sign up log in
Want to go ad-free? Find out how, here.

Air cargo growth fades; Canada building permits fall; China hits more US goods with tariffs; most emerging markets struggling; UST 10yr at 2.97%; oil drops, gold rises; NZ$1 = 67.6 USc; TWI-5 = 71.1

Air cargo growth fades; Canada building permits fall; China hits more US goods with tariffs; most emerging markets struggling; UST 10yr at 2.97%; oil drops, gold rises; NZ$1 = 67.6 USc; TWI-5 = 71.1

Here's our summary of key events overnight that affect New Zealand, with news trade trends are changing but not always in the way you might expect.

Firstly, growth seems to be fading in the aircargo markets. The uptrend is now modest and the June slowing may have got a help from a strike in Japan, but all the same the slowing was happening anyway. Weakest growth is in the Asia/Pacific region; strongest growth is in North America. But things are not so slow in the ship markets; the Baltic Dry Index is now at a four year high. This index is now six times higher than when it hit its record low in February 2016.

In Canada, the value of building permits unexpectedly dropped by -2.3% in June from May on weakness in the residential sector, especially for multi-family dwelling blocks.

As promised, China has moved forward to impose tariffs of 25% on US$16 bln worth of additional American imports from fuel and steel products to cars and medical equipment, all in response to the American escalation.

Meanwhile China's trade surplus shrank in July from June as it bought more from the rest of the world, but China's exports surged more than expected despite those new American tariffs. Its closely watched surplus with the United States dropped somewhat from its record high.

And here is a rundown of what is happening in some key emerging markets that are the most vulnerable to the trade wars. Russia is watching its currency sharply depreciate and inflation rise. Turkey is facing similar stress. Indonesia is rising, posting its best growth figures in more than ten years. Argentina is in the grip of strikes and its currency is tanking. But a bumper wheat crop may save them if they can get it to market.

In Australia, they are moving to complete a new free trade agreement with India, one that may set standards for us. Fonterra is also leading us into more trade with India.

The UST 10yr yield is unchanged at 2.97%. Their 2-10 curve has slipped to +29 bps. The Chinese 10yr is at 3.53% (up +3 bps) while the New Zealand equivalent is now just over 2.78%, up +1 bp.

Gold is up +US$4 in New York and now a just on US$1,213/oz.

US oil prices have slumped today, down more than -US$2/bbl and are now under US$67/bbl. The Brent benchmark is now just over US$72/bbl. The slide comes as US petrol stocks rose far more than expected, and international trading relationships seem to moving into a time of turmoil.

The Kiwi dollar is starting today firmer at 67.6 USc. On the cross rates we are little changed at 90.8 AUc, and at 58.2 euro cents. That puts the TWI-5 at 71.1.

Bitcoin is now at US$6,252 and sharply lower by almost -12% from this time yesterday. Confidence is still leaking after the US SEC again delayed issuing its bitcoin EFT decision. We track this rate daily in the interactive chart below.

This chart is animated here. For previous users, the animation process has been updated and works better now.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Daily exchange rates

Select chart tabs

Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
End of day UTC
Source: CoinDesk

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

85 Comments

Govt implements stricter rules on work visas for graduating international students
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12103471
So it takes a Labour Govt to have the courage to address this issue.
National would have pushed hard to add another additional 20,000 international students giving them 3 year work visas.

Up
0

Interesting changes (and good IMO)
- leading towards higher qualification
- not reducing the number of students studying and being able to subsequently apply for residency
- favouring the rest of NZ over Auckland (or penalising Auckland), that's an interesting one...

Up
0

Yes I commented on this earlier. National’s acquiesce in this immigration rort was a national scandal. That national supporters went along with the perpetuation of this scam just shows how one eyed and self interested some of them are.

Up
0

It was another sign of our success and a good problem to have no doubt.

Up
0

The opposition stands by its commitment towards "export" education. The Nat leadership and its claims on this topic are contradictory.
On the one hand, they claim that international students come to NZ for high-quality education and we allow them to stay back so as to use their skills for the benefit of NZ.
On the other, they believe if we restrict post-study working rights on the basis of the skill shortages and qualification levels, about 44,000 fewer foreigners will turn up to NZ for study.

Which one is it?
Funny how the Nat party lacks initiative on such crucial issues but their supporters bend over backwards to defend their indecisiveness.

Up
0

National just sees the $$$. Yes it’s a major earner, but if you asked the electorate if outsourcing immigration policy to the foreign student education sector was ok the electorate would say “no thanks”. The use of post study residency rights to direct money into the pockets of that sector just stank. The “education” providers trousered the profits, while everyone else (ratepayers, taxpayers and the low skilled existing workforce) had to pick up the costs. It was far and away the most dishonest and disgraceful policy of the last government.

Up
0

It's an odd one, eh. With Michael Reddell's recent analysis highlighting the high infra cost of running overly high immigration, it's effectively creating a near future cost for the taxpayer in order to enjoy a sugar rush in the meantime that's primarily going to Pretend Tertiary Education (PTE) sector companies.

Severe case of short-termism.

Up
0

When the Receivers stepped into the collapse of Ebert Construction it was found there were 95 employees of which 60 were migrants. The conclusion from that is all the skilled migrants on cheap wages enabling the construction comany to tender low-ball bids to win business doesn't work. The "we can't get skilled labour" mantra is a self-fulfilling path to bankruptcy. The constructors who survive probably survived with local talent.

The 60 "migrants" didn't save them. Wonder what will happen to the migrants now?

Up
0

Stricter rules on student visas is bound to loosen the rental markets further! This is excellent news.

Up
0

I think they had to dilute the initial proposal.. which was to take out the 1year work-permit for lower courses. Probably pressure from a billion dollars industry lobby..

Up
0

Interesting changes (and good IMO)
- leading towards higher qualification
- not reducing the number of students studying and being able to subsequently apply for residency
- favouring the rest of NZ over Auckland (or penalising Auckland), that's an interesting one...

Up
0

Yes, the direction is good. I was surprised on the Auckland one as well - but I do think Auckland needs a break. It's full - as a commentator here (Chris_J was his username, I think) used to say. He was a really, really interesting contributor, an experienced and entreprenurial property investor/developer from Christchurch. One with common sense, practical experience and morals/ethics.

Up
0

Baffled it took a year to get this policy change but they had so many lesser achievements to boast about in their first 100 days.
The increase in work rights after study from 2 to 3 years is likely to see an increase in immigrants eventually qualifying for permanent residency but they ought to be a higher standard.
A step towards tackling worker exploitation but not sufficient to eliminate it. A stain on NZ's reputation.

Up
0

Chinese stock market cap has lost 23% since Jan peak to 47.14 trillion yuan, equivalent to about $6.89 trillion, less than seven Apple
Lacalle

Up
0

Chinese elite are starting to get very uncomfortable with Emperor Xi's policy of poking the bear with commercial and militarily expansionist policy and increasing repression at home. They were regarded neutrally and with some hope that they were 'westernising' 10 years ago, now almost everyone in the world sees them as a dark totalitarian force rising.

Up
0

And now we've gone into bed with them for almost 25% of our exports. Superb work from Uncle John who was also there with a grin when Fonterra and Theo signed up to lose Fonterra shareholders half a billion dollars in a partnership on baby products. Hope they both had some really nice meals out with their hosts!

Up
0

Xi Jinping poking the bear? The Pooh Bear?

Up
0

the trade war is interesting in who needs who the most, At the moment china has the backing of the EU but for how long, also how many will soon move to producing in another low cost country to get around the duty

Up
0

Could be worth a look at India as a place to invest then?

Up
0

Rates in China have collapsed over the past few days. There can be no doubt as to a shift in perception if not policy. Rather than higher rates, the Chinese central bank has been fighting against them for a long time (“dollars” on the asset side of the central bank balance sheet). Going back to October, they’ve become only more aggressive through time
The Chinese economy is in trouble and officials know it. How do we know they know? We’ve seen this thing before. More than that, it’s when it last occurred that we should take note. The similarities are beyond remarkable.

http://www.alhambrapartners.com/2018/08/08/very-loud-globally-synchroni…

Up
0

I am not sure this analysis is correct. People (especially wishful Americans) saying the Chinese economy is about to collapse have been around for a very long time now. Breathless gloomsterism never seems to fade in the US.

But specifically, we have been tracking China bond rates daily since the start of 2017 and even today's small decline doesn't put their rates in any place that is remarkable. They are still right in the middle of their long term range. What is moving however are US rates; they have been moving much more than Chinese rates, especially their 2 year which seems to be on an upward ride. If you have a US perspective, perhaps you see the Chinese changes through that prism.

And the same with the exchange rate. Yes, the yuan is weakening against the USD and that may get up the noses of Americans. But the yuan is actually not moving much against anyone else. Check the yuan:NZD as an example. What is actually moving is the USD. But Americans rarely acknowledge that.

I am actually not disagreeing that China has issues, but I doubt they are the ones some American analysts think they are, especially doomster analysts.

Up
0

Hey David, any thoughts on the yield curve inversion in Canada (swap rat at 23bp) - seems to be more severe than on US bonds.

Up
0

You sure its actually inverted? I only follow Canadian Govt bond rates. Today the 2 year is 2.124%, their five year is 2.269% and their ten year is 2.360%. That is still a positive curve with the 2-10 at +23.6 bps.

Yes, that is less than the US's +29.3 bps today. and both are shrinking.

Maybe Canada will invert before the US, and that will be a bad signal (whomever inverts). Certainly bond investors are pushing shorter rates up faster than longer ones which is why there is an invesion watch in place. But the Canadian moves have gathered pace in the past week (2yr rising while 10 yr stable) while the US spread has stabilised in the same period. 

The culture/trade spat with Saudi while relatively minor won't helf the Canadians (even if I agree with them on the specific issue).

Up
0

The fact remains David that no one has any real idea how the Chinese economy is doing. All their figures are fabricated by bureaucrats and central planners. To just assume China is going to be the next global super power because the communist party claims another year of 8.888% growth rate is just as wishful a thought as predicting a collapse.

Up
0

On August 9, 2007, the eurodollar system cracked. Over the eleven years since that day, the crack has only become enlarged. No amount of QE nor the bank reserves those produced has been able to patch the system back up into functioning condition. The thing lingers on, limping forward through small ups and more serious downturns. One step forward, two steps back for the global economy. The stress that creates has over the past few years really started to show.
http://www.alhambrapartners.com/2018/08/08/august-9-2018-debut-of-eurod…

Up
0

The world doesn't have enough Soy for China without the USA, eventually China has to start buying US soy.

Up
0

Over the 10 years since Q2 2008, consumer debt has surged 48%. Over the same period, the consumer price index has increased 15.1%, and the economy has grown 17.8%.
https://wolfstreet.com/2018/08/08/the-state-of-the-american-debt-slaves…

Up
0

errr, no. You are mixing 'real' changes with nominal changes, common error. The proper comparative with the nominal consumer debt rise is the nominal US GDP growth over the same period and that is +37.8%. (On that basis the CPI change is a red herring.)

It is not nothing and will get reversed in the next downturn like it did in the last one. But that means that consumer debt has been growing faster than economic growth by less than +1% per year. Maybe that can be accounted for with the rise in investment values? or pay? or a host of other things. Whatever, its marginal and not unusual in a expansion period. As I say, it will reverse in the next downturn. Doomsters think it will the the "mother-or all ..." but history shows it will just be a normal correction (but maybe deeper to correct for the Trump excesses - self imposed).

Up
0

Thanks David

Up
0

David please don't fall into the 'label-then-denigrate' trap. Doomsters - and optimism re business surveys - are totally misplaced in what is a factual problem.

The physical planet cannot support unlimited growth, and beyond the top of the Gaussian curve, physical growth cannae' be had. We are at - and in some ways well past - the top of the Gaussian. We have clearly avoided counting the real planet in GDP - Climate Change, ultimate depletion and oceanic plastic soups don't show up, which is why we haven't adequately addressed them. Tells us that GDP is an inadequate measure in human-survival terms.

But every dollar spun into existence, is an expectation that something will be done in the future. More dollars spun, more expected done. The currently-held combined expectation - from mortgages to pension funds to share 'investments' - is not underwriteable in any meaningful manner (meaning, without Zimbabwe/Weimar Germany-type inflation).

So I posit that the next one will be the last. I suggest that the building stress is why Trump chose to be there, why he was voted-for, and why he is making moves that show what some of us already figured - that globalism and global trade growth have peaked. Had to happen, and some of us did done tell....

Up
0

PDK. The "next one" will be the last what? Are you of the view the human species will become extinct?

It's the part of the ultimate carrying capacity/environmental limits worldview/narrative that proponents of this narrative as an "undeniable truth" never get around to explaining satisfactorily, to my mind.

If this "next one" is it - i.e., the end game of the human species, why should civil society bother doing anything positive to arrest ecosystem decline?

This "next one will be the last" is purported to be the position of some/many evangelicals;

https://www.newsweek.com/trump-will-bring-about-end-worldevangelicals-e…

So where you are relying on the laws of physics as your "undeniable truth", they are relying on the laws of Christianty as set out in the Bible. Both such "undeniable truths" are to my mind hubris.

Up
0

Every prior rev-up has subsided - many did so pretty suddenly.

But imagine a mass understanding that money is no longer underwritten. No trust, no trade. How long does NZ, or you individually, last in that scenario?

The last time Europeans lived within their solar-derived (and therefore sustainable) local limits was prior to 1492, and they were in draw-down mode then.

We will reduce to sustainable numbers - mother nature will do that if we don't - but the longer you push into overshoot territory, the lower the oscillatory bounce. I see 1 billion by 2021 - maybe 3 billion in slum conditions and maybe none, but probably somewhere in between.

You seem to be falling into what I chided David about - guilt by association leading to avoidance. I regard 'believers' in anything as dangerous to society - to the point that I'd like to see 'journalists' declaring their affiliations to religion. Just remember the Titanic Times .....

I've not come across someone who called the laws of physics 'hubris'. I'll try not braking next time and see where it goes...... . :)

Up
0

pdk - hubris in the sense that the laws of physics as understood today is an "undeniable truth" - so it is the "undeniable truth" claim that is the hubris, not the body of knowledge that is physics. It like every other body of knowledge is evolving; and I think most theoretical physicists would agree with me.

Take Brian Greene, for example;

https://www.wired.co.uk/article/best-ted-talks-science-lectures

Up
0

PS so the "next one won't be the last", so to speak. That was my point.

Up
0

It has been explained, if you cannot fathom the math and science, Ok, but it has been logically and openly explained.

The math if nothing else is really simple, you cannot have exponential growth on a finite planet. This was explained by a Math's professor some decades ago.

Bible v laws of the universe are not comparable. Which makes you really an even bigger denier than the fundie christians, at least they have something to cling to no matter how thin the veneer.

Up
0

But does our species/our world end without exponential growth - that's my point/question.

Point is, steven, what makes you so sure the "fundie christians" are wrong? Are you somehow "all knowing"?

I'm so far from being a "denier" (denier of what, I'm not so sure... but you seem to be!!!!) - it's just comical.

Up
0

The next one will be the 2nd great depression, after which we had a somewhat authoritarian outcome but this time we wont have the energy and economy to do anything about it. Trump in this respect when he sides with Russia its totally correct ie the 2 biggest energy producers on the same page means no meaningful opposition to them taking anything they want by any method they choose.

The only possible opposition of size and outlook is the EU and they are energy vulnerable. Trump's attacks on the EU and NATO then make perfect sense in the context of my first paragraph.

Up
0

See how improved your points become when you stop talking in platitudes. That was an interesting proposition - grounded in rational thought processes - absent the moral judgement component. Well done.

Up
0

Kate - if i turn up and offer you 1 M grains of sand for your house would you accept?
How about 1 M dollar notes?

The difference is only your faith (and someone elses willingness to accept) that the notes have value and will hold some value for trade in the future. All supply chains rely on this faith (and the faith that value growth or PROFIT is possible).

Meanwhile Central Banks are furiously bucketing sand into the system so that the growth faith holds... for now.
If the future is smaller, then it makes sense to hold onto resources rather than trade them for depreciating tokens. Zero interest rates really means the tokens are FREE.
The next crash will have everyone question the value of all tokens.

(as an aside, Trump didnt cause this - no matter the squeaking from the media...)

If this "next one" is it - i.e., the end game of the human species, why should civil society bother doing anything positive to arrest ecosystem decline?""

Answer. We (collectively) arent. Protecting ecosystems is the exact opposite to exploitation/economic growth .... so ultimately is doomed to fall over. Its the environment OR the economy.

The real Hubris is thinking you dont need 2000 calories a day to live.

Up
0

"We (collectively) aren't" at least seems to be a concession by you that there are some initiatives out there working to halt and reverse ecosystem decline.

I've long argued that governments the world over should be scenario planning and managing a country's economic affairs based on scarcity. It seems these days this is a bit of an emerging trend, referred to as 'building resilience'. I think we'd have been better being upfront and sticking with the word scarcity.

This Government's move toward a wellbeing budget is a good initiative, - any alternate to GDP has to be worthwhile.

As for money/debt/means of exchange, I doubt the current system as we know it will be in place forever. Capitalism is a young concept in historical terms. And yes, central banks the world over seem void of new ideas.

Did I ever say that I needed less calories? These attempts to 'snipe' at others degrade the discussion. I'm not an enemy, I'm a grandmother.

Up
0

The hubris around calories and ecological protection are absolutely linked .. townies especially dont realise this.

"We (collectively) aren't" at least seems to be a concession by you that there are some initiatives out there working to halt and reverse ecosystem decline"

Yes - the point is, they only work in (deluded...) isolation ... as long as someone somewhere is increasing their exploitation to offset this tradeoff - thats what economic growth mandates.

Up
0

The physical planet cannot support unlimited growth, and beyond the top of the Gaussian curve, physical growth cannae' be had. We are at - and in some ways well past - the top of the Gaussian.

I don't think you know what a Gaussian curve represents...
To say we are "at the top" or "beyond the top" of the Gaussian curve doesn't make any sense. No sense at all intuitively or mathematically.

I suppose your approach is good in arguments...If not even you know what you are saying, how can anyone argue against you.

Up
0

In rough terms, graphing the exponentially-increasing extraction (economists call it 'production' - go figure!) of a finite resource, will initially resemble the left-hand side of a gaussian curve. As the ability to extract falls away - as it inevitably must in the real world - there becomes a divergence between the ever-more=vertical J-curve desired, and the levelling-off of real availability (per time). Left to it's own devices, the whole go-to-depletion process would resemble the standard Paddington-Bear hat profile. Hubbert noted that decades ago.

The problem? - if you attempt to force the growth vertically, something has to fill expanding the gap to the gaussian line, and that is inevitably the stuff which would have been extracted at the right-hand end - the last stuff. Too obvious.

So the drop-off to depletion gets ever-steeper due to your attempt to force the rate of extraction. Seneca worked it out, a wee while back...... I suggest we're slightly past top-dead-centre, we've attempted to fill in the widening gap in the graphs, and we're heading for the qualitative dregs. Seneca event, here we come.

The above will not be altered by messenger-denigration, denial, claims of superior education, condescension (eh, Kate?) avoidance, or most commonly, counting the wrong things. The only things which can help are energy of high EROEI, and/or efficiencies (but they can never be enough - your word for them is 'productivity gains'.

The Titanic sank because it filled with water - onboard were business-brains galore. Physic beat them. Never forget it.

Up
0

Okay. That makes a little bit more sense. But not much.
You are still conflating different things.
I assume you are trying to say the distribution of extractable resource normalised by extraction difficulty follows a standard normal distribution?
That is a stretch to argue though.
Perhaps log normal would make sense.

Either way you are using the term incorrectly for what you appear to be saying. You are just talking about standard resource extraction paths where the total resource is represented as a convex function. No one is contesting that given a finite integral value, the function form must change in order to satisfy given differential or limit constraints.
However, the function doesn't have to change to alter extraction rate - this is why economists don't consider it in the simplistic case (as you do), by adding in pesky microeconomic principles such as optimal temporal extraction based on marginal costs and expected depreciation rates.
You complain about people shooting the messenger, but have you actually had the foresight to consider that the reason those economists explain things differently is because they actually have a much better understanding of it than you do or would like to admit?

The crux is don't describe it as Gaussian, because that is not what it is. The Gaussian function has a very specific purpose describing ergodic processes. It does not apply to what you are trying to say.

Up
0

Did you hear of the economist who dove into his swimming pool and broke his neck? He forgot to seasonally adjust.

Up
0

Did you hear of the bloggers who thought they knew more than the economists? - I'd be very surprised if not, because they tell everyone.

Up
0

Here's such a blogger:

http://www.hubbertpeak.com/bartlett/

Enjoy the listed links, Nymad. :)

Whaddy'a know - a Physics Prof. Now we're just down to a question of who's right. I back physics - having investigated the difference for a decade, I can say with confidence that any discipline which forgets what the real basis of things is - is going to be wrong. Statistically, can't be any other way.

Up
0

I don't need those links to know that a Hubbert curve is not a Gaussian curve.

Ironically you shouldn't say Statistically, can't be any other way. if you confuse the two.

Up
0

lumber -3.52, when will the suffering end?

https://finviz.com/futures_charts.ashx?t=LB&p=d1

Up
0

If you abuse your markets, they will stop buying and the price will fall. Hardly rocket science. Others will step in. And one winner is New Zealand. Our prices (see Export A) for sales in international markets (India, China, etc) are holding up much, much better than those US prices you linked to.

Up
0

Those log prices are already out of date. The market has moved and there is some pain out there.

Up
0

Look at the long term picture. Even though there has been ~1/3 decline in prices from the peak, the prices are still well above the 10 year average. Rather than the shorter-term "D" graph, click on the "W" chart. The price has retraced all of the way back to the prices of a year ago, which was a 1/3 higher price than just a couple of years prior to that. Short term decline from an artificially high value.

Up
0

For consider the fruits of free trade policy during the last 25 years.

The frozen wages of the US workers, $12 trillion in US trade deficits,55,000 factories lost, 6 million manufacturing jobs gone, China surpassing the US in manufacturing, all causing a backlash that pushed a political novice into the presidency.
To maintain a belief in the superiority of free trade to economic patriotism, in the face of such results is to recognise that this belief system is impervious to contradictory proof.

Patrick Buchanan Aug 2018

Up
0

There are other views. After all, that is Patrick Buchanan, always a very partisan observer (remember Crossfire ?). You can explain this also (as I have done before) through a prisim of underfunded and partisan public education failures which built the hollowed-out labour knowledge base unsuitable for modern manufacturing - especially high tech manufacturing. Cheap labour was never the issue; knowledge is. US manufacturing will return only to the extent workers with new skills are available. Education failed the 9 mln men of working age not in the workforce anymore, not "China". And that education failure is rooted in partisan politics at a local level.

Up
0

And an interesting counter-point!

Up
0

Cheap labor is very much an issue, especially when the work shifts to a country that is unencumbered by the additional costs of complying with environmental laws for some of the potentially polluting industries. There are many jobs in the US that have had rather severe wage reductions due to offshoring of work, as well as the usage of H1B visas to bring in much cheaper somewhat indentured labor. If it was the quality of available workers that was at issue, then the wages for the capable workers would have skyrocketed. This hasn't been the case.

BTW, I very much agree with your assessment of Buchanon.

There has been a polarization in education,as well as partisan shifts. Urban and higher level education has seriously shifted left, and rural education (and flyover country) has seriously shifted right. I'm very much less than pleased with either choice. The sad incursion of religious aspects into education has been a fact in the US for many decades. A couple of decades ago, there was a Gallup poll in the US that showed almost half of the population believed that the world was created ~6k years ago. The challenges of separation of church and state in the US have been an issue for a very long time. Some people have never accepted the result of the Skopes trial...

Up
0

Hi David

History tells us that no hegemonic power has grown great without access to an abundance of cheap labour All the way back to Rome. Be they slaves or brainwashed disciples of a regime the advantage of 'cheap labour and lots of it' have always created power shifts when the ruling (educated) elite have had the opportunity to harness their toil. It's why we are now seeing the decline of the West.. Our choices? To import cheap labour and try and compete (except our populations don't really like that idea) or getting very good at creating new markets. (which we've not been very good at thus far). Hence cheap labour will win out every time and we've masked its effects thus far by kidding ourselves that our assets make us rich whilst we borrow against them.

I would argue the contrary position cheap labour is and has always been the issue and always provided comparative advantage to those that can access it all the way back to 2000 years before Adam Smith.

Up
0

9 mln men of working age not in the workforce anymore

That's not cheap labour, that's no labour.

Up
0

And Beveridge economics has done nothing to assist the competitive abilities of much of the West as it has artificially sucked resources from the private sector (and that's not that I don't agree with the principles that brought those policies into force).

ps. You're involvement in the comments section this morning has made the 9.00am update a wonderful read. Thankyou

Up
0

Your analysis is in line with Marxian political economy. I wish we had more economists in NZ using this form of economic analysis.

Up
0

actually you need to take it back to basics, its cheap energy really.

Up
0

Excellent rebuttal.

Up
0

Hi David, factory jobs generally have not required much in the way of education, and a barely high school education is often or even more than sufficient as all training is given by the factory. So my question is is the loss of those factories and jobs because of education or economics? I challenge you put aside any prejudice against the messenger and consider the facts presented and the possible causes?

There may be a flow on of course for "high tech" industries, but at the base level those factories will have filled a vital base for an economy, and even people with a minimal education can come to learn of their own capability in such an environment and go on to further their education.

Up
0

... I can't imagine a factory full of our currently unemployed soldering motherboards for 10 hours a day no matter how much training they got. No criticism of them.....but a westerner just won't do this work.

Up
0

Rubbish - a westerner (or whomever) will do any/all kinds of work - provided that work is undertaken within an environment of mutual respect between persons within that work community and provided the fruits of their labour produce, for them, a living wage.

Up
0

.....nope. people of the West no longer have the mindset to do such work. They expect much more from a job. You can promise them all the respect i the world (whatever you mean by that in a practical sense).

The term working wage has no meaning ... so I'm sure where you are going with that. In fact such work is so monotonous, the only driver is probably desperation. Which does not exist in the West.

Up
0

Desperation does not exist in the West - Yeah, right.

Up
0

You're right. Japan has almost no immigrants, and it's a mess. You can't get a taxi there, because they have no immigrants to drive then. Fruit in orchards remain rotting on the trees, as they have no immigrants to pick them. Their factories are empty, because there are no immigrants to work in them. And forget eating out - the restaurants have no staff, they're just empty, forlorn buildings.

Up
0

Problem is, education has been turned from an investment in the young of the nation (with the expectation of economic returns for the nation) to a for-profit exploitation of young people via massive socialised debt that they cannot discharge (unlike business debt).

Counterproductive to the need to compete, as a nation.

Up
0

Great point.

Up
0

The problem might also be that China had workers unencumbered by debt.

Up
0

Interesting points.

Up
0

An India-Australia trade deal makes sense as India's growing industrial capacity and rising middle class has a growing hunger for base and precious metal ore. Australia needs to desperately reduce its export reliance on China and India seems to be the clear alternative.
Not sure how much a trade deal between India and NZ would benefit either side barring some gains for the Indian dairy sector and Fonterra.

Up
0

India has not shown good signs of being able to fix it's corruption+infrastructure issues, which is admittedly incredibly hard to do, but until they do they cannot rise as a great manufacturing power.

Up
0
Up
0

Thanks Kate

Does highlight the type of people that you are having to deal with and the reasons why oversight is absolutely necessary. Our society has sadly been infiltrated by too many people who have no care for the rules. Are they just selfish? or ignorant? or both?

Up
0

Selfish. Anyone who practices tax minimisation is to my mind selfish - anyone who practices tax avoidance is criminal. It seems to me that if a tax is not so punitive as to put you out of business, or in the case of an individual, out on the streets - then it is morally appropriate to pay it.

Up
0

And as such it would be morally appropriate that taxes are spent wisely :)

Up
0

Agree.

Up
0

Kate, it might surprise us all just how many still think realization of property will always be free of CGT. It's as dumb as a speeder arguing to a cop, there was no sign post.

Up
0

Meh. We give the government so much money, and they spend it so poorly. Taxpayers don't have the same 'consumer choice' that people do when it comes to the private sector.

If our bloated civil servant welfare state showed me some kind of fiscal responsibility, I'd be as aghast as you. But as it stands... I can't bring myself to begin to care.

Up
0

If only I could do this with income tax or GST :(

Up
0

Container trains are now running between China and Europe, targeting Goods that are not urgent, but still go by air because shipping takes too long. I wonder if this is eating into the Asian air cargo growth.

Up
0