RT @JoshBBornstein: 65 year study confirms my research: Tax cuts don't lead to economic growth. Ping @Nick_Xenophon , @BCAcomau https://t.…
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RT @attn: .@Schwarzenegger has a blunt message for Nazis. https://t.co/HAbnejahtl
18/08/2017 9:38 PM
RT @PositiveMoneyUK: Make Monetary Policy Fair: It's time to explore alternatives to 'conventional' QE. https://t.co/m6CFVojm7w #QEforPeopl…
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@deirdrekent To be expected when income is taxed and capital gain not...
16/08/2017 9:22 PM
@bernardchickey @YourHomeLoanNZ Add ring fencing loses / deal to negative gearing and we might see some balance develop in the economy.
16/08/2017 7:36 PM
@bernardchickey Or take the job and do the right thing anyway - the RBNZ is "independent" after all...
16/08/2017 7:34 PM
@bernardchickey Not take the job because you would know you would be on a hiding to nothing. The link between earn… https://t.co/nxPRuAaT6t
16/08/2017 7:31 PM
RT @theyearofelan: Sure, the cancer was aggressive. But the chemotherapy was also very aggressive. There was aggression on both sides
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@bernardchickey DTI+LVR+OCR all needed for financial stability & inflation.RBNZ can then push back on dumb policy f… https://t.co/CqXISZUHGq
16/08/2017 7:27 PM
@SelwynPellett Farming capital gains makes it hard to pay current expenses hence the need to externalise costs. Th… https://t.co/J1yevZAHft
14/08/2017 5:46 PM
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4
JUN 10

Export and Carry Trade Exposed




The problem is New Zealand is both trade and carry trade exposed. Exports at 30 odd percent of GDP and the weight of the carry trade, even now the wires say we see the NZ$ traded at 43% of GNP on a daily basis (by the way that is the highest in the world).


There is a feeling – again largely in the non-traded economy – that inflation pressures are growing. Hence the conventional unidimensional approach lift the OCR, that drives the carry trade and lifts the dollar. That of course lowers returns for exporters – the last time I looked that included the agricultural sector as well as manufacturers.


I have to say I have no idea how Federated Farmers can claim to represent their trade exposed members who did not climb on the bandwagon of farming capital gains, sacrificing their needs in favour of the ones who did and in so doing helped create the mess we are in.


A macro prudential response is the only one that does not come with an exchange rate kicker and that is the only one that can damp inflation pressures and support exports at the same time.
Is this really so hard to understand.

In a deleveraging world income statements are much more important that balance sheets.
 


tags: exports, trade, macroprudential
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