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Thread ID: 81215	2007-07-20 20:50:00	The current NZ dollar inflation debate	Digby (677)	PC World Chat

Post ID	Timestamp	Content	User
570640	2007-07-21 10:40:00	The US dollar is also weak because there was a behind the scenes agreement between China and the US whereby the Chinese would invest in US treasury bonds. This went some way to addressing the US trade deficit with China and helped prop up the US dollar. From what I gather, this is no longer the case and the Chinese have elected to invest elsewhere. So yes the US dollar is falling against all/most currencies but as was stated previously, the kiwi is climbing faster than the other currencies given we are also seeing a higher cross-rate with the GB pound and the Aussie dollar. The worrying thing is that the strong currency is not based on something going fundamentally well within our economy - rather the increase is pushed from without. You raised some interesting points Robby. -Maybe have an Anzac dollar with Australia, so our dollar is tied to a for more powerful economy. I agree - the vast Australian mineral wealth combined with increasing international demand for minerals, the Aussie dollar will be considerably stronger vs the kiwi in the long term. The question is would they want us to join them? -Capital gains tax on investment properties, is also a good way to stop people profiting on properties. I just don't understand why the government is so against this. They must have too many friends who are property investors. That would be political suicide. Remember the McLeod report? Any property purchased with the intention of resale at a profit is already taxable. This is more an issue of investigation and enforcement by the IRD. Don't worry - the IRD are watching via the Land Transfer Office, but they are biding their time. - Making it illegal for real estate agents to trade in properties themselves. I have seen so many apartment complexes purchased off the plan by real estate agents, and these are then onsold by the agents for a fat profit. Agreed - it's more than just the real estate agents that are ripping off investors, but the agents have a conflict of interest. Self regulation in that industry has not worked. -Removing the ability of offsetting the loss on a rental property, against your personal income. This is currently being looked at by the government, but could end up pushing up rent prices. I respectfully disagree here (about removing the ability). I understand where you are coming from but the inability to offset losses against profits would open up a much larger can of worms. Why stop at individuals? Why not property trusts and the like? IMO that would create longer term problems for NZ as a whole. - Stricter control on lending money to people to buy household goods, and houses. The Reserve bank has recently talked to banks about this. If people can't afford to buy household goods that aren't essential for living, without putting them on HP, such as LCD TV's and gaming systems, they shouldn't really be buying them. You would expect the lending organisations would have sufficient controls in place to not lend money to people who cannot afford to repay the loan. Unfortunately the kiwi consumer has embraced the consumer culture, albeit helped along by the emotive/selfish ad campaigns from various multinational companies (Recognise these? Just do it! Go on, reward yourself! Because you're worth it! Live for the now!) So the FMCG and marketing companies should also burden some of the blame (not to mention the consumer too!) -Tarrifs on imported goods, especiallly form china. This will never happen though. It's interesting that you mention that. The US has far more import tariffs than we are lead to believe. But they expect everyone else to open up their markets. Free trade? Free for the US more like it. NZ not getting a FTA with the US is actually a good thing. I agree there should be some sort of tariffs but if we do that then we can't complain about our apples getting rejected from Europe, or our beef not getting into the US. Andrew	andrew93 (249)
570641	2007-07-21 10:44:00	is it possible for a NZer to get a loan from a japanese bank at a low rate, use that to buy NZ$, sit on it a bit (possibly buy property) and then pay it back to the japs after making a few cents in the dollar? and wouldn't doing so actually help to secure you currency investment? You could but the Japanese lender would probably want you to have Yen-denominated assets of at least the same value. Without the assets that is gambling and I suspect you wouldn't find a willing counter-party unless they knew something you didn't. If you were a gambling man you would invest in US dollars, GB pounds or the Euro now and wait for inevitable reversal of the strength of the NZ currency. Make your gains that way - but if you set out to make money from this then remember that any gains would be taxable. Andrew	andrew93 (249)
570642	2007-07-21 11:41:00	The $NZ is not tied to the $US or any other currency. It is fully convertible. There is no need to tie it to anything else. For convenience and familiarity, every other currency is quoted against the $US by most banks. Even if we want to compare the $NZ againt the Euro, most banks will first quote it against the $US and then the $US against them Euro. This does not mean the $NZ is tied to the $US. Foreign investors come and go. Inflation goes up and comes down. Interest rates go up and down. The $US will recover like it always does. There is nothing horrible going on at the moment, and people are not dying in the streets (except in Iraq etc). If you ban Chinese imports, prices go up and you get the same inflationary pressures. Exporters have been through this before and don't seemed to have learnt to cope by hedging currency or using futures to stabilise the prices. I hope they don't go cap in hand to the taxpayer again.	vinref (6194)
570643	2007-07-21 11:45:00	OK, Im going to take a stab and see if i understood whats been going on in the news. I have no real clue on how the dollar works, so please be gentle on me lol This is what I think I heard: Our dollar is too high, we buy to much. So to curb it we're going to have intrest rates put up (again) to make us stop getting loans/finance? Or does it affect buying in general as well? Hmmm it doesnt take much but i think ill stop there as the question i want to ask does not make sense if Im wrong here...:confused:	rob_on_guitar (4196)
570644	2007-07-21 12:32:00	Its all good, I just paid $80US for something that I saw in an aussie shop for $300. A few thousand job losses against my ability to consume more for less....woohoo....And the winner is my credit card vendor.:D	Metla (12)
570645	2007-07-21 18:51:00	Yes, how come when our dollar was $1.12 against the US it wasn't a bad thing? Now its less and it is? The problem is we sell sheep, logs and milk and not much else. And import crap everything else. The thing is when our dollar was a $1.12 US we were a very strong country financially we had a balance of payments surplus ! The reason was that we did not import anything. You could not buy a new car unless you had overseas funds, you could not buy blank reel to reel tapes, you could not buy any major brands of musical equipment unless you had overseas funds, you could not buy anything from overseas directly unless you bought British Pound notes one at a time from the post office. So we were really artificially strong. And no one would like to go back to that. Regards Digby	Digby (677)
570646	2007-07-21 18:55:00	Yes really the problem is not the actual rate of our dollar to the US dollar or anything else it is what we can sell our goods for. If exporters cannot make a decent return by exporting their goods/services because of our rising exchange rate they will go out of business. As PCtek says we sell mainly low priced commodity goods and we are also a long way from anywhere (freight costs and cost of sales visits etc). So we have to be more efficient and smarter than every other country, and our governments arn't smarter ! Regards Digby	Digby (677)
570647	2007-07-21 21:51:00	we need more pro-active decisions from the government, rather than re-active; because by they time they get around to acting it's too lateNo NZ governent is about to do something proactive. It would be called taking a risk, and risks are only taken after a $3 million feasibility study on said risk. You will a majority of actions taken by Labour are reactionary. National on the other hand tends to do the proactive thing only where money can be spent (remember Think Big anyone?). Otherwise its also reactionary One thing I do wonder, has Bollard (Reserve Bank governor) been doing all that he can do in this current situation? Brash (former Reserve Bank governor and National Party leader) was never in this situation (as far as I remember); was that just through current events of the time, or was Brash able to prevent things like what is happening now?	Myth (110)
570648	2007-07-21 22:14:00	The thing is when our dollar was a $1.12 US we were a very strong country financially we had a balance of payments surplus ! The reason was that we did not import anything. You could not buy a new car unless you had overseas funds, you could not buy blank reel to reel tapes, you could not buy any major brands of musical equipment unless you had overseas funds, you could not buy anything from overseas directly unless you bought British Pound notes one at a time from the post office. We made more things here too. As for buying directly, well online shopping hadn't been invented then had it.	pctek (84)
570649	2007-07-21 22:57:00	Ahah, an insert in the paper today promoting Buy NZ Made. An article on a metal products manufacturing company, oh dear, it says they can't compete now and make trinkets and are starting a cafe on the premises too for tourists. websites listed: www.buykiwimade.govt.nz Can't see a list of things to buy. Ah here we go: http://www.nzmade.org.nz/ :horrified	pctek (84)
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