanke himself put it, even the "credible threat" of monetary inflation by the central bank should be enough to cause people to want to spend paper money rather than save it. Thus, Bernanke promised, he can always speed up the velocity of money and thereby bring about a boom, of sorts, simply by threatening to drop money from helicopters.

But lately he threatens. And still the dollar holds firm. Why? Because the threat is not credible.

Oh what a wicked twist of fate. What has this world come to when a central banker cannot roll the currency markets and whack speculators?

Usually, central bankers are careful to give the impression that they will protect their currencies. Even while they are actually undermining them with monetary inflation. Investors catch on after they've been shellacked a couple times. Then, the central banker loses credibility and the currency falls.

But this time, Ben Bernanke actually wants investors to believe he WILL undermine the dollar. He wants to stimulate spending and investing by encouraging people to get rid of greenbacks rather than save them. But people don't believe him.

Inflation is only really a threat, we conclude, when central bankers are pretending to prevent it...not when they're trying to cause it.

But why won't Ben Bernanke drop money from helicopters? Because he's got a rope around his neck...and it's getting tighter. As long the US can finance its deficits at low interest rates, he can't move. It's uncomfortable, but it's a damned sight better than hanging. More on this as we figure it out.

Regards,

Bill Bonner

FYI the connections of Former National PM Jenny Shipley and current Labour PM Raymond Huo to the Natural Dairy/May Wang/Jack Chen bid for Crafar is detailed here by Karyn Scherer at the Herald.

How curious.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10662262

cheers

Bernard

andrewj - nice to see you commenting again - had a good holiday?

QE - Let's just call it what it really is  ZE  or  Zimbabwe Economics

Outcome will be the same !

 It seems the UK govt is to hold a referendum to see if voters want the right to be able to veto council rate rises that are above the rate of inflation.....now that's a bloody good idea...anyone like to guess how long it will take the Noddy govt to catch on?

This is a fascinating read at Fabius Maximus

http://fabiusmaximus.wordpress.com/2010/07/26/19752/

"Eventually Congress will enact a large-scale fiscal stimulus (and the will Fed monetize it, as necessary). Much depends on how quickly they respond, the size of the package, and how well they craft it. There will be great pressure to design this according to trickle-down economics: tax cuts for the rich, so that they might spend some of it on consumption and investment (rather than save it, which is fact where most of it will go). And direct aid to politically powerful constituencies (i.e., agribusiness, government unions, large corporations).

"Building useful infrastructure and advanced education would be valuable, but do little to re-elect congressmen. Our ability to overcome this political gravity will test our political cohesion and collective wisdom."

"The great recession marks the end of the post-WWII global political/economic regime, and the transition to a new era. The transition might be short and relatively smooth. The two previous transitions were neither. They lasted 3 decades (1789-1815, 1914-1945). We can make some guesses about this period.

"The political dynamics of this downturn are murky, as the governments of most western nations have lower levels of legitimacy than they did in 1914 and 1950. Hence their ability to respond by increasing government regulation, as they did in the 1930′s and after WWII, seems problematic.
The two past transitions were scarred by long wars. With nukes ending the era of conventional war, a difficult transition might see new modes of conflict. "

cheers
Bernard

Re # 1

If you managed to read 'The Dying Of Money' on zerohedge before it was pulled you would have seen the massive printing of money 'worked' for Germany from 1914 -1921. The reason is that inflation is caused by increases in amount of currency times velocity (a tricky idea to measure but basically how many times each dollar is used in a transaction each year).

During the period 1914-21 there was massive printing but the velocity declined. At some point the velocity suddenly increased and inflation took off. As inflation increased the rush to buy things and get rid of the money increased. This increased the velocity until it was estimated that the total M1 was transacting every hour.

This is the danger ot QE, it works without inflation as long as the velocity decreases. At some point there is a tipping point and the velocity inceases very quickly. The Fed think they can pick this tipping point and reduce the money supply quickly before inflation takes off, but have my doubts.

http://www.zerohedge.com/article/guest-post-read-sought-after-dying-mone...

The book also points out that the Germany economy (measured in USD or Gold) was the same size after the hyperinflation as before. What changed was who held the wealth. Anyone who's wealth was held in money eg savings had nothing. Those who had debt and physical assets become wealthly as the debt inflated away to nothing. 

A nice read to start the weekend..stuff here for all..not stuff all!

 http://www.marketoracle.co.uk/Article21506.html

•  "..the gist of Bernanke’s comments were fully digested and analyzed, - the US-stock market indexes began to rebound strongly. Industrial commodities, such as crude oil, copper, aluminum, nickel, and iron-ore were also bid higher. The main message behind Bernanke’s riddle was becoming clearer. The Fed is putting a psychological safety net under the stock market, and if necessary, would print vast quantities of US-dollars, in order to inflate asset markets".
• "the “Plunge Protection Team” (PPT) is determined to prevent a slide in the stock market",
•  The Fed is therefore prepared to unleash all of its weapons, including the nuclear option – QE, in order to prevent the onset of another bearish trend in the stock market".
• Copper stockpiles at the London Metal Exchange have also dropped 18% this year to 411,425-tons, signaling global demand is exceeding supply. In Shanghai, copper inventories have also been whittled down by nearly 40% over the past two months, to as little as 114,000-tons. In 2009, China bought about 35% of the global copper supply."

go gettem' Wally!

This - from Jesse's Cafe - is a good summary of where we are at:

To say now that 'No one knew' or 'I was mistaken' or 'I was just doing as I was told' is another in a series of lies and deceptions that have supported one of the greatest frauds in the history of the world.

But this is not history. This episode of fraud is still playing itself out now. And to fail to understand the depth and breadth of this madness is to place oneself in peril, and in the power of those who are twisting the Western economic and political system even now to satisfy their lust for wealth and power. You are only successful if you can keep what you kill.

Glass-Steagall fell after a decade long campaign involving hundreds of millions in lobbyist money spread lavishly around the Congress, led by Sanford Weil of Citibank, supported by key banking and political figures in the Congress and at the Fed. It involved Senator Phil Gramm, who helped to put a stake in the heart of the financial regulatory process under the Reagan free markets banner, and who recently said the problem is that the middle class were a bunch of whiners. As did his wife Wendy, who as the chairperson of the CFTC had exempted Enron from regulatory oversight, and then left to take a position there on its board of directors.

Like the Mortgage Backed Securities scandal it involved surprisingly few principal players, like Alan Greenspan and Robert Rubin, who used their power and influence to silence and ostracize critics, and promote a climate of reckless disregard for the public trust under the meme of 'efficient markets' and deregulation. This might have been an innocent policy error if it did not involve premeditated theft on a massive scale, followed by cover ups, denials, and a control fraud that exists even today.

But it also involved literally thousands of collaborators and enablers, from mainstream media people, economists, analysts, and other thought leaders to politicians and regulators who saw that it was to their advantage to at least passively support this scheme which they knew very well was a fairy tale, a fraud, class warfare by a new name, but were able to hide their own guilty consciences behind self-serving rationalization and the shield of plausible deniability.

History, and hopefully the justice system, will sort this all out. It is difficult, even now, to get one's mind around the enormity of it. This is its most powerful weapon. Who could be such monsters, so amoral, so destructively sociopathic? Future generations will regard it as an episode of madness, driven by a few people in a tight circle of self-reinforcing thought, people with remarkably similar cultural and educational backgrounds, driven by a consuming lust for power, that were able to dupe and delude an entire nation made vulnerable by propaganda, a co-opted press, and apathy.

In the meanwhile all the great mass of people can do is to watch, and wait, and seek to protect themselves from these ravening wolves grown increasingly desperate, as their arrogance comes to a tragic fall. They can vote out incumbents, but the parties choose the candidates, and too often they resemble competing crime families of special interests more than pillars of a representative government, saying one thing to get elected and doing another thing once in office.

This is the approach of trouble when hubris is at its height, and the few feel they have everything to gain and nothing to lose, if only they can gain more power, and necessarily become more ruthless. They are trapped in a cycle of fear and greed. The fear provokes the lies and the cover ups, but the greed promotes the extension of the fraud and the theft, requiring even more lies and cover ups. The operative word is 'over reach,' in a classic late stage Ponzi scheme. This will undoubtedly add to the confusion as the truth is assaulted by the big lie.

The last vestiges of polite society are often shed as the downfall reaches it final conclusion, at the end, when all is revealed, at last. And so there will be great danger.

Reports doing the rounds suggest Bernanke is going to ease again...quite how is another point. Clearly he is determined to drive Wall street higher. That would put some fat on the assets the Fed bought and make the books look good. It would also help out Obama in the mid terms cos the dude looks set to become a lame Duck. I spose that's one better than becoming a lame Turkey with xmas closing in. Glenn Beck is still hard at it trying to scrape democrats from the soles of his sneakers..it's work for the soul man.

Paulg - We're screwed both ways. If we are in too much debt, then the banks will clean us out when interest rates rise. If we are prudent and debt free and put all our savings with them, then inflation and/or their possible insolvency will also wipe us out.