Posts by Nat Torkington
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Related to nuclear power: this story in the Economist.
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Thanks for having me there, Russell. It was great fun. Mr Brown was fantastic--that great mixture of subversive and popular. Who's the NZ Mr Brown?
Reading through your links, I see Robyn was there. Damn! I wanted to meet more PA System readers. Next time. There *will* be a next time, right Russell?
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So, it seems obvious now I've been thinking about it:
If Bollard puts interest rates UP, NZ is a more attractive location for foreign investors to park their cash. NZ$ goes UP, inflation goes UP because most of our products are imported.
If Bollard takes interest rates DOWN, the housing market gets a kick in the pants and goes batshit again. Higher house prices make accommodation take an even larger chunk of everyone's paycheck, reducing amount of cash available for spending. Effectively, inflation goes up because you can buy less with an unchanged income. (Unless you also play the housing game)
The way out of this bind is to have low interest rates (so businesses can invest in technological improvements to increase productivity) but do away with the idea that housing speculation is an acceptable source of income.
Probability we'll see a politician from either party implement this: zero.
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Re: the purchasing power of the NZD ... check out this interesting survey by The Economist. The Big Mac survey measures the purchasing power of different currencies according to how much a Big Mac costs in that country. Taking US as the base, NZ is slightly overvalued against the dollar, Australia significantly undervalued, with China being the cheapest and Switzerland the most expensive.
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Rich: didn't the locked economic conditions, inefficient production, and artificially high prices happen in NZ too under Muldoon?
How did the gold standard lead to the Great Depression?
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Thanks for the pointer to that No Right Turn article on John Key. As laudable as 0% unemployment is in principle, it certainly seems to make things difficult in practice.
Full employment seems, in practice, to drive prices up. If you need someone for a job, you have to hire them away from the job they already have. That generally means paying them more. So growth is expensive and must come at the expense of some other industry. Life becomes hard because the costs are shared while the benefits only go to those changing jobs (everyone has to pay more for their products and services to fund the new hire who's getting the higher salary). This is already happening--our school has struggled for ages to find a cleaner, and they can't pay what it'd take to draw people away from other jobs.
The other interpretation of John Key's statement is that he believes in importing labour. That, of course, puts pressures on the home market which has its own concomitant craziness.
Does anyone have any solutions to the inflationary problems of the last while? Like, if you were PM and somehow magically had the balls of Treasury and the Reserve Bank in your hands, what steps would you take to solve NZ's economic problems?
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Although people might be xenophobic about furriners, it doesn't actually have much practical impact that companies are foreign owned - why is it better to work for a a wealthy kiwi than a Japanese pension fund?
Rich: imagine two NZ companies--one sells to a foreign owner and the other remains locally owned. They both make a shitload of money. They each reinvest some of that in their businesses, and the rest is issued as profit to the stockholders. In the case of the NZ company, the money is ploughed back into the economy: marble kitchens, sports cars, personal trainers, unregulated homeopathy. In the case of the foreign company, the money is taken overseas and ploughed into another country's economy.
That's how I've always seen it, anyway. I'm fuzzy on the "money is taken overseas bit". It's possible that economists say "ah yes, but to take the money overseas they must sell their NZ dollars and buy the local currency of their country. In so doing, someone else buys their NZ dollars, someone who will spend those dollars and thus the economy will see the benefit of the profit even if it's not the profiteer directly reinvesting." As I said, though, I'm fuzzy--it seems to me like I'm confusing buying currency with spending it.
Any economists out there who'd care to enlighten me as to where I'm wrong? :-)
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My point, if I have one, is that prices aren't universally higher in NZ or lower in NZ. Depending on what you get, and when, the prices can be great or can be shit. The only exception is meat--regardless of the type of meat you get (except possibly for the minced up foreskins and nostrils that make up hamburger) it's probably cheaper in NZ.
As Stephen says, NZ beef isn't readily substitutable for US beef because of the corn feeding. I love "The Omnivore's Dilemma". Strongly recommended reading to understand how the buggery Americans can feed corn to their cattle. (This is the foodchain equivalent of heating your house by burning $100 bills)
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Jeremy is right: the NZD$/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.
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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)