Forum Archive Index - December 2000

["G Stolwyk" <stolwyk@wave.co.nz>]

 

 

Hugh,

 

The $NZ has been rising lately, what do you make of that? Is it too high?

H: I think that we can live with 45 US cents and 80 Aus.cents; those levels will still promote tourism and exports and cut back on inflation. Film makers will still create employment in this country at current exchange rate levels.

We need to spend less on consumption and spend less time abroad. Economists have discussed desirable exchange levels for a long time now, but they will agree on governments promoting savings. 

 

The problem is that the exporters go hungry for a number of years and when the exchange rate falls, they go on a spending spree. This improves local economies of course. Over time, the NZ economy will always be fragile due to international pricing of commodities. 

G:Yes, overseas deficits will always be a problem with the protection rackets being applied by our trading partners. The Aussies have problems with our apples: I looked at some Australian oranges, I don't think that the colour is a natural one.

H: In that case we need to ban them, tit for tat! 

 

Aussies and others need to be reminded all the time that it is difficult to keep up an expensive defense force with them putting barriers to trading into place!

 

G: Foreign governments export a lot of heavily subsidised butter, meat and other agricultural products. At present we keep talking about the need for foreign consumers to pay less for their butter!

 

What we should be saying is that we don't like paying high tariffs because this tax is then being used to subsidise the export of products in competition with our own! We are subidising Your exports!    

 

By the way, when Bill Birch was Minister of Finance, the interest rate(cash rate) was sometimes temporary raised and this was followed by repayments of overseas loans. I don't know if that was the intention but we certainly repaid less in $NZ.!!

  

H:Readers can discuss or reply to  this column; unfortunately, we are already spending a lot of time in the preparation of these articles and won't be able to reply.

 

Gerry