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‘Playing fair’ makes us losers in currency wars

Written By: - Date published: 6:29 am, November 12th, 2010 - 49 comments
Categories: capitalism, Economy, monetary policy, overseas investment - Tags: , ,

The US Government has begun ‘quantative easing’, which is effectively creating new money out of thin air, to inflate away the value of its debt and lower its currency to make its industries more competitive. It’s not the only country playing this ‘beggar thy neighbour’ game. Nearly all the major currencies are engaged in the ‘Currency Wars’ and we’re in the cross-fire doing nothing.

China and Japan have been trying to hold their currencies down for years – it was key to the economic development of them both. Since the global economic crisis began the US and the UK have joined in along with a few other countries. Together these countries, and the 20-odd countries that have their currencies pegged to the US dollar, represent a huge portion of the world economy. With all these currencies being pushed down, the handful of floating currencies that aren’t taking the same measures are finding themselves pushed to catastrophic heights (on a side note, I see the Aussie unemployment rate is rising again, undoubtedly linked to their currency being at parity with the US dollar).

New Zealand, the first and last neoliberal puritian, is one of the few ‘good guys’ leaving it to the market to set our exchange rates with intervention. And we’re getting royally screwed as a result.

Hickey explains the consequences:

A world of a permanently weak US dollar and the refusal of China and its neighbours to let their currencies rise vs the US dollar essentially sentences New Zealand to being a farm and tourist destination, and a foreign owned one at that as foreign investors look to spend their newly minted US dollar on hard assets in stable, food-rich democracies with proper legal systems.

Any manufacturer trying to sell to Asia, America or Europe would have no hope. Any that remain would have to focus on exporting to Australia, assuming of course the Australians leave their hands off and allow their currency to rise even further above US dollar parity than ours.

Some would argue that the world wouldn’t end if New Zealand had no manufacturing base exporting outside of Australia.

However, I think this would be a mistake. Manufacturing implies factories employing lowly paid manual workers, but in a modern sense manufacturing actually refers to higher wage jobs that will keep our youngest and brightest from leaving the country permanently.

The idea that we shouldn’t be a manufacturing country is nuts but it was a cornerstone of the neoliberal revolution. In the age of peak oil, having our own manufacturing base is going to be all the more important.

The Hobbit was a perfect example. Fisher and Paykel Healthcare and the other companies in the TIN 100 technology companies that produce NZ$5 billion in exports annually, just behind Tourism and Dairy as one of our biggest export industries.

These are the jobs and businesses we need. Can we really build incomes and repay our debts with the promise jobs on dairy farms pumping out commodity products or more jobs in cafes and hostels cleaning up after Australian tourists?

So what should we do?

There are plenty of ways New Zealand’s government and its Reserve Bank can try to stop our currency and high wages jobs from being stomped on by the elephants.

It could move much faster to reduce consumption and improve savings, reducing the need to borrow or sell assets in a way that pushes up our currency.

Introducing a capital gains tax or land tax would make a good start. Such a move to improve our national savings rate would also allow lower interest rates, which would encourage investment in exporting businesses.

We should be taxing things that can’t be shifted (like land) and things that are undesirable (speculation, pollution) and taking tax off things that are desirable (work and savings).

The government could impose limited forms of capital controls to discourage big lumps of freshly minted US dollars (or their proxies) from entering the country. Big farm and property sales to foreigners could be banned or limited. Other asset sales to foreign interests could be discouraged or blocked.

Selling your productive base is stupid. Your just giving someone else your profit stream forever in exchange for a bit of cash in hand. It should be a measure of last resort but we’ve been indoctrinated with this belief that foreign investment is vital.

New Zealand’s savings institutions, particularly the ones with government mandates or subsidies (the NZ Super Fund and the KiwiSavers funds), should be encouraged or forced to invest in New Zealand.

I agree. If we want a prosperious economy we can’t keep on borrowing the capital from overseas. We have to save and invest in ourselves.

Foreign investments in New Zealand government or corporate bonds could be taxed.

Government companies could be directed to buy goods and services from New Zealand companies.

It’s insane that SOEs are forced to make decisions purely on their own costs and benefits and ignore the wider impact on the government and the country. Kiwirail wasn’t permitted by Steven Joyce to build the new railcars itself and keep the work and tax revneu in New Zealand, instead it’s going for slightly cheaper railcars from abroad.

The IRD could be much more aggressive in forcing foreign owned companies to pay their fair share of taxes. Its success in forcing the Australian-owned banks to pay a fair tax rate sharply reduced our current account deficit.

Allowing Google to make $150 million of revenues in New Zealand and to pay just $7,726 in tax here last financial year would be a good place to start.

Can’t see that happening with National. If Google threatened to up and leave tomorrow, National would give them some of our dosh and change whatever law they want.

In a world where it’s every country for itself, New Zealand needs to look after itself.

All of these suggestions are interventions in the free market and they are specifically designed to put New Zealand interests first. The neoliberals scream that we shouldn’t pick winners (something even Fran O’Sullivan now disagrees with). We’re meant to play fair and leave it to the markets. Well, countries don’t become economic powers by playing fair and that is becoming truer by the day as the major economies retreat from free-market ideology and try to protect their own economies first. ‘Playing fair’ while everyone else is ‘cheating’ is a recipe for distaster.

49 comments on “‘Playing fair’ makes us losers in currency wars”

  1. joe90 1

    A bizarre animation explains the US-Sino currency battle.

  2. Good comment. The “invisible hand of the market” has been used to make the wealthiest even more wealthy to the cost of the rest of us.

    David Cunliffe has a keen understanding of the issue and is advocating for both short term action to knock the top of the currency value spike and longer term change so that the currency can be valued down. His comments are at http://blog.labour.org.nz/index.php/2010/11/11/currency-intervention-two-clips/

    • smhead 2.1

      Cunliffe doesn’t understand shit. NZ is far too small to take on the US currency. The US currency becomes more irrelevant every time they devalue. Every time the US prints more money its relative value against the rest of the world goes down, and commodity prices in US dollars go up. That’s how the market works and Cunliffe’s too much of an opportunist asshole to either understand it or accept it.

      If the NZ government chucked taxpayer’s money at the currency it would only make speculators very rich. Speculators have far more money than the NZ government and if they know that the NZ government will intervene and game with them, they will come a-playing and they will win.

      The main reason why the NZD is appreciating against the US, Euro and GBP is because the outlook for our economy is so much better than theirs.

      • Jim Nald 2.1.1

        Yes, that is right. NZ can’t do anything at all. We should not, at all cost, do anything.
        Just learn to take it, call it ‘rebalancing’ if you will. If you are exporting and can’t handle it, the positive way forward is simple. Just close shop. Do something else. Or, for goodness sake, shut up. Even better, just leave NZ. If you friends, family and workmates haven’t done it, then tell them to just leave. And those who are crying out in pain can just do the same. Just bloody get a one-way ticket to Oz and don’t come back. Just go, for goodness sake. Just go somewhere else. The free market has served us very well. And will continue to serve us even better. The message for the NZ economy and you all is clear: put up, shut up, close up or piss off.

      • Bright Red 2.1.2

        New Zealand managed a fixed exchange rate for most of its history. Including its most successful years.

        Since the currency has floated, the economy has experienced long periods of recession and bubbles.

        captcha: ‘floats’ (get out of my head, captcha)

        • insider 2.1.2.1

          But there wasn’t the ability to instantly trade and transfer money then. We also had captive markets for much of our produce. The world is very different today so the strategies probably need to change too.

        • JayMal 2.1.2.2

          Yeah smart guy… thats one of the main reasons the country was practically bankrupt in 1984 and forced the Lange government into a raft of changes which are still hurting us. Artificially maintaining a cross rate with the USD is a shitty idea. Can’t be sustained unless you want absolutely massive debt or can artificially control your cost (as in China).

          Anyone else aware of how much the Aussies lost trying to intervene in recent weeks and keep their dollar down? That was a success wasn’t it! Sure we’d all be over the moon if the NACT gifted currency traders a few billion dollars for no purpose.

          Only way to control the currency is to control the economy. Other thing to do is float Fonterra, stop bloody dairy futures traders using the NZD as a proxy for dairy commodity prices.

      • Bored 2.1.3

        The main reason why the NZD is appreciating against the US, Euro and GBP is because the outlook for our economy is so much better than theirs. So true. Ignoring the fatuity of the rest of your comments about Cunliffe you have a valid outlook. I see the larger picture as far more concerning. The US robber baron corporatism and financial larcenists have met their nemisis, a culture of several thousand years of shared understanding in such concepts as worth, value, price and cost. The Chinese are far too grounded in reality to allow some jumped up finance leader in Wall Street to make up rates and print valueless paper. They will respond in their own way, more in line with Sun Tsu than Smith.

        Unfortunately for ourselves we wont get much opportunity to take advantage of our comparitively (with the US) stronger economy. We may along with the rest of the world become collateral damage, at some stage soon we will have to choose which “empire” we will belong to. The world is not a happy place.

        • dave brown 2.1.3.1

          NZ capitalism has already chosen which side it is on with a free trade agreement with China. China is the rising imperialism. China props up the dairy industry. Haier has taken over F&P. China’s expansion acccounts for half of global growth.
          The US is hanging onto hegemony only by its military expenditure and feverish deployment. A token agreement for military cooperation with the declining US imperialism means nothing except NZers getting killed trying to defend the indefensible in the coming interimperialist wars. The FTA of the Pacific will collapse just as the FTA of the Americas died a few years ago because the US economy is technically bankrupt.
          The wild card in all this gloomy future is the Chinese working class that has the numbers and the tradition to challenge its own bosses as well as the US ruling class. US, Aust and NZ workers should form alliances with Chinese workers for the nationalisation of industry under workers control, so that the dynamic growth of China becomes the basis for global socialism and not a Third World War.
          NZ workers should be demanding land nationalisation, the nationalisation of the banks, and of all major corporates under workers control. Working farmers and iwi would not be expropriated as they would have rights protected to work land and benefit from the labour expended on it. What would go for good is the speculative rent that goes into the pockets of parasites who privately own a limited resource at the expense of the rest of us.
          The Labour Party is never going to stand up for a socialist Aotearoa, so it will need a new socialist party to lead this fight.

          • Colonial Viper 2.1.3.1.1

            Core banking functions should be treated as a utility needed by all to live – which it is – and taken out of private hands.

            The private sector can still do all the speculative financial stuff but the utility aspects of the financial system must be split away.

            • insider 2.1.3.1.1.1

              it’s not a core utility. Firstly you can always use cash for transactions and your mattress as a vault, secondly there are so many providers of financial services and so many ways to transact, there’s no need to mandate such a thing. Mandating would remove flexibility in how people choose to transact.

              • Draco T Bastard

                There’s only one way to transact today – electronically.

                • Nick C

                  Well of course you can use cash its just becoming less and less common. Thats because people are voting with their wallets and they generally trust banks to handle their money. Sometimes they make mistakes, but are overall a good thing for society. Its only crazies like you who would seriously consider hiding money under a matress if that were a viable way to conduct business and talk as if banks have some sort of sinister plot to control our economy.

      • Colonial Viper 2.1.4

        smh you just opened you rmouth and declared your ignorance. Cheers mate.

        The main reason why the NZD is appreciating against the US, Euro and GBP is because the outlook for our economy is so much better than theirs.

        To be clear, its because the NZD is highly speculated upon (it has nothing to do with the state of our real economy), and we are also one of the stable countries in the world where foreign money can still earn a lot more interest than in US treasuries (again, it has nothing to do with the state of our real economy).

      • Bunji 2.1.5

        Taking on the speculators is indeed a mug’s game, but there are other measures. For example, if we print money our currency will go down, like anyone else’s (as you essentially dilute wealth).

        But I’m sure your understanding of currencies and economics is far better than Cunliffe’s and his time as a management consultant, his Masters of Public Administration from Harvard and his post-graduate diploma in Economics mean nothing compared to your vast knowledge.

        The outlook for our economy isn’t exactly rosy, and it’s certainly not better than the Asian countries we’re appreciating against just as rapidly.

        Good post Marty.

        • Herodotus 2.1.5.1

          And Muldoon was on the Chair of the board of the IMF and World bank, and did he play on that with his omniscient view. So what the plebs at the mercy of some academic, and economics is no more than a specialist degree in history. They can tell you why something did happen but are crap weather forecasters !!!! Keep smiling and follow the clip
          http://www.youtube.com/watch?v=eZQyVUTcpM4

        • nzfp 2.1.5.2

          Hey Bunji:

          if we print money our currency will go down

          It is too simplistic to say that. I would ask you to prove this assertion – in doing so it will demonstrate that it is not a given.

          There are many factors which determine the health and stability of a nations economy.

          With regard to money alone, the factors include (but are not limited to) the following:

          1. The state of the government and consequently the law – without a stable government or enforceable laws, a FIAT (FIAT meaning, “by law”) money supply cannot be supported by the government – consequently it is likely to fail and loses its value on the world stage. This is regardless of the quantity of the money.

          2. The type of money – if the money is gold or silver or platinum or any other commodity or basket of commodities, it can manipulated. this has happened many many times and is research able. The commodity the money is based on can be manipulated in the market – consequently the “value” of the money can be lowered or raised. Irrespective of the quantity of the money. However an non convertible FIAT paper currency which will not be sold to speculators is much harder to manipulate – see this comment.

          3. The quantity of money – the amount of money (or credit) circulating in an economy will have a direct affect on the international and local value of the money. However more money does not instantly mean an increase in CPI (consumer price index) or price inflation. The American economies – such as Pennsylvania – who were experimenting with Government issued FIAT paper currencies found that an increase in money led to an industry boom which initially lowered prices before stability. However at a certain point – only found by trial and error – the price index rose as the economy reached a maximum capacity for industry, i.e. zero unemployment etc… At this point a continued increase in money supply led to price inflation and a lowering of the currency value. However, if the new money is spent on creating goods and services such as national infrastructure – while there is monetary inflation or an increase in money supply, there is not price inflation as the new money is soaked up by new products and services – until the economy reaches its industrial capacity.

          There is a great article on the related topics of fiscial and trade deficits by Chinese economist Henry C. K. Liu titled “The fighting twins”. Liu states:

          In monetary economics, the trade deficit and the fiscal deficit are referred to as the “Twin Deficits” as if they were genetically related twins merely because they both contribute to increases in the public debt. Yet these two deficits are genetically opposite and can act like fighting twins to neutralize each other in their adverse economic effects.

          A fiscal deficit is created by government spending in excess of revenue in the domestic economy. The external penalty of a persistent fiscal deficit is the devaluation of the exchange rate of the domestic currency in foreign trade.

          A trade deficit is created by excess imports over exports in foreign trade. One of the curative measures for a persistent trade deficit has been conventionally identified in trade economics as a devaluation of the domestic currency against those of its trading partners, or in multilateral trade, against a reserve currency. Currency devaluation is expected to make exports less costly and more competitive in price. It is also expected to make imports more costly in local currency terms.

          Therefore, there is logic in viewing a fiscal deficit as a solution to a trade deficit through its function in devaluing the domestic currency.

      • nzfp 2.1.6

        NZ is far too small to take on the US currency

        Malaysia did it and we could do exactly the same as Malaysia. American economist Professor Michael Hudson explains it best in a recent interview on Democracy Now: “New $600B Fed Stimulus Fuels Fears of US Currency War (November 05, 2010)” where he states:

        JUAN GONZALEZ: Well, in terms of how countries can respond, one of the things that obviously a lot of the Asian countries did during the financial crisis in late 1990s was currency controls—in essence, trying to prevent foreign capital from either leaving or entering the country. Is that something that you envision something this country is beginning to do?

        MICHAEL HUDSON: Yes, there is only one country that did that, and that was Malaysia under Prime Minister Tun Mohamad Mahathir. He would not sell the domestic currency to the foreign speculators, so George Soros and the others who sold the currency short, hoping that the central bank would use all of its money just to defend its currency and then be emptied out, they couldn’t cover their position, so they were squeezed.

  3. Pascal's bookie 3

    http://www.ritholtz.com/blog/2010/11/quantitative-mining-debasing-gold/

    Forget QE, the Gold Miners are doing QM Quantitative Mining. These irresponsible Miners are “printing gold” by scraping it out of the ground as fast as they can. They are debasing it as a store of value, and are no better than central bankers with their fiat currencies and printing presses.

    Silver, not Gold should be the reserve currency of the world!

    • Colonial Viper 3.1

      Its important that we never go back to a gold standard. The rarity of gold means that it can be even more easily manipulated by a few large holders of the metal and the money supply to society increased – or shrunk – rapidly and drastically at will.

      A silver standard is far better if we ever wanted to go back to a metals based currency.

      • joe90 3.1.1

        Or rare earth metals, a major component in the manufacture of clean energy products such as wind turbines and hybrid cars and key to the production of electronic equipment including iPods, flat-screen televisions and even some military equipment. And China controls 90 percent of rare earth metals production

    • nzfp 3.2

      Hey PB,

      Forget QE, the Gold Miners are doing QM Quantitative Mining. These irresponsible Miners are “printing gold” by scraping it out of the ground as fast as they can.

      This has happened. There have been periods of time when the quantity of gold has been increased so much so that it caused price instability. This happened in Europe during the Spanish destruction, rape and pillage of Central and South America.

      The end result was the export of vast quantity of Central and South American gold, harvested with indigenous slave labour, to Europe. The cost of the slave labour is never costed into the commodity price of gold – the price is artificial.

      The massive increase in “monetized” gold quantity drastically reduced the commodity price of gold and consequently the value of the monetized gold coins which in turn caused price inflation throughout Europe – it had the exact same affect as QE.

      It is not just the type of money – but the quantity of money and what that money is spent on that defines the economy.

      Gold is a commodity and like all commodities can and is manipulated by the giant banks – just as FIAT paper currencies are currently being manipulated.

      The gold standard of the US was manipulated in the 1800’s by the UK in an attempt to rape the American economy in the exact same way the FED is attempting to rape ours today. However the discovery of new gold fields in California and other places allowed the US to infuse new monetized gold into the economy to offset the amount of gold being drained by the UK – in effect, the new gold fields allowed for the QE of gold into the economy.

      However, had the US implemented a strict Greenback government issued FIAT paper currency and not made it convertible into gold, the private non government corporation, the Bank of England (BoE) would not have been able to manipulate the US economy and drain the US of its gold reserves.

      The history of money is clearly explained in the book “The Lost Science of Money” by american economist and head of the American Monetary Institue (AMI) “Stephen Zarlenga”.

      While highly critical of Austrian and English economists, Zarlenga is impressed with Austrian economist Murray Rothbard, and in particular his attack on Fractional Reserve Banking.

      • Colonial Viper 3.2.1

        It is not just the type of money – but the quantity of money and what that money is spent on that defines the economy.

        And the type of money is really irrelevant too. All you need is a currency which you can pay your taxes with, which people will accept as their salaries and which shops will take. The issuance and control of the quantity (‘supply’) of that in the economy is then crucial.

        The ancient Roman empire found that cheap minted copper coins could act as the commercial basis for an entire empire. A form of money created without an associated debt, owed to no one, and which efficiently allows the transactions of real economy commerce to occur.

  4. Herodotus 4

    \”New Zealand managed a fixed exchange rate for most of its history. Including its most successful years\”. BR there was the post war (ii and Korea) boom we also were bankrupt with Muldoon trying every form of intervention to readdress the issue he would/could not face. This resulted in the 84 Lab govt and Douglaus into their reforms that unfortunately were required (Many here may argure re Douglaus but many are too young or dont want to see what NZ was facing in the early 80\’s we were at a crossroad and Lab in 84 allowed us to continue on.
    Also by reducing consumption (Currently in place ) we then face higher unemployment. When the bubble bursts there are consequences, the bigger the bubble the bigger the mess, unless the govt manages this change opotentially reduce the adverse effects and pre-mpt favourable outcomes both earlier and to magnify them.
    Sorry MS we had currency intervention when Lab held the strings- nothing resulted except we then gave a platform for currency speculation to occur. If we enter the market at predetermined levels those speculators will carry off their winnings at the cost of Res Bank and NZ Ltd. D.C is still reacting no plan.
    Personnally we still have not addressed the property situation yet (By default it is still going its own way). Note: Yet we are 10k new houses short (This alone accounts for $500m in GST) + tax, employment PAYE etc.

  5. nzfp 5

    American economist Professor Michael Hudson during a recent interview on Democracy Now: “New $600B Fed Stimulus Fuels Fears of US Currency War (November 05, 2010)” describes the currency war with clarity. Hudson mentions Australia and from that we can infer the affect on New Zealand. Hudson states:

    MICHAEL HUDSON: Well, the object of warfare is to take over a country’s land, raw materials and assets, and grab them. And in the past, that used to be done militarily by invading them. But today you can do it financially simply by creating credit, which is what the Federal Reserve has done. It’s created $600 billion. It hasn’t gone into the economy. The head of the Fed is known as “Helicopter Ben” because he talks about dropping money into the economy. But if you see helicopters, they’re probably not your friends. Don’t go out and wait for them to drop the money, because the money is all going electronically into the banks. And the Fed has said, we want to give the banks so much money that they will lend it out so you can begin to bid up prices on real estate again and pull the banks out of the real estate negative equity that it’s in. So the purpose, according to the Fed, is to raise the price of real estate, to inflate asset prices. But that’s not happening. The actual banks have lent less today than they did in 2007. So the money is going abroad. And it’s going abroad not really to buy foreign companies so much, but to speculate in currency.

    Now, the Fed and the Congress, two weeks ago, said, “We want China to raise its currency by 20 percent.” This would create billions and billions of dollars of bonanza for Wall Street banks, and it would enable them to earn their way out of debt by essentially looting the China central bank, the Brazilian central bank, the Turkish central bank and the other central banks, because you can now borrow money in America at one percent. So you’d put down, let’s say, a billion dollars of your own—a million dollars of your own money, borrow $99 million of the bank’s money—that’s $100 million. You would buy Chinese currency, RMB, for $100 million. You then say, “Raise your currency by 20 percent,” which is what the Fed has asked them to do. That means that your million dollars now has turned into a $20 million gain, because $100 million is now worth $120 million. You’ve made a 200 percent profit. And for Wall Street, they deal in billions, not millions. And so, this would enable the banks to make up their money by buying out, essentially, foreign currency. They’re doing the same in Australia. It’s currency gamble.

    • Colonial Viper 5.1

      If we think a property/asset bubble is bad wait until the international value of our currencies pop. No economic activity – from your grocery shopping to buying a car – will be untouched.

      • nzfp 5.1.1

        At that point we will replace the bank credit with RBNZ dollars which cannot be sold abroad – rebuild our infrastructure, health, education, energy systems, telecommunications with our own QE from our own publicly owned central bank, spending our own interest free non-debt money, on our own people, citizens and nation!

        Captcha:stuff – stuff that English and Cunliffe and Key and Brash and Douglas and Richards et al know (it’s certain they know) – and yet for some “conspiratorial” reason they choose not to implement.

        • Colonial Viper 5.1.1.1

          Step by step I think does it…the private banks can choose to cripple our economy overnight if they feel under threat, simply by not renewing loans, not giving out new loans, and raising the interest charge on existing debt. Massive economic crisis ensues and the Government changes. Plutocracy in action.

          By the way, China has raised the equivalent of our core funding ratio up to 18% to control the massive liquidity in their economy.

          That is unprecedented.

          • Draco T Bastard 5.1.1.1.1

            the private banks can choose to cripple our economy overnight if they feel under threat,…

            At which point the government winds them up and appropriates all their assets with no compensation.

            simply by not renewing loans, not giving out new loans,

            Which the government then maintains with interest free money.

            At which point the people will have the power rather than the banks and democracy ensues.

  6. nzfp 6

    Hey Marty,
    Bernard Hickey is really ticking all the right boxes – finally an economist with a voice expressing common sense on economic matters in the corporate – widely read *sigh* – media.

    Go Bernard!

    • insider 6.1

      He’s not an economist he’s a journalist. I like him and his willingness to put himself out there, but IMO he seems to have got increasingly reactionary, saying he doesn’t like how things are panning out in various areas and demanding something be done.

      Remember in his theoretically core journalistic expertise area of housing he has been calling the market wrong for a while. So why think he has great insights to offer on macroeconomics and international currency issues?

      • nzfp 6.1.1

        So why think he has great insights to offer on macroeconomics and international currency issues?

        Maybe – and I’m speculating here – he’s changed his sources. His article reads like he’s been reading/listening/watching – Nobel laureate American economist Joseph Stiglitz, as well as American economist Professor Michael Hudson or Dean Baker or Steve Keen or many other economists who haven’t subscribed to neo-liberalism.

        Maybe just maybe…

        • insider 6.1.1.1

          There’s no doubt he’s had a seachange in his view. But changing your sources doesn’t make you more credible or authoritative. It just means you are quoting someone different.

      • Draco T Bastard 6.1.2

        Getting things wrong may have caused him to actually learn something.

        • insider 6.1.2.1

          I don;t read his blog too closely but not sure he has recanted from the view and come out with a reason as to why the market is different from his prediction. I think he still thinks ‘the housing crash is coming’ and history will prove him right

          • Draco T Bastard 6.1.2.1.1

            If we go into a double dip recession, which I believe is still possible, then he could end up being right in the medium term but I’m just saying that getting it wrong in the short term could have caused him to question and then research the underlying assumptions. He certainly has changed his tune about the “free-market”.

  7. M 7

    Marty, seriously impressed with this – Hickey is looking fresher these days as though a weight has been lifted off his shoulders.

    Joe90, cool YT can’t wait to forward it.

    • Colonial Viper 7.1

      Yeah Hickey has channeled the fear that his kids are going to grow up and simply leave as economic migrants to foreign lands into a motivation to do something about NZ so that they will not need to.

      • Jim Nald 7.1.1

        The choice seems to be getting clearer for us and our future generations as Jonkey & Double Dipton clutch on to the miracles of the free market:

        Be a tenant (or renter) in your own country, or take off and live overseas.

  8. Nick C 8

    So the Chinese want to discount their currency, making it cheaper for us to buy goods from them. It builds their industries, and gives them jobs; but those things are only a means to an end, the end being higher standards of living. Because they are producing more goods for us at a cheaper price, its us who gets the living standards benefits not them.

    Why should we object to them giving us foriegn aid? We’ve given them quite a bit.

    • Colonial Viper 8.1

      Because they are producing more goods for us at a cheaper price, its us who gets the living standards benefits not them.

      People can only buy cheap goods if they still have jobs. And if all that is left in our economy is are low numbers of cheap low paid jobs, cheap goods aren’t going to help our standard of living that much, are they?

      Why should we object to them giving us foriegn aid? We’ve given them quite a bit.

      Does being bent over a barrel = being given aid? Some might think so.

      Basically if we are willing to see more unemployed in our neighbourhoods, more industries closing down or shipped overseas, the lack of good jobs onshore telling young NZers they should go to Oz ASAP then we should definitely continue down this track of continuing to have access to cheap shite in our stores even as the economic foundations of our society deteriorates.

      In other words we are choosing to destroy our own economy and job market in order for those who still have money to have cheap overseas holidays and cheap TVs.

      PS what foreign aid have we ever given to China???

      • Nick C 8.1.1

        “Does being bent over a barrel = being given aid?”

        Does being sold cheap goods = being bent over a barrel?

        “People can only buy cheap goods if they still have jobs.”

        This bizzare situation where we all lose our jobs to the chinese is impossible. What do you think the chinese want in return for selling us all these cheap goods? Green pieces of paper with the number ’20’ and pictures of the Queen on them? No, what they want is what those pieces of paper can buy. So the chinese sell us goods, get paid in $NZ, and then use those $NZ in NZ (they are pretty useless elsewhere in the world) to buy things like Dairy products, tourism, movie tickets for the movies we produce, thus creating jobs.

        The only difference that their artificially low dollar makes is that we now have to produce relativly fewer movies/dairy products for every import we get from them. So we do less work for the same amount of goods.

    • nzfp 8.2

      Hey Nick C,

      … they are producing more goods for us at a cheaper price, its us who gets the living standards benefits not them …

      Hey, you’ve just described the USA. Except the USA has a world reserve currency and we don’t – look how great this Alan Greenspan economic model is doing.

      Oh check out what Alan Greenspan thinks of his economic model with this wee gem smuggled out of the Jekyll Island Federal reserve 100 year anniversary convention.

      Captcha:inadequate – Alan Greenspan was an inadequate economist.

  9. alloverrover 9

    “In the age of peak oil, having our own manufacturing base is going to be all the more important.”

    You are on to it Marty. Jeff Rubin former chief economist CIBC Global Markets and one of the few economists who “gets” peak oil summaries it thus..

    “In tomorrow’s economy, distance will cost money. Globalization was the product of cheap energy. De-globalization is the economic face of triple-digit oil prices.”

    ” The whole notion of sourcing supply from halfway around the world to save on labor costs will no longer make any commercial sense. From making our own steel to building our own furniture to growing our own food, the soaring cost of oil-fired transport will bring production back home to the local markets it once served.”
    http://www.jeffrubinssmallerworld.com/2009/10/30/deglobalization/

    Problem … while this may be true for USA and Canada who have massive large internal markets, NZ on the other hand is a tiny market and is as far as you can get from our trading partners (other than Aussie). When the oil crunch comes as soon as 2012, prices spike and we face a series of oil-restrained recessions can NZ’s tourism and trading economy keep afloat ? Seems to me we will have no alternative but to do more of everything locally – including manufacturing

    more on this theme at http://oilshockhorrorprobe.blogspot.com/

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    The Daily Blog | 27-09
  • David Cunliffe Resigns As Labour Leader – Forces Robertson Out of the Bel...
    David Cunliffe has made a smart move, resigning as the leader of the Labour Party so as to force a leadership primary campaign. The move draws rival Grant Robertson out of the beltway to parts of the country where he...
    The Daily Blog | 27-09
  • Deep thought vs Deep prejudice
    . . This letter to the editor appeared in The Listener, on 27 September, and caught my attention; . . Mr Dawson wrote in response to one of those typically unthinking comments which  condemned the poor for their “unbridled, reckless...
    The Daily Blog | 27-09
  • The NZ National voters elected
    The NZ National voters elected...
    The Daily Blog | 26-09
  • GUEST BLOG: Kate Davis – The post election postmortem is giving me post p...
    I feel the need to contribute to the discourse. This is a new experience for me. Not having an opinion, but expressing it on a popular forum in a public sphere. That’s why I have waited till now and put...
    The Daily Blog | 26-09
  • A dictionary of education terms and definitions, brought to you by the let...
    Free to all TDB readers, please enjoy your very own cut-out-and-keep handy primer of terms that I predict you will need to know over the next three years… Achievement Gap (noun) Synonym for wealth gap. ACT (abstract noun) Intangible. Reported to exist in...
    The Daily Blog | 26-09
  • A Mines Rescue brigadesman’s perspective on the Pike River Mine
    My husband and I lived in Greymouth in 2010, we were a coal mining family.  The day Pike River Mine blew up and the days following changed us profoundly, as it did for so many.  This is a Mines Rescue...
    The Daily Blog | 26-09
  • The Left Triumphant! A Counterfactual History of the Last Twelve Months.
    DID IT REALLY HAVE TO END LIKE THIS? Reading through the commentary threads of the left-wing blogs it is impossible to not feel the anger; the sense of betrayal; the impression of having had something vital ripped from their grasp;...
    The Daily Blog | 26-09
  • GUEST BLOG – Myles Thomas: The media won it!
    Make no mistake, John Key is a clever communicator – reasonable, authoritative and relaxed – but without the media he wouldn’t be PM. Depending on your viewpoint, New Zealand’s news media are either a bunch of Grey Lynn lefties or...
    The Daily Blog | 25-09
  • Not Learning Lessons Past: the West’s Response to IS
    In an earlier posting Ukraine, United Kingdom, Ireland, Scotland, I noted that the first lesson of conflict learned by Robert McNamara was “understand your adversary”. If we have honourable objectives, our first and most important weapon is empathy. In the Vietnam War,...
    The Daily Blog | 25-09
  • GUEST BLOG: Dr Jarrod Gilbert – Proof of David Farrar’s deception: my ...
    In the lead up to the election the Minister of Corrections Anne Tolley launched a gang policy. In order to justify the government’s approach she used gang figures that overstated the gang problem. Not by a little bit, but a...
    The Daily Blog | 25-09
  • SPECIAL FEATURE: Stuart Nash – Red To The Rescue?
    SPECIAL FEATURE by Selwyn Manning. IF THE ELECTION RESULT which was dished out to Labour was not enough to incite an immediate leadership primary, then the caucus’ refusal to recognise David Cunliffe as the leader should cement it. Now is...
    The Daily Blog | 25-09
  • Has the one party state crackdown begun already? Left wing NZ activist grou...
    Well known left wing activist social media group, ‘John Key Has Left Down NZ’ has been shut down on Facebook. At 11.40pm last night, Facebook, without any warning shut the group down siting a breach of terms of service as...
    The Daily Blog | 24-09
  • Why Cunliffe should probably just let Nash & Robertson win
    We have to face some very unpalatable home truths. If you are a left wing political person, best you put your vote now to the Green Party, although you’ll have to do that all the while the Greens frantically tell you...
    The Daily Blog | 24-09
  • The graceless win of Kelvin Davis
    The graceless win of Cameron Slater’s mate in the North, Kelvin Davis is difficult to swallow. Here Cameron Slater’s mate in the North is shitting on Hone Harawira by calling Hone all steam, no hangi as Kelvin rubs his ganged up win into...
    The Daily Blog | 24-09
  • So Labour shifted too far to the left?
    So Labour shifted too far to the left?   Here’s the ill-judged view of Josie Pagani in the Pundit “Labour must change”: “At the last election I made myself a heretic when I wrote a column mentioning how unpopular the...
    The Daily Blog | 24-09
  • Uncomplicated Loyalties: Why Cunliffe and the Labour Left Cannot Win
    THE STORY of David Cunliffe’s leadership of the Labour Party has been one of missed opportunities and unforced errors. That he was the only choice available to those who wanted to rid the Labour Party of its neoliberal cuckoos is...
    The Daily Blog | 24-09
  • So we can expect this now?
    So we can expect this now?...
    The Daily Blog | 23-09
  • Can Labour be saved? Why Whaleoil & National won and why we need a new ...
    As the shock of my optimism that NZers would recoil from the real John Key as exposed by Dirty Politics and mass surveillance duplicities wears off, I am surprised to find that the right in NZ are not content with...
    The Daily Blog | 23-09
  • Three more years (up shit creek and paddling hard)
    “If the future is not green, there is no future. If the future is not you, there is no future”. Emma Thompson’s stirring words to the climate marchers in London last Sunday are worth considering in the aftermath of the...
    The Daily Blog | 23-09
  • One Party State
    In years to come this election will be seen as a historic turning point towards one party rule. I don`t mean this literally, absolute single party dictatorship is not in prospect. In the New Zealand context though, one party has...
    The Daily Blog | 23-09
  • No More. The Left Falls.
    . We cannot be beaten down Because we are down already. We can only rise up and if you should beat us down, We will rise again. And again. And again… And when you tire of beating us down, We...
    The Daily Blog | 23-09
  • Hang tight everyone – Marama Davidson campaign reflection
    To the many people who had expressed their overwhelming support for me to enter Parliament this election – thank you. That the Greens held steady in a big loss for progressive politics is an achievement. We are hopeful that after...
    The Daily Blog | 22-09
  • New flag for NZ once Key signs TPPA
    New flag for NZ once Key signs TPPA...
    The Daily Blog | 22-09
  • Reflecting on Elections Past
    There are a number of past elections that can give the left in New Zealand guidance and hope. Two major points though. Major parties require leaders who can bridge the political divide through strength of personality, vision of what it...
    The Daily Blog | 22-09
  • GUEST BLOG: Kelly Ellis – The Reptile Room
    I stress, at the outset, that I’ve got nothing against reptiles. Some of my best friends are reptiles. Some say I am one, but I’m not really. I just emulate that ability to sit, stationary for hours in court, eyes...
    The Daily Blog | 22-09
  • The success of right-wing counter messaging in the election
    One of the reasons National won the election was due to its success in counter messaging – and the way so many media commentators ran with th the right-wing spin. Here are some examples. Dirty Politics The original message was...
    The Daily Blog | 22-09
  • New Flag competition
    New Flag competition...
    The Daily Blog | 21-09
  • New Zealand Red Cross Responds to Drought in Tonga
    New Zealand Red Cross has sent an aid worker and two desalination units, to turn seawater into safe drinking water in the drought-hit Ha’apai islands of Tonga....
    Scoop politics | 30-09
  • Can you ever tell if an email is real or forged?
    Computer industry veteran Brian Eardley-Wilmot warns that we should never take claims about stolen emails at face value....
    Scoop politics | 30-09
  • NZ MPs to attend the ASPG Annual Conference in Sydney
    New Zealand MPs to attend the Australasian Study of Parliament Group Annual Conference in Sydney...
    Scoop politics | 30-09
  • Independent Maori seats still needed in Parliament
    “He’s got to be joking!” is the reaction of the president of the Maori Party, Rangimarie Naida Glavish to a call by a former Labour Minister of Maori Affairs, Dover Samuels, for debate by Maori on whether the Maori electorates...
    Scoop politics | 30-09
  • Support for Democratic Rights in Hong Kong
    Rallies supporting the rights for universal suffrage will take place all over New Zealand today and tomorrow...
    Scoop politics | 29-09
  • Trout Mass-Poisoned in New Zealand
    Trout Mass-Poisoned in New Zealand The Graf Boys New Zealand has some of the best trout fishing in the world! Every year thousands of international visitors wade pristine rivers in search of the freshwater game fish....
    Scoop politics | 29-09
  • New Zealand’s 2014 Hottest Vegetarians Crowned
    With winter gone things are heating up, and things just got even hotter with the crowning of New Zealand’s hottest vegetarians, says animal advocacy group SAFE. Marking World Vegetarian Day, 1st October, director James Napier Robertson and actor...
    Scoop politics | 29-09
  • A day to remember our duty to look after our senior citizens
    Human Rights Commissioner Dr Jackie Blue says International Day of the Older Person (1 October) is a United Nations day to celebrate our senior citizens, but also acknowledge the need to protect our kaumatua, or older people from abuse and...
    Scoop politics | 29-09
  • Clear data needed on impact of benefit sanctions on children
    A lack of data on benefit sanctions means there is no way of knowing whether welfare reform is helping or harming children, says Child Poverty Action Group....
    Scoop politics | 29-09
  • The socialist alternative to austerity and war
    Public meeting: After the New Zealand election—the socialist alternative to austerity and war By Tom Peters 29 September 2014...
    Scoop politics | 29-09
  • New recruits to boost border protection
    Twenty six new recruits began an intensive nine-week training course in Auckland today that will see them graduate as Customs officers in time for the busy summer season....
    Scoop politics | 29-09
  • Dwindling Mallard population shows up ‘pest’ myth
    The pro hunting organisation Fish & Game is researching the causes of the decline of the mallard duck population, upset at the prospect of fewer ducks to kill....
    Scoop politics | 29-09
  • Support for Democratic Rights in Hong Kong
    New Zealanders in Auckland will gather on Wednesday to support the rights for universal suffrage in Hong Kong....
    Scoop politics | 29-09
  • Campbell Live Exclusive Interview with David Cunliffe
    David Cunliffe resigned as leader of the Labour party on Saturday; but he still wants the top job....
    Scoop politics | 29-09
  • Action needed on cycling safety
    “Clearly we aren't doing enough to protect the 1.5 million New Zealanders who ride bikes,” said Mr Morgan....
    Scoop politics | 29-09
  • World Rivers Day Passes Without A Whimper
    Sunday 28 September was World Rivers Day to celebrate clean, flowing rivers and caring about them. But a recreation-conservation advocacy the Council of Outdoor Recreation Associations of NZ (CORANZ) says the day seems to have slipped by without...
    Scoop politics | 29-09
  • The Kiwifruit Claim: Q&A
    1. Who is running The Kiwifruit Claim? The Kiwifruit Claim was founded by kiwifruit growers representing well in excess of 10% of the industry. 2. Why are you running this claim? The introduction of Psa into New Zealand had devastating...
    Scoop politics | 29-09
  • Fed Farmers Need to Be Weaned
    The Taxpayers’ Union is calling on Federated Farmers to make a firm commitment to reject any future Government funding, after it was revealed that the lobby group had received over $200,000 of payments in recent years....
    Scoop politics | 29-09
  • Children paying the price for charter school stitch up
    New Zealand children will be paying a high price for a one-seat deal between ACT and National, with an expansion of the beleaguered charter school system says education union NZEI Te Riu Roa....
    Scoop politics | 29-09
  • Hikoi From North Reaches Oil Conference Tomorrow
    Today: The Hikoi opposing Statoil plans for seismic testing and deep sea oil drilling has marched through Dargaville and later be welcomed to Piringatahi Marae, West Harbour,Tamaki Makaurau/Auckland....
    Scoop politics | 29-09
  • Communities Still Count
    The efforts of many organisations to influence the electorate and the political parties they voted for in the lead up to the 2014 Election is over. The voting public has spoken and provided a strong endorsement to the centre-right National...
    Scoop politics | 29-09
  • Eleven social enterprises get ready to take off
    Eleven teams from across the country will take part in the Launchpad, Ākina’s programme to get social enterprise ideas off the ground....
    Scoop politics | 29-09
  • An open letter to the Prime Minister
    in which Transparency International New Zealand asks the Prime Minister to ensure integrity underpins all work he leads "in the best interests of all New Zealanders"...
    Scoop politics | 29-09
  • Paula Bennett ‘great work’ acknowledged – McVicar
    “Paula Bennett, as Minister of Social Development, has contributed significantly in lowering our crime rate and preventing further victims.” - McVicar...
    Scoop politics | 29-09
  • Key’s Restraint in Propping up ACT Welcomed
    The Taxpayers’ Union is welcoming the announcement that ACT MP David Seymour will not be appointed as a Minister....
    Scoop politics | 29-09
  • Only Concession is from the Taxpayer
    Responding to the confidence and supply agreement reached between John Key and Peter Dunne’s United Future Party, Taxpayers’ Union Executive Director Jordan Williams says:...
    Scoop politics | 29-09
  • A Tent for Any Tenant
    AUT students and Salvation Army Manukau Community Ministries team up to raise awareness, as South Auckland’s housing situation moves from crisis to collapse...
    Scoop politics | 28-09
  • Cycle Safety Panel Draft Report Seeks Comments
    The Cycle Safety Panel Draft Report and Recommendations was published on 25th September 2014 and the panel are inviting comments. Lucinda Rees from NZ School Speeds, the organisation campaigning for consistent speed limits outside schools, is encouraged...
    Scoop politics | 28-09
  • Labour’s Review – Terms of Reference Agreed
    Labour's Review - Terms of Reference Agreed Following a meeting of its ruling New Zealand Council yesterday, Labour has released the terms of reference for the comprehensive review initiated following its 2014 election result. The review will comprise three...
    Scoop politics | 28-09
  • The final countdown for Kiwi smokers
    There are just two days left until many smokers stubb out their cigarettes for the last time and embark on Stoptober – New Zealand’s first national quit-smoking month....
    Scoop politics | 28-09
  • “In A Democracy People Win And People Lose”
    “In A Democracy People Win And People Lose” – Chris Hipkins Labour Senior Whip I would say to all of the caucus and all of the members let's actually hear the arguments from the people who want to be leader,...
    Scoop politics | 28-09
  • Campaign to make Murder of Unborn ”Safe and Legal”
    The IPPF have launched an international campaign through its 161 affiliates including the New Zealand Family Planning Association [NZFPA] to make the murder of the unborn safe and legal and accepted as a human right. This is an acceleration of...
    Scoop politics | 28-09
  • Grant Robertson Labour leader hopeful on TVNZ Q+A
    “Look I think what we need to be is relevant, clear and consistent with New Zealanders about the Labour Party's values,” said Labour leader hopeful Grant Robertson on TVNZ’s Q+A programme....
    Scoop politics | 28-09
  • Labour Needs to Get House in Order Before Deciding Leader
    Ex Labour party leader and possible repeat contender David Shearer says the Labour Party is going about the post-election period in the wrong way....
    Scoop politics | 28-09
  • Hate merchants at it again with smear tactics
    “It’s disappointing to see the hate merchants at it again with yet another attempt to smear and silence a health professional who’s doing research they disagree with,” says Ian Powell, Executive Director of the Association of Salaried Medical Specialists...
    Scoop politics | 28-09
  • Women’s group heartened by response to promo girls
    The National Council of Women of New Zealand is heartened by the strong response to the inappropriate use of bikini-clad girls at a technology expo....
    Scoop politics | 27-09
  • Owen interviews Jim Anderton, Helen Kelly and Selwyn Pellet
    Lisa Owen interviews Jim Anderton, Helen Kelly and Selwyn Pellet ___________________________________________ The Nation on TV3, 9.30am Saturdays and 10am Sundays. Check us out online , on Facebook or on Twitter . Tell us what you think at thenation@mediaworks.co.nz or text...
    Scoop politics | 27-09
  • Owen interviews Mark Boyd, Jonathan Milne and John Minto
    Lisa Owen interviews Mark Boyd, Jonathan Milne and John Minto ___________________________________________ The Nation on TV3, 9.30am Saturdays and 10am Sundays. Check us out online , on Facebook or on Twitter . Tell us what you think at thenation@mediaworks.co.nz or text...
    Scoop politics | 27-09
  • Prime Time on Labour
    Mike Smith - former General Secretary of the NZ Labour Party Jim McAloon, Assoc Prof, Victoria University of Wellington History Department (currently writing official history of the Labour Party) Rob Salmond, consultant to Labour Leader's office and...
    Scoop politics | 27-09
  • Korero Mai Ki Ahau – Saturday 27 & Sunday 28 September 2014
    Saturday 27 September 2014 | One million people voted for National in last week’s election. Another million didn’t vote at all. In Kia Korero Mai this week, Eru Morgan talks to political commentator Henare Kingi about the figures and what...
    Scoop politics | 26-09
  • On The Nation this weekend: Labour, National, The Media
    This weekend on The Nation… Labour’s had its worst election result in 92 years, so what happens next? We’ll talk to former Labour president Jim Anderton, CTU president Helen Kelly, and tech entrepreneur and past donor Selwyn Pellett about the...
    Scoop politics | 26-09
  • Red Cross, Pacific leaders prepare for cyclone season
    The New Zealand Red Cross Pacific Advisory Group, met for the first time this week, to develop a disaster response plan for the upcoming Pacific cyclone season, which is forecast to be severe....
    Scoop politics | 26-09
  • Teachers support PM’s call for solutions to child poverty
    NZEI Te Riu Roa is pleased to hear that the Prime Minister is calling for new ideas to address child poverty....
    Scoop politics | 26-09
  • First batch of household protection kits arrives in Liberia
    Kits containing protective gear will equip a network of community-based Ebola care centres nationwide...
    Scoop politics | 26-09
  • Dr Paul Hutchison praised for work to reduce child poverty
    The Association of Salaried Medical Specialists (ASMS) has thanked retiring National MP Dr Paul Hutchison for his work to reduce child poverty....
    Scoop politics | 26-09
  • Bag snatch hero deserves a medal – McVicar
    The Justice Spokesman for the Conservative Party, Garth McVicar, is calling for the woman known as the bag-snatch hero to be awarded a medal for bravery....
    Scoop politics | 26-09
  • Police Remembrance Day
    This week, Police staff and others have been wearing the distinctive huia feather-shaped Police Remembrance Pin as they reflect on those who have lost their lives in service to the society they swore to protect. Police Remembrance Day falls on...
    Scoop politics | 26-09
  • Affordable Auckland Attacks Creeping Apartheid
    Affordable Auckland Leader Stephen Berry is disturbed by developments increasing the number of local body regions choosing racially based representation. The Waikato and Bay of Plenty Regional Councils already have Maori wards, while New Plymouth...
    Scoop politics | 26-09
  • Dairy Strategy Proving to be a Disaster
    The intensification of the dairy industry is proving to be a disaster, says SAFE. This comes after the forecast 2015 milk price payout was cut 12% by Fonterra this week. “Last year, the government effectively gave the green light for...
    Scoop politics | 26-09
  • Where Next for the Left?
    26 September 2014 A discussion of the post-election prospects for radicals, facilitated by Fightback. 6pm | Monday 28th September | 19 Tory St [ Facebook event ]...
    Scoop politics | 26-09
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