Hard News: Death Spiral!
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I thought that we stopped the farmers running the country/business media some time ago?
Where are all the good news stories about how the exchange rates are making capital goods for the service and manufacturing sectors (otherwise known as "the post-colonial economic future") significantly cheaper?
If, putting aside sectoral pleading, the main issue facing the nation is high housing costs, why aren't we following the UK and building more houses rather than using the hopelessly blunt instrument of interest rate?
Word Rich of Observations!
NZ consumers must be the most gouged/rorted in the Western world in terms of price and quality. Food, books, telecommunications, electricity, petrol, and so on and so on and so on...
You can vote at whatever age adult criminal responsibilty begins.
Brilliant! If you're responsible enough to do the time, you're responsible enough to vote (& drink & drive & join the army & get carnal etc). One size fits all.
Better yet, have an exam, an adulthood exam, you can sit it at any age you like, but until you get your grownup licence, you can't do grownup stuff.
But our interest-rates look spectular in comparison, and while our economy has a similar imbalance to the US, there's been the feeling that NZ (via the interest rate at least) is doing something to correct the trade deficit
I've only got an undergrad economics degree, but my understanding is that our interest rates are a product of RBNZ policy. The RBNZ increases the prevailing interest rate in order to slow economic activity and thereby control inflation. (As you point out, low interest rates both encourage productive investment and encourage speculation in housing. A stronger capital gains tax regime for investment housing would help decouple this link.)
The increasing interest rates have the effect of appreciating the currency, as people invest their money here. This in turn worsens, not improves, our trade deficit, and increases overseas ownership of our economy. This is why rising house prices and rising oil prices are not good for us.
As for the US, on multiple fronts George Bush is responsible for diminishing US hegemony. As Russell mentioned, I can't say I've seen much comment on this in the US media.
Great post just btw, Nat. I'm hoping to travel through the Americas sometime soon and am biding my time for my purchase of $USD. Hello, currency speculation.
Just got a quote on UK petrol (taxigas.co.uk) - 86.9p = NZD2.24
NZ caltex = NZD1.51
So the Brits are paying 50% more for petrol. However, because this is mostly tax, when the price of crude oil goes up, we get hit correspondingly harder.
Petrol is a bit of a special case, because NZ governments are forced to undertax fuel because of our car compulsion. In general, most things with a high local labour content are cheap here whilst small easily transported things are a little bit more expensive than the global minimum (Canon EOS400=NZD1250here, USD834=NZD1055 there - tax removed for comparison).
Yeah, but didn't the Police Association also tell us prior to the Anti-Smacking Bill that their hands would be tied and by law they would have investigate every reported case of smacking? But once legislation was passed it wasn't all so grim afterall was it?
I'm all in favour of those at the coalface (in this case the judiciary who will have to action this proposed law change) having an input but surely it is up to the Govt to set the law? That said, I'm also not in favour of bad law ...
I'm not sure what Greg O'Conner's qualifications are, but I'm not sure if it's fair to compare his opinion on one badly written law, with the chief justice's of the youth court, who I hope we can assume is an above-average legal mind, on a different law.
Hi Max, in answer to your questions:
Do you have any references regarding why 'teenagers' exist in our society (and not in others)? Also if deliquency is normal for a teenager (for the reasons you have outlined) what happened in our society before this demographic existed? (and in other societies where it does not exist).
Unfortunately I'm not all that au fait with evolutionary psychology and can't answer this in full. All I can say is what I found for that submission: that some researchers have observed risk taking behaviour as normative in adolescents of other species too (primates and even non-primate mammals such as rats). There is no definitive answer to my knowledge, but it is theorised this helps the adolescent break away from the parental / familial group (through rule testing and breaking), and enables the establishment of a number of psychological coping mechanisms - essentially the maturity to act as an adult without relying on the role of parents. It appears to be a natural and normative mechanism for a number of species. For this, I'd suggest checking out:
L.P Spear. 2000. "THe Adolescent brain and age-related behavioral manifestations." Neuroscience and Behavioral REviews 24:417-463. (This is a good comprehensive review of the literature.)
Also very good is Arnett, J. 1992. "Reckless behavior in adolescence: a developmental perspective." Developmental Review 12:339-373
In terms of the normative role of risk-taking, definitely check out Terrie Moffit's work. She has been on the forefront for the last 15 years or so (and much of her work has been based on interpretation of the CHristchurch and Dunedin longitudinal studies). Best starting place for her stuff is Moffit, T. E. 1993 "Adolescence-limited and Life-Course-Persistent Antisocial Behaviour: a developmental taxonomy." Psychological Review 100:674-701. THis is a seminal article on the topic.
Do you think the widening gap between sexual/physical and mental maturity is having an impact on these things too?
It would certainly make sense, but I'm unaware of studies that demonstrate this. What I would really like to know is whether a girl who hits puberty at 9 is also undergoing those rapid physiological changes in the neural substrates responsible for her thinking as well as the systems responsible for her becoming sexually mature. There must be some info on that about, but I haven't seen it (because I haven't looked for it. Yet!) Because if she is socially and psychologically immature but the pathways are being laid down, then perhaps it's the social interactions with her that need to be changed and tailored.
i am currently looking at risk-taking behaviour in teenagers with regards to alcohol in particular.
Awesome! What's the study for?
And thanks for the positive comment - I really enjoyed researching and writing the submission. Looking back, it's a bit repetitive in places (mainly because the short time frame didn;t give me much time to edit it).
The increasing interest rates have the effect of appreciating the currency, as people invest their money here. This in turn worsens, not improves, our trade deficit, and increases overseas ownership of our economy.
In theory (cough cough- in a nice cleaned-up model of a wholely rational world market economy- as if this ever existed) higher interest rates decrease consumption across the board; people start spending less, there's an incentive to save more, production per dollar invested increases and for a host of reasons inflation stays low and trade imbalances disappear.
But there's another "rebalancing" scenario (the one we're facing): the combination of high interest rates and high dollar knocks the stuffing out of the export sector (and slows production overall); jobs start to disappear, the trade imbalance gets lunatic, and speculators buzz off towards the next peice of rotting meat leaving the kiwi $ in the dust...
Most economic theory operates on the fringes of reality- if only because real economies operate with a touch of chaos theory. Monetarism as a very simple means of combating inflation worked ok for a while. But we've bet our houses on it and (AFAIK) now things are looking ropey, noone quite knows what to do next.
The other distorting oddity at the moment is what people are suddenly calling a "glut" of investment $ looking for a home. A lot of that isn't trade-imbalance money recirculating, but boomer retirement funds. Canadian teachers paying $2b for our yellow pages!
It's spooky to think the widely admired- (well, I like it!)- "Cullen Fund" and kiwisaver could be joining a great tide of investment money sloshing around the world looking for something- anything- to buy.
I just got back from the supermarket. Here are the prices:
Haas avocados: USD$1.79 per. (NZD$2.26) It's summertime here, remember.
Peaches: USD$2/lb (NZD$5.57/kg)
Bananas: USD$.79/lb (NZD$1.75/kg)
Yogurt: USD$3 for 5 tubs (NZD$3.79 for 5)
Milk: USD$4.29/gal (NZD$1.13/L)
Pepsi: USD$3.79 for a 12 pack (USD$4.78)
Cheese: USD$3.88/lb for cheap Cheddar (NZD$10.80/kg)
Bread: USD$1.20 for a loaf of shitty white bread (NZD$1.52)
Ritz crackers: USD$3.49/lb (NZD$9.71/kg)
Sausages: USD$4.49/lb (NZD$12.50/kg)
Ribeye Steak: USD$11/lb (NZD$30.62/kg)
Boneless Tenderloin Steaks: USD$18/lb (NZD$50/kg)
Boneless Pork Chops: USD$4.99/lb (NZD$13.89/kg)
Tilapia fish (cheap farmed fish, a bit like Parore): USD$5/lb (NZD$13.91/kg)
Salmon steaks: USD$8/lb (NZD$22.26/kg)
I'm trying to be fair to Mark - it may not be his fault - but any lawmaker who thinks 10 year olds should be in the dock in adult court - let alone in jail - for petty theft should go find some tin pot nation to become dictator of and save us from themselves.
Myself and a couple of other people spoke to the Select Committee, and we all got the impression (it was not hard to get) that Mark honestly believes his Bill is the way to deal with all young offenders. Because, ya know, he was a little s*hit when he was younger, he joined the army, and it straightened him out. Apparently all that these kids need is a bit of structure and discipline. (Brought to them, of course, by District Court judges).
Interesting prices, Nat, but hardly a real comparison. Who eats ribeye or tenderloin steak? Mince at $10/Kg, blade at $9/kg. Your NZ price for sauages must be for the gourmet variety. And if you eat seasonal fruit...kiwifruit at $2/Kg, the gold variety.
WTF? Boneless pork chops? What's the point?
Well, Avocadoes are about $4 each right now, down to maybe $1 in season. Although Haas fruit all year so I wonder about that sometimes.
Pork, milk & salmon look about the same I think, but my, can we sell them more beef? Those prices seem steep.
Yet I am still so thoroughly confused by global markets, 'pegging' to the US dollar, and what our interest rates actually mean that my head is swimming
Isn't this the problem so where are the economists?? Most of them are alongside the same boat as the correspondent . Which means they have have swimming heads!!
Where are you John Maynard Keynes and yes god bless him Milton Friedman. We need a new theory.
I just hope the crash, when the merry go round stops is not as bad as the 20's, but do not hold your breath. The theory is social security will soften the blow when the crash comes, but look at the other theories? How about this thought process?
Capitalism overvalues property.
Asian economies make things
The westen world buys them and pays for them in $US dollars or Euros
Money borrwed against property whose store of wealth is supported by an overinflated world housing market.
The USA prints money exports its wealth
The Europeans subsides everything else including food and so drive the world prices down
The Chinese accept payment until they realise the US$ is worthless and probably soon the Euro
It is not that difficult really is it?
can we sell them more beef? Those prices seem steep.
Not without some creative thought.
As Nat said, Americans are used to and prefer marbled meat, with lots of fat throughout the muscle. You simply do not get that with grass-fed beef. There are feedlots in New Zealand, and we could do it, but the economics are far different without subsidised grain and cheap fuel.
What we could and should be doing is selling grass-fed New Zealand beef as lean. We should be stressing that grass-fed beef has a different (and far healthier) lipid profile than grainfed. And we should be using words like "free-range". Given that The Omnivore's Dilemma has been such a hit, we should be riffing on the themes in that book in our marketing.
Now, whether the NZ meat industry can do that... I dunno.
good summary neil.
but you forgot this one:
all the cheap oil is used up, here comes the (really) expensive stuff!
thanks for your time and help James.
I am currently studying a Grad Dip Teaching (Secondary) and am researching for a paper i need to write on this topic. My original degree was in Geo and then i had a career in rural banking so this is all new territory for me - but i am thoroughly enjoying it nevertheless.
however i have too many threads i am interested in around this topic to cover in my essay (word limit!) but this is frustrating because the more i read about the more questions i have... though as a (future)teacher it is of course my job to not only 'teach' but learn.
As an aside, in my limited experience teaching (seven weeks at a decile 4 local College) teenagers are people too!! I feel there are too many people in MSM, politicians etc who portray only the negative and some people who don't have much contact with teenagers may get the impression that they are all evil sociopaths intent on self and community destruction - not true!
some of the NZD prices quoted for food in above post are way off reality (my reality in Tauranga anyway).
I have never paid anywhere near $10 for kg of cheddar - you usually would get this for around $7 on special. Also is not comparing peaches with peaches!! They would be in season (or close to it in States) and the peaches on offer here are imported from States because it is winter here. In our summer i would pay around $2kg for beautiful (far superior tasting) peaches here in NZ.
I could go on but others have already covered bits and pieces.
Good call Max. Teenager bashing is as old as Asterix. Ron he-of-the-finger Mark cuts no straightened ways with me, little imp.
Has anyone considered that interest rate rises are actually inflationary as they increase prices across the economy as well as reducing profits or expenditure.
Like energy, interest costs are embedded in the price of everything we buy. As someone mentioned in a controlled money supply the increase in rates would lessen the demand for money.
However, we do not have a limited supply of money........it's unlimited. And who is in charge of it? Not the RBNZ but the private banking system.
Here are some numbers for Dec 1988-Dec 2006:
GDP +2.70% pa
CPI +3.02% pa
Money Supply (Broad Money) +18.1% pa
House Prices +22.1% pa.
Our underlying economy is sound but our speculation in land prices isn't and that is driven mostly by in expansion in the money supply which in essence is bank's creating accounting entries.
Inflation targeting is nothing more than a red herring, a wild goose chase and totally ineffective.
When the latest boom is over and interest charges overwhelm the ability to repay them (mathematically guaranteed to happen) and the banks stop expanding the money supply then we will have our bust.
According to Fred Harrison, author of "Boom Bust: House Prices, Banking and the Depression of 2010" this will end another cycle of 18years of boom and bust. His work, which i recommend, identifies an 18 year cycle going back to 1775 and in his view to 1600 when land first started to be sold by the Churches in England.
The money supply is the problem not inflation.
Hopefully one day we will address this but i fear it is too late for the current cycle which is already approaching its point of no return.
Hiya Raf, yeah, there are some contradictory bits of "teh theory"- eg axiom a/ money is just a commodity like any other and axiom b/ raising the cost of money is not inflationary and not an arbitrary intervention in a "ideally free" market.
In terms of money supply: isn't it the "globalisation" - the instant, electronic transnational "liquidisation" of the supply- that makes the RB so impotent? (And monetarism so lacking in answers to our current dilemma?)
Crikey, I can remember the Muldoonist days of applying to the Post Office if you wanted to send money off-shore. Heh.
some of the NZD prices quoted for food in above post are way off reality
I think you'll find the NZD prices were just translations of the USD prices for comparison, not the prices of comparable products in NZ.
I'm hoping to travel through the Americas sometime soon and am biding my time for my purchase of $USD. Hello, currency speculation.
I'd suggest you buy half your dollars before Bollard's announcement on RBNZ interest rates on Thursday and the other half after. That way you hedge your punt - there's no telling what wacky stunt he might pull!
I have a simple solution: We link Kedgley's desire for a review of the voting age to Marks' bill. You can vote at whatever age adult criminal responsibilty begins. Problem solved!
Good idea! (But it was Bradford's idea, BTW) If you're old enough to vote you're old enough to go to jail!!
I think you're right, Jeremy. Most of the prices there seem to be above our local prices.
Jeremy is right: the NZD$/kg was me running "USD to NZD" and "lb to kg" through Google to make it easy for you to compare to the products you presumably already know well. I'd love to have someone price the equivalent items in New World and see how much a Kiwi pays for a kilo of snarlers in Colorado vs Kelburn.
The way people are talking you'd think we had some sort of actual crisis. Look at the figures
Inflation is 4%
Unemployment is 3.8%
I'd call that pretty successful. We should be careful about trying some snake oil scheme (like cutting short term interest rates to drive the dollar down) that could wreck this. The concept of "it aint broke so don't fuck with it" possibly applies in economics as well as engineering?
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