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PM Key tells US audience rising NZ$ will dampen economic growth if it can't be brought under control

PM Key tells US audience rising NZ$ will dampen economic growth if it can't be brought under control

Prime Minister John Key says the rising New Zealand dollar will dampen economic growth if the currency cannot be brought under control, Reuters reports.

Answering questions following a speech to the US Chamber of Commerce, Key acknowledged the high NZ dollar, which hit 86.4 US cents overnight, was hurting the economic recovery.

"There's no getting away from the fact [that the current high exchange rate] is very difficult for our non-commodity-linked exporters," Reuters reported Key saying.

"We haven't seen these levels since the 70s ... and it is going to dampen our economic growth if we can't get it under control," Key said.

Key told Chamber members the US Federal Reserve's quantitative easing policies had the effect of devaluing the US dollar, which was pushing New Zealand's currency up.

"That obviously has concerns from an exchange rate point of view from our perspective," Key said.

However US policy makers had to make their own judgements about what was best for the US economy, Reuters reported him saying.

Key was later quoted by Radio NZ as saying there were benefits to a high currency.

"Obviously it has some benefits in terms of imported components," he says. "It takes some pressure off clearly - oil prices and the likes - but we are seeing in areas like tourism, export education and some of our other areas where there's no commodity link a tremendous challenge. And we havn't seen these levels since the 70s."

(Updated with comments quoted via Radio NZ)

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103 Comments

not exactly breaking news, this.

Perhaps he is telling Bolly to not raise interest rates.

Funny as a fart...... coming from a currency trader!

A gambler Wolly, a currency gambler.

If I remember well the first one to feel comfortable with the high NZD was the very same  John Key but now he seems to have changed his mind... he must have closed his longs.   

But yet he refuses to entertain the thought of using any other means of containing inflation to compliment interest rates, like capital controls or a capital gains tax.

He's obviously not serious about controlling the high dollar then is he.

Just the usual saying one thing to look like you are addressing it, while doing absolutely nothing about it.

Clearly.... Key is calling for the exchange rate to be manipulated to bail out non commodity based exporters.

Did you get the message Alan?......keep that ocr near zirp for longer boy....the stone cutter's puppet has spoken to you.

Gives you confidence in the game doesn't it...not!

Yeah you got it, it's all the US's fault, and Bollards, nothing to do with Key at all, even though he's prime minister and is there for the very reason of setting NZ's economic policies. 

He's just absolving himself of all responsibility of it.

You're in charge Key, obviously just interest rates isn't enough to contain inflation without the high dollar you don't seem to want.

So you need implement some other polices to help, now just stop whining about it and go and do it.

Ok smarty pants, what policies?  Not that Key will do any policies mind you.  The second he does we wont get any traction with other nations on removing theirs...devil and the deep blue sea.

Basically IT IS a US problem.....on so many levels...

Inflation, this is in some prodcuts/produce only and its CPI and not core inflation....

regards

"What policies?" he's already had a raft of ideas laid out to him by numerous working groups, but he's not interested in any of them apparently.

He's supposedly financially savy so should already have a few ideas himself.

He's the one not happy using interest rates to control inflation, so he should be the one coming up with alternatives, he can't just allow inflation to run out of control.

John just wants to be popular though that's the problem.

It's not core inflation? so why did the inflation results come out at almost 6%?

Whether it's caused by the US and other countries or not is irrelevant.

The US and rest of the world won't change for us, so we need to change our polices to fit the rest of the world.

Financial Transaction Tax - clip the ticket on the currency traders, surely!

"Key told Chamber members the US Federal Reserve's quantitative easing policies had the effect of devaluing the US dollar, which was pushing New Zealand's currency up".

And having listened to John Key, the Fed decided against the QE - just to help NZ's economic recovery :-)

John Key needs to use his often spoken of, but seldom used, Toolkit on the currency.  Some blunt instruments or a hammer .  

At least he is experesing his concerns to a lobby that is influential .

I dont expect the Americans will take much notice , but it does mean JK knows its an issue affecting us.

 

Honestly I think the US only cares about itself and to my mind its proven that time and time again.  So unless there is an advantage for a big enough lobby group(s) that outweighs other lobby group(s) in supporting us, he's wasting his time.....

Hence I'd just walk away, yes asia is our future. Asia has $, a growing middle class wanting our quality products, and shorter shipping distances.  The US only has no raw materials left, huge and escalating debt, and a destroyed middle class too stupid to see why its happened and wont do anything about it.....time to move on.

regards

What Key fails to say is that a higher Kiwi means lower fuel costs...not that we will see freight rates drop any time soon...but ma and pa might get to drive further on a dollar.

Anyone out there able to point to falling food prices...which is what should be happening with the Kiwi going higher....no!.......gosh I wonder why.

Could it be that the beast has escaped Bollard's dungeon on the Terrace... and is free to do terrible damage throughout the economy.....I wanna pay rise....NOW

"I hear ya, Wolly! Look. I can give you and your three mates a 10% pay rise, but then will have to let one of you go. So you decide who stays, and who the one finishing up this eveing is, and let me know" The Beast ...is higher unemployment.

Sure Wolly how does a 30 hour week instead of 40 sound?, say 9 til 3? so you get 10% and I get 10%, sound fair?  or maybe you can try welfare....

Have you considered the short term effect of cliamte events this year / AGW on food prices?  wheat up because of Russian heat waves for instance?  dont worry thats a 1 in 1000 year event, cant happen again in your lifetime, can it?

Public sector pay rises will be interesting to watch...here we see private businesses struggling so diddly pay increases, sympathy for Firemen? for 8.x%? not from me thats for sure. 

I wonder how Labour would cope with this.....run a tight fiscal ship? yeah right.....Have Labour come out in support of the Firemen?  or do we have silence....?

regards

 

Public sector wage rates.  For me in the public sector  over the last three years my real wage increase has been -1.9%, +1.5%, -3.9%.  I think that is fairly typical of us in the lower ranks.  (And no free tickets to rugby or ballet either).

So I am looking forward to the 4%+ real wage increases JK said are going to happen while he is PM.

FYI,

Firefighters aren't asking for 8.9% like the commision says.

They are asking for 3.75 for the next 6 months and 5% for the following 6 months

The past 9 years (including the years of great economic development) pay rises to the firefighters have been between 1.7% and 2.5%. Often 2% below inflation this is about the same across the board, teachers, nurses, police. So far this means our entire publice sector have been taking pay cuts next to inflation

... Welcome to the reality train John, better late than never...

 Election dilemma

 There are several bloggers here, who are capable of reading the world’s economy future better then our PM tells the NZpublic - why ???????????

no no no no,  they THINK they are capable of reading the world’s economy future better than our PM.  

Or they are just Labour party members... or worst Greens Party members

LOL....soon it will be obvious that the Labour way or the National way are history....then where do we go?   We have to get to husbanding our non-renewable resources and living within the energy NZ has/produces each year....OK so that's Green I guess....

;]

So since im a Green party member that means Im in charge in here!

:D

regards

 

OMG what are you doing here.. should be out there hugging trees, and smoke some serious stuffs!

For some reasons, I have the image of Greens Party & Labour is like minime and Dr Evil

 

Trees, Im making a new kitchen out of bamboo...see Im eco friendly!  Im just waiting for some smart alec to say those need hugging as well....

:/

Smoking, na, asthmatic, I'd just puke...and thats CO2 emissions and smog, cant have that can we...

;]

Dr Evil, well I could be lumbered with worse...say Libertarianism...

regards

oh well, fair enough. 

But in my own country, the pandas are running out of food because some entrepreneurs are harvesting all the bamboos to satisfy the demand for "eco friendly" furnitures (i.e. for the Greenies). 

On the other side, we have the libertarians, who preferred real woods and destroying the rain forests and the monkies.. 

So take your pick!

Interesting on the bamboo, Ive/ We've spec'd plantation bamboo and in fact I think some of the traders selling it Ive written to are a bit "vague" on the source its just listed as "re-usable" and "eco-friendly" I will keep a close eye on that.   Our choice says  in writing they use sustainable plantation bamboo, and I think its  $9~15 more a sq metre than the non-specified one.  In fact everyone ive talked to who are using bamboo are doing the same as us, or rather we are following them, ie plantation.  So usually "Greenies" as you call them want to know end to end about the product.  So the Q is, is it greenies or vendors/manufacturers taking advantage?  the latter I suspect...be interesting to find out....

"Real woods" Not sure I'd blame Libertarians as such, I seem to recall the/a west coast mayor jumping about like a loon over loss of work and "we" should be allowed to chop down what "we" want (what happens to his community anyway when its gone of course is another matter, just a can kicker really).   Hence why I use pine and bamboo these days, I wont support such trade knowingly. NB Recycled rimu if I can get it, Ok....but its usually way over-priced for my pocket so bamboo it is, which actually I really like anyway, and no borer.

regards

 

You have to watch that bamboo stuff delaminates a bit.

I'm libertarian, at the moment I have installed a bench top that came out of a friends kitchen. I like the ides of a rata bench top milled from some of the old dead trees in the bush behind me, with a butlers sink sunken in to it.

I hear that red coloured eucaliptus from northland works well, seen it on a floor looks orsome.

 

Ive used it in the States, its actually Bam-glue, so not so enviro-friendly. The flooring marks easily and was a problem ( no shoes inside). Not saying its all the same just my experience.

ENVIROMENTALISM REFUTED - some weekend reading for you Elley and others tired of PDK and Stevens theories...         http://mises.org/daily/661

Thanks I enjoy joke books....and that site contains some of the best...

NB Not really my theories for sure environmental theories of others that I subscribe to because of data, reserach and logic.....

Unlike the above site, which is the rant of a raving fundie loon.

regards

the truth hurts ,eh ?

lol, that mises site has no truth on it......

regards

I love this bit on the AGW nonsense ! -But while the intellectuals have turned against reason, science, and technology, they continue to support socialism and, of course, to oppose capitalism. They now do so in the form of environmentalism. It should be realized that environmentalism’s goal of global limits on carbon dioxide and other chemical emissions, as called for in the Kyoto treaty, easily lends itself to the establishment of world-wide central planning with respect to a wide variety of essential means of production. Indeed, an explicit bridge between socialism and environmentalism is supplied by one of the most prominent theorists of the environmental movement, Barry Commoner, who was also the Green Party’s first candidate for President of the United States.

GoNZ - I have a habit - as others here will tell you - of 'calling' folk when they get to spewing horseshit like the above.

Spin - which is what you exude - is lies. Porkies. Sure, it is done on behalf of one section of society which seeks to better itself in relative terms.  We understand that.

But some of us look for the truth of every matter, and have the ability to do so dispassionately.

Let me make it quite clear - it doen't matter what political persuasion you come from, or how rich you are, if you are diagnosed with a terminal illness, you die. The same goes for the ecosystems of the planet.

This is a case of physics, chemistry, biology and pure math.

You, on the other hand, seem to be waffling on in the manner of a mean Baptist hysteric doing a bit of ritual devil-denigration.

Answer me one question - How many doubling-times do you think we have left, planetarily?

You won't answer. Believers never do, and their disciples alway put their mortgages ahead of anything resembling integrity.

Yawn. PDK, NZ's great Luddite of the 21st Century.

PDK. Write out 100 times; "Technological Progress is Exponential"; there's a good boy. Stop trolling and hijacking sensible economics and financial blogs.

Sigh.. Philbest. Write out 100 times; "The planet is not infinite"; there's a good boy. Get an understanding of physics and chemistry.

"Technological Progress is Exponential"  proof?

Besides which there is some interesting research that says that complexity and technoloogy are functions of population size and the ability to specialise which of course are both linked to energy.  Since we have reached the limits of energy production we have reached the limits of population and technlogy....really we are in over-shoot...So the Q is then where we will be with 2 billion ppl.....

regards

You guys are such non-intellectual, non-rational time wasters.

in the year 1700, you would have been saying that all human progress was coming to a stop as the world ran out of firewood, and city streets filled up with horse shit. I am not joking, read "From Horse Power to Horsepower" by Eric Morris.

If the Luddites back then had had their way, horses might have been banned (they were in some cities at some times in history) and it would have been a question whether humanity would have accumulated enough capital to progress to the next stage of development.

Matt Ridley, in "The Rational Optimist" quite rightly says that the one thing we need to be pessimistic about today, is political self-fulfilling prophecies where anti progress idiots like you people, shut down progress and humanity will never know what the next stage of progress might have been.

The parts of the world that DO remain free of this nonsense, will bury the rest of the world in progress and wealth and wellbeing over the next few decades. I am picking Texas will be the new redoubt of western civilization.

 

LOL, coming from someone who knows diddly about engineering, and it seems science...or if you do it seems its blocked by your libertarina blinkers, if there is anyone in the room who is a non-intelectual, it is you, reason and philbest is an oxymoron it seems.

We have moved on a long way since the 1700s....in some ways, in others it seems some are like lemmings....and it didnt end well for them.

Texas, you miss Peak oil, taxes it seems is more dependant on that than most other states, the only redoubt is for the denialists, the rets will have moved on.

regards

 

 

Philbest - is church out? Or did they pull the rubble off you?

I watched closely, but it seems that all your faith-based schisms suffered equally - Anglicans alle same Pentecostals.

How long did it take for those glacial valley to form again? 4000 years? 5? Where do the dinosaurs fit into that picture?

Y'all come back when you've gotten some facts under y'belt, y'hear?

Actually, you could try the Marx Brothers - they managed to mangle 'Dallas, Texas' into 'Dollars, Taxes'. You might become a little disillusioned, though - they look like serious scholars in comparison to the gospel according to Simon.

I don't think there is much denying that over the last 200 years humans, have contributed too climate change through burning carbon.

But there is no doubt a global carbon tax system is the first step in the elites plan to enslave everyone and should be resisted at all costs.

So from your fundie libertarian point fo view, anyone with an IQ of over 100 (obviously not you eh?) has "sold out" and lost reason....so you know how incredible that sounds?  Basically you are saying anyone who can research, read, and think / deduce from doing so, has become a "socialist" .....

Basically by your reasoning that means 1000 libertarians in NZ of IQ <100 who dont research, read  or think are right v 4miilion with an IQ > 100 who, because they are "socialists" are wrong....lets forget Maths, Geology, Physics, engineering....my little red book is what counts...

So you know what that smacks of? book burning....imprisionment and torture of intelectuals....who was best at that? other extremists, Mao, Stalin, Hitler etc....interesting that, all extremism comes back to total control freaks....why? because to enforce the libertarian system you want on others you will have to stop the other 99.9% of NZ organising as they want and have done...our society is what you see and is what we want.

"lends itself to the establishment of world-wide central planning with respect to a wide variety of essential means of production". Indeed, WW2 was such a undertaking, and to survive Peak Oil will be such another undertaking but bigger.....of course we have left it at least 10, probably 20 years to late.....so in effect the laisezz faire have won (hey celebrate while you can)....their inheritance? a wasteland....congratulations...

NB read up on a book / works called the "long emergency".....sit back and realize that our future consists of one long civil emergency as the Govn declares it Nation wide in order to stop society collasping...enjoy petrol and food rationing....etc

regards

 

What a filthy perversion of the truth, Steven.

What Libertarian, Ayn Rand or whoever, has EVER been remotely associated with violence in the pursuit of their aims?

The violent coercive State is on YOUR side. The shutting down of progress, the Ludditism, the kids taken off parents, the kids indoctrinated at State schools, kids dobbing their parents in, the political correctness, the cultural relativism, the shutting down of free speech, etc etc.

"Climate Science" - BAH, spit, chunder.

There is simply NEVER going to be a "Libertarian" "1984" or "Brave New World". There would certainly be a new political hell on earth if the deep Green ideological trajectory is not HALTED NOW.

How's that Green party mandated regulation shower head working out for ya, Steven? You guys going to mount a pogrom to stamp out all non-regulation shower heads in all New Zealand homes. You going to send around the shower head police to every New Zealand house and into every New Zealand bathroom just to make sure that no one is cheating the system? Going to ask the neighbours, teachers, friends, children to dob in the dirty cheaters? And when you find those who are not compliant with the glorious new path of Green environmentalism, what are you going to do? Drag people off to re-education camps? Screen how to shower TV programs on national TV, just to make sure that everybody is doing the same thing.

You have no idea of how clueless you are.

DavidB - are you the Nat Party propagandist?

Propaganda and lies differ only in degree.

I'd rather be me than you, given that fact.

Answer me this, my little goebbels - is economic (or any) growth sustainable indefinitely?

If you answer yes, I'll comfortably call you a purveyor of false assumptions (whether you do it knowingly or not is up for debate).

If you answer no, I'll agree with you.

Then I'll ask you whether it's better to hit that vertical-trending graph at full-noise, or throttled back.

There are decent New Zealanders out there who deserve to be told the truth, particularly as it will inpact their children, and their, and theirs.

Oh, and some of us will write the histories (we'll make sure of it). Wonder what your offspring will make of your attitude? They will wonder what you thought you would stand to gain. Hope their mum did the right thing and that their genes aren't a clone of yours.

 

I'll answer you, you barking half-wit. Sigmoidal. Now go figure it out.

No, I think you have no idea how desperate and clueless you / libertarians sound....

Re showerheads, it scomes down to 2 choices, start to save energy now. have Govn/Leadership in setting policy and goals to achieve that over a time period to reduce or eliminate pain, or ignore this until such time as the cost of energy is so crippling you find you dont have the money to do the energy savings thing you wish you had done when you had the chance.

Now scale this up to the National economy and the global economy....it is already probably to late since it seems many dont understand or wnat to the expotential function of our present growth and its implications on a finite planet....so there is going to be a lot of financial pain and draconian measures by Govn(s) to deal with keeping society together while GDP and the economy shrinks and with mass un-employment.... 

Maybe you should go back to what happened during WW2, because this is the scale of the problem and look at such how "free" ppl were in that period....look long and hard because this is what the next 20 to 30 years will look like in terms of your freedom....

regards

It's now difficult to work out what this comment is replying to, but whatever it is replying to - it is still an utterly weird critique of libertarianism.  

You can criticise libetarianism on the grounds that it allows other people to do what you do not want them to do, or that it fails to force them to do what you want them to do. 

But you cannot possibly criticise it on the grounds that it forces people to do what they do not want to do, or that it prevents people from doing what they want to do. 

Any system which "enforces a system on others" and prevents the majority - or even a minority - from acting as they want, is by definition not a libertarian system.

 

Do you read that sort of twaddle? You need to get out more. In fact you would have to be brain dead to make it too the end without falling asleep.

It is so full of fallacious statements that you can't take it seriously surely?

For instance the one you use above. "But while the intellectuals have turned against reason, science, and technology, they continue to support socialism and, of course, to oppose capitalism"

If you want to be taken seriously you need to come better equipped than that, if that is possible.

Mate, you are the most ignorant time waster on this site.

If any site in the world could be said to have published more accurate predictions of the GFC than any other, it would be "Mises.Co"; and by a wide margin, probably orders of magnitude.

Uh no, credible warners, Steve Keen...

Mate, no....I dont have any mates who are fundie extremists.

regards

Steve Keen's predictions were nowhere NEAR as good as those of "Austrian" economists. In a just world, Austrian economists would now have all the top, policy formation jobs.

Your ignorance is not the standard. In fact, the arrogance is proportional to the ignorance.

Check out Fred Foldvary, Gary North, Frank Shostak, Christopher Mayer, Ron Paul, Mark Thornton, Stefan Karlsson, Bruce Bartlett, and of course Peter Schiff. These are just the "Austrians" who wrote the EARLIEST warnings of the GFC.

FRED FOLDVARY's "The Business Cycle: A Georgist-Austrian Synthesis.” was published in an academic journal in October 1997. This might seem far too early, but the detail of the predictions is amazingly close to the chronology of the bubble which began 2 years later.

Foldvary said that expansions in money and credit fuel malinvestments in higher-order capital goods and speculative cycles in real estate and land. He takes land values and real-estate trends to be particularly telling indicators of unsustainable booms and impending busts. He applies the ideas to the historical studies of U.S. cycles, building on the idea of real-estate cycles by Homer Hoyt (1933).
From Foldvary's final paragraph:

"The 18-year cycle in the US and similar cycles in other countries gives
the Geo-Austrian cycle theory predictive power: the next major bust, 18
years after the 1990 downturn, will be around 2008, if there is no major
interruption such as a global war. The Geo-Austrian synthesis provides
a research agenda that can test historical cases in more detail. Much
work needs to be done on empirical studies linking the money supply,
real estate markets, and business cycle......"

So, Steven, smart ass, now YOU bring on your favourite intellectuals who predicted the GFC.

Put it away, PB.

The world doesn't revolve around, nor does it in anyway care, about your precious median multiples and your dreams of endless ticky-tacky.

It's a physical planet, spherical and finite.

There is no benign deity, batting on the side of any brown-tongued congregation.

We are a species which grew to the physical-impact point where we have to control what we do, or suffer. Not surprisingly, from a mathematical point of view, that point coincides with having exhausted roughly half the reasonably-available resources, buried at a time when we couldn't have existed.

But of course, you deny that such a time existed.

Makes it hard to take anything else you pour out with any cred.

 

 

Now there's one of the best examples of somebody teaching the thing they most need to learn that I've read in a real long time.

The world, and this site, doesn't revolve around you either, PDK.

Why don't you take a break for a few days? The tone of your posts lately suggest to me that you're feeling under some strain of some sort, and need a bit of a rest.

Labour dips below 30% in opinion poll  - yeah I think the strains showing,David B !   Looks like PDK & Co  will need quite an extended break , Id suggest Gathering at Takaka -plenty of caves and nature stuff there,Kumbaya,pot and the lot

LOL.....imagination working overtime DB?  The world revolves around energy and specifically fossil fuel transport energy....no ifs no buts. 

This paradgym shift is singly the biggest challenge out today....HughP's and PhilB's fixation with land values is frankly a bad extremist joke....its the equiv of fiddling while Rome burns.  It will at best make no difference to the outcome of this shift and in fact could very probably make it worse.  All so some ppl can make more money...and/or be more free...while others pay for it.

In the mean time we see voodoo economics, dodgy pseudo-science, economic mumbo-jumbo, lies and mis-directions from the right / libertarinas determined that we will not start to change because that threatens their "way of life" or  "liberty and freedom"  bearing in mind that this means in NZ of all of about 1000 ppl .....v 4million.

regards

 

I already did, Steven Keen for one....

 

regards

Don't forget to push those girlie magazines aside and have look for reds under the bed tonight boys!

Does it count if I get my wife to dress up in red leather incl hi heel boots and then go looking?

;]

regards

In GREEN leather - not red!...  see you guys are a LABOUR minime after all!

but im giving the "reds" one....

;]

 

regards

CMoa - I was at a University lecture while you were writing that drivel.

It was entitled 'Energy and Debt - There Is a Connection'.

One of us was attempting to become more informed - and it wasn't you.

Jk didnt undestand why we were not growing at 6% because the low OCR and stimulus should have provided that, even I, goddam it could have told him that.....so whats changed for him since then?  he's still a neo-classical economics acolyte, which is clearly failed us....ditto treasury, ditto bank economists....ditto many economists.....

Im getting the feeling from listening to stuff like this that he publically at least isnt prepared to stand up and say we have to do something else, but then no one is, not Labour, not any other country....He is however coming out with lines like Asia is our future, so maybe behind closed doors he's moved on.....admitting the US is no longer of any importance of course would draw great ire from them.....

regards

Wasn't the floating exchange rate, according to the Neo Classical theory, supposed to correct currency anomallies like this. The countries with significant current account deficits would automatically see their currencies fall and visa versa. We've been in the red on the current account since 1973 some years nudging an eye watering 9%GDP. Australia has a significant current account deficit yet they're well past parity with the $US.

Clearly the whole concept is flawed and look at our trading partners? Let's see UK, Japan, Euro (ECB) and the US (with China pegged to the $US) all printing money - these are our major trading partners and we're getting screwed. Should we be firing up the printing press as well?

I think the floating does a good job myself, and fixing it I think is way worse just look at the EU....Correcting it via indirect means seems a better policy/method.  I dont think we can compare with OZ, their mining boom is un-precidented...where would they be without it?

"Printing presses as well" definately  not, we dont have huge un-employment and a catatonic economy threathening to go into a Depression.......keeping our printing presses is whats saving our bond rate, if we print foreign investors will want far higher margins to compensate them.....bad idea.

Why did we have such a deficit? how about because we sold our assets and borrowed heavily for housing? if we had done neither we wouldnt be bleeding $s abroad and we wont be in huge danger of a bubble implosion. How about successive Govns did nothing to correct this?

regards

 "if we print foreign investors will want far higher margins to compensate them"

well that certainly doesn't appear to be the case  -- US 10 year at 3%, Japan just over 1% and the UK with a massive current account deficit, a money printing central bank and the highest combined private and government debt in the Western world is at 3.75% - 2% less than we're paying Go figure. In any case if the RB was taking the $300m/week of Government debt onto it's books it would stop a big chunk of the inflows that are driving up the currency. It's a war out there and no amount of half arse grovelling by John Key is going to make our competitors alter course

. "Why did we have such a deficit?"

40 years now coming up - excess consumption over production - simple as that and it's largely down to the abysmal performance of our larger cities (I'm looking at you Auckland). Massive levels of consumption, the highest wages in the country and a mere trickle of exports. We are now 90% urbanised and our Government is fully captured by the urban vote so don't expect any meaningful re-alignment of our economy towards poductive industry, saving and individual self reliance until the whole thing blows itself up. Exactly what led to the fall of Rome. 

 

Well the US has a floating rate..also they have the status of the world's reserve currency so they are different....throw in they are seen as a safe haven for cash....and have a massive economy and I cant see what we are trying to compare here?

Combined debt, I think OZ, the USA and NZ are pretty close..

RB and 300mil a week, I think that was or has peaked for a while, its back to under 100mill now?  I think the idea was to get it here before the EU blew up and we found we couldnt get any more for a bit.

Fall of Rome, uh you have read recent papers on this?  I have been and certainly its an interesting example of the fall of a society and not like us....Some good examples are the Great Depressiona nd Long Depression.....

regards

 

Thanks for the comment Steven.

Total UK debt, private and public, stood at 540% of GDP (2010). US: 370% 

http://inaudit.com/reports/uks-total-debt-to-hit-10-trillion-by-2015-pwc-1999/

Re Rome; the similarity I see was the taxing to death of the productive (farmers, artisans etc.) to support a swelling, non productive city -

" Roman politicians devised a plan in 140 B.C. to win the votes of the poor: giving out cheap food and entertainment, "bread and circuses", would be the most effective way to rise to power"...........

 

 "the Roman practice of providing free wheat to Roman citizens as well as costly circus games and other forms of entertainment as a means of gaining political power through populism. The Annona (grain dole) was begun under the instigation of the popularis politician Gaius Sempronius Gracchus in 123 BC"

http://en.wikipedia.org/wiki/Bread_and_circuses

The Q is why did they have to tax?

regards

"Why did we have such a deficit?"

 

Because we live in a debt based monetary system.  Its a mathematical certainty a collapse will occur.

but we dont have to have a deficit.....in the good days we runa  surplus so in the bad we dont have to cut so badly and cab spend the stored surplus....FFS is squirrels can see thsi sense why cant we? If we are certain the business cycle has to have booms and busts we dont we allow for that? its moronic frankly that we dont....

regards

KD - the theory was established when real trade flows were not dwarfed by speculative money flows. However, something has changed .... while the theory has not and is now no more than an article of faith, like so much in the Neo.Con doctrine. Yet people still believe the associated principle of efficient resource allocation. Even if they don't they still sit on their hands doing sfa of practical significance about it; perhaps maybe a speech and whine or two to those manipulating their currency.

But we are trying to stop inflation, so why would we ever be considering printing money? that will cause massive inflation, exactly the opposite of what we need to achieve.

The US has had deflation so that's one of the reasons why they've printed money, but we have inflation, so printing money is an even worse idea than it is in the US.

Thanks for the reply Philthy. I don't see how borrowing made up money from the RB or borrowing made up money from an overseas bank would be any differant in their inflationary effects. The money enters the NZ economy in the same way and in the same quantity.

Once the economy begins to expand the government would reduce the debt from tax money. The RB's balance sheet would shrink back and the "money" cease to exist. That phase is deflationary. It's not like just printing up $100 bills and spraying them around the economy.

Well its seems while you dont see a difference, there is in actual fact a difference in the real world....but its a good Q that needs answering because I'd like to see the answer, and you are not the first with that Q, and I hate having Qs there isnt an asnwer for.

 

regards

But you forget KiwiDave that this government especially, and probably any others, is way too gutless to take that extra money out the economy again in the form of taxation, you know it's never going to happen
Because everybody would complain like mad if they did.

Letting inflation run out of control is not an option.

philthy,

Money doesn't get "taken out" of the economy through taxation, unless its used to retire debt without new borrowing occuring. Its just spent in different ways. 

I don't know why people are so suprised that we have "high" inflation rates, which are actually negligible by recent historical standards. Its inevitable that we have these inflation rates, when those sectors of the economy which are key drivers of it are those that are the least subject to competitive pressures, eg Council rates, imported fuel, housing supply. Money supply isn't the cause of inflation, just the most noticeable symptom. Its just the natural outcome of mature economies experiencing capacity constraints or consumers being subject to uncompetitive or controlled markets. 

'Money supply isn't the cause of inflation' 

Inflation is the natural outcome of fiat money, gold has not inflated in the thousands of years it has been used as money, nor silver or barter. 

Skudiv,

Rubbish. The last bout of high inflation predated fiat currency by a wide margin. I suggest you throw out your textbooks on so-called "honest money". 

"Alongside growth however came a problem not seen since the time of Alexander the Great. From 1520 to 1640 a great inflation swept the continent, the result of population change, money supply and war – three forces that would drive waves of price fluctuations over the next 500 years.Somewhat confusingly, historical accounts suggest a constant shortage of money, prompting ‘long and persistent complaints’ from the population. The stock of money in England between 1526 and 1561 was reportedly unchanged at around £1.45m, and rising prices were probably caused by increase in ‘velocity’, or turnover, which spiked in the years following 1520."

http://www.bgtrustonline.com/articles/history/the-story-of-inflation.aspx

Oh puleeze, can we stop him:

"Key told Chamber members the US Federal Reserve's quantitative easing policies had the effect of devaluing the US dollar, which was pushing New Zealand's currency up."

Because of course they didn't know this... So now they'll be on the blower to their hedgie mates with this hot tip and before you know it they'll want to buy lot's of milk powder, because of course that is what drives NZD up - falling milk prices, eh Bernard:

'Reserve Bank currency claims no longer wash'

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10739906

"The currency strength is as much about our foreign borrowing (mostly by the government), the reinsurance inflows and the US dollar money printing in both America and China.

Key can't blame either commodity prices or a weak US economy any more. Our currency is near record highs against most currencies and is strengthening against the Australian dollar.

In my view Bollard and Key are comfortable letting the the currency rise to do their own dirty work. Key likes a strong currency because it is good in the short term for consumers by keeping petrol prices, import prices and overseas holiday prices down.

It helps him get elected on November 26.

Bollard likes a strong currency because it helps him control inflation in the short term without having to increase the Official Cash Rate. It means he can delay a rate hike until December 8. Key likes that too because any rate hike would be after the election."

(Some of the commentators there could do with reading the RBNZ paper by Cassino and Wallis, which I've referred to here many times. Sure, NZD is heavily traded, as some commenters observe, but why - read that RBNZ paper. Could it be changed, yep, ditch the vanilla approach to mon.pol - see what Bernard says. Bernard is so wise - but don't expect too many reports of progress on macroprudential work until after the election as well.)

It's great that JK is so caring, swoon. [ and yawn, again.]

Cheers, Les.

www.nzmea.org.nz

There never was a recovery, just an election in November.

Bollard is caught between a rock and a hard place. Raise rates, and the NZD rises, hurting exporters. Lower rates, or keep them on hold, and inflation ticks up, which means higher food and energy costs for the "average Joe on the street". So what is the lesser of two evils?

I can see that NZ's commodity prices are near record highs, and so are NZ's debt levels, the average person in NZ is heavily in debt. So it seems obvious that rates will stay low for as long as possible, a bit of inflation can't hurt while we have high debt levels as it erodes the real value of the debt.

If anything - I'd argue for a rate decrease. If inflation ticks up people will spend less, the whole supply and demand thing, but this will help exporters and really get the economy going gangbusters. Eventually this will spill over into wage inflation, which helps people pay their mortgages or credit cards down! I don't see a downside - every other developed nation is holding rates low for this very reason, so why shouldn't we?

If only Don Brash was still Governor, see slide 13:

 http://www.nzmea.org.nz/documents/734-presentation_by_dr_don_brash_t.pdf

Which implies?

However, Bernard nails it here:

'PM who favours elderly and people like Wolly a signal for young to flee' '

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10737444

"Key is not governing for the nation but in the interests of property owners and the elderly who created our crushing debt load.' 

.... and hence also the contentment with an overvalued dollar.

Cheers, Les. 

www.nzmea.org.nz

Actually Les you old socialist, Key is just being pragmatic. Already the talk about town is that goofy is gone. How's that for a voter reply Les!

And what is wrong with young Kiwi hoofing it off overseas to sell their skills....why should they stay. Or is that the new Les Rudd doctrine for a better future....lock the young buggers in!

Wolly - I don't give a fig who goes what or where, so long as the policies that Labour are now promoting that will support the real economy and rebalance the whole, stay on. I can't see em' pulling them now, too much credibility loss, so they have to fight and sell on, and at some point win. 

Do you think that if Labour won, implement a CGT, lose next election to Nats, that Nats would repeal it? Not likely, Bill E and folk like him also know it's the right thing to do.

Nowt wrong wiv' da' yoof hoofing it, so long as they come back because NZ at last generated high-value businesses and jobs - so they can pay taxes to keep people like you in the style to which you have unfortunately become accustomed.

Cheers, Les.

Isn't it  more likely that the CGT idea will die ('yep...tried it in 2011, didn't work').

I find it a really odd thing to be campaigning on. If it is a necessary part of tax strategy, then implement it properly - regardless of Party. Not 'grand vision' stuff is it (though I've yet to see anything even  vaguely convincing re SOE power generation sell-off either - maybe its the trade-off for a Nats/Greens coalition (tongue firmly in cheek))

 

Totally agree, Bollard has no where to go IMHO....Raising rates also causes other problems. Unlike other inflation genies there is no corresponding wage increases (yet) so money is being taken out via fuel and food instead of via mortgages....what is the difference? I cant see any myself. These two items are doing what a higher OCR would do to my mind, quiet an economy which isnt booming.... The danger then is higher OCR will send us into another recession which will cause disinflation, then deflation and then a depression....

The banks seem keen to raise rates, maybe they hope to get ppl to fix? dunno....so far they have been saying it for 3 years and nothing has happened.....so raising now? what has changed? we are still in a bad way and i think in-arguably a worse position than 3 years ago....

I think there are a few things that are possible, a tobin tax for one to reduce volitility....otherwise we need to reduce the value of our currency somehow against the US and printing is dangerous....

Get the economy going gangbusters, personally I think the risks right now are too high to try that and I dont think lowering the OCR matters much....the high exchange rate is over-welming...

Fonterra has announced its dropping prices 15% odd here....just to do that arbitarily is frankly the signs of a state sanctioned monopoly, that needs fixing......

regards

 

Bit against the grain, my view is I dislike all of John Keys decisions except the work he has done on foreign diplomacy and trade negotiation.  

He seems to be comfortable in talks with Asia, Europe and America without being to bias toward each.  And so far is the first prime minister I can remember that seems to be able bring everyone to the table without only being onside with half of them. 

Don't get me wrong, most of it is he is a bit of a slippery eel that fits right in with the dodgy dealings, back handed diplomacy and greasing the corporate wheel, fits in perfectly.  

Funniest of which is standing on a soap box in front of the yanks and criticizing their federal money printing, hoping to come off as a hero on election year.

But hey, he has been out there giving it a go, and seemingly making some progress.

His free trade stuff has me the most worried personally.

"There's no getting away from the fact [that the current high exchange rate] is very difficult for our non-commodity-linked exporters," Reuters reported Key saying.

Nice spin JK. The high exchange rate is not good for commodity exporters either (although it would be fair to say at least they are buffeted a bit by high commodity prices, although they have been falling away haven't they?)

Have updated with this quote from Key in Q&A via Radio NZ. Currency rise not all a bad thing, he says.

"Obviously it has some benefits in terms of imported components," he says. "It takes some pressure off clearly - oil prices and the likes - but we are seeing in areas like tourism, export education and some of our other areas where there's no commodity link a tremendous challenge. And we havn't seen these levels since the 70s."

of course there is some truth to what JK is saying, but how much consolation is slightly lower petrol costs when they are still far higher than they were a year or so ago? Then....couple that with the high dollar

not pretty 

does anyone have any data on fall off in export education?

Presumably fewer international students coming here will be reflected in the migration stats

I would be worried if I was in the tourism sector. Sure the Chinese are still coming here, but they stay for short periods and typically spend in chinese restaurants and tourist shops

The tourists we really need - the Euro long stay tourists - they are coming less and less with their weaker economies and the currency (and ChCh) 

Im not aware of any fall in students...I will try and find out...many come here for 5 years so the drop off has a long term effect....but should be slow...

Tourists, many from the UK and the exchange rate is awful but they often stay with family and simply dont spend much....plus the UK is in an awful way....plus tourism jobs are poorly paid.....so for me tourism isnt what we need.....if there is Govn action make it agressivly helping software startups, design, green technology, all these will be in short supply I think and should pay well.  Hence when labour says it will stimulate a bit it gets the thunmbs up from me IF and its a bid IF (actually HUGE given they are morons) its into new industry like the above....and not supporting old stuff...like trains....

regards

 

I used to quite like JK. Now I'm starting to think he's an ineffectual, spinning dork.

So he thinks commodity exporters are not challenged by the currency?

Well, how about this from the Herald:

 Federated Farmers president Bruce Wills said the combined impact of softening commodity prices and a rising kiwi was a concern for agricultural exporters.

Personally I think he's now lying through his eye teeth about growth etc "next year" if we trust him....LOL....but this is a confidence game, I have to give him that.....I also think he's a bright cookie, no one worth 50mill by his own efforts is stupid IMHO....but what exactly can he do? I would assume he's still closely linked to finance, which is probably telling him he has tight boundaries on where he can move without impacting the borrowing costs... Then he has to realise with a housing economy that IS the economy that if he pricks the bubble and it bursts as opposed to deflate it, its going to wreck us....we'd be the next Ireland....

Take a look at Greece and now Italy, the rates can rise in a matter of months, once its starts it cant be stopped I suspect, despite what ppl want that has to be a priority IMHO....continue with the confidence game....

So is he the best person for PM right now? Im having a hard time saying no....can Goff do as well? If LAbour wins can Goff contain the fast amjority of his party? I mean Goff is a right winger inside the Labour party so he's on soft ground....the demands and expectations from the unions and poorly paid will be blistering IMHO....can he conatin them? He has to to keep the confidence game up....

I really dislike his want to sell the SOEs, its plain nuts IMHO....if he drops it then frankly I think I may have to go back to voting National (I always did before switching to Green's)  its still the lesser of two evils....but Labour dont have what it takes....

regards

Stephen 

Following up on some comments you made elsewhere about abmboo as a construction material.  

Are you only talking about bamboo flooring? or interior lining? or furniture/cabinets?

If more than flooring what is there available -- sheets of bamboo wood say 1.2m x 2.4m x about 20mm thick?

Does bamboo flooring have to be laid on top of chip board or similar? 

Any web pages you can refer me too?

Thanks

 

http://www.wovenbamboo.co.nz/  Pahiatua - seemed like good folk. (No association, have talked to them).

Thanks

There are no sheets like that!!! I wish!!!

Im looking at clicklock bamboo flooring that I want to glue and/or mechanically join together to make panels and doors that I can then use to make a kitchen etc....lots of adverts on trademe.....$50 to $90 a sq metre.

http://www.trademe.co.nz/Building-renovation/Carpet-tiles-flooring/Floor...

From what I can read I think Im going to have to screw it together which is fine for the style I want anyway and attach it to a chassis of wide framing.  It seems its hard to glue, 2 pack epoxy might be Ok....but I think its going to need mechanical help from reading the woodwork forums to guarantee stability.  Samples seem very machinable in a router table and table saw, and Ive had no problems drilling and plunge routing it. Glue is another matter, PVA is useless....

So for a say 400mm wide door 4 x 135mm 720mm long pieces for the doors, cut to length and width and 2 pack with a z frame backing, screw through the backing into the panels....I'll use 25mm stainless steel screws on a 28mm total thickness...

Im also considering paneling room walls...cant see why it wont work as long as its stable, so 18mm ply as the backing onto the 2x4 or 4x4 frame....then the flooring onto that....

Im going to make 2 bedside units and see how it goes....if it doesnt Im a few hundred $ down...

regards

 

self-deleted this.... unhappy 'advertising' further. 

Amazing how Key´s statement to the obvious has sparked such a large number of comments. We have to be running out of news... bring the RWC on sooooooon.