The Economy is recovering? sounds more like fibs to me

[Otto_Weddigen]

Ok

I just laughed my head off at the news today,the news presenter was saying NZ's economy is recovering but at the half hour mark at sports,the sports presenter said less people in NZ mainly in Wellington are attending rugby matches due to the economic downturn and this morning on the radio someone called Michael Laws who is Wanganui's mayor saying to him WHERE IS THE RECOVERY,the job market is quiet and if anyone gets lucky and gets a job its mostly part-time.I've also been actively looking for a job its just way too quiet out there,lots of people are now going on the benefit known as the dole

[Catfish]

at least the bank managers have gone back exactly to what they did before the crisis - buy unsecure bundles and screw customers, and making better gains than ever. :woot:

You know it's all just a game about who is dumb enough to trust them, and their bribed right-wing politicians.

Greetings,
Catfish

[UnderseaLcpl]

Economic recovery takes time, especially in the face a massively expanding global currency supply and stagnating economies in other parts of the world.

New Zealand, however, is in a fairly good position to recover more swiftly than other nations with comprable resources. It consistently ranks at the very top of the index of economic freedom, and the NZD has gained 25% on the dollar over the past year. On the face of it, and in the short run, that's actually a bad thing because it lowers demand for exports and investment on top of the already lowered demand because of the recession.

In the long run, though, a stronger NZD is good for the country, and more immediately, a good indicator of economic prosperity. Without going too much into monetary theory, a strong unit of currency allows you to trade worthless paper for stuff. What a great deal! The US has been riding on the strong dollar for like, half a century now, which is partially why we have the most people with the highest standard of living in the world.

It is, of course, slightly more complicated than that; all that paper has a value attached to real goods and services, which fluctuates constantly as the currency supply and the value of commodities and services are adjusted in the market, but a naturally strengthening currency is generally a good thing.

If New Zealand's economy has a problem (other than the global recession, of course), it's the defecit (and resultant public debt) you guys are racking up. As I write this, it stands at nearly 10% of GDP. I don't know enough about New Zealand to know what you're spending it on, but I can safely say that whatever it is it's worth negative 10% of the country's GDP. That's a path to economic failure, as the US should have clearly demonstrated by now. We'll take longer to fall because our economy is so big, but it isn't so big as to be able to ignore the laws of economics.

On a personal level, I'd advise any of you who trade currency to be on the lookout for the NZD/USD. Most of it's recent growth during this past year has plataued, as the dollar's fall has not matched the NZD's growth, but a long-term investment in the NZD will yield impressive gains over the next five years or so, especially if you wait for the immediate trend to bottom out, which should happen fairly soon. Alternatively, you could wait until about 2012, when there's enough real Federal "stimulus" spending to really take the dollar to a new low (the US economy will still not be stable by then, and will likely contract) but this is a less-safe strategy as the US economy has consistently proven to be very resurgent in the face of idiotic Federal fiscal policy. I have my doubts about the US economy managing anything better than virtual stagnation over the next few years, especially with the new banking regulations, massive Federal spending and increased capital gains tax, but it could gain significantly, especially if US firms start exploiting the hell out of less-developed nations to turn a decent profit, assuming the lobbyists can overcome the trade barriers. It could happen, so I prefer notto take the risk.

There's also the concern that a Republican administration will be elected to the executive in 2012 and radically reverse the "Obanomic" policies, resulting in a rapidly strengthening USD, but I see this as being highly unlikely. Republicans have a long history of completely failing to reduce government spending and the currency supply to acceptable levels, despite their platform, and I seriously doubt a new Republican administration (or Congress) will do anything differently. Nonetheless, it is a risk that must be factored into any long-term investment strategy.

In any case, there is money to be made, even in a recession, and New Zealand is a great place to do it.