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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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22/6/11

Gareth Morgan on why the high dollar isn't a sign of our economic success


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Gareth Morgan explains why a high dollar is not a good thing when other countries are keeping their exchange rates artificially low in an article for the Herald:

"In the global race to deliver the cheapest currency in the world, a stampede that has everyone trying to switch to export-led growth to make up for the slump in their debt-fuelled expansions of the past 20 years, there is a whiff of something not quite right. Whereas economic orthodoxy would say a strong currency is an indicator of prosperity, in this environment it is one of vulnerability, of helplessness in the face of a clash of economic juggernauts."

He then explains how New Zealand's dollar is hurting any exporter not involved in commodities and what can be done about it:

"That leaves fewer currencies against who these depreciating ones can move against - right? Guess who has to take the strain? The commodity producers who have "free" exchange rates are ideal suckers for this role. Their export income is improving courtesy of Chinese demand so again economic orthodoxy would suggest, other things equal, so should their currency. And as we well know, it is.

Herein lies the huge risk these commodity producers face in our world of neomercantilism. It's called the Dutch disease, originating from the experience of the Netherlands in the 1960s after its discovery of natural gas drove the guilder up and laid to waste the competitiveness of the country's exports and leading to a major surge in imports. Already we see Western Australia and Queensland the only two states able to withstand the pressure from a surging aussie dollar and here the pressure non-agricultural producers are under is manifest in the layoffs we're starting to see.

Can the central bank here cap the NZ dollar rise and join those immune from the Dutch disease? Of course, it can just print money. But without the other policies that the neomercantalists use, such as controlling credit availability to households and channelling all funds to a range of successful investments that improve competitiveness, then that money printing is likely to spill primarily into household spending and inflation."

http://www.nzherald.co.nz/business-editors-picks/news/article.cfm?c_id=1501981&objectid=10733427


 



tags: dutch disease, exchange rate, capital controls, currency

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