Saturday, August 11, 2018

ST JACINDA REVEALS HER ECONOMIC ILLITERACY

One is allowed to have genuine fears for the countries economic future when the Prime Minister talks up the continuing slide in the value of the New Zealand dollar as a positive.

If  'she' had the slightest understanding of economics she would know that you cannot 'buy' economic prosperity by the sustained devaluation of the country's currency.

While this might help exporters in the short term every individual pays a price for that by way of the increased cost of imported goods especially fuel imports.   It adds to inflation and puts upward pressure on interest rates.

You add to that the increased cost of servicing the of the nation's o'seas debt, a debt which, in the first quarter of 2018, rose to a new record high of 273275 millions of dollars (up 2709 millions of dollars).

Throw into the mix the decision by Fonterra not to pay any further dividend this year coupled with a reduction in the farmgate milk price paid to farmers to $6.70 a kilo of milk solids and 'her' stock message of relentless positivity wears increasingly thin.

Note too the growing voice of economic commentators who are backtracking on their earlier derision of Steven Joyce's warning of a fiscal hole in the government's economic plan.   Looks like history will be repeating itself with National having to pick up the pieces of the CoL mismanagement of the economy.


18 comments:

David said...

So what are you arguing for? A return to a fixed rate of exchange?

If you were economically literate you would know that most of the money sloshing around is speculation on currencies, not trade. When currencies became a tradeable commodity they were debased from their original purpose as a store of value and a means of exchange, and became just another chip in the Capitalist Casino.

Allan said...

No David, remove your eyepatch please. What we are arguing for and what the country desperately needs is sound management and policies which create growth, employment and a strong economy. Our current Coalition of Losers comprised mainly of student politicians who have never held down a real job in the real world where a profit has to be made in order to keep the Company solvent have not got a clue. In fact our PM has never ever lived in the real world she has gone from school to University then into Politics and I am sure that she would find it difficult running a children's day care centre let alone trying to govern a country. The facts speak for themselves, since the day this rag tag bunch of clowns got into power the economy has tanked and their policies are simply making things worse. NZ is in trouble and the only way to get out of the hole is to get rid of the idiots who are in Government.

The Veteran said...

David ... yet again you are demonstrating your innate ability to deliberately misconstrue something I said into something else ... guess that goes with being one of 'them'.

I will say it again s l o w l y so you might understand. Arguing that a slide in the dollar is a positive (for exporters) while refusing to acknowledge the negative downside is either a sign of economic illiteracy or a deliberate attempt to hide people from the truth.

As 'she' is a Saint it can't be the latter so it must be the former.

Psycho Milt said...

So, is she nearly as incompetent as Bill English, or do politicians have to put the best spin on things?

Bill English, Oct 2015: "A lower Kiwi dollar helps all export industries, not just dairy - as well as local businesses that compete with imports."

Bill English Sept 2014: "Finance Minister Bill English says the falling New Zealand dollar lessens a 'headwind" faced by exporters and an obstacle to the re-balancing of the New Zealand economy."

Anonymous said...

I had no idea of the far reaching power and influence of our Government. It appears we have caused a whole bunch of currencies to fall against the dollar.

https://www.wsj.com/articles/emerging-market-currencies-fall-against-dollar-1526578721

In times of uncertainty and instability caused by the Orange Gibbon using tariffs as weapon this was entirely foreseeable but to place the blame on the Government is not true.

3. Thou shall not use small numbers to represent the whole. ("Hasty Generalization")

Lord Egbut

Snowflake said...

In accusing the Prime Minister of economic illiteracy, The Veteran sadly exposes his own. Sad.

I am particularly stunned by his claim that quarterly interest on borrowings is at $273 billion (or “273275 millions”, if you’re financally illiterate), meaning our quarterly interest bill exceeds annual GDP by some margin! When did things get so bad? Trumpian, Vet, Trumpian.

And list the commentators saying Joyce was right. Cameron Bagrie wrote a confused rant where he implied this, but it made no sense. Who else have you got?

Gerald said...

Not sure any Gummint could have influenced the MS price.
https://farmersweekly.co.nz/section/dairy/view/fonterras-7-looks-shaky

Snowflake said...

Jesus, read what you wrote. Either way you’re utterly wrong in saying that borrowing increased by $273 billion or interest payments did. Your writing was muddled on this, but you’re still a joke.

And now you’re running the argument that the government is responsible for every global economic event. And as for people in a tiz, I know you’re still tewwibly butt hurt over the Nats losing the election, but get real Einstein. Come up with some policy and stop whining.

The Veteran said...

Egbut ... so we are to be consigned to emerging market status. A more balanced view is that the world has looked at our economy and said ... foul winds ahead.

PM ... when English said that the cross rate was 76c. Now it's down to 66c and trending south. 76c and there wuz wriggle room. 66c not so much.

Snowflake ... where the f**k did I say the quarterly interest on borrowings is at 273 billion? What I said was that o'seas borrowings rose in the first quarter of 2018 (under a CoL government) by 2.73 billion and that the cost of servicing the total debt would obviously increase exacerbated by the fall in the value of the NZD.

Does anyone want to join with me in contributing to the cost of a new pair of specs for Snowflake ... nah, I withdraw the offer, its his brain that needs fixing.

Some of the the commentators here (not looking at David) come across like those in some far left book club arguing a variation of Social Credit theory that our economy is somehow controlled by international Jewry and all we have to do is to break free from the chains that shackle us and we will never have to work again ... the last bit comes per courtesy of Walter Nash, Labour Party Finance Minister and grandfather of the beleaguered Police Minister ... 'If Social Credit works none of us will have to'.

Psycho Milt said...

PM ... when English said that the cross rate was 76c. Now it's down to 66c and trending south. 76c and there wuz wriggle room. 66c not so much.

I can remember wondering how the fuck we were going to pay for things with the NZ$ worth around US 50c, so there's about 0% chance I'm going to shit my pants over 66c. Can you elaborate on your proposed mechanism for how the exchange rate against the US$ is a matter of which party is in government in NZ?

Anonymous said...

Veteran ...yes we are considered an "emerging market" along with Brazil and Sth Africa etc.

An emerging market is a country that has some characteristics of a developed market, but does not meet standards to be a developed market. This includes countries that may become developed markets in the future or were in the past. ... The economies of China and India are considered to be the largest emerging markets.

New Zealand is regarded as a developed market by some of the criteria and emerging by others......the point i was making is that we are not alone in our currency falling against the US dollar and until stability is re-established in world trade and stock markets look out for a rough ride. The Aust dollar took a hammering as well.


Lord Egbut


Noel said...

You should check out the Nzd to Thai baht. This isn't one currency against another as in the old days.

https://www.stuff.co.nz/business/92077186/why-are-global-currency-markets-betting-heavily-against-the-new-zealand-dollar.

The Veteran said...

PM ... re controlling the exchange rate. The only mechanism for controlling the exchange rate that I know of would see a reversion to the bad old days of a fixed exchange rate ... problem is that perhaps the only person in favour of that would be a certain WRP having supped heavily from the milk of Muldoon to the point where it still surging though his veins and is embedded his psyche.

I don't certainly don't favour that although good socialists do (you know the bit ... Marxism 101 ... public ownership of the means of production, distribution and exchange ... repeat exchange).

The reality is that the world looks at our economy and assesses it against a basket of indicators and right now it doesn't like what it is seeing. And St Jacinda is certainly demonstrating her (lack of) economic credentials by talking up the positive associated with an exchange rate going south (and there is a short term positive ... for some) while refusing to acknowledge the downside for many.

Downside started today for me with the pump price for 91 increasing by 2c/ltr.





David said...

Veteran, when Marx wrote of ...production, distribution and exchange... the exchange he referred to was the money supply within a nation. There was no notion of currency as a tradeable commodity, there were no foreign exchange markets to the extent we see today, there were no John Key's making a fortune by speculating on the value of a currency.

In 2015-2016 world trade exports were US$16 Trillion. FX trade was US$5 Trillion PER DAY. Just over 3 days of FX activity was needed to fund all trade exports. What was the rest doing?

The Veteran said...

David ... well, you would know all about Marxism. Those words are the cornerstone of 'real' socialist thinking and I include you in that. Go back to the question PM posed ... I gave him the answer. I have to assume you would be right on song with it.

Gerald said...

https://www.nzherald.co.nz/economy/news/article.cfm?c_id=34&objectid=12105652

Noel said...

https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Monetary%20policy%20statements/2018/mpsaugust2018.pdf

The Veteran said...

So it's all ok then, nothing to worry about, move on ... I'm underwhelmed.