Economic Weather Report: Advance Australia Fair

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Uploaded by on Mar 2, 2010

Bernard Hickey explains why foreign lenders are so relaxed about New Zealand's high debt levels.

Essentially, they see New Zealand as a suburb of Australia, which is itself a province of China. Australia is the lucky country and we're lucky to live next door. But both sides of the Tasman are vulnerable to a China slowdown and collapses in both housing markets.

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  • The dominoes will fall.  The US is tilting.

  • i call us, a farmlet , lol

  • We are not dependent on foreigners to buy our bonds. They merely choose to hold their savings in NZ dollars.

    If they net reduce their holdings, maybe the currency declines, maybe the trade deficit improves but there is no risk to the ability to sell bonds.

    NZ cannot be compared to Ireland, Greece or Iceland. Ireland and Greece use the euro and have abrogated monetary (and much of fiscal) policy to the ECB.

    Much of Iceland's debts are denominated in foreign currency and indexed to inflation.

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