A few good men

This was too good to pass over:

I've stolen this from Rod Drury. It's a great take-off of the Jack Nicholson speech in A Few Good Men.

Sales: “You want answers?”

Finance: “I think we are entitled to them!”
Sales: “You want answers?!”
Finance: “I want the truth!”
Sales: “You can’t handle the truth!!!”

Sales (continuing): “Son, we live in a world that requires revenue. And that revenue must be brought in by people with elite skills. Who’s going to find it? You? You, Mr. Operations? We have a greater responsibility than you can possibly fathom.

You scoff at sales division and you curse our lucrative incentives. You have that luxury. You have the luxury of not knowing what we know: that while the cost of business results are excessive, it drives in revenue.

And my very existence, while grotesque and incomprehensible to you, drives REVENUE! You don’t want to know the truth because deep down in places you don’t talk about at staff meetings … you want me on that call. You NEED me on that call!

We use words like comps, migration, discounts, flex licensing, global purchase agreements, butt-fusion. We use these words as the backbone of a life spent negotiating something. You use them as a punch line!

I have neither the time nor inclination to explain myself to people who rise and sleep under the very blanket of revenue I provide and then question the manner in which I provide it. I would rather you just said “thank you” and went on your way. Otherwise I suggest you pick up a phone and make some sales calls. Either way, I don’t give a damn what you think you’re entitled to!”

Finance: “Did you expense the lap dances?”
Sales: “I did the job I was hired to do.”
Finance: “Did you expense the lap dances?”
Sales: “You’re goddamn right I did!”

Hat tip: David Farrar

Beware the global slowdown

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.

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.

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.

A lovely present for hard done by exporters in Exporter year…. it’s in the governments hands now.

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

How the Reserve Bank of New Zealand should manage Monetary Policy

Monetary policy appears to be ineffective and the Reserve Bank is losing credibility. Through 2006 the Governor, Alan Bollard, regularly threatened the markets with a rate rise, but in the end none came.

It should make some sense that with that much talk surely there must have been some action? I argue to the contrary; to make a bigger impact the Reserve Bank needs to say less. A lot less.

For the Reserve Bank to be effective, it needs to employ silence. Alan Bollard has yet to twig that markets love volatility and cannot make money in times of stability. Each time the Reserve Bank speaks, ostensibly in the interests of transparency, the New Zealand markets react. Not to what Mr Bollard says, but the way he says it, and more importantly, what he doesn’t say. They ignore the lines of text in favour of reading the bits in between.

2006 was a good example of this. First the markets were convinced that the Reserve Bank was going to lower interest rates as the economy slowed. Indeed, in March, the Reserve bank said that it did “not expect to raise interest rates again in this cycle”, which itself was a further softening of the language it used in January.

By June the rhetoric had slipped further, to “we do not expect to tighten policy in response to the high headline inflation in the short term. But, equally, we cannot afford to ease policy until we have more certainty that future inflation outcomes will be trending down comfortably below 3 per cent. Given this situation, we see no scope for an easing of the OCR this year.”

Then in September the language started to reverse: ”we are less confident that no further policy tightening will be required in this cycle. In this regard, we will want to be clearer about the economic situation and outlook. However, there is clearly no prospect of an OCR cut for some considerable time.”

By the end of the year the Reserve Bank was outright threatening: “further tightening cannot therefore be ruled out. This will depend on economic outcomes and in particular the emerging trends in housing and domestic demand indicators. Any easing of policy must remain some considerable way off.”

All this had a dramatic impact not only on the market setting of interest rates, but more dramatically on the value of the New Zealand dollar. And yet in the course of the year the Reserve Bank actually did … nothing.

In contrast to the style of management here the Reserve Bank of Australia (“RBA”) has a much simpler plan. If it has nothing to do, it has nothing to say. As a result the Australian currency and interest rate markets tend not to be pitched around by loose words.

The RBA meets 11 times a year to discuss the setting of interest rates, but when it makes no interest rate change it says nothing more than it agreed to make no change. Four times a year it states its case for how and why it is managing monetary policy, but these Statement on Monetary Policy documents are mostly read by insomniacs. The Statements only get read thoroughly when the RBA has something to say.

That meant that through 2005 there were few words written by the RBA and the markets had little to react to. It was only last year when the RBA communicated often, as it was changing rates (relatively) often.

For New Zealand’s monetary policy to be more effective the Reserve Bank need only mimic the RBA’s process:

Discuss interest rate settings each month (not 6 weekly).
If there is no change made, make no comment.
Publish the Monetary Policy Statement 4 times a year at different dates from the regular monthly meeting.

By limiting what is said through the year to only what is relevant the words published will receive the interest they deserve. Volatility will diminish and markets will not create instability as they jump at each Reserve Bank threat.

Who knows, households may then move back to floating rate mortgages, as 90% of Australia is and so when the Reserve Bank does do something it will be noticed…and have the impact it desires.

Training wheels on

Just created this blog...still figuring out how to drive it, layout not the best yet!