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Top 10 at 10: Chinese burn on credit tightens; Could the yuan fall, rather than rise?; Daily Show; Dilbert
February 5th, 2010Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments below or please send suggestions for Thursday’s Top 10 at 10 to bernard.hickey@interest.co.nz We like to breathe. I’m also loving the cartoons below on Obama choosing (not) to go to the moon.
1. Chinese burn – The Bank of China is applying the brakes to lending, increasing interest rates for property developers, Dow Jones reports. Just imagine in New Zealand if monetary policy was tightened in this way. A few phone calls from Alan Bollard and ‘Bob’s your uncle’ – lending stops. There’s something to be said for a dictatorship…
The move appears to be in response to the China Banking Regulatory Commission’s call last week for lenders to remain vigilant to property-market fluctuations. The regulator has pledged to step up its supervision of property-related loans amid growing concern about the formation of asset bubbles.
Bank of China told its credit officials at a meeting Monday that interest rates on new loans extended to real-estate developers should be raised from Feb. 1, and that “in principle” officials aren’t allowed to offer a rate below benchmark interest rates, according to the person, who declined to be named.
During the meeting, management also criticized some teams for lending too much in January, said the person, without elaborating.
2. Where the power lies - Chinese economists (who no doubt have been put up to by some government officials) are applying the pressure to America. Here’s a piece in state-owned People’s Daily Online talking about renewed worries that US dollar money printing to pay for US government deficit spending will devalue China’s holdings of US$ denominated Treasuries… HT Gertraud via email.
He Maochun, director of the Center for Economic Diplomacy Studies at Tsinghua University, said the deficit would be financed by those holding U.S. dollar-denominated assets with the main channel to transfer the risks caused by the deficit being the issuance of U.S. treasury bonds.
The U.S. is already in enormous debt, with Treasury data showing public debt topping 12 trillion U.S. dollars in November last year, the highest ever. To pay for the deficit, the U.S. federal government will borrow 392 billion dollars in the January to March quarter of 2010, according to a Treasury Department statement released Monday. It will then issue 268 billion U.S. dollars of treasury bonds in the second quarter.
China is the biggest foreign holder of the U.S. government debt. As of the end of November last year, China held 789.6 billion U.S. dollars of U.S. treasury bonds. Moreover, more than 60 percent of China’s 2.399 trillion U.S. dollar stockpile of foreign exchange reserves – the world’s largest – is in dollars.
Cao Honghui, director of the Financial Market Research Office of the Chinese Academy of Social Sciences (CASS), a government think tank, said the massive U.S. deficit spending and near-zero interest rates would erode the value of U.S. bonds. The U.S. government should not transfer the problems of enormous debt to other nations or regions that are creditors like China, he added.
Too bloody right. I reckon the Chinese government should demand nuclear powered aircraft carriers rather than more Treasury bonds when they’re asking for repayment.
3. Weaker yuan or not – The tension is growing too between China and America. Barack Obama jumped on his soapbox yesterday to read a teleprompter to say he would “get much tougher” with China over the perceived under-valuation of the Yuan versus the US dollar. The US obviously wants a weaker currency. But will the Chinese give in and hurt their own export sector? Can Obama push too hard when China are still funding America’s deficits?
Here’s what Obama said in a Reuters report.
“The approach that we’re taking is to try to get much tougher about enforcement of existing rules, putting constant pressure on China and other countries to open up their markets in reciprocal ways,” Obama told a meeting with Senate Democrats on Wednesday.
“One of the challenges that we’ve got to address internationally is currency rates and how they match up to make sure that our goods are not artificially inflated in price and their goods are artificially deflated in price.”
But Obama insisted he would not take a protectionist stance toward China, the world’s third-largest economy, warning that “to close ourselves off from that market would be a mistake”. Republican Senator Charles Grassley urged Obama to formally label China a currency manipulator to induce Beijing to raise the value of its yuan. Obama so far has resisted that step.
But what if the Chinese actually want to devalue their currency rather than allow it to appreciate? There are some credible thoughts bubbling up that China actually wants to devalue the Yuan/Renminbi further. Here’s Marshall Auerback at Creditwritedowns saying the Chinese may want to devalue to improve the competitiveness of exporters in the wake of inflation buliding right now.
More importantly, real economic growth may now be fast enough to create resource bottlenecks. Consequently, inflation in this quarter and coming quarters may exceed all expectations. Inflation actually erodes Chinese competitiveness. What if the big surprise is that we get a devaluation of the remnimbi? One aspect of this implies a loss of competitiveness amongst Chinese manufacturers, which might suggest future WEAKNESS in the yuan, not strength, as the West has been pushing for. This might actually explain the Chinese reticence not to revalue.
4. Greek revolt grows – An economic, fiscal and monetary policy (deficit spending and massive debt) is now becoming a political problem for Europe. The Euro fell sharply overnight after a Greek union called a massive strike and tax collectors walked off the job for 48 hours to protest massive budget cuts now needed to keep servicing Greece’s big debts and keep it in the euro, Bloomberg reported. How long before riots in Greece turn into a change of government and a withdrawal from the euro? And then who’s next? Portugal? Ireland? Spain?
GSEE, which represents about 2 million workers in the private sector, voted at a meeting in Athens today to walk out Feb. 24. The main public-employee union plans a Feb. 10 strike to protest spending cuts as Papandreou steps up budget cuts to persuade investors Greece won’t need a bailout.
“It is still the beginning,” Stathis Anestis, the GSEE spokesman, said on the telephone today. The slogan for the strike is “people come first, markets and profit second,” he said. Anestis reiterated the union’s view that Papandreou’s government “succumbed” to the markets.
Greece’s plan to narrow the budget gap won European Commission backing yesterday after the government announced more measures to reduce the shortfall. Papandreou promised to increase fuel taxes and raise the retirement age, while retreating on a promise to raise wages faster than inflation, a pledge that helped him win elections in October.
“The first part of the action plan is on its way and now has the EU’s approval,” said Ioannis Sokos, a London-based interest-rate strategist at BNP Paribas SA. “What remains is the second part which has to do with the Government versus the Greek people. This is as tough as the first part.”
5. Here it comes – The Dow is slumping towards 10,000 again as Americans are facing up to the enormous debt mountain they have, the inevitable de-leveraging to come and what it means for employment growth. Here is Alan Sloan from the Washington Post pointing out from a Congressional Budget Office report that for the first time in 25 years the US Social Security System will take in less tax receipts than it pays out in 2009/10. The is before the babyboomer bulge bankrupts America. HT Troy via email.
Instead of helping to finance the rest of the government, as it has done for decades, our nation’s biggest social program needs help from the Treasury to keep benefit checks from bouncing — in other words, a taxpayer bailout.
No one has officially announced that Social Security will be cash-negative this year. But you can figure it out for yourself, as I did, by comparing two numbers in the recent federal budget update that the nonpartisan CBO issued last week.
The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).
This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.
6. Check out the US Debt clock to give yourself a headache and a brief case of nausea. Don’t look at it too long or you will go blind. HT Neville Cropp via email.
7. Brits get serious – Investment banks in London have been told they need to tear up contracts guaranteeing their bonuses or their banking licenses will be withdrawn, The Telegraph has reported. Yowser. That’s one serious regulator. Thank goodness they’re not pushovers like the Americans. HT Kevin via IM
In an extraordinary ultimatum that has shocked some of the City’s biggest companies, the Financial Services Authority (FSA) told bank bosses that 60pc of all pay must be deferred, with no exceptions, even for those whose contracts conflicting with the edict.
Many of the global players have in recent weeks made representations to the City watchdog, in particular about pre-existing employment contracts that guarantee bonuses over a year or more. But their appeals have been met with the FSA’s toughest yet response.One pay executive in a major bank told The Daily Telegraph: “The message came back that while the FSA agreed that it does not have jurisdiction over contractual law, it does have jurisdiction over issuing bank licences in London, and that we should go away and unwind the contracts.”
8. Phishing for hot air – Here’s more fuel for the global warming sceptics and critics of carbon trading schemes. Der Spiegel is reporting (luckily in English) that cyber-thieves have made US$4 million by tricking companies into giving them information that allowed them to trade emission permits fraudulently. New Zealand is involved too, but there’s no indication that any New Zealand companies were burnt.
Of course this could happen for anything traded electronically, but I wonder if it’s easier when the thing being traded is so notional and created more by regulation than anything physical. Cue global warming debate outrage and defence.
According to a report in the Wednesday edition of the Financial Times Deutschland, hackers sent e-mails last Thursday to several companies in Europe, Japan and New Zealand which appeared to originate from the Potsdam-based German Emissions Trading Authority (DEHSt), part of the EU’s Emission Trading System (EU ETS). Ironically, the e-mail said that the recipient needed to re-register on the agency’s Web site to counter the threat of hacker attacks.
The cyber-thieves then exploited the user data that was entered into their spoof Web site to transfer emissions allowances to other accounts, mainly in Denmark and Britain, from which they were quickly resold. The new owners of the allowances would have assumed that they had acquired them legally.
9. Totally irrelevant video of impending boat destruction. HT Tory via email.
10. Totally irrelevant video of impending brand (Toyota) destruction from Jon Stewart at The Daily Show.
| The Daily Show With Jon Stewart | Mon – Thurs 11p / 10c | |||
| Toyotathon of Death | ||||
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February 5th, 2010 at 12:04 pm
Love the cartoon of the space elevator of debt…
February 5th, 2010 at 12:04 pm
http://www.ihatethemedia.com/12-more-glaciers-that-havent-heard-the-news-about-global-warming
Gee, thanks for the cue in Bernard! Global finance might be in meltdown but evidently a lot of glaciers are not. NZ gets a mention, Fox and Franz Joseph growing too.
February 5th, 2010 at 12:41 pm
Save Macquarie client investment manager David Kiely:
http://news.hereisthecity.com/news/business_news/9904.cntns
February 5th, 2010 at 12:46 pm
Don’t worry about the Dow Bernard…..Obama’s Plunge Protection Team will be on the job and pumping a lot more funny money into it. She’ll be right…
February 5th, 2010 at 1:02 pm
One of the greatest stimulus projects so far discovered so the news said…a company in the US being prosecuted for dumping chemical waste in a river…received 24 million in stimulus dollars to oversee the protection and policing of the very same river to prevent the dumping of hazardess waste.
Now …when you have morons for a govt and idiots handing out the money stolen by the morons, you can be sure the end is not far away.
February 5th, 2010 at 1:04 pm
The Chinese only have themselves to blame. If the Yuan was properly valued they wouldn’t have so many US treasuries in the first place.
February 5th, 2010 at 1:12 pm
“Just imagine in New Zealand if monetary policy was tightened in this way. A few phone calls from Alan Bollard and ‘Bob’s your uncle’ – lending stops. There’s something to be said for a dictatorship…”
Oh yes those reminiscent of those Muldoon years of price/wage freezes.
“2. Where the power lies – Chinese economists (who no doubt have been put up to by some government officials) are applying the pressure to America.”
I was asked the other day “am I in aware of China”…well yes..their ability to plan 30yrs ago to put their currency at the top of the list replacing the US$….
Built quietly up the foundations, not make any noises…then about 12 months ago start making a few comments here and there, occasional brief over night currency runs, just shake the establishment up a bit….then public statements about the yuan in international trading..knowing full well they could force the issue with disastrous results…..Now putting the screws on a little, while the US in its egotistical manner still acts as if it is in control, with China holding the purse strings.
The soap opera continues, the Chinese are far from meeting their objectives and hold a royal flush..its just a matter of time before they lay their cards on the table.
They are not stupid enough to force the issue with a lot of collateral damage, they want as little collateral damage as possible…the end prize is worth a lot more that way.
February 5th, 2010 at 1:22 pm
China is learning that you can’t devalue your currency to prosperity.
It works for a while but eventually inflation catches up with you, esp if the country is running a trade surplus.
China has been buying USD with Yuan to keep the exchange rate down. This just pumps more and more Yuan into the Chinese economy. (its China’s form of money printing).
It works if productivity is going up or there is surplus capacity, but in the end there is too much money chasing too few goods and you end up with asset bubbles or general inflation.
Even in dictatorships it can come unstuck very quicky but at least you can shoot the merchants for putting prices up!!!
February 5th, 2010 at 2:20 pm
NevilleWC,
Hear, hear…glad to see someone else sees through the brainless China worshippers.
February 5th, 2010 at 2:24 pm
As someone who is proud of his collection of TEMUKA pottery , I take exception to that crack about brainless china worshippers ……….. Temuka is top quality , Tosser .
February 5th, 2010 at 2:51 pm
Good call Roger
Temuka pottery is massively undervalued. I’m expecting my stock to appreciate massively as people exit their property portfolios. China is so totally where our future lies….
February 5th, 2010 at 3:06 pm
Are we nearing Peak Pottery yet?
February 5th, 2010 at 3:15 pm
That’s a good question Alex. Seeing the big picture as usual.
I like to think of my pottery inventory as real estate than has been value added, and as we know they aren’t making any more RE, so I would have to say that the time to get in is NOW.
If only i could train some gummi bears to make it and then form a LAQC around it…..
February 5th, 2010 at 3:16 pm
The Dow sure is a worry, look out below once wave 3 (down) starts {even as soon as next week}. Interestingly on the NZX for the last week, seller orders have outnumbered buy orders something like 10-1 .. yikes .. with a couple of brave soles pushing an occasional stock up.
Glad I’m all out and back into cash (and my gold of course). Happy sitting on the sidelines to see what happens.
Anyway not all bad today, did get the boat wet this morning.
February 5th, 2010 at 3:20 pm
“Just imagine in New Zealand if monetary policy was tightened in this way. A few phone calls from Alan Bollard and ‘Bob’s your uncle’ – lending stops. There’s something to be said for a dictatorship…”
In China the state’s central bank dictates banks’ reserve requirements. In New Zealand, the state’s central bank dictates interest rates. So which one isn’t the dictatorship?
February 5th, 2010 at 4:05 pm
……….trick question …………they both are dictatorships………….so the answer is that neither of them isn’t a …………..hang on……..two double negatives make a ………………….arhhhhh , shag ……. ….What’s the next question ?
February 5th, 2010 at 4:16 pm
Dosser Says:
“Hear, hear…glad to see someone else sees through the brainless China worshippers.”
Yeah that statement is like calling someone brainless when they warn you a 6er cricket ball is heading for your head m8
When it hits who’s the tosser then?
They are only 30yrs into a 40yr plan.
February 5th, 2010 at 4:28 pm
The question is whether China’s 40 yr plan will be more successful than Mao’s Great Leap Forward. There is a lot misinvestment going on in China. Aluminium smelters, high speed trains, empty mall, whole empty cities. Looks good for the GNP when its being build. Not so good when the ‘investment’ dosen’t make any money.
February 5th, 2010 at 5:06 pm
There is no whole empty city . Bernard reported that ( into a daily 10 @ 10 ) , from O/S news-links , without properly checking the story . Some chap blogged into us that 750 000 folk were currently residents of the ” Empty City . ” ………… Not exactly tumbleweeds rolling down a dusty deserted main street , with saloon doors clanking eerily in the deafening silence……….!
February 5th, 2010 at 5:44 pm
Roger,
You might want to hold that. The report was from Al Jazeera. I watched it and linked to it. Here it is. http://english.aljazeera.net/news/asia-pacific/2009/11/2009111061722672521.html
Then a lot of Chinese commenters came on to attack the report. Their IP addresses ended up with Chinese government bodies.
Here’s another view from a professor at a respected university in Beijing on the quality of the Chinese stimulus.
http://chovanec.wordpress.com/2009/10/26/chinas-quality-of-gdp/
There is a problem there. Ordos, the empty city, is real, at least in the parts with fancy apartment complexes that are built, sold, but empty.
Read this too for an ‘on the ground’ view from a non-Chinese government source on the real estate bubble.
http://chovanec.wordpress.com/2009/06/11/chinas-real-estate-riddle/
Also. I have reported from China from Reuters and spent years editing copy from reporters there. Most reports from Chinese government run news sources are propaganda. Hence the Al Jazeera report was useful.
cheers
Bernard
February 5th, 2010 at 5:49 pm
Shag ……… Gotta order more Gummy Bears …………Usual address to send them to , big guy ?
February 5th, 2010 at 6:44 pm
NevilleWC Says:
“The question is whether China’s 40 yr plan will be more successful than Mao’s Great Leap Forward.”
Mao and his little red book, was an uneducated peasant despot, with ‘ideas’ without any thinking thru..like kill of the sparrows and create fame because of the insects on the crops
Since he and his cronies disappeared into the wilderness, behind the scenes has been some very well educated and practicable visionaries…..all they have to do is fall back on basic teachings of guys like SunTsu, who the west knows as a military genius, but his principles go far beyond that.
While we think of China in terms of Mao, they are a very different kettle of fish in reality.
Russia has gone, the only threat left to ‘Rome’ is China, and lets face it ‘Rome’ thinks since they have the biggest guns they will reign forever
The fall of Russia was not force but rather economic…simply put Regan started a rumour about a star wars weapons system, Cost Russia everything to keep up with something that didnt exist, and went bust.
The common denominator is economic, just a different method….become ‘Romes’ banker then threaten or slowly put the pressure on, or actually pull the rug from under their feet.
February 5th, 2010 at 7:56 pm
I can’t find the reference but I think I saw an article the China was building enough aluminium smelter capacity to supply the world. This is on top of its existing capacity.
Is this any different, in principle, to Mao ordering people to build ‘backyard’ iron smelters? Both are a missallocation of capital and labour that in the end destroy wealth.
NZ had ‘think big’ that created ‘investments’ that couldn’t repay the debt that was raised to build them. Rogernomics brought in the rule that Govt investments had to have a positive return. From 2000 this rule slowly slipped eg Airnz, until the Govt was ‘investing’ in thing because a minister thought it was a good idea. The money spent on Kiwirail has just gone, but the debt is still there! This is a sure way to become less weathy and drive even more people to OZ.
In China State enterprises don’t pay dividends, so the money builds up and is spend with no thought of the return. China is building 2500km of Highspeed rail, which the fares can’t cover even a small part of the cost and in some places different local bodies are building lines side by side!
February 5th, 2010 at 8:25 pm
Bernards links above are good but one of the sites has a better article.
http://chovanec.wordpress.com/2010/01/17/is-inflation-stalking-china/
This explains it a lot better than I can.
February 5th, 2010 at 9:15 pm
Roger Nightingale ( Pointon York , economist ) is calling for pay cuts across both private and public sector in the UK , to assist the recovery , and cut government costs ……….. Hmmm , wonder how well that neutron bomb-shell would go down here , with the 40 000 + government employees . Well the rest of us are being cut back . As the fellow says , pay rises at this time for the public sector is absolutely obnoxious .
February 6th, 2010 at 12:41 pm
Wally – a big copper drop perhaps…?
http://dailyreckoning.com/falling-copper-prices-the-doctor-is-out/
February 6th, 2010 at 1:05 pm
True enough Ludwig but already the music or should I say screaming coming from cnbc is suggesting the correction is over. Thing is Ludwig..if we get a repeat of the 08 world market dummy spitting exercise…it will be the end of everything. You will be saying hello to protectionism and a depression. These last two weeks have seen a rush from the euro to the us$ and gosh wasn’t it fortuitous for the US Treasury with them selling off over 80 billion in toilet paper bonds at the same time. Lotsa people would smell a big fat rotten rat in that coincidence. And now that the dunny paper has been swapped for cash…the US$ is falling again. Of course the hedge fund et al lot who receive headline attention in the financial press just happened to come out with a screaming sell sell on commodities…guess what those upstanding ethical bastards had sold short before the scream?….you got it Ludwig…they sold commodities by the zillion and made many a billion from the lemmings who bailed out. By now these same moral leaders will have cleared their profits and loaded up on commodites ready for their next killing.
Copper will always be subject to violent market games but it remains the one metal all the developing nations must buy if they are to raise living standards and ward off the riots.
February 6th, 2010 at 1:25 pm
The $US has been heavily sold down , over the past year or so . The troubles in Geece , were the trigger ( however small that country really is , in the scheme of things ) for traders to bolt from the Euro to the $US . As the Yankee Doodle Dollar rises , commodities traded in that currency are falling , particularly oil & the non-precious metals .
As the Kiwi Peso is also plunging , my copper play isn’t looking quite so bad . And if it overeacts down into bargain basement levels , I’ll back the ute in , and load up .
Sometimes it pays not to hedge . Gardeners excepted !
February 6th, 2010 at 2:17 pm
Tuesday is closing in and JK has taken to the bathroom to get his speech just right in a mirror performance. Will he or won’t he…are we to see a seismic shift in govt direction…or is Queen Helen’s skirt just too tight to remove.
RT…the Geeks are not happy with you stealing their arrrrrrr
February 6th, 2010 at 6:05 pm
Kaiser Helen wore a skirt ? …………… Armour plated , with copper breeches !
Heard Barry Soper ( political commentator ) on ‘ZB radio saying that until the Maori reduced her to tears at Waitangi that time , the softest part of Helen had been her teeth !
February 6th, 2010 at 7:34 pm
Here is why the exodus of young skilled Kiwi to aus will take place:
http://news.theage.com.au/breaking-news-business/china-to-buy-a70b-of-australian-coal-20100206-njko.html
No arguments!
February 6th, 2010 at 7:54 pm
Wally – agreed. There will be a massive shift in wealth globally from those who hold their wealth in paper to those who hold commodities and precious metals. Hold on tight….the shift is likely to be chaotic, so steel your nerves for the ride. Good luck.
February 6th, 2010 at 7:59 pm
Government royalties are $A 700 M. per year , 20 % of net revenues .
Given the cost of Labour’s WFF rort , here in NZ we need projects 4 – 5 times the size of that , just to break even . …………… . Jeez we are screwed in NZ .
Thankyou Cullen , thanks alot , clown !
February 7th, 2010 at 9:07 am
That’s what Beijing has seen as well Ludwig…hence the drive to buy up the producers and the good land. The fools will be left holding tons of US toilet paper. It is a competition between short and long term planning. Beijing plans for 2100. Washington for the next sound bite. Before we are half way through this century, China will be the most wealthy, ‘farming’ the rest of the world for what it is prepared to buy on trade conditions that amount to ‘our price or starve’. History will revert to a Marco Polo norm, where western delegations line up for favours and hand back all the treasure looted from the Peking palaces in recent times.
February 7th, 2010 at 9:48 am
Small typo in your NZHarold article today , the profit potential from padding credit card transaction fees should read ” million ” , not ” billion ” . ………. Meebee you’re anticipating run-away inflation to come , from worldwide QE ! [ Roger & Out ]
February 7th, 2010 at 10:07 am
Bernard says..”it appears a no-brainer”..but is it?….granted, there would be a short term gain we can call the ‘learning curve cream’ but once the customers wake up to the rort, they will come armed with paper dosh and metal by the ton. For the criminal element, these shops will be easy meat. The mountains of cash and coin will demand special facilities and extra staff, frequent visits by expensive security companies collecting the loot and providing the small change needed for all the tills. Let’s not forget the higher insurance premiums!.
I think the wise retailers, supermarkets and gas stations will avoid the cash like they would, a dose of the flu.
February 7th, 2010 at 10:37 am
The meaning of ’safe’!
http://www.marketwatch.com/story/investing-lies-we-grew-up-on-2010-02-05
February 7th, 2010 at 10:53 am
Hehehe…we are in the news: seems a beaurocrat did something positive…..
http://www.economist.com/world/international/displayStory.cfm?story_id=15469415
February 7th, 2010 at 11:00 am
” Independent Developers ” of ” endless facts ” ………Ummm , is that a geek term for an ” Economist ” ?
February 7th, 2010 at 11:05 am
China is going through similar growths pains to those experienced by Japan. For those in the markets 20-25 years ago the arguments will be familiar…..stonking economic growth, emerging world leader, ridiculously weak currency…so on and so forth.
Then Japan put on the biggest bubble of all time…….rushing to buy any assets they could get there hands on….paying prices that even now would make ones eyes water; the currency strengthened hugely “Endaka” and the US regularly beat them up over the currency causing it to hit 79.60 against the $ in 1995.
Japan has been in hospice care for the last 20 years with a falling labour force and a stagnant economy. Life goes on though.
The question is whether China will experience the same kind of bubble, a super bubble given its size. Will they buy foreign assets with the same voracity as the Japanese….will they allow their currency to strengthen?
We don’t know yet. But something’s gotta give at some point…..a new Plaza/Louvre accord may well be the final outcome.
February 7th, 2010 at 11:31 am
From raf at 11:05 “The question is whether China will experience the same kind of bubble, a super bubble given its size. Will they buy foreign assets with the same voracity as the Japanese….will they allow their currency to strengthen?
We don’t know yet. But something’s gotta give at some point…..a new Plaza/Louvre accord may well be the final outcome.”
That certainly is the most pertinent question at the moment.
Link to the Plaza Accord. http://cambridgeforecast.wordpress.com/2008/03/30/plaza-accord-louvre-accord/
February 7th, 2010 at 12:48 pm
The war of words between Bollard and Key is heating up it would seem!!
http://tvnz.co.nz/business-news/bollard-we-can-t-compete-aust-3349822
My read on Bollard’s comments…he has had a guts full of the fluff and spin spewing from the Beehive. Time for some truth medicine.
I also think the exodus of young and skilled kiwi to aus is an absolute certainty now and the impact that will have on property is going to be like smacking your thumb with a hammer.
February 7th, 2010 at 6:30 pm
I think Bollard is correct in that we should just stop trying to compete with Australia. They have scale through a larger and highly concentrated population as well as the oft mentioned mineral wealth.
They are also strategically more important in the new global economy. So why should we bother? Quite frankly the obsession with “catching up with Australia” is embarrassing. The have serious climatic issues coming down the pipeline as well as severe water scarcity. New Zealand is endowed with a temperate climate and plenty of water.
NZ should just stick to its knitting and focus on doing it well.
As for Bollard complaining about property speculation, he should take a closer look at the way the RBNZ regulates the money supply in NZ. Simply they got it wrong by focusing on inflation and ignoring money supply growth (essentially credit growth) over the last 15 years.
Still 1 out of 2 ain’t bad
February 7th, 2010 at 6:56 pm
Bzzzt. They got if wrong by focusing on the false measure of inflation known as CPI, and ignored the real measure of inflation, Money (and credit) Supply Growth
Neoclassical blinkers meant that asset prices could sky rocket but were ignored
February 7th, 2010 at 7:06 pm
Bollard interviewed on TVNZ – Bollard looks like he will postpone any OCR rise:
http://tvnz.co.nz/business-news/bollard-we-can-t-compete-australia-3349822/video
February 7th, 2010 at 7:08 pm
Bollard says housing is looking spongy. Tax system advantages for property is negative for the economy says Bollard. Unusual household balance sheets in his opinion.
February 7th, 2010 at 7:47 pm
raf–no water worries here at present in brissie
http://www.brisbanetimes.com.au/queensland/teen-dies-in-floodwaters-torrential-rain-lashes-seq-20100207-nkcb.html
i spent last w/end in nz –drove from chch to southern n/otago–all the rivers were
dry except for the rangitata?[low] + the waitaki which was high from dam release,s
but all the dairy cockies were irrgating the full length of the hi way—they are pulling this water out of the ground—this has to be creating ecioligical problems surely
anyone got any water volume figure.s
February 7th, 2010 at 9:24 pm
One thing NZ has a bucket load of and in the VERY near future will be worth more than anything else is:
W A T E R
There is a catch though and it’s this, WE need it also. So the best thing to do is market our ‘wetness’ (which is a great local commodity) to bring the worlds ‘food’ production here. We have yet to really tap into it. A vast amount of new crops are growing well here now and THIS is what we should focus on. Being the best food produces in the world (best, not biggest) is key. The economies of the future MUST focus on ‘need’ commodities instead of ‘wants’. The ‘wants’ are worthless
February 7th, 2010 at 9:26 pm
As for J Key and his speech, watch for the gobbilty goop and weakness in it. It will be a ‘nothing to see here’ affair i suspect.
February 7th, 2010 at 10:09 pm
justice—there,s a bit of drama around the corner for the seed cropping cockie,s
bit of an oversupply going on worldwide
http://www.maf.govt.nz/mafnet/rural-nz/statistics-and-forecasts/sonzaf/2009/09-arable.pdf
February 8th, 2010 at 9:16 am
Bollard and Key at logger heads????
Media BS
So Bollard sees us not getting there , but going on the coat tails of Aussie
Key says “close the gap”…well the coat tails does that….and so does a lot of other things
“Close the gap” means the gap gets smaller.