This is an excellent article by Ulf Schoefisch in the Dominion Post. I have only just spotted it.
It highlights that with all the hue and cry about a stronger currency in the MSM it could be (as it has been in the past) an offshore shock that eventually drives the NZD lower.
Sunday, 22 April 2007
Sunday, 15 April 2007
New Zealand Dollar...0.7700 here we come?
The NZD/USD continues to press higher. The average change from high to low over the last 15 years has been 15%. That is, if you take the high in any one calendar year, then the low, work out the difference and average that over 15 years you get 15%. So that’s about 10 cents worth of change, historically.
The issue then becomes, is this year going to be a 0.7000-0.6000 band or a 0.6500-0.7500 band. Given that the low was just below 0.6700 in March 2007, and we are at 0.7360 now, then 0.7700 is possible this year, and it is just a normal year.
The issue then becomes, is this year going to be a 0.7000-0.6000 band or a 0.6500-0.7500 band. Given that the low was just below 0.6700 in March 2007, and we are at 0.7360 now, then 0.7700 is possible this year, and it is just a normal year.
So those looking for a test of the post float high at 0.7467 in March of 2005 may yet get their wish.
Of course, all this is based on a weaker USD itself. This has been the case for a while now, as economists have fretted over the state of the US economy, and the arguments over whether US interest rates will go up further or come back again. I think the US will sit tight on their current interest rate settings. That means that unless the USD has a major shock, all time USD weakness this year should prove elusive.
Alan Bollard still looks reluctant to raise interest rates at best, and as long as our Finance Minister does not go and spend like a drunken sailor in the budget in May, Bollard may also, like the US, sit tight, and let the current settings do their work.
Don’t believe all the hype about the property market. Bollard focuses on that because it is a problem. And he gets a lot of press on that. But the bigger problem is government spending. For the first time in many years we have a finance minister with no debt constraints.
If you take Central Government, Local Government, Regional Councils, SOE’s (including power companies) they are probably over 50% of the economy. They are where the inflation is coming from….and raising interest rates does not affect them.
So the problem is, politicians need to spend to curry favour. Alan Bollard will be waiting to see what Cullen does. An expansionary budget means higher interest rates as monetary policy tries to lean against fiscal policy.
Then we will see a test of the post float high of 0.7467 and who knows, maybe a 0.7700 plus exchange rate.
Of course, all this is based on a weaker USD itself. This has been the case for a while now, as economists have fretted over the state of the US economy, and the arguments over whether US interest rates will go up further or come back again. I think the US will sit tight on their current interest rate settings. That means that unless the USD has a major shock, all time USD weakness this year should prove elusive.
Alan Bollard still looks reluctant to raise interest rates at best, and as long as our Finance Minister does not go and spend like a drunken sailor in the budget in May, Bollard may also, like the US, sit tight, and let the current settings do their work.
Don’t believe all the hype about the property market. Bollard focuses on that because it is a problem. And he gets a lot of press on that. But the bigger problem is government spending. For the first time in many years we have a finance minister with no debt constraints.
If you take Central Government, Local Government, Regional Councils, SOE’s (including power companies) they are probably over 50% of the economy. They are where the inflation is coming from….and raising interest rates does not affect them.
So the problem is, politicians need to spend to curry favour. Alan Bollard will be waiting to see what Cullen does. An expansionary budget means higher interest rates as monetary policy tries to lean against fiscal policy.
Then we will see a test of the post float high of 0.7467 and who knows, maybe a 0.7700 plus exchange rate.
A lovely present for hard done by exporters in Exporter year…. it’s in the governments hands now.
Saturday, 14 April 2007
David Drake: Did George Bush Misrepresent
What Led Us Into Iraq?
A brilliant post from David Drakes Blog.
Looking back, maybe Bush did mislead us into going to war in Iraq.
Did he? What do you think? Based on what he knew from intelligence reports at the time, did he misrepresent and embellish "facts" in order to justify war with Iraq regarding WMDs, chemical and biological weapons and al-Qaida?
Let's look at the spoken word from President Bush, from his 2002 State of The Union Address:
"Intelligence reports show that Saddam Hussein has worked to rebuild his chemical and biological weapons stock, his missile delivery capability, and his nuclear program. He has also given aid, comfort, and sanctuary to terrorists, including Al Qaeda members.
"Eleven years have passed since the UN called on Saddam Hussein to rid himself of weapons of mass destruction as a condition of returning to the world community. Time and time again he has frustrated and denied these conditions."
"I want to insure that Saddam Hussein makes no mistake about our national unity and for our support for the President's efforts to wage America's war against terrorists and weapons of mass destruction. I want the men and women in our Armed Forces to know that if they should be called upon to act against Iraq, our country will stand resolutely behind them."
And from the 2003 State of The Union Address, Bush said:
"[The] mission is to attack Iraq's nuclear, chemical and biological weapons programs and its military capacity to threaten its neighbors. Saddam Hussein must not be allowed to threaten his neighbors or the world with nuclear arms, poison gas or biological weapons."
"Saddam Hussein announced that he would no longer cooperate with the United Nations weapons inspectors."Saddam Hussein [has used] chemical weapons against Iranian troops during a decade-long war. Not only against soldiers, but against civilians, firing Scud missiles at the citizens of Israel, Saudi Arabia, Bahrain and Iran. And not only against a foreign enemy, but even against his own people."Iraq repeatedly blocked UNSCOM from inspecting suspect sites."
Prior to the inspection of another site, Iraq actually emptied out the building, removing not just documents but even the furniture and the equipment."Iraq has failed to turn over virtually all the documents requested by the inspectors."Instead of the inspectors disarming Saddam, Saddam has disarmed the inspectors."
Now heres the clincher, the first quote WASN'T from 'W' but in fact from Hilary Clinton in 2002.
And as for the second quote, none other than the darling of the left wing political community President Bill Clinton in 1998.
Funny, isn't it, how the Left today falsely claim that if "Bush had only let the U.N. Inspectors finish their job", when their beloved Bill Clinton admitted - in 1998 - that Hussein was NOT allowing the inspectors to do their job.Hillary and Bubba get a Free Pass on their words. Why the different standard applied to both Bubba and Hillary than is applied to Bush?
Bush isn't a Democrat.
Hat tip Clint Heine
Looking back, maybe Bush did mislead us into going to war in Iraq.
Did he? What do you think? Based on what he knew from intelligence reports at the time, did he misrepresent and embellish "facts" in order to justify war with Iraq regarding WMDs, chemical and biological weapons and al-Qaida?
Let's look at the spoken word from President Bush, from his 2002 State of The Union Address:
"Intelligence reports show that Saddam Hussein has worked to rebuild his chemical and biological weapons stock, his missile delivery capability, and his nuclear program. He has also given aid, comfort, and sanctuary to terrorists, including Al Qaeda members.
"Eleven years have passed since the UN called on Saddam Hussein to rid himself of weapons of mass destruction as a condition of returning to the world community. Time and time again he has frustrated and denied these conditions."
"I want to insure that Saddam Hussein makes no mistake about our national unity and for our support for the President's efforts to wage America's war against terrorists and weapons of mass destruction. I want the men and women in our Armed Forces to know that if they should be called upon to act against Iraq, our country will stand resolutely behind them."
And from the 2003 State of The Union Address, Bush said:
"[The] mission is to attack Iraq's nuclear, chemical and biological weapons programs and its military capacity to threaten its neighbors. Saddam Hussein must not be allowed to threaten his neighbors or the world with nuclear arms, poison gas or biological weapons."
"Saddam Hussein announced that he would no longer cooperate with the United Nations weapons inspectors."Saddam Hussein [has used] chemical weapons against Iranian troops during a decade-long war. Not only against soldiers, but against civilians, firing Scud missiles at the citizens of Israel, Saudi Arabia, Bahrain and Iran. And not only against a foreign enemy, but even against his own people."Iraq repeatedly blocked UNSCOM from inspecting suspect sites."
Prior to the inspection of another site, Iraq actually emptied out the building, removing not just documents but even the furniture and the equipment."Iraq has failed to turn over virtually all the documents requested by the inspectors."Instead of the inspectors disarming Saddam, Saddam has disarmed the inspectors."
Now heres the clincher, the first quote WASN'T from 'W' but in fact from Hilary Clinton in 2002.
And as for the second quote, none other than the darling of the left wing political community President Bill Clinton in 1998.
Funny, isn't it, how the Left today falsely claim that if "Bush had only let the U.N. Inspectors finish their job", when their beloved Bill Clinton admitted - in 1998 - that Hussein was NOT allowing the inspectors to do their job.Hillary and Bubba get a Free Pass on their words. Why the different standard applied to both Bubba and Hillary than is applied to Bush?
Bush isn't a Democrat.
Hat tip Clint Heine
Subscribe to:
Posts (Atom)
