web analytics

The Salesman

Written By: - Date published: 2:20 pm, July 20th, 2009 - 12 comments
Categories: economy, national/act government - Tags:

One of the stories from John Key’s days as a currency trader is that he was always more of a salesman than an analyst. He wasn’t good at picking markets and investments; he was good at getting people to trust him with their money. He got New Zealanders to put their trust in him too but he’s still no good at understanding the economy.

December 6: Key: “the NZD will print with a four in front of it at some point against the U.S. dollar’ ie. the currency will drop below 50 cents US. To be fair, it did dip just below 50, for four days but Key got the trend of the exchange rate exactly backwards. Now it’s getting up to 65 cents US.

April 16: “[Key] is betting that a falling Kiwi dollar will naturally allow the current account deficit to correct itself over the next one to two years’ This statement shows a fundamental misunderstanding of currency markets. Commodity currencies like the Kiwi were always going to start rising as soon as recovery was on the horizon. When investors are nervous about the world economy, they get out of out of the NZD, causing the price to drop. When recovery is coming, the appetite for risk starts to return, and up goes the price of the NZD.

1 July: Key: “[the] budget delivered a credit upgrade, not a downgrade”. He doesn’t understand (or pretends not to understand) the difference between a change in credit outlook and a change in credit grade. Remember, Key told us the Cullen Fund had to be slashed, Kiwisaver had to be cut, R&D spending had to go to avoid the negative judgement of the ratings agencies. Now Fitch has put us on negative credit watch saying ‘government debt isn’t a problem, the problem is you’re not saving enough, you’re not investing enough in R&D so your exports aren’t competitive enough and you have to import all your high-tech, and you can’t just keep on borrowing to speculate on housing’. Key cut exactly the government investment we need to correct those problems. Now he’s trying to weasel out of his cock-up by announcing that Fitch doesn’t matter.. hmm, tell that to the markets.

July 17: This last one’s slightly facetious but I think it illustrates that this guy isn’t the economic heavyweight we were sold. “[Key] met three Havelock North High School pupils selling.. socks for $9.99 a pair for charity. [Key said] this could be the way to fix the deficit “7.7 billion pairs”. Umm, 7.7 billion times $9.99 is $77 billion. The deficit is $7.7 billion.

With over 2000 Kiwis a week losing their jobs, we’re still waiting for the Key government to do anything to ‘take the sharpest edges off the recession’ as promised. We’ll have to keep waiting. The fact is, Key doesn’t have any answers and he doesn’t really care.

12 comments on “The Salesman ”

  1. I kinda think this post is scrapping the bottom of the barrel marty… surely of all the criticisms that could be launched at Mr Key you could do better than the above list.

    nb. shortly after Key’s December 6 ‘prediction’ about the NZD, it dropped below 50c and stayed there (or abouts) for almost my entire over seas trip. trust me i remember, it blew my budget 🙁

  2. tsmithfield 2

    I think you’re overstretching by quite a lot to have a ping at Key.

    1. The direction of the currency is very difficult to pick, even for the experts. A case in point. I was looking to hedge against the Auzzie when the NZ was quite high against it a few weeks ago. The currency expert at the BNZ advised me not to take too much because the Kiwi was on its way up. So I took 100k instead of 200k. The very next day the Kiwi slipped back down again.

    2. The value of the dollar will increase as the world economy strengthens. However, I doubt it is going to get to the heights of 80 cents against the US, as it did when the world economy was very bullish. Even though confidence is slowly returning to the world markets, it is unlikely to be anything like the level it was in the extreme bull market preceding the fall. Therefore, the NZ currency is likely to be relatively low for quite a while. So, to this extent, I think Key is right.

    3. Granted. However, I think the terms “upgrade” “downgrade” etc tend to be thrown around a bit loosely. While techinically going onto negative watch or whatever may not be a downgrade, in the eyes of our potential financiers, it may well be a downgrade or upgrade. So, it depends on how you look at it.

    4. Well, 77 billion would certainly fix the deficit, and some. So, it could be argued that Key got this very right.

    So far as unemployment goes, our rate is far less than the US and many of our trading partners. There is a lot of stuff being done behind the scenes to make doing business easier. I have pointed several times to the change in GST threshold for the payments method as an example that has helped us. Given that increased unemployment is agreed by most to increase in the current conditions, and given that we are much better off than most, then the evidence suggests that the steps the government has taken is working.

    So far as financial literacy is concerned, what do you all think of Phil Goffs idea of paying the unemployment benefit to people who lose their jobs, even if their partners are earning hundreds of thousands per year?

    • Bright Red 2.1

      If you consider anything below 80 cents US to be ‘relatively low’ you’re always going to consider it low.

      When Key said he expected the dollar fall low enough to redress the current account deficit – it was at 57 cents, which is historically a pretty average number. It dropped to 55 cents shortly after but has risen nearly constantly since. It hasn’t been below 60 cents since the start of May. It’s not going to go down like he said.

      Currency markets are hard to predict with detail but that the dollar would start to rise (along with stockmarkets) at the mid point in the global recession was not.

  3. Bright Red 3

    Nah, jake. the NZD rose in the days after Key spoke from 54 to touching 60.. then it dropped away, touched 49.2 for a day and leapt back up into the 60s. http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1248042361210&chddm=231677&q=CURRENCY:NZDUSD&ntsp=0

    Key made that statement, what 7 months ago? For five of those months, the dollar has been higher than it was when he made his prediction that it was going to dramatically drop.

  4. Pat 4

    “He wasn’t good at picking markets and investments; he was good at getting people to trust him with their money.”

    Mathematically the equation reads:

    John Key > Mark Briers + Bernie Madoff.

    Because John Key never got caught. Instead he became Prime Minister. Undoubtedly he is an evil genious, the likes of which this country has never seen.

    .

    • stormspiral 4.1

      Na. No genius. I think he’s just dumb and plausible. Gambler’s luck.

      • BLiP 4.1.1

        John Key is the bankers’ unwitting front man, especially groomed for years, packed and branded by Crosby/Textor and foisted onto a gullible poplace.

  5. Mike 5

    That “take the sharpest edges off the recession” line cracks me up every time Key repeats it.

    It reminds me of old stoner flatmates smoking weed for breakfast to “take the edge off the day”.

  6. Ari 6

    You do realise that it costs money to make socks, right? There’s a big difference between revenue and profit. 😉

  7. mike 7

    Do you have anymore pics of JK looking tired Marty? Although not quite as desperate as this it adds a little colour your pathetic campaign..

  8. sk 8

    When John Key was the opposition finance spokesman his only bright idea was that New Zealand should follow Ireland . .. we don’t hear much of that these days

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5857074/Fiscal-ruin-of-the-Western-world-beckons.html

    This post is not scraping the bottom of the barrel . . The reality is that beyond ‘minding the store’, it is not apparent that the PM has a thought in his head in terms of new policy . .. or an effective direction for NZ to be taking.

    This makes his ‘predictions’ fair game. .. or the better question is, what is the Prime Minister even doing making currency predictions??

  9. crack on fellas. The laughing is not at key, its that you are stupid enough to think there is any point in your continued smear. Key made a great deal of money in currency and stupid people do not make money in currency. Your suggestions imply desperation and are on a par with claiming Santa Claus really does exist to adults.

    Sensible people forecasting currency may predict a target or a direction over a time period but never both. Key was right and you are bagging him for it.

    What is interesting is that the previous low of .38 to the dollar (1997 I believe) implies there is now an 11c risk on US default/US inflation premium vis a vis the NZD built into the trough of the rate. The socialist Obama spending plans are forcing a rethink in US economic direction.

Recent Comments

Recent Posts

  • Tokelau Language Week reminds us to stay united and strong
    Staying strong in the face of challenges and being true to our heritage and languages are key to preserving our cultural identity and wellbeing, is the focus of the 2020 Tokelau Language Week. Minister for Pacific Peoples, Aupito William Sio, says this year’s theme, ‘Apoapo tau foe, i nā tāfea ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • NZ announces a third P-3 deployment in support of UN sanctions
    The Government has deployed a Royal New Zealand Air Force P-3K2 Orion (P-3) maritime patrol aircraft to support the implementation of United Nations Security Council (UNSC) resolutions imposing sanctions against North Korea, announced Minister of Foreign Affairs Winston Peters and Minister of Defence Ron Mark. “New Zealand has long supported ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Pacific trade and development agreement a reality
    Pacific regional trade and development agreement PACER Plus will enter into force in 60 days now that the required eight countries have ratified it. Trade and Export Growth Minister David Parker welcomed the announcement that the Cook Islands is the eighth nation to ratify this landmark agreement. “The agreement represents ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Securing a pipeline of teachers
    The Government is changing its approach to teacher recruitment as COVID-19 travel restrictions continue, by boosting a range of initiatives to get more Kiwis into teaching. “When we came into Government, we were faced with a teacher supply crisis,” Education Minister Chris Hipkins said. “Over the past three years, we ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Border exceptions for a small number of international students with visas
    The Government has established a new category that will allow 250 international PhD and postgraduate students to enter New Zealand and continue their studies, in the latest set of border exceptions. “The health, safety and wellbeing of people in New Zealand remains the Government’s top priority. Tight border restrictions remain ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • First COVID-19 vaccine purchase agreement signed
    The Government has signed an agreement to purchase 1.5 million COVID-19 vaccines – enough for 750,000 people – from Pfizer and BioNTech, subject to the vaccine successfully completing all clinical trials and passing regulatory approvals in New Zealand, say Research, Science and Innovation Minister Megan Woods and Health Minister Chris Hipkins. ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • International statement – End-to-end encryption and public safety
    We, the undersigned, support strong encryption, which plays a crucial role in protecting personal data, privacy, intellectual property, trade secrets and cyber security.  It also serves a vital purpose in repressive states to protect journalists, human rights defenders and other vulnerable people, as stated in the 2017 resolution of the ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ministry of Defence Biodefence Assessment released
    The Ministry of Defence has today released a Defence Assessment examining Defence’s role across the spectrum of biological hazards and threats facing New Zealand. Biodefence: Preparing for a New Era of Biological Hazards and Threats looks at how the NZDF supports other agencies’ biodefence activities, and considers the context of ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020
    New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020 Hon David Parker’s response following Thomas Piketty and Esther Duflo. Good morning, good afternoon, and good evening, wherever in the world you might be. I first acknowledge the excellent thought provoking speeches of Thomas Piketty and Esther ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Kaipara Moana restoration takes next step
    A Memorandum of Understanding has been signed today at Waihāua Marae between the Crown, local iwi and councils to protect, restore and enhance the mauri of Kaipara Moana in Northland. Environment Minister David Parker signed the document on behalf of the Crown along with representatives from Ngā Maunga Whakahī, Ngāti ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • New Zealand and Uruguay unite on reducing livestock production emissions
    Agriculture Minister Damien O’Connor and Uruguayan Minister of Livestock, Agriculture and Fisheries Carlos María Uriarte have welcomed the launch of a three-year project that will underpin sustainable livestock production in Uruguay, Argentina, and Costa Rica.  The project called ‘Innovation for pasture management’ is led by Uruguay’s National Institute of Agricultural ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • 3100 jobs created through marae upgrades
    Hundreds of marae throughout the country will be upgraded through investments from the Provincial Growth Fund’s refocused post COVID-19 funding to create jobs and put money into the pockets of local tradespeople and businesses, Regional Economic Development Minister Shane Jones and Māori Development Minister Nanaia Mahuta have announced. “A total ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Health volunteers recognised in annual awards
    Health Minister Chris Hipkins has announced 9 teams and 14 individuals are the recipients of this year’s Minister of Health Volunteer Awards.  “The health volunteer awards celebrate and recognise the thousands of dedicated health sector volunteers who give many hours of their time to help other New Zealanders,” Mr Hipkins ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Community COVID-19 Fund supports Pacific recovery
    The Minister for Pacific Peoples, Aupito William Sio says a total of 264 groups and individuals have successfully applied for the Pacific Aotearoa Community COVID-19 Recovery Fund, that will support Pacific communities drive their own COVID-19 recovery strategies, initiatives, and actions. “I am keen to see this Fund support Pacific ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Community benefits from Māori apprenticeships
    Up to 50 Māori apprentices in Wellington will receive paid training to build houses for their local communities, thanks to a $2.75 million investment from the Māori Trades and Training Fund, announced Employment Minister Willie Jackson today. “This funding will enable Ngāti Toa Rangatira Incorporated to provide its Ngā Kaimahi ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Training fund supports Māori jobseekers
    Rapidly growing sectors will benefit from a $990,000 Māori Trades and Training Fund investment which will see Wellington jobseekers supported into work, announced Employment Minister Willie Jackson today. “This funding will enable Sapphire Consultants Ltd. to help up to 45 Māori jobseekers into paid training initiatives over two years through ...
    BeehiveBy beehive.govt.nz
    3 weeks ago