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Top 10 at 10: NZ management plateaus at ‘level of mediocrity’; Food stamps new US currency?; Sheppard calls for NZ$ currency peg; Dilbert
October 29th, 2009Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments in the comments below or please send your suggestions to bernard.hickey@interest.co.nz My apologies for the delay. OCR predominated today. And ANZ National results… and Treasury’s Long Term Fiscal view…. and Alex is doing a microeconomics exam…enough excuses? (eds: way too many….) We have a creative environment at interest.co.nz that values the individual…
1. ‘Not even a dog’s show’ – Brian Fallow at the NZHerald has an excellent column on the challenges facing New Zealand as it tries to catch up to Australia. He makes the valid point that we seem destined for a hollowed out and poor future without politically brave reforms. Here’s a taste, which include comments from some of the submissions to the 2025 Taskforce.
To close by 2025 the income gap, measured in GDP per capita, which had opened up by 2008, New Zealand would need to grow 1.8 percentage points a year faster than Australia, Treasury economist Michael Reddell points out.
The lucky country has escaped recession during the global crisis. If you take the two countries’ Treasury forecasts for 2013 as reliable, by then the gap will have widened to the point that it would require New Zealand to grow 3.2 percentage points a year faster than Australia to catch up by 2025.
If history is any guide we haven’t got a dog’s show.
Fallow also makes interesting points about interest rates being too low and a looming shortage of management talent. Sigh. How much longer are we going to lament this stuff before our ‘leaders’ do something.
We are up against a combination of unfortunate facts. One is that the cost of capital is high in New Zealand and capital markets are thin. But evidently interest rates are not high enough to encourage households to save. They continue, in aggregate, to spend more than they earn. And now the Government is running deficits as well.
All of which means New Zealand will continue to rely on imported capital, when our starting point is a level of external debt – 95 per cent of GDP – which is conspicuously high by international standards.
Meanwhile, the tax system all but compels domestic investors to put their hard-earned dollars into bricks and mortar rather than enterprises which might help the country earn a living as a trading nation.
According to the OECD, almost a quarter of all skilled New Zealanders live abroad and a sixth of the total New Zealand-born population do so. The Australian diaspora, by contrast, is relatively small.
Executive search firm Seqel Partners in its submission points to a looming shortage of business leaders over the next 15 years as babyboomers retire and so many of their potential successors from Generation X are expatriates who, survey evidence suggests, are not particularly interested in coming home. ”A very substantial leadership deficit of up to 40,000 people will hollow out the leadership capability of New Zealanders business,” they conclude.
Even now, the Institute of Management talks of New Zealand management as having “plateaued at a level of mediocrity”.
2. WTF – It seems South Canterbury Finance had enough money to participate in the PGC rights offering, Marta Steeman points out in a Press (Stuff) report about George Kerr increasing his stake in PGC to 13.2% from just over 10%. I wonder what the government thinks of South Canterbury Finance spending cash on buying shares in a fellow finance company.
3. Into the mainstream – Now former FT journalist Clive Crook is talking loudly over at NationalJournal.com about the parlous state of the US budget deficit outlook. He captures the mood in Washington (complacent) well and talks about the failure of previous congressional approaches to limit spending growth. HT ymbfa on twitter
A group of Democratic senators is exploring another approach. They are calling for a special legislative process that would make it harder to stop or amend deficit-reducing measures. One idea is to have a bipartisan panel of lawmakers and administration officials come up with a deficit-reduction plan, which would then be fast-tracked to a final vote. Committee chairmen, especially in the House, are understandably opposed to the idea because it would usurp their powers.
Though process reform has been a qualified success in the past, the risk is that it becomes a kind of displacement activity: something to talk about instead of cutting spending and raising taxes.
And the rules stick, in any case, only if soaring public borrowing is seen as an overriding problem. Despite all the statements to the contrary, that sense of urgency is lacking — partly for the good reason that slashing the deficit immediately, with the economy still weak and unemployment still rising, would indeed be a bad idea.
It is asking a lot of politicians and voters to grasp these two ideas simultaneously: The budget deficit had to rise dramatically because of the recession, but steps to make it fall dramatically once the economy revives are indispensable. The discussion about where to find the savings and how to raise revenues needs to start now — not least, to signal to the government’s creditors that the issue is going to be addressed.
4. New currency? – One of America’s biggest discount supermarket chains Costco has announced it will now accept food stamps, MSNBC has reported.
It’s a big about-face for a retailer that has catered to the bargain-hunting affluent — and a sign of the grim reality facing retailers and their customers. Food-stamp users recently hit a record 36 million.
Costco Wholesale Corp. began accepting food stamps at its New York stores this year under political pressure. The company doubted many would use them butsaw a strong response and will accept them in at least half its stores nationwide by Thanksgiving.
5. Shitigroup update – Citigroup is now offering to wipe off half the credit card debts of delinquent credit card customers in the United States, ZeroHedge shows with this letter. HT Gertraud.
6. Aussie dollar woes – Alan Kohler at BusinessSpectator picks up on the disastrous rise in the Australian dollar. HT Rob Pharazyn via email.
The strong Australian dollar is a disaster for Australian manufacturing, and persistent credit restrictions are likely to depress engineering and construction for years.
These are the two big, possibly permanent, losers from the aftermath of the ‘Great Recession’, but watching the action in Canberra there’s a sense of Nero Claudius fiddling on his lyre during the Great Fire of Rome.
Not that Australia is burning – far from it – but profound structural shifts are taking place in this country while our political leaders squabble endlessly and pointlessly about asylum seekers and emissions trading.
This country has indeed come through the ‘Great Recession’ in good shape and our resource industries are looking forward to decades of boom on the back of China and India, but that picture masks some difficult and lasting problems. Every silver lining, it seems, has a cloud; complacency is unwarranted.
In particular the 50 per cent appreciation in the currency from its long-term trading range could drive a manufacturing catastrophe.
7. More bailouts – GM will ask for another bailout from the US government, WSJ reports. GMAC, the financing arm debacle on wheels that spun out of GM, is also looking for another bailout. When will it all end? (When the Chinese finally lose faith)
8. Depression-esque debt – FT.com’s FTAlphaville highlights how the pace of write-offs for bad debts by US banks is actually faster than it was at a similar stage in the Great Depression of the 1930s.
The banks incurred $45bn of loan charge-offs in the third quarter, collectively, which means they’ve racked up $116bn so far this year. That translates to an estimated annualised rate of 3.4 per cent in Q3, or 2.9 per cent year to date, Moody’s says. Annual charge-offs hit 2.25 per cent in 1932 before peaking at 3.4 per cent in 1934.
9. Inside the beast – Ed Harrison at Credit Writedowns has highlighted a Seattle Times article that went beneath the ugliness at Washington Mutual, the massive mortgage bank that collapsed last year. Here’s a sample.
By the summer of 2004, nearly 60 percent of the loans WaMu was making were the riskiest sort — option ARMs, subprime mortgages and home-equity loans.
Talk to people who worked with (CEO Kerry) Killinger, and the same phrases and adjectives keep coming up. Ambitious. Quick study. Smartest guy in the room. And always, always optimistic. “He’s a cockeyed optimist to the nth degree,” one former associate said. “He always thought he could get out of whatever trouble he was in.” But Killinger also is repeatedly described as avoiding confrontation and uninterested in the nuts-and-bolts details of WaMu’s business.
And even more than most chief executives, insiders say, Killinger was focused on WaMu’s stock price as the company’s — and his — primary gauge of success. “Kerry’s view of himself was tied to a constant increase in the stock price,” Chapman said. “He was fixated on it.”
10. Fix the currency? – Bruce Sheppard has sent an email to a bunch of big shots including John Key and Allan Bollard, saying it’s now time to try to fix our currency to the US dollar or Australian dollar in the same way that China has. He cites the report below from the UN saying the massive global casino in foreign exchange helped create the global financial crisis.
Simple really: abandon the floating dollar, peg it to the USD or the AUD at a rate that is slightly undervalued and thus relieving Bollard of the worry of defending it.
Do any of you seriously expect China to change anytime soon? An undervalued fixed currency is working wonders for them when combined with a low wage economy and a high savings rate. We are witnessing a change in the world that the systems we designed with such academic perfection are facilitating.
Us mere mortals however must accept what is and plan to survive.
UN Report on Global Financial System
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October 29th, 2009 at 3:07 pm
#1. Would have to agree with Brian, pigs will be flying before we catch up with Australia. This really is mission impossible. Pretty much the only option now would be to stem the slide before it gets any worse is by becoming the east islands of Australia. Now what’s their national anthem again?
#10. Too late.. the USD$ has already bounced off its bottom and is finally showing signs of a rally.
October 29th, 2009 at 3:09 pm
#1, why even try? Would it not be easier to lower everybodies expectations in this country until we find uranium, metal ores, or strike oil in the southern basin? I really don’t get it, comparing one country to another at citizen income/wealth unless you normalise for the hard resources within the respective countries that can still be exploited.
October 29th, 2009 at 3:23 pm
Hamish.. keeping up with the Jones’s, but at the international level?
October 29th, 2009 at 3:28 pm
Hamish, but we do have Australia’s mineral wealth, it’s just locked up under our National Parks.
With modern technology it could be extracted with only the smallest of footprints above the ground, hardly a slug would be killed getting it out, and to the betterment of us all. After extraction, all tailings, etc, can be cleared, and the land left more picturesque and vibrant than before the extraction started.
But of course, then there are the Greens, who would rather we all be kept barefoot.
I think my hero of this year is going to be Lady Issac. She is a perfect example of how capitalism can enrich us, while leaving the Earth a better place still. See for yourself:
http://www.isaac.co.nz/conservation.html
http://www.doc.govt.nz/about-doc/news/media-releases/2007/blue-ducks-black-stilts-and-orange-fronted-parakeet-a-rainbow-of-winners/
http://www.stuff.co.nz/the-press/news/christchurch/2987915/A-new-old-village-with-stories-to-tell
http://www.lincoln.ac.nz/section645.html
October 29th, 2009 at 3:31 pm
“The economic crash has seen Treasury dramatically revising its long term outlook for the economy, questioning Government spending in virtually every area, including the eligibility of the pension for 65-year-olds.
Treasury says if spending follows historic trends, the books will remain in the red beyond 2050 and debt will rise to 220 per cent of the country’s wealth.” NZ Herald
October 29th, 2009 at 3:35 pm
Mark, I mentioned a few weeks back that I believe that is Jonkeys plan.. after all, we can only get so far with milk, apples and logs.
October 29th, 2009 at 3:49 pm
Are you suggesting that the cost of extraction would be similar between burrowing under our mountains, and open caste slather in Australia?
October 29th, 2009 at 3:49 pm
“including the eligibility of the pension for 65-year-olds.”
my mother in law lives and works in Aussie, has no intention of ever coming back and receives the NZ pension.
Why should poor young NZders pay tax to subsidise her just because she is 67? She has never saved so will work till she drops. Why should she get a NZ pension? The poor young tax paying bastards who are subsidising her will never see a pension!
October 29th, 2009 at 3:55 pm
Are we getting a peak at National’s sneaky way of avoiding the voter bashing that would come if the govt were to do what must be done….instead they are going to pass the bomb to Treasury and in the end front the country hands in the air…”we give in….we didn’t want to do it but Treasury said we have to….”
October 29th, 2009 at 3:56 pm
Did anyone in Auckland get along to listen to Robert Wade last night:
http://www.stuff.co.nz/business/market-data/3005273/Tax-speculative-foreign-funds-Economist
“A transaction tax on foreign money speculating on the New Zealand stockmarket is needed, according to a London School of Economics professor.”
and,
“They say just toughen regulation, tougher supervision. When bubbles in asset markets are underway practically any regulatory system is likely to fail in the mood of euphoria. It is very easy for people to be convinced the bubble is based on fundamentals and won’t crash.”
Instead the most urgently needed change was legislative action in all countries to separate commercial banking from investment banking, he said – such as the reinstatement of the US Glass-Steagall Act, repealed by the Clinton administration in 1999.
Glass-Steagall was passed in October 1929 after the collapse of the banking system in the Wall Street stock market bubble that sparked the Great Depression.
Paul Volkner, former head of the US Federal Reserve Board and Mervyn King, governor of the Bank of England, have both called for similar moves.”
October 29th, 2009 at 3:58 pm
Mother in law invites you to spend xmas in aus…expect something stuffed to be served for xmas dinner!
October 29th, 2009 at 3:59 pm
I’m saying, Hamish, we probably – according to some estimates – have a higher mineral worth per capita than Australia: but we are not ‘allowed’ to extract it, because we are led by the nose by Luddites.
I do not know about relative cost of the new technologies to extract, compared with Australia: I only know I have heard NZ mining experts say that we can very profitably extract the mineral wealth we have, with no detrimental effect on the environment.
Why aren’t we doing it?
October 29th, 2009 at 4:05 pm
It wouldn’t make any difference Mark H. Any recovered wealth benefit would be wasted in the same way as before. It is a question of ending the waste and that demands a change of political culture. Probably less difficult to turn lead into gold.
October 29th, 2009 at 4:10 pm
That’s ‘tungsten’, Wally…
October 29th, 2009 at 4:15 pm
Well then that’s the sort of debate this country needs to have and vote on then. You can have more bedrooms in your homes and more flatscreen tvs. If this is what makes us as a country happy, then realise the value has to be extracted from somewhere…
NIMBYs anyone?
But humans are inherintly selfish. How many people wanted to enjoy the charms of the coromandel as it once was for themselves only, and now look at it. It’s so removed from what it was even a decade ago.
But until the country debates this stuff, then I still go back to my initial point, that comparing gdp/person etc. is a bit pointless, and anyway, it’s only one side of the equation isn’t it? What value do you put on the other stuff? Uncrowded coastline etc.
People want to have their cake and eat it too. I don’t think it can be done.
October 29th, 2009 at 4:18 pm
“Shorter prison terms for non-violent offenders, larger school class sizes, reduced public services, a higher age of pension eligibility, and a higher rate of GST are among the many unpalatable choices it says we must face or watch public debt levels blow out unsustainably.” nz Herald. more from Treasury…….
October 29th, 2009 at 4:27 pm
Notice folks, how the Treasury motly lot, leave out any reference to the bloated salaries and bonuses handed out to the senior state serpents..!!!! Not for them are pay cuts thought up…no sir. Shall we start by culling 50% of the Treasury economists and chopping the pay back for those remaining to monitor the recession???
October 29th, 2009 at 4:35 pm
Looks like the 2nd wave of Financial Tsunami is coming sooner than expected. OCR remains the same but housing loans interest rates is going higher, so will house price fall ???
Also read the online Dominion Post reported that – “…..The average house price in Wellington has fallen 3.5 per cent to $538,000, with the corresponding section value reducing 4.4 per cent to $258,000…… ”
What’s next? Did anyone hear from the news mid-day about a Timber company closing down and about 45 jobs affected? Is that correct, can anyone share more details if it is a NZ company here or where ???
October 29th, 2009 at 4:38 pm
This talk of raising living standards from our mineral wealth is completely pointless unless the fundamental problem of lack of capital is addressed first. Apart from a few mine workers on minimum wage the real wealth would flow to the owners of the capital; our Chinese overlords.
I’m sick and bloody tired of seeing our wealth trickle away under a sea of stupid debt.
Another thing, why don’t we do what the Brazilians are doing?
No not that, though there’s nothing wrong with a nice tidy Brazilian.
“The rising value of the Brazilian real and the Australian dollar against the US dollar has had a disastrous impact on both countries’ non-commodity export and import competing industries. Brazil’s popular and largely economically successful left-wing Government led by President Lula da Silva is meeting the problem head on. It has decided to impose a 2 per cent tax on all capital inflows to stop the real appreciating further.”
http://www.debtdeflation.com/blogs/
October 29th, 2009 at 4:42 pm
Extracting any mineral wealth might be OK but we’d need some decent people negotiating any the contracts. My neighbour is a geologist and I was recently talking to him about the exploration south of Stewart Is. and if he knew how it was going. He wasn’t sure but said it would most likely be gas ( apposed to oil ) if found but it did not matter because NZ wouldn’t see any of it. Incredulously I asked why — he said we’d get royalties but not necessarily any of the gas . itself. That would all be taken off shore by Exxon.
Thats how good all Wally’s over paid bureacrats are !! We should at least have an option on some of what is found , even if we had to pay “market rates”
October 29th, 2009 at 4:56 pm
Maybe W.Kunz is right , after all , there is no hope for us . We’re gonna close our GDP gap with Oz by minerals extraction ? Not very far up the industrial pole are we . Going backwards from milking cows , to digging holes in the parks !
October 29th, 2009 at 4:59 pm
@David – re brazilians… you first.
@Mark Hubbard – how do you get the bold thing???
#5 – Citi will wipe the debt so the customer will go out and spend more. That is how the CC co’s make the profits. the debt forgiveness letter probably ends with…”and we have increased the limit on your card….”
October 29th, 2009 at 5:07 pm
Trev.
To get bold, put what you want in bold between html tags as follows:
(b) text (/b)
Except change the () for brackets (above your ‘.’ and ‘,’ keys. I can’t actually type them in, as they don’t show.
October 29th, 2009 at 5:08 pm
Trev:
http://www.facebook.com/notes_cheatsheet.php
October 29th, 2009 at 5:10 pm
Mark I think you missed the point of Brian Fallow’s article which was that NZ income is low because of low productivity, because NZ has much lower capital invested with each job. In effect NZ is full of ’simple’ low-paying jobs whereas countries like Australia have invested significantly in education, productive infrastructure, and other enhancements that enable their workers to produce far more than NZers are capable of.
Digging holes in the ground isn’t really going to help very much, unless the deficits in capital investments are corrected. And as Wally pointed out, if we rely on foreigners to invest for us, then they’re going to reap the rewards. As usual.
October 29th, 2009 at 5:20 pm
Actually I think we could very easily catch up with Aussie but it would not be pretty. Read Steve Keen’s Debtwatch site to get a grip on how messed up the Aussies really are – they make us look like amateurs.
So, if they really get into trouble because say China has a wee hiccup in their building programme we could find they go backwards a lot faster than we do, in exactly the same way and for the same reasons they have gone forwards faster than us.
It ain’t over yet…..
October 29th, 2009 at 5:28 pm
And 30% pay cuts for all public sector employees earning over $250,000 would surely help a bit wouldn’t it?
October 29th, 2009 at 5:37 pm
Man I am sick to death of all these rich and wealthy business people that suck the wealth out of the ordinary working people of New Zealand, why can not all their salaries/profits be capped?
Have you seen what the owners of some of NZ’s biggest companies are earning, it is crazy, then they go and spend all that money overseas on their big boats and 1st class travel.
Man is makes me sick, someone has to stop them earning sooooooo much money.
October 29th, 2009 at 6:02 pm
The reason i think high salary earners in the public sector should take a relatively modest pay cut is because some of my customers have gone bankrupt. They have lost everything. Unless you have been in a business of your own you don’t understand to what extent everything is on the line.
October 29th, 2009 at 6:09 pm
Do they make the big bucks during the boom years like those rich business people? Do they avoid paying the tax like the big business people do?
October 29th, 2009 at 6:13 pm
Treasury ( Whitehead ) say that at current rate of Gumnut spending ( 6.3 % increase / annually , over the last 15 years ) total debt in NZ – public and private – will top $ Trillion by 2050 . They say this is unlikey to actually happen . But it is the trajectory that we are currently on . ……… . Anyone in Gumnut awake / listening / understanding / sober ?
October 29th, 2009 at 6:18 pm
tax the rich more!!!!!!!! revolution i say…….. revolution……..do not allow rich people…. they spend their money elsewhere anyway.
But does the government get a tax rebate on their staff?
October 29th, 2009 at 7:13 pm
Mark and Harriet – Thanks that is o for oarsome
Re highly paid civil servants – it is ironic that we are told “if we do not pay high salaries, we won’t get high quality executives”,
given their generally poor performance.
October 29th, 2009 at 7:17 pm
Hi Paul
I think you will find that it is the ‘rich’ that create the jobs that the ‘poor’ want to work in. If you want to be rich – become a job creator – but you will have to be grownup about it because it is a bit like being mummy and daddy – you are the one that takes most of the risk and responsibility as well… … …
A country with out the ‘rich’ is a country full of unemployed hanging around for handouts from nobody as no one is working and paying taxes.
Oh wait – we are almost there already… … …
October 29th, 2009 at 7:19 pm
I think that a trillion dollar hole is oarsome too .
October 29th, 2009 at 7:51 pm
“Wally’s over paid bureacrats”(sic)..you absolute rotter Ross…mine indeed!
Beaurocrat is better Ross. Now write that down 500 times before bed.
October 29th, 2009 at 8:01 pm
BurrowKrauts ? , Wally ?
October 29th, 2009 at 8:06 pm
lol…… so Mimi, my mummy and daddy say that Mr Key and Mr Bollard have lots of people working for them, so why do they not get paid millions and millions of dollars?
They have lots of risks and responsibilities so therefore why should they not have a weally big wallypop?
But also from what my daddy say, he says that rich people exploit the poor in order for them to be rich. Mummy thinks that they are nasty as they also lend money to bad people that make us all poor coz they have grumpy faces on now.
I think we should all be poor then we will all be the same and we can all be happy. I like happy people. We then do not need to pay taxes or expect other people parents to look after us.
October 29th, 2009 at 8:15 pm
Roger-Roger……and no…not listening…never have…never will.
We know best. Same as the previous lot, but keep paying us..cos we deserve it. (NOT).
I actually wouldn’t mind if they did.
Paul, Change, not REVOLUTION. even if they are revolting.
There is nothing wrong with being a rich person, if there were, I would not say what I do about some of them.
There are good rich people, there are bad. You have to recognise the difference.
It is however, what they do productively that I tend to RAIL about and also about what distorted amounts we pay for useless people who drove us into this financial mess, but with no BENEFIT to us all as a whole…
(or is that HOLE as in DRAIN).
I call my self sore-loser, for effect, not cos I am a LOSER financially as I have been called because of my RANTS.
Some people do not understand irony or humour, or even bluntness, or even down right rudeness. I use em all.
I get attacked, ignored, railed at but have always put my money where my mouth is and can substantiate what I say.
Facts are facts.
I am prepared to back what I say for CHANGE too, cos that is what we need..
I shout when I need, I try to make others THINK and others WAKE-UP.
I could be considered affluent by some.
But a revolution is not necessary, only a change to a level playing ground.
A simple change of the rules, not support for the people who break and bend em for greed and illicit gain.
If there were not an employer, there would not ever be a need for an employee.
If there were not businesses, there would be no products to buy, food to eat etc.
Money is created to go round, as a tool, not to be filched from the unwary to benefit the lazy and intemperate and dishonest.
And some of those crooks who stole the gullible’s money and gambled via BLUE CROSS etc and other intemperate Financial scams and rorts, intended to defraud, got away with theft, plain and simple. There are hundreds of examples in NZ…
Now some of the lawyers are having a Field Day, same with LEAKY HOMES.
There is always money in it for someone. Even if the well is dry.
A lawyer should not be needed. However, we have too many of them here because of fraud, theft, etc.
Still there is always LEGAL AID if you know how to work that system too.
I could write a book about all the rorts, scams, theft and lootings of man.
We are a Nation of less than 5 million, a city in most other countries, with only about 1 in 3 working.
Why do we need so many lawyers, prisons, social workers, pollies, banks, real estate agents… etc.
DEBT & GREED, LAZYNESS & STUPIDITY & CRIME…and selling out of NZ…..plain and simple.
The situation has got totally out of kilter, when a layabout gets more than a sick person, the sick person gets less than a drunk who walks under a car.
We produce nothing of real value, but are miss-lead into thinking we are all rich because of allowances taken off someone else via those WORKING the Social Welfare and TAX systems set up by the past Governments and borrowings from overseas primarily.
They are called bubbles……they POP eventually.
ACC is a case in point.
So is the number of MP’s to get us into this crap via MISS-MANAGEMENT and then benefit.
Also the number of civil servants, con-sultants, etc. for no benefit, just make-work.
Likewise shonky business men, gangs etc…
I used to work in Disaster Recovery and Business Continuance planning.
Hence why I saw this lot coming, years ago, so I made my own plans but you cannot beat the idiots we put in POWER. Can only work around em.
These people TAKING and not GIVING are the very reason I am afraid for the future of NZ and the world in general.
Same as in the USA and UK…and all around the World. Just an escalating problem.
We cannot afford to stay on this course.
There is a bigger crash coming, because of energy problems as well as these overwhelming financial problems…etc…
And it may well be head on with some very, very scary people, and I do not mean just those miss-leading these problems.
I can forgive a certain amount of debt…..but not STUPIDITY.
Hence why I am a very, very sore-loser.
Nothing in this blog for me either, just trying to help make CHANGE, not REVOLUTION in my own way, like many here.
I am not intelligent, never went to university, self made and debt free and I like helping others, not just myself.
A bit like KEY…but not like KEY, if you get my drift. I wait to be proven wrong, but I keep waiting.
October 29th, 2009 at 8:31 pm
Sore-loser, you sound like a guy I need to invite to my next BBQ, I enjoyed your post.
I however sit in my sandpit and see the world go by and try and catch those that are just in it to make a buck and do not care about the other things that make up life.
I am supposively educated and worked my way through Uni to get Master’s degree [with a student loan paid off in my first years working] as I was brought up to believe that I could make a difference too. However the reality that I see has broken me.
I not that this is an economic blog, yet the people posting here seem to have very narrow views on what is important and what a measure of success really is.
As a fool I will continue to bring up my girls with values and to try and ensure that they “do what is right, not what is easy” [or gets you rich at someone elses expense]. If I truely was smart I would raise them to screw the system and use as many people as possible to further their own position in life as from my experience it seems that they are the only sort of people swanning off on their yacht and not having to contribute to society.
Anyway, back to my sandpit to plan the revolution.
October 29th, 2009 at 8:55 pm
Paul, and Sore-loser,
It really took me quite a while to read and digest both your themes. You guys really have lots of depth in the illustration. I take my hat off, ha ha ha…..
keep it up.
October 29th, 2009 at 9:16 pm
Re the Bruce Sheppard email.
Although the NZ$ is not literally pegged to the US$, it is certainly not unconnected.
As most should know, all paper currencies are losing value. The NZ$ is just one of them.
For evidence, checkout the chart titled “The Longer-Term Percentage Changes of a Variety of Currencies Against Gold” here:
The Long-Term Investment Haven View of Gold – Lots of nice charts
http://neuralnetwriter.cylo42.com/node/2057
The currencies just wobble against each other while they all fall.
October 29th, 2009 at 9:52 pm
It’s a stupid idea fixing the NZD to another currency.
There’s no point in fixing to a currency that fluctuating even more than the NZD, ie the USD.
Also doesn’t seem much point in fixing to the Aussie either if you want stability, they are now the new darlings of the carry trade, and the AUD looks to up up and away.
It would be a major step backward for this country.
Why bother anyway?, what the RBNZ is bringing in with the banks liquidity requirements, is doing the trick of raising interest rates anyway, without Bollard having to raise the OCR at all.
October 29th, 2009 at 9:59 pm
Phil –if we are going peg the $ ( which I agree with or at least some form managed currency policy ) it should against group of currencies , not just one.
October 29th, 2009 at 10:38 pm
Fixing the currency seems like a hell of a lot of trouble to go to, and a very detrimental step at that, for the sake of just keeping the NZD down a bit.
Just don’t make our currency so attractive for the carry trade, by doing things like what the RBNZ has recently done with the liquidity requirements, and if that doesn’t work, then other things as well.
So we don’t only have interest rates as a way of cooling the economy.
October 29th, 2009 at 10:43 pm
Watching this economy is like watching a frat house horror flick that never ends. You say to yourself, “for God’s sake don’t open that door,” and think about how stupid the debutantes and star athletes are as they are being slaughtered one by one.
I hope to hell there is some Bilderberg, Trilateral, CFR, group of elitists orchestrating a creative destruct of the world as we know it, because at least that denotes some intelligence and leadership. The alternative is that today’s economists, politicians, and financiers are just a lot of puffed up simpletons, unable to see beyond the next quarter.
Everybody is looking for someone else to do the “wet work” and set things right. Perhaps the Charles Uphams and Gary Coopers are permanently relegated to history and we have been prozaced, fluoridated, and dumbed down by an education system so flatulated by process and teacher mobocracy that we are just plain… buggered.
Western man has always been better at reacting to events than being proactive. There are some exceptions though; Hitler, Pol Pot, Stalin, Idi Amin, Mao. I’m coming to see where that choice might be tolerated by regular folks.
October 29th, 2009 at 10:48 pm
Doug,
Do you have a solution to tell us? Is your solution or idea reactive or proactive?
October 30th, 2009 at 11:13 pm
@ Ross from October 29th, 2009 at 4:42 pm
Ross mentioned the way NZ handles royalties from mineral rights – it’s fairly much the most common method used in the OECD. However there are plenty of other ways.
Ideally the mineral extraction/oil/gas company would probably prefer to buy the rights outright, however if for a range of reasons they can’t the rights are controlled via one of 5 different types of agreement between the company and the land/mineral rights holder.
They are
1.) Concession/Lease Aggreements – common up until the 1960s between oil majors and OPEC governments. Not much used by OPEC countries, but are by the US Federal Government and non-OPEC Countries – like NZ
2.) Production Sharing Agreements – involve the the oil company bearing the E&P costs and trying to recoup these back over a set number of years. Typically at least 5 years, although may go up to 30 years – before the whole venture is transferred back to the Govt or rights owner.
3.) Service Contracts – Oil company doing the E&P for a set fee, ownership of Oil is retained by the Rights Owner.
4.) Joint Ventures (JVs) – An agreement to share the E&P costs with National Oil Companies (Think Pemex, Petrobas, Saudi Armaco) – Typically these are for very high risk ventrures – like Ultra Deep Water. JVs used by Govt’s to create local jobs, and to gain technical knowledge from the Independant’s to their NOC’s
5.) Production contracts – primarily used to bring improved recovery techniques to already worked areas – techniques like waterflooding, gas injection. Rights owner will give a slice of the increased prodn to the Independent bringing in the very expensive infrastructure to run the process.
Considering that the vast bulk of the worlds oil is now produced by National Oil Companies and not the Independent/Major’s – maybe NZ should look to a change in the way we handle the licensing of our available resources as the royalty percentages gained from Concessions won’t make NZ rich or anywhere near it.
One only needs to look at the Resource Hotelling that Brazil is undertaking. Brazil will certainly develop into a significant oil producer over time, but don’t assume that it will be sold to fuel our SUV lifestyle.
Cheers