Lower is not better if it is volatile says Roger J Kerr. He is worried that currency markets have a habit of overshooting

epends which way our borrowing is going - if we are borrowing offshore, and funding internal projects. it's reduces costs.

then we need to swing balance of trade other way before paying the debt servicing at peak in the other direction. Generally one isn't expected to pay off government debt, only service and refinance it.

-
Was walking through a Mall today. Interesting how feminism has transformed the retail sector. HUGE inventory amount of clothing, accessories (aka j...), cosmetics, some food and coffee, 2 travel places...but I just really amazed at the amount of pure consumables compared to 10 years ago - especially given NZs debt and median earning per person (and this in a provincial center).

The number of retailers doing image and consumables would be a reversal of ratios 10yrs ago : 66:33. _Very_ few stores around town doing items of added value.
Where does the funding for all this consumption come from?

Easy does it. It would be all over by now if the majority of our foreign debt was raised directly in foreign currency. As it happens the banks which finance the C/A deficit on the citizens behalf hedge with currency swaps, while the government raises its publicly traded IOUs in NZDs. The big publicly recorded exposure is foreign investors (supposedly retail ) directly purchasing Eurokiwi, Uridashi and Kauri bonds for yield against say, JPY. - estimated outstanding issuance is currently NZD ~40.697 billion - even here the NZD issuer has swapped the proceeds for USD sub libor financing borrowed by our local banks' foreign subs. Hence the investor bears the currency risk.

depends where they're hedged/pinned to doesn't it.

if they sold at 88, with a contract price in NZD, then currency won't make a difference

It's no longer a "slam dunk".

International energy watchdog IEA said it expected global demand growth to slow next year to 1.2 million barrels per day from 1.4 million this year – far less than needed to balance stubbornly growing non-OPEC and OPEC supply. Read more

The established 12 month Libor uptrend is fading at this juncture. View graph

I am not so sure, watching yellen testify in front of the banking committee I got the impression that the forces to hold until next year are stronger. ie high USD, sluggish retail spending and unemployment

of course wealth ppols at the top, thats how it works.
if it wasn't the mailboy would have a key to the executive bathrooms until it became that way.

that's what socialism actually is. A social response that attempts to use one of the few tools available to redress the failing of that social mechanism. Those whom are at the top are so because they network to each other to build things that way.
How many non-mentored people are at the top?

This is because the social top and the resource are out of practicality the same them (the monkeys with the best bananas and most banana to show get to sit at the popular spot).

Unfortunately this puts those at the top in the dilemma, live it up with trophy wives and pat yourselves on the back how god has recognised your destiny and skill (this goes for the trophy wives too). Or do they find ways to empower the system.
Some use charity - that just enables the system to continue to fail with less visible damage, and feel good on the top.
some hand over responsibility to government, some then make sure government serves their pockets instead. (generally because government are pretty clueless and have the ultimate deep pockets).
some ignore the problem.
IMO, this project can be delegated, can't be "social responsibility'ed", can't left to the market, can't be left to experts who created the mess, nor can be be forced by law (see government just above). As that only transfers the power and the mechanism out of the hands of those with the resources.
It might seem we have no easy answers for this....and you'd be right, this is an area in which none have ever wanted to ask the questions. (far more fun to be rich, or continue to fight to be at top, or to take up draconian law and blame others for the damage)

Aj ...If u have not already seen/read this... I recommend it.
Ray Dalios' view on debt cycles, productivity and deleveraging.
He uses huge amounts of common sense..

His "Map" of the global economic landscape has been really useful for me....
His redefinition of the laws of supply/demand and price elasticity have been an "eye opener " for me...

http://www.economicprinciples.org/

cheers

That is one problem.

Here's the other :
constructive debt theoretically creates increased productivity, which would pay the debt without significant reduction of productive income. And there's not much point increasing productive income if it's net result is to only produce the level of income that the unimproved productivity would have produced.
But interest is paid NOW, it doesn't wait "for _lumps_ in in the future.

And that is what puts up the prices, having to service debt (and pay compliance related costs, increased govenment, tax on new areas, artifically increased wages).

which would reduce peoples ability to buy - as the higher cost would be acceptable to less buyers
which would reduce turnover and reduce GP giving less ability to service debt. creating a naturally limiting credit process.

But our suppliers and customers also take on debt. That allows sales revenue to climb (even if we have to offer them trade debt to get the sales). And our suppliers increase productivity by using debt, the cost of which they must pass to us. suddenly we no longer face our enhanced productivity having to cover our own debt but also that of three parties.
In itself that is a minor problem.
But to pay that principle and especially interest, we must pay taxes - every transation then becomes a lossy process - and the government since it's quiet socialist reform from "public servant" to "uber masters" pays itself higher wages and more leave...all paid for by other peoples' productivity.

Even time debt is create, the principle is capital, which we must pay government minimum 20 -30% of our income to repay.

If we look at the debt isn't repaid in a lump aspect, why do we get that saw tooth collapse/recession?
those who drive the system are great at doing as they're told, getting educationists approval, filling out forms. But lousy at analyzing raw metrics from base movements or facing things that look bad.
Every credit creation is matched by existing productivity OR more credit. The more credit is paid for by more credit (HP sales, credit card sales, business loans to develop), so the credit compounds.
Productivity increases slowly and with natural limits.
Credit compounds as it's FIRE , pure money related. Without careful governors credit can increase indefinitely, - as Greece is proving - as long as no-one is willing to give up their investment to foreclose.
then how can anyone repay credit compounded debt, from productivity, without using more credit? ... while being taxed (and other fees, such as consent fees) to death doing it....

this one gud too https://acrossthestreetnet.wordpress.com/2010/09/24/understanding-the-n…