Switzerland going broke, too?

Looks like debts in Swiss Francs going bad in Eastern Europe could make a mess of the Swiss financial sector. The Swiss Franc has long been viewed as one of the most stable around. That reputation has seen the value of currency rising rapidly, making those Eastern European debts even more precarious. 

In another interesting development, the Swiss National Bank recently began selling debt in US dollars. This story suggests it is doing this to cover part of the US$60 billion in toxic debts held by UBS, Switzerland's largest bank. 

The more you look into the detail, the more all this looks like a bathtub full of worms....  

Downward Kiwi dollar

With the Kiwi dollar on the way down, it's interesting hear Reserve bank Governor, Alan Bollard, talk about having lee-way to reduce interest rates further.

A falling dollar will fuel inflation further for imported goods like oil......and almost everything else we use daily other than food and toilet paper....even if the price overseas hasn't increased, which they are.

It's hard not to see the interest rate moves right now in a wider political context. As usual, time will tell.

Auckland, NZ Dollar, ARTA, End-time silliness

Several things happened (or failed to happen) today that are noteworthy from my point of view.

Last day: Royal Commission on Auckland Governance

Today was the last day for submissions to the Royal Commission on Auckland Governance. I got mine in on time. Did you?

In order to bring some measure of coherence to the Auckland urban area and put us all on the same page, I recommended a single city with Councilors elected from up to 7 wards. There would be between 5 and 9 councilors elected from each ward, depending on the population. These Councilors would be elected by Single Transferable Vote (STV) rather than the current first past the post voting system. STV would allow for robustly democratic and diverse outcomes with more equitable representation among the communities that compose Auckland. The Council should be 35 to 50 (or maybe more) in number. There would need to be enough Councilors to sit on the relevant committees that would capture input and feedback from people and groups in the Auckland region.

I submitted that the Mayor of Auckland should have little, if any executive power and act instead as the Chair of the Council. The Mayor's job would be to find common ground and build consensus and cast the deciding vote, but only if necessary. There should be no "Presidential mayor" that would polarise rather than bring together. The Mayor could be elected from across the city or elected by the Council from among their number. This is provided the Council is elected by STV.

In response to the local governance issue, I said I saw no reason why any part of Auckland would need special laws that could not be passed by one council. There may be special circumstances in some places, but they should be recognised within the regional framework and addressed in that context.

There was more, but that is the guts of it.

NZ Dollar

I've heard some business people complaining that the NZ dollar is "too high" (against the US dollar) and lamenting the policies of the government that made it so.

But let's look at what's really going on.

The NZ dollar has fallen against the Euro from €0.54 two months ago to €0.49 today. It's fallen against the Aussie dollar from AU$0.88 two months ago to AU$0.84 today. The NZ dollar has fallen against the Yen from Y87.5 two months ago to Y81.5 today.

The Kiwi has been declining or stable with respect to the currencies of many countries we trade with other than the US. One of the reasons our currency is desirable is the good performance of our economy against global trends.

It's the US dollar that is going down against everyone - even the Chinese, who have their yuan set to "sticky" mode in relation to the US dollar. In fact, the US greenback has been in serious trouble ever since George W Bush decided to cut taxes while simultaneously exploding a fiscal debt bomb when he invaded Iraq and decided to stay. After the invasion, the US Fed increased interest rates for 11 straight quarters, and central banks all over the world followed suit in order to compete for capital against the black hole of US debt: public and private.

Those higher interest rates in the US, driven by the US Federal reserve rate rises, arguably lead to the sub-prime credit crunch by taking interest rates well outside previously expected bounds.

None of this was in any way controllable from New Zealand or any other country.

I'd like to know why our exporters and the people they trade with still price their products in US dollars.

The Euro would be a much better option. We've been relatively stable against the Euro.

Why do people seem to expect theNZ government to indemnify them against the instability of the US dollar with policies that would keep our dollar going down even faster than the plummeting greenback?

That makes no sense to me. Why would we want to have an economy in even more trouble than the US economy in order to see our currency plummet even faster than theirs? If anyone thinks they have a good answer to that one, I'd love to hear it.

If we had a "40 cent" Kiwi dollar, we could be paying close to NZ$4 for a litre of petrol. A 1kg block of cheese at $13 today would be more like $26. Would your wages track that? I'm thinking not. Hands up everyone who thinks that makes any sense?

ARTA and Children

I finally got a response from ARTA (Auckland Regional Transport Authority) today about Birkenhead Transport not allowing school children on peak-hour buses.
Here is the (anonymised) letter:

Thank you for bringing to our attention the matter of the school buses
operating in the Birkenhead area.

Following direct communications with Birkenhead Transport, operator for both the regular bus services and the school buses, it has been confirmed that the regular services are available for any fare paying passenger, including school children. Therefore, the service is provided in accordance to existing public transport policies. If any incidence of this policy not being followed does arise, please let us know and it will be treated on an individual basis.

It is important to note, however, that we strongly recommend that school children make use of the school buses available. This responds to operational considerations related to the needs of commuters to the city as well as to the numbers of school children required to justify the existence of a school bus service. It is ARTA's responsibility to monitor that the school bus services are well patronised and therefore guarantee that its provision is an appropriate use of resources.

Lastly, I would like to take this opportunity to inform you will be hearing from us shortly regarding other concerns you have raised.

Best regards

On behalf of ARTA

Great to hear that children in Birkenhead Transport's area of operation should now be able to board any bus. Thank you, ARTA.

I note the comments regarding operational considerations and the need to support the school buses. While perfectly reasonable on one level, ARTA hasn't dealt with the reality that the school bus they urge us to use leaves at 07:43am and arrives at the school at 07:56am. That's 50 minutes prior to classes commencing. Other options offered on the Journey Planner were to walk the whole way any time you like or take a 7-hour two-step via the morning school bus to Northcote and then take the afternoon (after school) school bus from Onewa Rd to St. Mary's Convent School....then walk 500 metres to Birkenhead College to arrive after classes have ended for the day. That one was just silly.

I responded and asked politely if the person writing to me had checked the timing of the school buses. It isn't much use offering a school bus at a time so early it has little practical value. Or one that takes all day and arrives after classes end. I included the relevant options (as above).

I'm waiting to hear back.

End of the World

Pastor Ronald Weinland, "end-time witness" and head of the Ronald and Laura 'god-family', hasn't posted anything more on the First Trumpet sounded at the opening of the Seventh Seal since the 18th, so I'm assuming the world is OK for now. Fingers crossed. He was in Palestine for the big (non) event. He should be back in the US by now and may be laying low given nothing whatever happened. The only part of his prophecy that came true was that the few people who were aware of his claims did make fun of him and there was some mocking. Perfectly reasonable under the circumstances, but probably only feeding Pastor Weinland's sense of righteousness. So no more mocking. After that last bit of mocking. No, really.....No more.