web analytics
The Standard

‘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

        • 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/

Links to post

Recent Comments

Recent Posts

  • How many victims missing out on protection?
    Hundreds of domestic abuse victims could be missing out on getting protection orders because they are unable to get legal aid, Labour’s Justice spokesperson Jacinda Ardern says.“In the last two years some 351 people who applied for legal aid for… ...
    23 hours ago
  • Government kicks hardworking whanau
    A major incentive to help young Kiwis and people on low incomes to start saving has been kicked out from under them with the National-led Government ramming through short-sighted legislation under Urgency today, Labour’s Maori Development Spokesperson Nanaia Mahuta says.… ...
    23 hours ago
  • Speculator tax political stunt gone wrong
    Bill English’s admission he doesn’t know whether National’s new speculator tax will have any effect shows last weekend’s announcement by the Prime Minister was a desperate political stunt, says Labour’s Housing spokesperson Phil Twyford. “This Government is so desperate to… ...
    1 day ago
  • The value of parenting
    This week, as part of the Budget, the government introduced a bill to address child poverty. This bill will require parents receiving income support to look for part-time work once their youngest child is three years of age rather than… ...
    GreensBy Jan Logie MP
    1 day ago
  • Another new tax, another broken promise
    National has unveiled yet another new tax in this budget – a rural broadband levy that will almost certainly result in an immediate price hike for internet and telephone connections across New Zealand, Labour’s ICT spokesperson Clare Curran said “The… ...
    2 days ago
  • Anniversary of Sri Lankan Tamil Massacre
    This is not going to be a happy story but if the Green Party of Aotearoa doesn’t want to know who else will? May 18th marks the anniversary of what is known as the ‘Mullivaikal massacre’ of Tamils in 2009 at… ...
    GreensBy Catherine Delahunty MP
    2 days ago
  • Labour MPs join youth to take part in 40 hour famine
    A team of Labour MPs took part in the 2015 World Vision 40 hour famine and we were told by World Vision and the young people, that it was the first time MPs had joined them and how appreciative they… ...
    2 days ago
  • Rodeo: ‘Family entertainment’ or animal abuse?
    Recently  TVNZ ran a story with confronting footage showing rodeo animals being punched, repeatedly shocked with electronic prods and having their tails violently twisted over their backs. It was clear that significant force was being used behind the scenes to make… ...
    GreensBy Mojo Mathers MP
    2 days ago
  • Budget puts the squeeze on police
    The Government has cut funding to the New Zealand police force in the latest Budget, says Labour’s Police spokesperson Kelvin Davis. “The reduction is a whopping $15.3 million that could put front line officers at risk. ...
    2 days ago
  • Crucial social services take another hit
    The Government looks set to slash half a million dollars of funding for critical social services, including Women’s Refuge and Barnados, says Labour’s Social Development spokesperson Carmel Sepuloni “Taking $500,000 from organisations aimed at improving the lives of vulnerable families… ...
    2 days ago
  • Saying it Loud on Climate in Christchurch
    The Government’s Christchurch consultation meeting on New Zealand’s emission targets was inspiring – not for what was in the Ministry for the Environment’s (MFE’s) defeatist video about the obstacles to changing to a low carbon future, but for what the… ...
    GreensBy Eugenie Sage MP
    2 days ago
  • Budget silent on small business
    The Government has completely ignored one of the most important sectors of the economy – small and medium-sized enterprises – in Budget 2015, Labour’s Small Business spokesperson Jacinda Ardern says. "A stunning 41 per cent of jobs were created by… ...
    2 days ago
  • Thank you John, it’s been bloody marvellous
    The departure of John Campbell is a blow to current affairs investigative journalism, Labour’s Broadcasting Spokesperson Clare Curran says. “Campbell Live stood out in its field. Its axing comes as local broadcasting in New Zealand remains in a state of… ...
    2 days ago
  • KiwiSaver cut shows no long-term plan
    National’s cutting of the KiwiSaver kickstart is incredibly short-term thinking, typical of a Budget that is woefully short on ideas to generate wealth and opportunity, Labour’s Finance spokesperson Grant Robertson says. “New Zealand’s savings rate is far too low. KiwiSaver… ...
    2 days ago
  • National hits the panic button for its 7th Budget
    National has hit the panic button for its 7th Budget in a desperate attempt to look like they’re taking action to reduce our shameful child poverty rates, but they are giving with one hand and taking with the other, Opposition… ...
    3 days ago
  • Panic and back-flips can’t hide twin deficits
    National’s token measures to fight fires they have left burning for seven long years can’t hide a Budget that is long on broken promises, short on vision and fails to reach surplus, says Labour’s Finance spokesperson Grant Robertson. “After being… ...
    3 days ago
  • Auckland land measure seven years too late
    National are so desperate to look like they are doing something about the Auckland housing crisis they have dusted off Labour’s 2008 inventory of government land available for housing and re-announced it, says Labour’s housing spokesperson Phil Twyford. “Despite National… ...
    3 days ago
  • Access to gender reassignment surgery essential
    I was frankly disgusted to hear the Minister for Health say that funding gender reassignment surgeries is a “nutty idea”. A recent study found that in New Zealand 1% of young people identified themselves as transgender, and 3% were unsure… ...
    GreensBy Jan Logie MP
    4 days ago
  • Global milk prices now lowest in 6 years
    The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices… ...
    4 days ago
  • Big risks as CYF checks stopped
    Revelations that Child, Youth and Family is no longer assisting home-based early childhood educators by vetting potential employees should set alarm bells ringing, Labour Children’s spokesperson Jacinda Ardern says. “Doing away with an extra mechanism for checking potential new employees… ...
    5 days ago
  • Housing crisis about real people not numbers
    The Government’s continued failure to tackle the housing crisis is seeing thousands of vulnerable Kiwis being kept off social housing waiting lists, while others, who are on the list, are being forced to live in cars and garages, says Labour’s… ...
    5 days ago
  • Housing crisis about real people not numbers
    The Government’s continued failure to tackle the housing crisis is seeing thousands of vulnerable Kiwis being kept off social housing waiting lists, while others, who are on the list, are being forced to live in cars and garages, says Labour’s… ...
    5 days ago
  • State of origin
    Kiwis are increasingly concerned about the food they give their families. New Zealand consumers have the right to know where their food has come from, particularly when it involves animals, and should be able to expect our Government to label… ...
    GreensBy Steffan Browning MP
    5 days ago
  • Relationships Aotearoa
    It is disturbing that Relationships Aotearoa, a voluntary organisation set up in 1949 to help couples struggling with their relationships following the upheavals of World War II, may be forced to close, says Acting Spokesperson for the Voluntary and Community… ...
    5 days ago
  • An economy that is just working for some is an economy that is not working
    The National Party presents itself as a great manager of the economy, but if the economy is only working for some we really need to question that assertion. Alongside the perpetually elusive surplus, the levels of risk in our economy are… ...
    GreensBy Jan Logie MP
    5 days ago
  • An economy that is just working for some is an economy that is not working
    The National Party presents itself as a great manager of the economy, but if the economy is only working for some we really need to question that assertion. Alongside the perpetually elusive surplus, the levels of risk in our economy are… ...
    GreensBy Jan Logie MP
    5 days ago
  • House prices to a crack $1 million in 17 months
    The average Auckland home is on track to cost $1 million in 17 months’ time if nothing substantial is done to rein in soaring price rises, Labour’s Housing spokesperson Phil Twyford says. “Auckland’s house prices have skyrocketed 63 per cent… ...
    5 days ago
  • Vital support services can’t be left in lurch
    The National Government has big questions to answer about how a provider of services to thousands of vulnerable New Zealanders is set to fold, Labour’s Finance spokesperson Grant Robertson says. Relationships Aotearoa which provides support and counselling to families, individuals… ...
    6 days ago
  • Treasury and IRD on a capital gains tax
    Both the Treasury and IRD have been advising the National Government on the benefits of a capital gains tax. Documents released to the Green Party under an Official Information Act request show that John Key has been selective with the… ...
    GreensBy Russel Norman MP
    6 days ago
  • Charity legislation needs review
    It is unacceptable that the big corporate based charities claim  millions in annual income tax exemptions, while small community based and operated non-profit organisations  struggle to gain official charity status, Labour’s acting spokesperson for the Voluntary and Community Sector Louisa… ...
    6 days ago
  • John’s panic-Key response to housing crisis
    John Key needs to tell New Zealanders what caused his sudden change of heart that led to the Government’s scrambled and last-minute housing measures, Opposition Leader Andrew Little says. “The Prime Minister’s sudden rush of blood to his head followed… ...
    6 days ago
  • Keep our Assets Christchurch Campaign: An update
    I recently presented my submission to keep Christchurch Council assets at the Christchurch City Council’s public hearings on its 10 year plan on 13 May. The hearings are live-streamed and recorded so you can watch them on www.ccc.govt.nz. The Council’s… ...
    GreensBy Eugenie Sage MP
    6 days ago
  • John Key finally admits there’s a housing crisis
    John Key’s weak measures to rein in the astronomical profits property speculators are making are an admission – finally – that there is a housing crisis, Labour Leader Andrew Little says. “But yet again National is tinkering with the housing… ...
    1 week ago
  • Government stifles voices in CYFs review
    The Government’s exclusion of the Māori Women’s Welfare League in a panel on the future of CYFs is a cynical ploy to stifle views, says Labour’s Māori Development Spokesperson Nanaia Mahuta. “It's unbelievable that a significant review on the future… ...
    1 week ago
  • Speech to the Otago Chamber of Commerce
    Thank you very much for the opportunity to be here today. It’s a pleasure as always to be back in the town that raised me. Growing up in St Kilda meant that there was one thing that was a big… ...
    1 week ago
  • Key can’t just be Prime Minister for Parnell
    John Key must show New Zealanders in next week’s Budget that he is more than the Prime Minister for Parnell, and is also the Prime Minister for Pine Hill, Putararu and Palmerston North, Labour’s Finance spokesperson Grant Robertson says. In… ...
    1 week ago
  • Stop the conversions
    This week, some Waikato locals took me and intrepid photographer Amanda Rogers on a tour of some  lakes and waterways in their region, and up to the massive dairy conversions in the upper catchment of the Waikato River. It… ...
    GreensBy Catherine Delahunty MP
    1 week ago
  • More regional jobs go in Corrections reshape
    News that 194 Corrections staff are to lose their jobs will have ramifications not only for them and their families but for the wider community, Labour’s Corrections spokesperson Kelvin Davis says. Prison units at Waikeria, Tongariro and Rimutaka face closure… ...
    1 week ago
  • Government’s climate meetings off to a bumpy start
    On Wednesday, I attended a hui and an evening meeting that the Government had organised in Nelson as part of its climate change consultation tour, to support the Nelson community telling the Government to take meaningful action on climate change.… ...
    GreensBy Steffan Browning MP
    1 week ago
  • Taxpayers the only ones left feeling blue
    Ministry of Social Development bosses could have saved themselves thousands of dollars in consultants’ fees by providing staff with rose-tinted spectacles, Labour’s State Services spokesperson Kris Faafoi says. A report out today reveals the Ministry is spending over half a… ...
    1 week ago
  • Why are the regions still facing restrictions?
    Labour's Housing spokesperson Phil Twyford is questioning why the regions should continue to be saddled with LVR lending restrictions announced by the Reserve Bank today. “Labour has been calling for the regions to be exempted from LVRs for the best… ...
    2 weeks ago
  • The high costs of weak environmental regulation
    Te Waihora/Lake Ellesmere is described on the Department of Conservation website as “Canterbury’s largest and New Zealand’s fifth largest [lake], and an internationally important wildlife area.” But the lake is also polluted by nutrients leaching from farms in the catchment.… ...
    GreensBy Eugenie Sage MP
    2 weeks ago
  • Submissions to Wellington City Council on their Gambling Venues Policy
    Every three years Councils across the country are required to check that their gambling venue policies are still fit for purpose and they can choose to consult on their policy if they are thinking of making changes. Councils don’t have… ...
    GreensBy Denise Roche MP
    2 weeks ago
  • Reserve Bank action shows Govt out of touch and out of ideas
    The Reserve Bank’s unprecedented measures today show it understands the serious risks of the overheating housing market – in complete contrast to John Key’s refusal to acknowledge the crisis, Labour’s Finance spokesperson Grant Robertson says. “The Bank is right to… ...
    2 weeks ago
  • Send us your snaps: 25 Years of the Green Party
    This year we've hit a milestone. We're turning 25.To help celebrate a quarter of a century, please send us your photos from the last 25 years of the Green Party Aotearoa New Zealand! Note: Photos must be jpg, gif or… ...
    2 weeks ago
  • 25 Years of the Green Party
    This year the Green Party sends 25. To help us celebrate a quarter of a century please send us you photos of 25 years of the Green Party!Photos must be jpg,gif or png and smaller than 2MB. If you are… ...
    2 weeks ago
  • Bay growth plan too little too late
    Today’s Bay of Plenty growth study from MBIE is another example of Government spin - lots of talk but little action, says Labour’s Regional Development spokesperson David Cunliffe.  “This is a region that desperately needs to develop the downstream processing… ...
    2 weeks ago
  • Government bows to ACC pressure
     The Government has finally buckled to pressure from Labour and the New Zealand public in making a half billion dollar cut to ACC levies, but the full benefits are two years away,” says Opposition Leader Andrew Little.  “$500 million over… ...
    2 weeks ago
  • False figures cloud Auckland transport facts
    The Prime Minister should apologise and issue a correction after both he and Transport Minister Simon Bridges have been caught out misrepresenting facts on Auckland’s transport spending, Labour’s Housing spokesperson Phil Twyford says. "Both John Key and Simon Bridges have… ...
    2 weeks ago
  • Govt books confirm National can’t post surplus
    The last publication of the Government’s books before the budget shows National will break its promise of seven years and two election campaigns and fail to get the books in order, says Labour’s Finance Spokesperson Grant Robertson. “The Government is… ...
    2 weeks ago

Public service advertisements by The Standard

Current CO2 level in the atmosphere