Comments

David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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11/11/10

Currency management and economic rebalancing


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In a world of currency manipulation in other countries the argument that we can do nothing with our currency is disingenuous at best say the New Zealand Manufacturers and Exporters Association (NZMEA). The simple fact is our politicians and Reserve Bank officials are choosing to do nothing. That choice threatens our very future as that future is built around export success.

NZMEA Chief Executive John Walley says, “A distinction must be made between currency intervention at the top and bottom of the exchange rate cycle. Bill English commented earlier this week that New Zealand would need $200 billion US ‘in the bank’ to effectively manage the exchange rate; extensive currency reserves are only really needed to hold up the value of a currency.”

“The fact is there is no limit to the intervention possible if it is aimed at devaluing the currency. Selling New Zealand dollars to foreigners expands our foreign currency reserves and we should make money if successful. Intervention aimed at holding up the value of the currency is limited by foreign currency holdings; that should not be used as a justification for not intervening at the top.”

“We can do nothing about gravity; monetary and fiscal policy is not an immutable, it is a matter of choice. Singapore has recognised it is an export dependent economy and has strategically aligned its policy and institutions behind that export dependence; New Zealand policy makers have chosen to bias the economy towards consumption and debt.”

“The argument that we can do nothing makes a mockery of the talk around economic rebalancing, job expansion and an export led recovery.”
 



tags: currency intervention, devaluing, rebalancing, managed exchange rate

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