BNZ Weekly Overview
Analysis – By Tony Alexander.
This week we have not learnt all that much fresh about the state of the NZ economy and most attention remains on events
overseas. Sharemarkets have again gone down then up during the week and at the end of it all the Dow Jones Industrial
Index in the United States is still only just below where it was before Standard and Poors cut their US credit rating on
August 5.
The underlying concerns remain however.
The US economy is performing worse than expected.
The US deficit is large and worrying to investors.
The US political process has proved not up to handling the task of reducing the deficit in a professional manner.
The European debt crisis continues as ever with another surge of concern always just around the next corner.
The ability of central banks and governments to react to a new crisis is heavily constrained by the need to tighten
fiscal policy, the already low level of interest rates, and the proven uselessness of printing money as a tool for
stimulating activity when people are unwilling to raise debt levels.