Yes indeed, <any thoughts on the falling kiwi?> I have been betting against NZD for years. It became absurdly high a few months ago and started trickling away. Now people have realized, belatedly, like one of those running off the cliff scenes in cartoons, that there is nothing holding it up.
There are many $billions loaned to NZers and the chickens are coming home to roost. Japanese lenders are not feeling like renewing the uridashi loans they made in the face of the currency risk. They are preferring to sell their NZD and buy yen, or USD, where interest rates are going up, while in NZ the currency is dropping like a brick, faster than the higher interest rates can compensate. If, to avoid inflation, interest rates here are raised, the drop in NZD will accelerate. I expect, in the tradition of central bankers, inflation will be "temporarily" politically acceptable and interest rates won't be increased. As the economy grinds to a halt, with the loans dried up, interest rates might actually be lowered, in which case, the NZD will really accelerate downwards. 39c maybe? Which is where it was in Y2K briefly.
There are other earlier rants, which a search should find, but these give the flavour.
In December:
Message 22010560
I am STILL holding USD, which against NZD is doing okay, at last, with more to come I expect. Which definitely does not mean I expect USD or NZD to be anything other than historical curiosities in a few decades after the Quid takes over [Q, or U for Utopia, cybercurrency which I am still inventing].
Februrary:
Message 22138571
Uncle Al KBE went out on a high note, with more Happy Meals added to my USD returns. Now 4.5%, which is better than a poke in the eye with a burnt stick. NZD refuses to accept gravitational forces. But sitting comfortably here in a Mount Maunganui mall on yet another fantastic day, following our national holiday celebrating the deal between Maoris and Queen Victoria, I can see swarms of happy people bustling about, enjoying their spending power [as provided by Japanese housewives at 7% interest rates] while their houses have continued to rise rapidly in value, [leveraged with said Japanese loans].
The farmers are starting to bleat as loudly as their sheep and oinking as they fail to bring home the bacon from overseas markets for wool, lamb, beef, milk, fish, trees, paper, kiwifruit and other agricultural entitlements.
Sitting in the citadel things look good. We will see how good as winter encroaches.
Many thanks to Uncle Al KBE for decades and centuries of service to my financial well-being. It was a well-earned accolade from my sovereign. Cheap too!
Now, bring on Big Ben. We will see for whom the bell tolls.
March:
Message 22258267
Don't forget financial relativity theory changes the cubic dollars of houses and the kilograms of "value" in a QCOM share and the lucre lustre of gold.
So, what seems "high" is perhaps just a shift to another dimension in Calabi Yau Financial String Theory as a metre is a defined by time, and time is defined by metres, in a self-referential "disappearing up it's own quantum tunnel" abracadabra process.
Even as a dollar warps into another dimension, China maths overlaid onto the process holds it in suspended animation, creating an illusion of normalcy.
<Tough arena> Fun arena, like Alice in Wonderland. Or maybe a Funhouse mirrorland where financial images are not a good representation of economic reality, or perhaps they are reality.
NZD down - big deficits, economic crunch arriving, I did warn you some time ago to dial 1.800.GETMEOUT. But wait, before you head for the USD hills - <AP
U.S. Current Account Deficit Hits Record
Tuesday March 14, 8:58 am ET
By Martin Crutsinger
America's Current Account Deficit Hits Record of $804.9 Billion in 2005; Feb. Retail Sales Dip
WASHINGTON (AP) -- America's deficit in the broadest measure of international trade surged to an all-time high of $804.9 billion last year as the country went deeper into debt to foreigners.
The Commerce Department said the deficit in the current account was up 20.4 percent from the previous record of $668.1 billion set in 2004. The current account is the best measure of trade because it tracks not only goods and services but also investment flows between countries.
... >
Aztecs, seeing that, scuttle for caves, swapping their goodies for little gold talismen which they can hide with in their cave, chanting incantations to ancient gods, clutching their family jewels, preparing to time travel, on empty stomachs as they are not harvesting while hiding. While outside, hordes rampage around.
Message 22277310
Shock and ore, continued: Thirteen years ago, there was a thriving business disassembling machine tools in the UK and shipping them out to New Zealand where talent was high and wages were low.
I don't know what has happened since with those machines, but I suspect some of them were shipped to China.
Meanwhile, across the road, a neighbour is [with some business partners] setting up engineering production in Thailand, China and India to produce plastic processing equipment for injection moulding machines. They have developed good engineering design and algorithms/software for input of data and hope to sell a LOT.
Also meanwhile, did everyone bail out of NZD as warned by Mq? Plunging down. From USD74 to USD63 so far. More to come I guess. Against yen it has dropped a bit more as yen is doing better than USD. Those who foolishly wrote off Japan, which has charged on throughout the 1990s and early 21st century, denying prognostications of their doom, will be losing money.
Honesty, thrift, work, savings, technology, investment, rinse, lather, round again is a good way to do well.
Mqurice |
