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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Swiss intervene to stop currency overvaluation

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This statement from Philipp Hildebrand, Chairman of the Governing Board of the Swiss National Bank, details their intention to prevent their currency being overvalued:

"The Swiss economy has staged a remarkable recovery from the Great Recession. It has benefited from tremendous efforts by thousands of companies, employees, and decisive policy measures by the authorities.

International developments, however, have now caused the Swiss franc to appreciate a great deal within a short period of time. This has resulted in a massive overvaluation of our national currency. Switzerland is a small and very open economy. Every second franc is earned abroad. A massive overvaluation carries the risk of a recession as well as deflationary developments.

The Swiss National Bank is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below one Swiss franc twenty. The SNB will enforce this minimum rate with the utmost determination. It is prepared to purchase foreign exchange in unlimited quantities. Even at a rate of one Swiss franc twenty per euro, our currency is still at a high level. It should continue to weaken over time. If the economic outlook and deflationary risks demand it, the SNB will take further measures.

With today’s decision, the SNB sets foot on a challenging journey. We have to accept the fact that the costs associated with it might be very high. At the same time, doing nothing would almost certainly inflict tremendous long-term damage on our economy. With today’s measure, the Swiss National Bank is acting in the interest of the country as a whole."

The last paragraph shows the Swiss National Bank are prepared to accept the risks associated with controlling their currency as they see the benefits of maintaining a competitive export sector.  New Zealand needs to look to make a similar commitment.

tags: swiss national bank, exchange rate, currency control


1 Comment(s)

Les Rudd - 07 September 2011 at 13:10 PM
This is the line I like:
"With today’s measure, the Swiss National Bank is acting in the interest of the country as a whole."

When will our central bank start, "acting in the interest of the country as a whole." ?

Why not?

What's stopping them?

Idelogy, or whatever, is not stopping the Swiss.

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