With that election thing finally out of our hair, we can focus on the fact that things aren’t looking good out there.
Krugman puts up a nice illustration of how this really is the fault of the Euro. (It would help if creditors and debtors just accepted that they need to take a bit of a bath)
And markets are now picking rates in NZ to be lower in a year’s time. This is the extent of the positive news – again we are relying on European policy makers … I just don’t know if they deserve any trust anymore.
But, there is one thing I’ll give us here in NZ – a collapse of the Euro-zone isn’t necessarily going to be as bad for New Zealand as continuing uncertainty in financial markets. The key is what happens to growth in Asia (given that it accounts for so much more of our trade now), and for now our dollar is pointing to a reasonable outlook for commodity prices. But if there is anything we remember from September 2008 its that this can turn …