Can there really be there any link between the US presidential elections and yesterday’s RBNZ signals on interest rates and the NZ dollar? Well, maybe. And it would be this: the improving US economy is reportedly putting a tailwind behind the US dollar, and rendering the actions of our Reserve Bank virtually irrelevant. Not to mention putting a dent in the protest campaign of Donald Trump.
A steady stream of strengthening fundamentals are driving the U.S. dollar higher. Healthier data from jobs, consumer spending and housing have put a tailwind on the greenback.
Moreover, America’s economy is outperforming the weaker economies aboard. And this is setting a backdrop for improved prospects for another rate hike in the months ahead….And as the U.S. is expected to deliver a steady procession of healthier data over the next few months, this should spill-over to the dollar and keep most commodity prices on their backfoot.
Meaning: if the RBNZ cuts interest rates – or doesn’t – in the coming months, the result is going to be much the same: relative to the USD, our exchange rate is headed downwards, thereby raising import prices and lifting the rate of inflation most of which will be imported. None of which came through yesterday in the myopic concentration on the RBNZ actions and intentions. Similarly, it is taken for granted that this cocktail of rising prices will be good for ordinary New Zealanders, even though their wage rates have been virtually stagnant for the past 18 months.
Besides: if 70 cents in the dollar is judged “high” you have to ask: how much of a crutch do our exporters really need in order to compete on global markets, if enjoying a 30 per cent advantage against the US dollar is still felt to be an intolerably harsh burden for them to bear? And if we have to import inflation to get it near the RBNZ’s preferred 2% target, what does that say about the depressed, deflated state of the rest of the productive economy – you know, the bits that aren’t building houses, or waiting on tables (and making beds) for tourists in Queenstown ?
Just about the only good thing in this current economic scenario is that a recovering US economy – measured by job growth, increased retail spending – is going hand in hand with increasing approval poll ratings for President Obama. This has to be bad news for Donald Trump, and for the rest of the circus entourage now winding up the Republican convention in Cleveland. His apocalyptic message can only resonate widely if and when the US economy is tanking.
Overall, it hasn’t been a great week for the Orange Messiah, starting with his tentative “do I really want this guy?” unveiling of Indiana government Mike Pence as his running mate. Quite a team: a former reality TV star for President, and a former conservative radio DJ for Vice-President. Pence gives Trump two essential : access to Koch brothers campaign money, and credibility with evangelicals, who will relish having a fellow religious zealot only one heartbeat away from the Presidency. Especially when Trump appears willing to entirely outsource the actual work involved in running foreign policy and domestic programmes.
To be fair to Trump, that’s not a major innovation. George W. Bush also outsourced most of the decision-making in his presidency to Dick Cheney and Donald Rumsfeld. Pence however, is not in their league. In early April, I wrote about Pence in this column.
Just in case you thought Trump was the nutty extreme of American politics,there’s this situation in Indiana: Governor Mike Pence recently signed a bonkers anti-choice bill into law that will not only hold doctors liable if a woman has an abortion because of a fetus’s race, sex, or diagnosis of Down syndrome or any other disability, but also requires fetal remains to be cremated or buried, whether from an abortion or a miscarriage. Providers would likely pass the costs of these funerary services to patients. Plus, women seeking an abortion would need an ultrasound 18 hours before the procedure.
(As mentioned in that column, Pence’s actions inspired a genius form of telephone activism by Indiana women.) Still, it says something about the current state of the Republican Party that a Pence seemed to be the sanest person this week at the Cleveland convention.
There was radio talk-show host Laura Ingraham giving a Nazi salute onstage. There was the delegate who called for Hillary Clinton to be executed for treason. There was Trump himself saying that (under his presidential leadership) the Russians could invade the Baltic states and he wouldn’t necessarily come to the aid of America’s NATO allies. Apparently, It would depend on what they’d been doing for America lately.
None of which makes much difference to Trump’s supporters, and to opinion polling that still has him only three or four points behind Clinton. The fascinating history of white delusion on which Trump has based his self-pitying campaign has been well documented here and also here:
Even so… if concentrated doses of Donald Trump are bad for your mental health, its hard to imagine what prolonged exposure to Hillary Clinton will do to the American psyche over the coming months, either.
UN Secretary-General shortlist
Talking of showbiz politics, the democratic and transparent part of finding the next UN Secretary General is now over. Things have now returned as usual to the secretive, undemocratic forums in which this decision has always been made; namely, the Security Council. Today, its 15 members (permanent and temporary) carried out a secret straw poll and chose a shortlist.
The results, which will not be made public, will then be shared with governments sponsoring the candidates. The point is to urge candidates incapable of securing sufficient support to drop out of the race.
The initial debates have played to the strengths of U.N. insiders like including [UNDP chief Helen] Clark, António Guterres, who served as the U.N. high commissioner for refugees for ten years, and Argentine Foreign Minister Susana Malcorra, a former top U.N. official who oversaw logistics for the organization’s peacekeeping operations; these three have displayed a far deeper grasp of the issues before the U.N. than some of their challengers.
To that list of front-runners (Malcorra, Clark, Guterres) one has to add two further women : the Costa Rican diplomat Christina Figueres (who has made a strong late run) and the UNESCO boss, Irina Bokova.
Early informal news reports have Antonio Guterres as the top of the shortlist voting, and with Helen Clark falling short of the unrealistic New Zealand expectations Since this straw poll included all of the temporary Security Council members, there’s no definitive indicator of how the Big Five (the US, Russia, France, China and Britain) will finally vote. Still, choosing Guterres would put someone with a long background in refugee work at the helm of the UN. Not a bad outcome.
The Politics of Crazy
In 1992, Texas maverick millionaire Ross Perot made Willie Nelson’s “Crazy’ his presidential campaign theme song – partly as a defiant joke, and partly because he just wanted to dance with his wife to a song he liked. This year, it feels more literally true of the presidential contest… but no-one really needs an excuse to listen once again to the great Patsy Cline: