Well at least that is what the title says. Reading the article indicates to me that the commentary is not on the current crisis at all – but about how we grow when we come out of it. Infometrics seems to be of the opinion that once the crisis is over, fundamental imbalances in the domestic and global economies will drive us back to high current account deficits and a worse net debt position.
Once this happens, a global economy that has recently been stung by risk loving behaviour will punish us – forcing us to take on an adjustment that we didn’t complete during the current crisis.
Now I buy that reasoning. But my only question (which isn’t covered in the newspaper article) is, what are the structural factors in the New Zealand/global economy causing this imbalance. Is it our artificially high exchange rate (against fixed Asian currencies), is it artificially low interest rates, is it no capital gains tax, is it poor financial education, is it an inherent bias towards housing as an investment vehicle, is it poor investment decisions by firms, is it uncertainty surrounding policy?
Without an answer to this question, how are we supposed to know what New Zealand is supposed “to learn” 😛 .