Is New Zealand ready for the current wars that are breaking out all over the globe?

Good question Bernhard.

Too many are already underwater and with prices going up - I doubt -  the world changed forever and most people still don't realize the fact. Our unbalanced economy isn’t any help for improvement  either. Therefore New Zealand will increasingly become under the influence of these worldwide events.

Come on Bernard - stop with the 'Sun' like headlines...  next thing you know this website will be no better than the Herald on Sunday...  panic and scaremongering where you look...

I suspect that the reliance global traders will place on the US$ will steadily decline and be replaced possibly by the Euro...

The 'wars' that you screech about are nothing more than a transition from one state (US$ dominant) to a new state, although we don't know what that new state is yet...  Its not the end of world as we know it...

Stop thinking in linear terms...  this is a dynamic and rapidly evolving situation - flexiblity is the key and that's what the RB has... 

Now start reading some books on economics!!!  Your ignorance is showing....

For people not going to church tomorrow morning - with some fun too:

http://www.youtube.com/watch?v=UTrEC-zszpI&feature=player_embedded

more serious and more NZ from 13:00 min.

The “Currency War” can only be solved with international unity - I know in the current worldwide economic environment – a dream.

http://www.financialnewsusa.com/finance/archives/18120-china-warns-us-currency-bill-might-harm-ties-and-spains-hurting-economy-hit-with-debt-downgrade

China warns America – America warns Europe – Europe warns Russia – China warns Japan etc.

 Free trade agreements – globalisation – free market economy – etc. – a real question mark !

 New Zealand economically hang on to Australia and orientate to a few other, rather smaller, well structured countries.

Currency Wars Ha! - the best thing we could do is stop shooting our selves in the foot.

With the Govt borrowing 250 Millon a week offshore... the biggest real purchaser of NZ Dollars is the NZ Govt (AKA National/Act/ Maori Party) avoiding making the hard decisions...

That's right the Govt is materially interviening against Exporters to buy NZ Dollars, thereby diminishing Export returns and subsidise the Business of Importers.... absolutely the wrong thing to be doing.

All because they are yet to realize Borrow and Spend is no longer a strategy for return to the old Normal... 

Normal Transmission sadly, will never be resumed. 

Justice,you are so right about the importance of "WATER" for the ongoing future of NZ. As you quoted, "that even Maori know it". The following link is a must read for all thinking New Zealanders. Nationals foreshore and seabed bill, and see if you are at all comfortable with the directon JK is taking the NZ people, without a mandate ? 

Roger Thompson,

Tell us a bit about yourself, would sure like to know your real deal?

You could be Richard Prebbles long lost twin brother, or are you him?

AI R,

Your challenge should you accept it?

If you are going to read the biography of Michael Joseph Savage, you need to read also - Simple On A Soapbox by John A Lee, you will discover that Savage was not the hero he was built up to be, but along with Walter Nash was very much responsible for the European Banking Empire putting us firmly back under the grip of the 'orthodox world best practice' after ww2. Walter Nash would become another of a long line of public financial figures stating their regrets of not doing something whilst they had the opportunity. The below as evidence, long but another very insightful window of NZ economic history ;

 Address by President of St Louis Federal Reserve Bank, Delos C Johns, Mississippi University July 28 1952:

"I mentioned one road to financial independence of the executive as the power to issue money. At this point it is tremendously important to recognize that in this country money is created without actually issuing currency or coin. This fact is not widely enough understood. Money can be, and in this country usually is, created through the expansion of bank credit. And this bank deposit money, which circulates in the form of checks, is just as much money as currency. Indeed bank deposits constitute the great bulk of our money supply, and an over-expansion of check-book money may cause the value of the money unit to fall just as surely would an overissue of currency."

Simple On A Soapbox by John A Lee (New Zealand Labour Party)1963;

Pg 52 - Maybe it was inevitable that a Savage-Lee conflict should arise. The PrimeMinister represented an old unadventurous, uimaginative Labour period, whereas I came to political maturity during World War One and later the great depression. I am sure Savage always believed that by administration alone, with few changes in the law Labour could alter the nature of government. In the days when the depression was approaching I had advocated a socialist bank and government credit issues. While men an mills were idle in tens of thousands during gluts of unconsumed materials I deplored the borrow our way out of the depression talk of some of the old Labour M.P.s and refuted their arguments. It would be time enough to borrow when goods were in short supply, when mills and factories were working overtime, I maintained.

Ten years before any other politician in New Zealand I was a advocating exchange control and

import selection which have now become permanent features of our economic life.

State use of the people's credit seemed to me to be the socialist answer to poverty amidst plenty, the control of social investment by direction and the granting of government credits. All this is now accepted but when I first advocated it, it was heretical even in Labour circles. Nash and Savage were followers of Snowden.

Frank Langstone, M.P. for Waimarino, and I became the two protagonists of this policy. Our speeches in Parliament aimed at converting the parliamentary Labour Party and carrying it with us.

Savage continued to believe we could borrow our way out of depression. He resented what Langstone and I were doing and could scarcely be civil in his fury at our advocacy of unorthodox methods.

Pg 53 - During a budget debate in the depth of the depression Savage, Nash, Parry and McCombs had tabled a resolution in caucus.

They wanted the Labour Opposition in Parliament to move that a certain sum of money be borrowed on the security of the unemployment fund and used to alleviate distress.

The time had arrived for a challenge. I became very active and lobbied every Labour M.P. I ensured a big caucus attendance. We would move, as an alternative, that credits be advanced by the Government-owned Reserve Bank so that we could invest our materials and idle man-power surplus in socially owned construction. We could see no reason at that moment for borrowing at a rate of interest. Surely the time had arrived for an issue of credit. Australian Labour was talking`issue'; in Britain tracts on money reform were flowing from Labour pens. In a world of plenty the dispossessed had no money. Even Roosevelt, later, talked our language. We thought the moment had come for the people to claim rights of issue for their own bank. The goods existed, why not create credits?

Caucus when it met, divided in a bitter debate in which Savage organised the advocates of borrowing and I the faction in favour of the State issue of credit. Caucus was adjourned four times. I think every member insisted on speaking. At the third meeting, Harry Holland ,then Leader of the Party, espoused our cause. I saw M.P.s taking their coats off to one another in that caucus, so bitter did the conflict become. The Savage-Parry-Nash-Fraser-McCombs resolution went down to a humiliating defeat, only Fred Jones of Dunedin South supporting the resolution. Nearly thirty Labour M.P.s voted for a credit issue including Harry Holland himself. We moved accordingly in Parliament.

Out of that debate had come a new finance policy in which, I am convinced, Nash never believed. In 1935 the Labour Party affirmed that the Government should have sole right over the issue and control of new credit. But in the meantime Holland had died. Savage, the oldest surviving private and deputy, had become Labour Leader and was on the road to the prime ministership. He never forgave me the humiliating defeat I had organised.

Prior to that caucus Savage used to tell everyone, both publicly.......

Pg 54 …..and privately, that I would be one of the first chosen in a Labour cabinet. After that defeat I knew that only a caucus vote would compel Savage to accept me. He became unfriendly from that day on.

Many apparently woolly and benevolent folk are capable of sustained malevolence when crossed. Fraser knew his man when he told me that when he had prevented Savage from becoming a candidate for the mayoralty of Auckland Savage had sulked and hated him for years.

I was not concerned about Savage's feeling, nor was Langstone. We were both concerned with the Party's adopting a progressive policy. We were to discover that recalcitrant men do not carry out bold and imaginative programmes.

In July 1962 the leader of the Labour Party, the Rt. Hon. W. Nash, made a lengthy statement in which he said : "Consistent with the needs of a sound economy, the State should create and use credit at the cost of issue for purposes of approved capital development. We are satisfied that the use of Reserve Bank Credit, within the limits set out is not only justified, but has already contributed much towards the Nation's economic well-being."

Thus, 27 years too late, Nash accepted the policy on which Labour was elected in 1935.

Pg 133 - As the 1928-35 economic crisis receded the electorate remained pronouncedly conscious of monetary theory, of rates of interest and of development by State credit rather than by recourse to higher borrowing rates. The British Labour movement had the same lively awareness. G. D. H. Cole, Arthur Henderson and many other socialists who rejected the Douglas Credit mythology had become genuine social creditors. I distinguish between social credit and mystical Douglas Social Credit. The clamour for more intelligent use by the State of its own resources and for lower interest rates continued across the world, in the wake of the depression, until it was submerged in the clamour of the Second World War.

Our caucus resolution not only ordered exchange control but also that there should be no increase in the interest rate without the consent of caucus. But we did not trust the Old Man or Nash. Labour movements the world over had not recovered from Ramsay MacDonald's and Philip Snowden's determination to place the gold value of the pound above a life-time's loyalty to Labour (even though the gold standard was abandoned a week later).

During the election the Old Man at his vast evangelic meetings had made emotional affirmations, between the cheers, of his determination to use the "internal credit of the people" for public works, indeed for "loan-free public works", and had repeated assurances that Labour intended to reduce interest rates for public development.

But from the moment the M.P.s returned to their homes inspired news paragraphs started to suggest a return to orthodoxy to deal with our exchange crisis, a greater rate of interest to attract funk deposits, and maybe a lesser use of credit in New Zealand, a policy which contradicted everything Labour had.........

Pg134 …...said about money since 1928. All this was easy for Walter Nash to swallow, but not for the rest of us. We knew that, sentimentally, the Old Man was with us, that he always talked our way, but we knew that in fact he would defend whatever brief Walter Nash put into his mouth. Any suggestion of a credit squeeze was abhorrent to us.

Pg 215 – When Japan bombed Pearl Harbour the War Cabinet was enlarged to contain Sidney Holland and other National members in addition to Coates and Hamilton. Suddenly, for a few months, I was a party of one in an otherwise united Parliament, occupying much the same position as Bevan and Ackland held in Great Britain, wholeheartedly in the war against Fascism and yet not willing to forget my political views. I believed the war had grown out of the very economic conditions Labour was pledged to alter. Idid not want to only fight Hitler, who was himself a result of an evil economy, but to fight as well the economic conditions which would continue to sprout Hitlers. 

The government most certainly shouldn't be using taxpayers money to throw at our currency. Just abolish the central bankers, and our currency will take care of itself. The world is really not going to be pooring money into a country that is falling out of the OECD top 30.

I think a US/NZ exchange rate of 0.68 would be a very reasonable value for the Kiwi and NZ as a whole. So with our currency hovering around 70-72c I don't think it's that overvalued. Anything over 74-75c would be a different matter though. The American consumer is broke; they are not going to be the savior or driver of the world’s economy again for a very very long time. Get over it!  So of course the US currency is going to decline in value, it simply isn’t worth what it once was.  Rather than having a currency war, maybe it would be better to price international trade in a different currency? But then there really isn’t one out there that’s suitable, and maybe that is in fact the real problem.

By the way, in war, if one is to win, good allies are a must. So who’s ours?

I think our fearless leader, Darth Hickey, is onto it here...It has been a week since Brazil’s Finance Minister, Guido Mantega, declared that we are in the midst of an international currency war and that Brazil was joining in to try to keep its currency from appreciating further. 
That led foreign exchange traders to immediately bet $US14 billion that the Brazilian real will, in fact, keep rising.

Meanwhile central banks and governments in Japan, Colombia, Thailand, Poland, Taiwan, Russia, Peru, Mexico, Korea and South Africa are now either intervening directly in foreign exchange markets to try to force their currencies down, or talking about it.
China, of course, intervenes simply and directly by pegging the yuan to the dollar. American authorities are effectively intervening by holding interest rates at zero and talking about printing more money.

So, everyone is worried about exchange rates except Australia. The Australian dollar has appreciated 50 per cent since March 2009 and 20 per cent since June this year and is this morning sitting comfortably above US97c, but there has not been a peep from either politicians or central bankers.

Australia is an island of laissez-faire calm in a frothing sea of competitive devaluation. Why? Because they have neither a demand deficit nor high unemployment.

As 12-year Reserve Bank staffer and now HSBC’s Australian economist, Paul Bloxham, said in an interview with him on Inside Business yesterday, the RBA likes the appreciation of the Australian dollar because it helps reduce inflation. “Increasing interest rates is hard work. If the exchange rate does some of the work for you in terms of slowing some parts of the economy down, I think that's regarded as a good thing.” 
And Australia’s politicians are kept quiet by low unemployment. Brazil’s unemployment rate has fallen steadily from 12 per cent in 2004, but it is still an uncomfortable 7.4 per cent.

The world is finding that without rampant credit growth, through which demand is borrowed from the future, it is very difficult to create enough work for people supplying domestic markets. For China, make that rampant exports supported by rampant credit growth in the US. 
As a result, the economic crisis that began with the credit collapse of 2007 is entering a new phase in which countries are trying to steal demand and employment from each other, instead of from the future as they did before.

Martin Wolf wrote in the Financial Times last week that as a result of the crisis developed countries are suffering from chronically deficient demand. “US, Japan, Germany, France, the UK and Italy … are now operating at up to 10 per cent below their past trends.” 
Those countries are now trying to use the demand of other countries to make up the gap through exports. The simple way to achieve that is by debasing the coinage. As a result money is pouring out of the developed world and into emerging countries, pushing their currencies higher. They are now intervening to reverse that.

China’s peg means that while the US dollar may depreciate against the yen, euro, Australian dollar, Brazilian real and so on, it won’t depreciate against the yuan. 
That, in turn, means that something more direct may be needed, such as tariffs or embargoes targeted at China. In other words, a trade war, not a currency war.

As Alen Mattich wrote in the Wall Street Journal, competitive devaluation is like shipwrecked sailors trying to keep their heads above water by climbing on each other’s shoulders.

And you thought I was just a pretty face , eh Wally/Wolly...?

I would simply like to quote the words of US economist Donald J. Boudreaux  on the benefits that free trade has brought us all:

Trade and civilization are intimately, indissolubly connected. Trade creates civilization. The greater the freedom to trade, the more civilized the society; the more civilized the society, the greater the freedom to trade.

People, to the extent they are civilized, do not forcibly restrict the range of persons with whom others can trade peacefully. People, to the extent that they are civilized, attach no significance to the nationality of those who offer peacefully to trade.

Historian Will Durant (1939) penned one of my favorite descriptions of the ultimate benefit of open, free commerce – pointing out that reason itself is a child of open trade:

The crossroads of trade are the meeting place of ideas, the attrition ground of rival customs and beliefs; diversities beget conflict, comparison, thought; superstitions cancel one another, and reason begins.

Put another way, protectionism not only keeps prices unnecessarily high and not only creates unjustified special privileges for the politically powerful few. Most importantly, protectionism breeds ignorance and stupidity, two arch-enemies of civilization.

People, to the extent that they are civilized, find the very notion of protectionism to be barbarous. 

Unfortunately Kim Jong Hickey, for something so boring as 'seeing to be doing something', counts himself now amongst the barbarians that would see us back to a repressive past; a past that has been done, and stupid men have learned nothing from thus are set to repeat it all over again.

Every column penned lately by Kim Jong Hickey, sees another jackboot into the vulnerable stomach of freedom.

What a load of self-indulgent, self-righteous crap.  Bernard is clearly just trying to pen little terms - he was too late for "the new normal" - and won't be satisfied until he has a name like "dr doom".  It's just so hot right now.  And all his mindless little hacks who have nothing better to do at work than engage in message board debates all go crazy.

Bernard, seriously mate you look tired. Bet the wife has said the same thing. Get some sleep or take a holiday man. Your looking poorly and your eyes looked stressed. Take a break and have a kit kat 

that's just his "public" stage appearance look..you oughta see him relaxing up on jervois quay supping a latte!

True Blood ain't got nuttin' on dat !!

but without him we are nothing!