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.

Leave a Comment

Show Tags

Recent Comments

Recent Posts

  • A real heart stopper?
    The story of a Hamilton man who jumpstarted his heart with an electric fencing unit may be a classic bit of ‘number 8’ wire thinking but it also reveals a lot about our stressed health system, says Labour’s Health spokesperson ...
    2 hours ago
  • Why has Pike footage been hidden for so long?
    New footage of workers servicing a robot in the Pike River drift appears to show that going into the drift doesn’t pose the danger the Government and Solid Energy claimed, says Leader of the Opposition Andrew Little. ...
    18 hours ago
  • Nats’ housing policy fails to keep pace with population growth
    Auckland got less than half the new houses it needed in the past year to keep up with record population growth, says Labour’s Housing spokesperson Phil Twyford. ...
    3 days ago
  • Urgent action needed on dirty rivers
    The Our Fresh Water Environment 2017 report re-confirms that we need urgent action to clean up our rivers. Meanwhile, National is standing by as our rivers get even more polluted, says Labour’s Environment spokesperson David Parker. “This report is yet ...
    4 days ago
  • Where there’s smoke and mirrors, there’s Steven Joyce
    Steven Joyce’s much vaunted pre-Budget speech is simply an underwhelming response to the infrastructure deficit National has created, says Labour’s Finance Spokesperson Grant Robertson. “Steven Joyce has belatedly come to the realisation that everyone else has a long time ago, ...
    4 days ago
  • Time to stamp out cold, mouldy rentals
    New figures show a small number of landlords are letting down the sector by renting cold, mouldy rentals. These houses need to be brought up to a decent standard for people to live in by Andrew Little’s Healthy Homes Bill, ...
    5 days ago
  • Time for fresh approach on immigration
    Latest figures showing another record year for immigration underlines the need for an urgent rethink on how this country can continue to absorb so many people, says Labour Leader Andrew Little. “New Zealand needs immigrants and is all the better ...
    5 days ago
  • Bring back the Mental Health Commission
    The People’s Mental Health Review is a much needed wake up call for the Government on mental health, says the Leader of the Opposition Andrew Little.   “I applaud their proposal to restore a Mental Health Commission and their call for ...
    7 days ago
  • And the band played on…
    Making Amy Adams the Housing Minister five months out from the election is just the orchestra playing on as National’s Titanic housing crisis slips below the waves – along with the hopes and dreams of countless Kiwi families, says Labour’s ...
    7 days ago
  • Hotel no place for children in care
    ...
    1 week ago
  • Maybe not, Minister? Nick Smith’s housing measure suppressed
    Sir Humphrey: Minister, remember the Housing Affordability Measure work you asked us to prepare back in 2012? Well, it’s ready now.Minister Smith: Oh goodie, what does it say?Sir Humphrey: Nothing.Minister Smith: Nothing?Sir Humphrey: Well, sir, you asked us to prepare ...
    1 week ago
  • Inflation data shows many New Zealanders are worse off under National
    The latest inflation data from Statistics New Zealand shows that too many New Zealanders are now worse off under the National Government, said Labour’s Finance Spokesperson Grant Robertson “Consumer Price Inflation (CPI) is now running at 2.2 per cent, and ...
    2 weeks ago
  • Another emergency housing grant blow out
      Emergency housing grants data released today show another blow out in spending on putting homeless people up in motels, says Labour’s Housing spokesperson Phil Twyford.   ...
    2 weeks ago
  • Families struggle as hardship grants increase
    The considerable increase in hardship grants shows that more and more Kiwi families are struggling to put food on the table and pay for basic schooling, says Labour’s Social Development spokesperson Carmel Sepuloni. ...
    2 weeks ago
  • More tinkering, no leadership from Nats on immigration
    National’s latest tinkering with the immigration system is another attempt to create the appearance of action without actually doing anything meaningful, says Leader of the Opposition Andrew Little. ...
    2 weeks ago
  • Suicide figures make for grim reading
    The 506 suspected suicides of Kiwis who have been in the care of mental health services in the last four years show that these services are under severe stress, says Labour’s Health spokesperson David Clark.   “If you do the ...
    2 weeks ago
  • Pay equity deal a victory for determination and unions
    The pay equity settlement revealed today for around 55,000 low-paid workers was hard-won by a determined Kristine Bartlett backed by her union, up against sheer Government resistance to paying Kiwis their fair share, says Labour Leader Andrew Little. “Labour welcomes ...
    2 weeks ago
  • DHB’s forced to make tough choices
    The Minister of Health today admitted that the country’s District Health Boards were having to spend more than their ring fenced expenditure on Mental Health, says Labour’s Health spokesperson David Clark.   “The situation is serious with Capital and Coast ...
    3 weeks ago
  • Nats break emergency housing pledge – deliver just five more places
    Despite National’s promises of 2,200 emergency housing beds, just 737 were provided in the March Quarter, an increase of only five from six months earlier, says Labour’s Housing spokesperson Phil Twyford. ...
    3 weeks ago
  • Research underlines need for KiwiBuild
    New research showing the social and fiscal benefits of homeownership underlines the need for a massive government-backed building programme like KiwiBuild, says Labour’s housing spokesperson Phil Twyford. ...
    3 weeks ago
  • Social data security review too little, too late
    The independent review into the Ministry of Social Development’s individual client level data IT system is too little, too late, says Labour’s Social Development spokesperson Carmel Sepuloni. “The Minister of Social Development has finally seen some sense and called for ...
    3 weeks ago
  • More questions raised on CERA conflicts
    With the admission that three more former CERA staff members are under suspicion of not appropriately managing conflicts of interest related to the Canterbury rebuild, it’s imperative that CERA’s successor organisation Ōtākaro fronts up to Parliamentary questions, says Labour’s Canterbury ...
    3 weeks ago
  • Labour to tackle Hutt housing crisis
    Labour will build a mix of 400 state houses and affordable KiwiBuild homes in the Hutt Valley in its first term in government to tackle the housing crisis there, says Leader of the Opposition Andrew Little. “Housing in the Hutt ...
    3 weeks ago
  • Farewell to John Clarke
    This wonderfully talented man has been claimed by Australia, but how I remember John Clarke is as a young Wellington actor who performed satirical pieces in a show called “Knickers” at Downstage Theatre. The show featured other future luminaries like ...
    GreensBy Catherine Delahunty
    3 weeks ago
  • Valedictory Speech
    Te papa pounamu Aotearoa NZ Karanga karanga karanga; Nga tupuna Haere haere haere; Te kahui ora te korowai o tenei whare; E tu e tu ... tutahi tonu Ki a koutou oku hoa mahi ki Te Kawanatanga; Noho mai noho ...
    3 weeks ago
  • Buck stops with Gerry Brownlee
    The fact that the State Services Commission has referred the CERA conflict of interest issue to the Serious Fraud Office is a positive move, but one that raises serious questions about the Government’s oversight of the rebuild, says Labour Canterbury ...
    3 weeks ago
  • Teachers deserve a democratic Education Council
    Teachers around New Zealand reeling from the news that their registration fees could more than double will be even angrier that the National Government has removed their ability to have any say about who sits on the Council that sets ...
    3 weeks ago