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Non-Tech : Deflation
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To: Ilaine who wrote (532)7/25/2011 4:04:46 AM
From: Maurice Winn2 Recommendations  Read Replies (1) of 621
 
After financial deregulation in 1984, New Zealanders realized they were genetically endowed with amazing financial perspicacity and led the world. That lasted until 1987. The crash around the world was financial catastrophe in NZ with hordes of investors [speculators] wiped out. Fortunately, such people are those with spare money who think they are into the "investing class" which is not inhabited by 80% of people so the real world carried on more or less, though unemployment zoomed for a few years and interest rates were punishing.

The rest of the world bounced off the bottom quite quickly and carried on as though nothing had happened. NZ never really recovered and is in the process of repeating the process now but on a grand scale, with huge borrowings, this time for the family house and to fund profligate wastrel government spending on a bludger entitlement culture. It could be hideous. Many NZers have fled to Australia and elsewhere.

Fortunately, NZ is so little that if Japan or China let a few crumbs fall of the table or they toss a bone to the dog, the dog will be fine for quite a while. China could simply buy NZ and is in the process of doing so.

Meanwhile, debts are booming at NZ$1.3 bn a month. With 4 million low GDP people compared with 300 million high GDP Americans, you can see that US$1 bn a month would be real money even in the USA. That's US$80 billion per month in USA population terms. Which doesn't seem all that bad compared with spending in the USA. But the USA is hardly a guiding light with bankruptcy looming.

Mqurice
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