Forum Archive Index - March 2000

["hugh webber" <hugh.webber@clear.net.nz>]

Economists disagree with much of that. Flexible exchange rates enable
adjustments towards equilibrium, each iteration is smaller rather than
larger.
There are other factors you have ignored, probably not published in the UK 
such as the export price commodity index which ANZ periodically publishes
which has been booming, strong economic growth showing up in a raft of good
company
earnings reports. 
Exchange rates are very unreliable in terms of equivalent purchasing power.
The London Economist publishes the Big Mac Index showing how long to buy
a standard McDonalds hamburger in each country on the average wage and I 
recall it showed the NZ dollar was undervalued. Cars, housing, some food is
very cheap here.
Although I personally think Brash is coming on too strong (its hard to get
two
economists to agree on the detail) the alternative is to let a booming
growth 
rate end in a sudden and much bigger collapse than gently choking it down,
like Greenspan.
There's also the lifestyle choice that's been ignored; why exchange NZ's
beaches, forests, empty spaces, recreation, leisurely life-style for the 
ulcers, bad weather, crowded depressed environment of London.
Maybe most sharechatters haven't seen Londoners commuting on the
Underground to work in the winter, a more tired, white, depressed, unhappy
looking lot of individuals it would be hard to find.
Me, I keep England for occasional holidays in summer :-)
And of course we have the best bargains in the world in our very own NZSE
;-)

cheers,
Hugh

----------
> From: RIL <RIL99_99@yahoo.co.uk>
> To: sharechat@sharechat.co.nz
> Subject: [sharechat] Macro-economic issues
> Date: Wednesday, 15 March 2000 22:31
> 
> Currently NZ is running a very high deficit. International funds are
> exiting because, along with the dog infested stock market, classical
> economics says that if a country runs an enormous trade deficit the
> currency will decline. A fall in the currency with respect to the
> denomination of the investing fund is a loss.
> 
> Now with a falling currency the cost of imports increases thus imported
> inflation. Dr Brash consequently, given the expected rebound in the NZ
> peso, sorry dollar did not occur, has raised the OCR by 50 basis points.
> He has promised more if the dollar doesn't respond.
> 
> This rise in interest rates is contractionary for the economy and
> investment, profits and so on.
> 
> Secondly, the expectation of bad performance in NZ is gaining momentum.
> People are selling stocks and converting NZD to stable currencies. I
> believe the dollar will not therefore stabilise or increase. Thus
> interest rates will rise further soon. 
> 
> This will hit the market badly. And so on.
> 
> Brash and his university mates will have to get used to the idea of the
> NZD down at 40 US cents or so because that is where it is heading. ie
> its truer value.
> 
> We are talking 25 pence here folks.
> 
> My advice; get your money offshore either by buying NZ listed Aussie
> stocks and shunting or by buying US or pounds. Nothing will stop an
> economic event whose time has come.
> 
> Better still if you have a skill come to England. The grass really is
> greener.
> 
> Please fault my logic. If you don't get out, in 10 years you will have
> to explain to your kids why you can't afford to travel overseas. No one
> blamed the passengers for jumping off the Titanic before it went beneath
> the waves.
> 
> Don't say that RIL didn't warn you. Once again; NZ can not survive
> globalisation.
> 
>
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