On the exchange rate, and faux prudery about politicians

Given all the other problems facing the New Zealand economy, the exchange rate is among the least likely to engender much sympathy among the ordinary public. And that’s not simply because the latest spike in the exchange rate was entirely self-inflicted – thanks to the Reserve Bank’s signal to global markets yesterday that New Zealand plans on raising interest rates at year’s end. We could hardly have given a clearer “shop early for Christmas” message to currency speculators.

There are other reasons for feeling annoyed about the exchange rate “crisis.” As the government likes to remind us, the current situation is less about the strong NZ dollar than about the ever-weakening greenback. More to the point, the focus on the dire state of the USD routinely neglects the favourable exchange rate that Kiwi exporters enjoy over their Australian rivals. That’s worth spelling out in detail before we break out the tissues. Remember the trans-Tasman market? Isn’t Australia supposed to be a crucially important domestic market and trading rival for us? If so, shouldn’t business be celebrating the edge we have over the Aussies rather than always beseeching the government to bail it out vis-a-vis the greenback?

Yes, the NZD has been up at 82-83 cents lately against the US currency, the highest since our currency was floated in the mid 1980s. Aussie exporters though, are actually at parity – or worse. This week, the AUD is being traded at $1.06 to $1.07 against the greenback. Add to the fact that while the NZD has been edging slightly upwards against the AUD it has been only at 76-77 cents against the Aussie dollar for the past week. Is that significant? Yes. After all, look where that relationship was back in early June 2008, when we were up at 79-80 cents against the AUD. Or take the first week of June 2005, when our exporters were labouring in the 92-93 range against the Australian dollar. There’s been a very significant easing in favour of New Zealand exporters.

In fact, you could argue that our exporters are at a terrific competitive advantage against the Australians right now. Both when you put the two currencies head to head and – indirectly – if you pit both against the greenback. New Zealand enjoys a similar currency advantage re the Australians with respect to our relative positions against the euro, the yuan, and the yen as well. In sum: in our nearest major market, our exporters are enjoying a marked advantage over the Australians in all respects, currency-wise at least. That’s even before you take into account the cheaper labour costs here. Perhaps business should simply lift its game – rather than be always bewailing government regulation on one hand, while asking for tax cuts and currency assistance on the other.


Would-be scandals, home and abroad.

It has been an odd period for the private lives of politicians, worldwide. This week has seen the dropping of the Police investigation into a complaint laid in March against former Labour MP Darren Hughes.

Wellington District field crime manager Detective Inspector Mike Johnson said the evidence… has been properly considered, both internally and by the Crown Solicitor’s Office in Wellington.

“After this careful consideration, the allegations do not reach the evidential threshold required to bring charges,” Mr Johnson said. As a result, no charges will be brought against Mr Hughes.”

While senior members of Labour are already talking about a return to the fold for Hughes – who dutifully fell on his sword for the sake of party and leader – that should still be some way off. After all, what has been established by the Police is that the evidential threshold for bringing charges hadn’t been reached. The propriety of Hughes behaviour and judgement on the night towards a Labour supporter many years his junior is still worth consideration before Labour hangs out the “all is forgiven” sign.

That’s why the current criticism of Labour leader Phil Goff that if he’d just stood Hughes down until the Police inquiry was over… then everything would now be hunky dory, seems entirely wrong and misguided. That course of action would have backfired.

If he had remained an MP, Hughes would still be – particularly if he had wanted to continue in his Education role – in an indefensible position, and would be being pressed right now to explain publicly what did happen that night, thus re-igniting the entire issue. This way, the matter can be let quietly die, and Hughes can come back for the 2014 election, hopefully having learned something about judgement and responsibility in the interim. Personally, I think Hughes still owes the public an explanation, and (perhaps) an apology.

Overseas, the hapless US Congressman Anthony Weiner has also learned something: even if it is only that sending out crotch shots of yourself to your Twitter followers in general and to young women in particular is a bad thing to do. Lying about it afterwards – up to and beyond being unable to confirm or deny whether those underpants in the photo were really yours – is also very unwise.

As things stand, Weiner has lost his career, his aspirations to be New York mayor, and (probably) his marriage over what looks like compulsive sexting behaviour. To date, Weiner’s left wing reputation has rested atop a bedrock of his absolute and unquestioning support for the state of Israel – which makes it doubly unfortunate that some of Weiner’s sex texts happen to have mentioned the alleged abilities of Jewish women at certain oral sex practices. According to the New York Post, this hasn’t been well received by many Jewish voters in his electorate.

Still, it was all online. A sex scandal in virtual space, without sex. The feasting by the US public on Weiner’s demise has been interesting to observe from afar, given the Victorian delicacy of our media on such matters. To date, the most succinct commentary I’ve read of the public’s faux prudery about l’affaire Weiner has been this one by Susannah Breslin in Forbes magazine:

Americans are fascinated by political sex scandals because the politician is doing what Americans are doing but won’t admit, or what they wish they were doing but won’t say, and Americans, rather than confess their natural tendencies or sexual fantasies, would rather criticize those political figures who there, but for the grace of God, are doing what Americans wish they were doing.


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