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| Thread ID: 118286 | 2011-05-27 13:24:00 | Borrowing. | Snorkbox (15764) | PC World Chat |
| Post ID | Timestamp | Content | User | ||
| 1205230 | 2011-05-27 13:24:00 | I was under the possibly mistaken impression that if you go and ask for money you have to put collateral on the line and if you don't pay back you lose the item(s) home.nzcity.co.nz But what would I know? The Govt knows what is best they say and relies on Treasury reports that are like the Met service apparently. :) |
Snorkbox (15764) | ||
| 1205231 | 2011-05-27 20:36:00 | I was under the possibly mistaken impression that if you go and ask for money you have to put collateral on the line and if you don't pay back you lose the item(s) That is only the case for directly secured loans, which as a rule healthy governments don't tend to need. Selling bonds is much more common - this is effectively a promise from the govt that they will pay the money back, plus some amount of additional interest. Bonds aren't generally backed by specific collateral, but rather are 'secured' by the bond issuer's history and credit ratings. While there is a minimal risk involved with purchasing bonds, this is generally *very* low for bonds issued by the NZ govt. As the returns on these are also quite high (due to our generally high interest rates, and at the moment also our inflation against the USD), it makes them very attractive for overseas investors. Note that governments aren't the only entities that issue bonds - many large companies also use this method as a means of acquiring capital. :pf1mobmini: |
Erayd (23) | ||
| 1205232 | 2011-05-27 23:51:00 | As the returns on these are also quite high (due to our generally high interest rates, and at the moment also our inflation against the USD), it makes them very attractive for overseas investors. Inflation against USD makes them unattractive, .81 right now... It won't go much higher if at all, only lower (probably plateau ~.72). So there's only a loss to be made... |
Cato (6936) | ||
| 1205233 | 2011-05-28 00:29:00 | So which World Power is most able to put NZ into bankruptcy? PJ :( | Poppa John (284) | ||
| 1205234 | 2011-05-28 00:31:00 | Inflation against USD makes them unattractive, .81 right now... It won't go much higher if at all, only lower (probably plateau ~.72). So there's only a loss to be made...That's not quite what I meant - although noting the current state of the US economy, I'm interested in how you're reaching those figures. Any chance you could expand on those a bit? When I said "at the moment", I meant a slightly longer timeframe than "today". I was talking more generally about the current trend of the NZD against the USD - for example, consider what your bonds would be worth today if you had bought them with USD in March. :pf1mobmini: |
Erayd (23) | ||
| 1205235 | 2011-05-28 00:35:00 | So which World Power is most able to put NZ into bankruptcy? PJ :(There are a few in that position - basically anyone who spends a significant amount on NZ exports or tourism. Lack of easy access to credit could also have a similar effect. :pf1mobmini: |
Erayd (23) | ||
| 1205236 | 2011-05-28 01:53:00 | That's not quite what I meant - although noting the current state of the US economy, I'm interested in how you're reaching those figures. Any chance you could expand on those a bit? The US was hardest hit by the rescission, if you look at it over all, we haven't done too bad for ourselves here. And that is why we are seeing our currency doing well against the USD. The NZ dollar is, pretty much, as high as it has ever been. I can't see it staying there. Look at the trend against the AUD, CAD or SGD, we aren't doing well at all - you can can see anything you want if you look only at NZ vs USD but it has to be more than that doesn't it? The USD lost ground against everyone and, mark my words, it will soon be above the AUD and the CAD. The question is, what is the terms (as in duration) of these investments? If you are talking a year, might see a profit, long term even with massive interest you'll only find loss. NZ doesn't have any form of development plan, the trend has been raise minimum wage (which will deflate the currency) and that's about it. All I can see is wasting money of bullshit like the RWC which will not bring a lot of money in (if we don't end up in a loss), the earthquakes haven't helped. Neither will government cost cutting or selling off assets. National is sell, sell, sell and Labour is borrow, borrow, borrow. The only good thing we have coming for our economy is the possibility of oil. When I said "at the moment", I meant a slightly longer timeframe than "today". I was talking more generally about the current trend of the NZD against the USD - for example, consider what your bonds would be worth today if you had bought them with USD in March. That's the big question, how long will these investments last? I can only see them perpetuating indefinitely. As for buying in march etc... How about you look at buying in October '10 and selling in March? :) |
Cato (6936) | ||
| 1205237 | 2011-05-28 03:02:00 | The possibility of oil? We do have same and also coal but the various Iwi and Greenies put their oar in do they not and we can't mine the assets NZ has so therefore we keep borrowing. |
Snorkbox (15764) | ||
| 1205238 | 2011-05-28 04:05:00 | The US was hardest hit by the rescission, if you look at it over all, we haven't done too bad for ourselves here. And that is why we are seeing our currency doing well against the USD.Absolutely. That's why the USD is particularly notable at present. The NZ dollar is, pretty much, as high as it has ever been. I can't see it staying there.Agreed, and the longer it does stay there the worse it is for exporters. Look at the trend against the AUD, CAD or SGD, we aren't doing well at all - you can can see anything you want if you look only at NZ vs USD but it has to be more than that doesn't it?Of course it's more than that, but the US dollar is particularly notable considering its common use as a global currency - it's not just used by the US. This also applies to the Euro to some extent. The USD lost ground against everyone and, mark my words, it will soon be above the AUD and the CAD.What makes you think that? The AUD has been above the USD for a while, and noting the shape of the US economy I can't see that changing in a hurry. The question is, what is the terms (as in duration) of these investments?They vary, but bonds are usually issued for several years. If you are talking a year, might see a profit, long term even with massive interest you'll only find loss.Long-term with massive interest, of course you'll see a profit unless inflation stays above interest rates for several years, or you buy at the top of a rather large currency peak. NZ doesn't have any form of development plan...I suspect you haven't been paying attention then; we do indeed have development plans, although the policy in this area certainly isn't as firm as I'd like it to be. ...the trend has been raise minimum wage (which will deflate the currency) and that's about it.Less so at present - this was largely Labour's trend. All I can see is wasting money of bullshit like the RWC which will not bring a lot of money in (if we don't end up in a loss)...Are you kidding? The reason that things like the RWC are worth hosting is because they result in a large cash injection into the NZ economy (generally larger than the cost of hosting the event), and provide valuable exposure for our tourism sector. Sure, the government doesn't see a direct return on its spending in that area, but that's not the point of the investment anyway - the idea is to improve the economy, not to provide a profit to the government. ...the earthquakes haven't helped.Agreed, they're expensive. Not too much when viewed over the long term, but they've certainly put a pretty decent hole in this year's budget! Neither will government cost cutting...Why do you think this won't help? The less the government spends, the less it has to borrow, and the less it needs to collect in taxes. Efficiency in the public sector is almost always a good thing, and long-term viability is essential - if the spending isn't affordable, then the government has no business maintaining it at the current level. ...or selling off assets.The government isn't selling off assets, they're part-floating them to free up capital for immediate investment in developing further assets. The end result is the government doesn't have to borrow as much do do the same job, which means it has to pay less in interest, while still maintaining full control of existing assets. These assets can then easily be fully re-nationalised when the books are in a healthier state, should this prove desirable. National is sell, sell, sell...Care to provide a source for this? Last time I looked, that certainly wasn't their policy, although the Opposition would certainly like you to think that - it makes for a good scare campaign. ...and Labour is borrow, borrow, borrow.That sounds about right! Not to mention they also can't seem to maintain a consistent position, so it's hard to figure out what they really do stand for - they certainly don't seem to be pursuing their stated ideals at present. The only good thing we have coming for our economy is the possibility of oil.Yup, although the greenies seem to be having entirely too much impact on that sector; ditto extraction of mineral wealth. That's the big question, how long will these investments last? I can only see them perpetuating indefinitely.Which investments specifically are you referring to? Bonds are generally only issued for a fixed period, and often held to maturity, although they can also be traded between other parties before reaching maturity. As for buying in march etc... How about you look at buying in October '10 and selling in March? :)The exchange rate for October 2010 was roughly the same as for March 2011, so no significant capital gains would have been realised over that period due to changes in the exchange rate. |
Erayd (23) | ||
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