Sunday, 26 October 2008


That has been the line that Labour has been running for a while here in the NBR

Here is the pertinent bit

But Dr Cullen said banks were not facing a crisis in the short term, giving the government time to work on details of an extended scheme.

“They will get to a point probably this side of Christmas where they will be needing to review some of their existing loan facilities; now we have plenty of time to work through what an appropriate response might be,” he said.

Dr Cullen emphasised there was no need to rush the scheme through and it was crucial that it be carefully designed to suit New Zealand’s financial sector, which is overwhelmingly owned offshore.

But today's headline in the Herald shows that the banks are at least hedging their bets and with the run on the dollar last week - which is essentially caused by the Carry trade money, the money ma and pa Asian investors have had invested here because of the high returns for depositors. Now they are not reinvesting that mloney and have taken it back home to put under their futons.

So the upshot is we have a little less money in our banks than we did.

And if you want a really really good ( even bustedblonde gets it ) article on the carry trades and their impact check this out at NYTimes here

Thanks to the Sweeper

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