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Do Not Go into Battle With A Slingshot

by Whaleoil on August 14, 2012

Rob Hosking at NBR has brought some sanity to the “high dollar’ debate that Bernard Hickey along with Selwyn Pellett and his corporate welfare gang, seem to talk about quietly and then loudly among themselves.  Rob has dissected the issues  and provided reasons that Hick-think is so very very wrong for the New Zealand economy.

Rob looks at the enormity of our paddle pond v the world’s markets on US QE measures.

Rob goes one further

 

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  • le sphincter

    The real story is that the US dollar is sinking, well at the rate they have been printing money which was on top of borrowing money like no tomorrow, its no wonder

    Wont be long before the Us dollar has parity with the Bangladesh wazoo

  • Someone

    I worked for a company that Selwyn Pellett was CEO of. That guys is an absolute penis. Anything he “backs” is retarded just as he is. Don’t give him the spot light, it’s what he wants. Just like Bernard “I have no solutions” Hickey

  • get a grip

    Yes Its a race to the bottom. US dollar is likely to be further devalued in September. The Euro is a joke and also likely to be devalued after the 12th September. All the smart money WAS pouring in to the Ozzie & by default the Kiwi (it has a higher interest rate).

    However with a wee bit of time the smart money will start to worry about the risk (ie commodities including dairy) THEN NZD will start to fall and the smart money will head for safe haven. The US of A.

  • Horace the Grump

    “Hick-think”… nice….

    Hickey and his bunch of disagreeable acolytes clearly don’t understand the subject matter they are discussing – Hosking has it absolutely on the button. HIckey clearly has not read any economic history… he may like to read up on an particularly interesting adventure George Soros had with the Bank of England about 20 years ago… in short he just about fucked them.

    Anyone who thinks that the RB can bring down the value of the NZ$ by selling NZ$ and buying (insert currency here) is a blithering idiot and should be treated as such.

  • johnbronkhorst

    The stupidity is…labour tried “buying & selling” US dollars prior to 2008, in an attempt to affect the exchange rate…it worked for exactly half a day and then kept doing exactly what the international markets were doing. This only achieve the result of wasting NZ dollars. They appear to be advocating govt. interference in the currency markets again with questions in parliament today. Isn’t this the definition of insanity….repeating the failures of the past, expecting a different result!!!???

    • 2ndAmendment

      Labour voters don’t have any money or property. Some of ‘em, perhaps’ “buy” houses (with the disastrous consequences only to obvious from the US).

      So Labour wants the interest rate down to zero, mortgage rates down, dollar down so anyone with property or funds in NZ is screwed

      The truth is the dollar is too low, and the interest rate is far too low. Reward Makers not Takers, Achievers not Grievers.

  • http://twitter.com/Orcs2Elves Monique Angel

    Plebs. U.S dollar won’t soften – will strengthen as the Euro softens and Japan remains dull. Also as the renminbi appreciates – a slow but sure process. Long term NZD will sit between 82 and 84c.

  • nzd.gbp

    Using the exchange rate to make us competitive is parochial fakery and has nothing to do with our real purchasing power.

    Rob Hosking is right and wrong. NZ dollar is a wee drip in the sea of currencies but he’s wrong to look at it like that. If the RBNZ started the printing presses then it only needs to be proportional to the amount that the US prints in order to hold the NZD/USD constant (ceteris paribus etc etc).

    What printing will do is signal that the value of the NZ dollar is determined by the imagined (RBNZ and their models) rather than the real (market fundamentals), which is a far riskier proposition and therefore will be instantly less desirable and so demand will drop. Printing will devalue the NZD both because of this added risk and because it becomes a diluted token of a given underlying economy (ceteris paribus etc etc etc).

    But why exactly do they want a cheaper dollar? With a strong dollar we get to swap our bits of paper for more real foreign things. We can use these things to build more real things.

    All our exporters need to do is mark their prices down or produce relatively better quality shit if they want to remain competitive. There is no avoiding the fact that they have to get off their arses and constantly improve rather than skimming off the value of the NZD.

  • Michael

    The qualitive easing should worry us – the money not going into US Bonds is going into sharemarkets. Anyone care to guess what will happen when 30% of share value growth will not match the 0% economic growth?

    As for making the dollar cheaper, we are at a low point when compared with the Aussie dollar and will be for some time. We’re getting more and more work outsourced here because of it. There is more to the world than the US economy.

  • blazer

    the U.S dollar will rise ,it remains the international default currency for commerce,confidence in their ‘paper’ is backed by the most potent military global force..end of.

  • parorchestia

    Any attempt to correct the value by entering the market will end in tears. We must change the system and tax the b…s who make money by coin clipping (like our PM did, legally) or ban it altogether, as Singapore does.

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