90 seconds at 9 am with BNZ: Hobbit location in the balance as NZ$ rises; Craig wants NZX alliance to boost volumes; South Africa to weaken rand

The NZ$ always has been the reason for Warners trying to get out.

The union fiasco was always a smokescreen and JK is totally sucked in with a nice easy option to union bash!

Totalitarianism is a term, which has been used in this blog seldom. What I can see is as long as we keep traditional pattern the way we deal/ work in our economic and social environment, the sooner we are experiencing unwanted development towards totalitarianism - where the state or single group of people are taking control.

Interesting - the NZMEA and other organizations in support of free market ideology are opposing strongly any form of authoritarianism, but have a blind eye for fundamental structural changes in economics. Go figure.

As I wrote many times the only way out of this misery and to make progress is to demonstrate unity between the private sector and government. What is happening right now in the world is too big to handle alone for any sector of our economy. Internally our economy needs far more strength.

We cannot and should not compete on wages. Like a few countries in Europe (e.g. Germany/ Switzerland/ Sweden) we should compete on quality. The product makes the wages. There are plenty of opportunities as far as production concern, including for exporters, but only on the basis of a structured economy.

 In the current economic situation productivity preferable manufacturing, building our own infrastructure needs should go hand in hand with science,  eg similar to NZagriculture.

 As a small, but smart nation we do need a NZnational industrial & science park http://www.highbrook.co.nz/default.asp?s1=Business where major NZmanufacturers and NZscience are based and work together. A number of important facilities need to be included such as a distribution & supply centre ( incl. Logistics) for widgets. A centre of advanced technology where talented Kiwis go to engineering collage, research institute and other youngsters have a change to learn skill in trades to become leaders of the future - a future for our economy and for the next generation.

 The administration of a NZ Industrial & Science Park should work regularly with the media. Creating awareness among the public what sustainable production and its positive potential mean for the nation is essential. Such educational developments lead over time to fundamental changes in our political and social environment – a culture change - away from consumption to a rather productive society.

Please, read and understand this article in context with many others I have written here.

Warners has other cost pressures in play with the structure of things I understand...they really need all the cutting of costs they can get...come on NZ tax payer...I sure they also would like to stay in NZ given their  sunk costs todate..... wonder how much politically it is worth to the Government and also the opportunity to change employment law as a spill over benefit...

Purely FYI. I just spoke to Signature Homes Executive Director Gavin Hunt. An emailer asked me if any of the Franchise Homes franchises were having any financial problems because he had heard of one staff member being laid off.

Gavin told me the Karacrombie Enterprises Ltd franchise in Palmerston North had laid off one staff member, but he was confident it would be able to trade its way out from under its debt. A new General Manager had been appointed 18 months ago as part of the turnaround efforts, he said.

"We don't anticipate it to go into liquidation," he said.

Hunt said the new home building industry was the toughest he had seen it since he entered the industry in 1983.

Signature Homes has 16 franchises around the country and builds around 200 homes a year.

August and September had been good months but October was less certain, he said.

cheers

Bernard

An Australian politician "get's it"

http://www.debtdeflation.com/blogs/2010/10/23/seconding-llewellyn-smith…

He must be on to something. 

…Treasurer Wayne Swan confected outrage and labelled Hockey’s musings ”an attack upon the very pillars of our prosperity and therefore an attack on prosperity itself”

But his solution is not necessarily the right one (going by some of the comments on Steve Keen's blog).

And a great graph in here http://www.zerohedge.com/article/project-weimar-why-qe2-could-be-more-i… for Andrew in Finland

Hot off the PEC press.

It’s not the unions. It’s the dollar.

 

In December 2007 when the Hobbit was announced we all celebrated quietly. We assumed it would be business as usual for Peter Jackson and New Zealand. Why wouldn't Warners spend their US dollars here?

 

Perhaps we should have asked: why would they? There are only four reasons for large overseas corporates to invest in New Zealand.

 

1.      Access to raw materials (land, water, minerals, food etc)

2.      Access to low cost labour,

3.      Access to unique intellectual property

4.      Access to our tiny 4 million person market.

 

We can assume Warners weren’t after access to our tiny market nor were they really after access to unique intellectual property. After all, they can get Jackson to work elsewhere and Weta Digital already does work for off-shore projects from its New Zealand base. Of the remaining drivers, access to raw materials -in this case our scenery - is secondary since there are many other scenic places in the world. That leaves access to low labour costs as the big deal maker back in December 2007.

 

At that time the global film industry was in good shape; work was plentiful and people charged accordingly. Even though our dollar was high then, I'm sure the producers factored in a lowering of our dollar over time to get a cost model they were happy with. However since March 2008 the exchange rate has been near one way traffic to over US75 cents.

 

When you are competing on price it’s never in isolation. Others want the business as well. Now the world is a very different place and our dollar is no longer enough to sway the decision as the competition globally for such work has sharpened.

So we now have the negotiations with the government and tax breaks to try and swing the business our way. Why?

 

We have an edge with vertical integration of Peter Jackson, Weta and our scenery, that Warners no doubt find very attractive but ultimately it’s still about cost in USD and that's about our exchange rate.

 

The two parts of the Hobbit are each budgeted at US$250 million, for a total US$500 million cost. However, the fluctuations in our exchange rate means the cost over the last two years to make the movie here has varied by 50 percent and with our no intervention policy and the US printing money (quantitive easing) the producers know it’s likely to go higher still, costing them more money. It’s that potential variation in cost that is the real issue here.

 

So Warners are trying to mitigate the risk of that by off loading responsibility for the exchange rate risk to the government - by seeking additional tax breaks and so would I if I could.

 

What the public needs to understand is that New Zealand is losing this amount of work from our exporters every day while the exchange rate sits at US75 cents compared to it being at say US65 cents. No one other than the exporters being crunched appear to notice or care. Our exporters certainly do not get emergency meetings with the government and talk of changes to legislation and compensation.

 

The irony is that while the Hobbit debacle has gained a level of visibility for a problem that hard working New Zealand exporters have failed to achieve, it is for all the wrong reasons. The media are portraying this as dispute born from the actors’ actions. It’s not. The industrial dispute may have been a catalyst, but the real issue is the dollar. Our dollar.

 

Key will sweeten the pot as this has become a political not economic issue. But given the potential lift in the NZ dollar with no intervention from the Reserve Bank it will need to be a big sweetener.

 

I would not like to be the PM that does that for $500 million in export earnings and not the other $40 billion in exports. If he is prepared to change New Zealand employment Law on the fly to comply with a US corporate’s demands and throw tax payer dollars at an exchange rate issue then the race to the bottom is truly on, with John Key leading the way.

http://www.pec.org.nz/2010/10/it%e2%80%99s-not-the-unions-it%e2%80%99s-the-dollar/

Its all political....

Would Key want to be the man who lost The Hobbit??

Can see the Labour election ads now......

My guess is he will stump up to help keep his job at the next election.

So what are Warners choices? How are they going to get stable prices (in US$)  over several years. well they could make they movie in the US or take out a currency hedge.

I'm sick to bloody death of this bullshit from Warners, they're a worldwide company with revenue streams in all currencies, how is their problem differant from our exporters for example, except, perhaps, they choose to be based in a country with a money printing madman in charge of the central bank.

Julia Gillard must've taken a leaf out of Michael Cullen's NZ Labour Party manual . Else why would she be so stupid to propose stomping over shareholders' rights to earn  a profit , because of " the national good " .

Cullen cost shareholders in Auckland Airport hundreds of millions of profit , in his personal decision that it was a key asset , and therefore couldn't be sold , even a 40 % chunk .

Our less sheepish cousins in Oz may well be more vocal to Gillard's mooted blocking of the ASX-SGX merger . I hope they give her hell .

How the heck can capital markets be expected to work efficiency ,  to produce profits , or  to clear out the dead wood and to punish the miscreants , when politicians keep leaping in to block or to prop up !

Its funny they are concerned about the currency because its their own Government doing it to them, go lobby Congress is my answer.

Also isnt that a red herring anyway? ie unless they do it in the US, then US currency collapse would have a similar effect no matter what currency they buy....all else being equal, like unless they are going to latvia where the local currency might end up being really worthless.

regards

It's such an insult that warner brothers, a mere foreign company, can have such power that  the Prime Minister of NZ  have  to pay homage and negotiate with them.  It's not like they are state dignitaries or head of states.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/808826…

So we seem to swing from one disaster/inflamation point  [back] to another.....

Back to Greece....

Europe's debt woes have returned to the fore after Greek premier George Papandreou threw open the door to fresh elections and vowed to liberate the nation from "slavery and surveillance".

So he might throw the debt off (default), but if the opposition gets in, it might default...anyway....boom go the French and German Banks...unless they can unload that onto the voter of course.....while the resppective govns look on....

"Spreads on 10-year Greek bonds jumped 31 basis points to 9.57pc and the euro tumbled 2 cents to $1.385 against the dollar as investors awoke to the risk of political upheaval in Greece, not helped by warnings from bond giant PIMCO that Athens will default within three years."

A Barclays survey found that 82pc of clients expect the eurozone to face a debt restructuring, a sovereign default or even a full break-up by 2013.

Good news eh Gummy?

Does your money feel safe?

regards

The government had to change that law, it was ridiculously ambiguous, even the court ruling said that.

If you have signed a contract, why is that different from any other contract you signed in your life?

It's not, you're a contractor.



The US dollar is falling against almost all currencies not the the NZ$.