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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Oblomov who wrote (48754)	3/27/2006 9:10:58 PM
From: Elroy Jetson	Respond to of 116555

I'm beginning to think you're a comic . . . for every NZ dollar buyer, there is a seller If a huge wave of buyers wish to purchase NZ Dollars, the New Zealand central bank can accommodate their wishes as easily as any other central bank can. They just end up with foreign currency reserves to: feed their current account deficit; and send to Australia, as I will explain below. The underlying New Zealand economy is small and anemic. The capital flows into New Zealand bear no relationship to the underlying economy. You might next ask where all this money goes since it didn't push down NZ interest rates? Almost all banks in New Zealand are subsidiaries of Australian banks, with the rest owned by other foreign banks. Bank of New Zealand? A subsidiary of National Australia Bank (Melbourne). Apart from some credit unions, there are no locally owned New Zealand banks. In many economic aspects, New Zealand is an Australian colony. New Zealand's economy is further to the Left than Australia in some areas, but the primary difference is the small population in New Zealand. The great influx of money into New Zealand ended up in Australia where the capital could be used by a large robust economy. .

To: Oblomov who wrote (48754)	3/27/2006 9:24:23 PM
From: Wyätt Gwyön	Respond to of 116555

How could this be? In the forex market, for every NZ dollar buyer, there is a seller. there is nothing unique about NZD forex trading being greater than NZ capital usage. in fact global currency trading volume is much greater than the global economy. the yearly currency market was around $700 trillion the last time anyone checked (2004 BIS triennial survey, see here: bis.org ) the next time they do the survey (2007) it will probably be close to 1 quadrillion dollars, compared to a global GDP of maybe $100 trillion. there is little relation between an economy's importance to the world and its popularity in the forex market. even an economy as puny and insignificant as Australia's can count itself among the 6 most popular forex currencies traded.