|Last Updated: Mar 25th, 2013 - 16:46:15
Thought for the Day
Lao Tzu, the sixth-century Chinese poet:
“Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.”
Feb 8, 2008, 10:35
Credit Crisis: Precursor of Great Inflation
The Americans had a boom in the stock market in 2000 followed by a bust. Greenspan dropped the Federal reserve interest rates to 1% and produced a boom in housing. This is now going bust as sub-prime mortgages create the Credit Crunch. The solution according to Federal Reserve Chairman Bernanke is to lower the interest rate again and supply more money to the market.
Government interference causes booms and busts. They can only do this because they have complete control over the paper money printing process.
Bernanke has lowered the interest rate 0.75% and a week later by another 0.5%. This action is unprecedented. What will happen in the USA?
New Zealand continues with the highest interest rates in the world and the highest unaffordability of housing in the world by a wide margin. Pundits are picking (Westpac in this morning's paper) that our Reserve Bank will push interest rates up even higher. How will the Labour government interfere to make this situation worse? This year looks interesting.
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Feb 8, 2008, 10:23
Welcome to the 2008 Meltdown
Austrian Economics predicts that after the crack up boom comes the bust. Unfortunately because politicians and their Central Banks can behave unexpectedly it is not possible to predict just when the bust will occur.
At the moment it certainly looks as if 2008 could be the year. Can our government save us from the paper money melt-down?
This web site makes for compelling reading!
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Feb 7, 2008, 12:05
Stein Half Full
We can learn a lot from other countries. We can see what strategies are successful and what are not. Germany has a large welfare state attitude but it has a lot else besides.
I see in this morning's paper that Dr. Cullen is looking at tax cuts and one of the criteria is that people should not have incomes that are too much above the average. This socialist ideology always ends in evenly shared poverty. The enterprising and energetic leave for Australia and other places (77,000 last year) and our Labour government is the cause.
When our housing industry starts to falter, what industry will we have left? Can the dairy farmers save the country?
Perhaps Labour should take a leaf out of Ireland's strategy book and reduce tax to 10% for companies and then stand back and watch the growth!
Feb 7, 2008, 11:31
China's Fear Of Inflation
The dot.com boom became the dot.com bust and the Federal Reserve under Chairman Greenspan dropped interest rates to 1% and flooded the place with cheap money. This caused the property boom which has turned to a bust and the new Chairman is flooding the banks with "liquidity" (money sounds a bit crude and obvious - doesn't it?) in the hope of avoiding a recession. Britain has a bank run at Northern Rock, the French now have a "sick" bank and the Spanish are being bailed out of a property bust by the European Central Bank - they hope!
And some say that the world economy has de-coupled from the USA. "We should be alright because of China".
So what is happening in China? Can the Socialists (Communists?) make better capitalists than the Americans? Or will they revert to the "command and control" methods of yore?
The Economist has a look.
Feb 4, 2008, 12:58