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The beggared neighbour

Written By: - Date published: 9:37 am, December 20th, 2012 - 12 comments
Categories: exports, jobs - Tags:

Japan just elected a Liberal Democrat government promising more jobs through a huge quantitative easing programme. The US has stated it’ll continue QE until unemployment drops below 6.5%. The effect has been to send our dollar to new highs, killing exporters and import-exposed local businesses. Contrary to media belief, Japan and the US aren’t in worse positions than us.

Japan has a lower and falling unemployment rate and a higher growth rate. The US’s unemployment rate is systemically higher than New Zealand’s, but it too is falling sharply and may soon fall below ours. But they’re using QE any way because it is helping them to devalue their currencies against their competitors – aiding both their exporters and their local businesses.

Meanwhile, our government does nothing and the dollar surges. Sure, that means cheaper consumer imports. But at what cost? 40,000 jobs lost in manufacturing, 7,000 lost in tourism, a claiming current account deficit as exports fall and imports rise. What does it matter if flat-screen TVs are cheap for the 300,000 jobless and 100,000 underemployed Kiwis?

We are heading for a Greece-like situation where we have massive foreign debts, all our shit is foreign-owned, and we don’t have the productive capacity left in the country to get back to an even keel.

Yet, the tools of orthodoxy in the mainstream media stomp on any suggestion of change. They’ve been drinking the neoliberal kool-aid so long that they think it’s all there is.


12 comments on “The beggared neighbour”

  1. AsleepWhileWalking 1

    Japan is substanitally worse off and we can expect a currency collapse sometime soon.

    It has nothing to do with employment rate, but rather government bonds that were issued.

    • Galeandra 1.1

      ‘substanitally worse off ‘

      Care to explain with citation/s?

    • aerobubble 1.2

      The argument I believe is this, that much future wealth was speculated to exist based on continuing cheapening supplies of energy. Over the period of cheap energy inflation was hidden, pollution, erosion of support systems, financial, ecological, social, could be managed as an opportunity for activity. But since capitalism as we have it today focuses on short terms, locking in rent seeking activity, so they essentially target the symptoms rather than the causes (the government role).
      In this context, US, Japan are just regions of one global nation, akin to Greece to the Eu, we are all awash in the same bath tub, with the same dirty water, so it more plausible to assume we should be
      do QE, and ask why we aren’t and what rewards there are for not doing so. I would argue that
      selling assets when money is devalued is pathetically stupid, why sell when we can print. Also holding ones breath for decades with tight policy, when suddenly the cycle turns and we can loosen money into our economy why aren’t we, why can’t we have a quite deep breath for all our hard work, aren’t we due a relaxation of rabid neo-liberal inflation targeting? What better time to do it. So we come to the reason why not, well higher inflation would actively help debtors write down debt, it would harm savers, it would boost incomes for exporters and harm voter buying power, and could cause a massive round of bankruptcies and foreclosures on middle stupid NZ that needs two cars and lavish indebtedness and servitude to their betters.

  2. vto 2

    So what is John Key going to do about this? Does anybody know?

    because there aint no doubt that it is going to happen ….

    • David Viperious H 2.1

      Nothing he’ll be in his house in Hawaii. He’s not going to do anything, so maybe he is going to turn our country into another Greece, so that the bastards can ‘bail us out by stealing the 20 billion in the Kiwi Saver and then Austerity as the like has never been seen. Then we would need a strong government to tell em to get stuffed like Argentina did. And that we A’int got.

  3. PlanetOrphan 3

    Well said Eddie, we need “Good Inflation” in NZ, and yes there is a lot of hype out there about good and bad inflation.

    The Gnats’ believe in “Good Deflation”, but they are profiteers and will never care about the average Kiwi getting a livable wage/salary.

    The Gnats’ wont be happy until they are the only one who can hand out charity, and it’ll only be given to people they “Like”.

  4. Richard 4

    Please, tell me more about your expertise with regards monetary policy above the zero lower-bound. I am sure you are well qualified to discuss this technical issue.

    Oh, and by the way, the Japanese economy contracted by 0.9% in the third quarter.

    • Shane Gallagher 4.1

      How about Switzerland? It is printing money explicitly to keep its franc devalued. So tell me about that… 🙂

    • bad12 4.2

      Your a funny wee chap aint you, seriously do you ever actually THINK, because from what i have read if it was not for the work that has been carried out in Christchurch associated with earthquake recovery the New Zealand economy in the last year is shown to have shrunk by at least 2%,

      Even then we have to question the ludicrous way in which the Bean Counters measure our economic activity when they class earthquake recovery as GDP, surely just one more fucking big lie in a whole series of fucking big lies that have as an end result a succession of Governments mis-managing the economy by institutional design and that’s befor the village idiot from down Dipton way has been let loose to play ‘betcha i can create as much unemployment as i did last time’ with the economy,

      Think about it logically for just a second, how can anything in the field of demolition/construction that is occurring in Christchurch at the moment be considered as ‘growth’ and be included as a positive in GDP figures???,

      That supposed growth occurred in Christchurch over the years as the City was built up prior to the Canterbury earthquakes and in those years was recorded as that growth, rebuilding post-earthquakes is simply re-building of the prior ‘growth’ and as such should not be included in GDP figures unless the loss of the prior growth was also recorded as a shrinkage in GDP at the time of the earthquakes, (to my knowledge this has not occurred),

      So for the next 2 years Slippery and that idiot from Dipton will off of the back of rapidly expanding rebuilding in Christchurch record NZ wide GDP growth of 2% annually when in fact without such bullshit replacement of prior GDP lost to the earthquakes the true picture is going to be an overall shrinkage of GDP annually of 2% annually for those 2 years if we put to one side the activity surrounding earthquake recovery…

  5. bad12 5

    The only advantage we gain across the whole economy from having a dollar over-valued by 15-20 cents is that petrol-products in theory become cheaper,


    Wouldn’t you know it Slippery, the Prime Minister, announced yesterday that His Government would seize that advantage for the Governments coffers by rack renting the taxes on those products over the next 2-3 years…

  6. geoff 6

    I think that maybe this article is completely misinformed.

    Japan’s debt to GDP ratio is one of the highest in the world (second only to Zimbabwe, according to wikipedia) and many commentators have said that its currency is about to collapse. From what I understand, it is not in a strong economic position.

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