NZ in 2008

Just a quick note on some of my observations from this trip.

Mullets are in for NZ guys. Big, fancy mullets. They not only grow fantastic mullets, they do everything possible to show them off. They dye them in exciting colors, they style them so they curl to the left or right, they spike them and have them stand out in all directions! It's amazing, and awful...

The economy has run amuck here. Gasoline is about $6.00 (US) per gallon. Inflation has sort of gotten out of hand since our last visit. I don't know how the people here survive. Just a few years ago we thought things were incredibly cheap. Part of the disparity is certainly due to the exchange rate. On previous visits we have had the rate be as low as 47 cents US would buy $1.00 NZD. This time it is hovering around 80cents to the NZD. That's a big change, but its not all. Everything is SO much more expensive this time. A bottle of coke goes for about $3.50 - as compared to $1.50 on previous visits. Susan went to the grocery store and spent a couple of hundred dollars just buying some cheese and crackers, a couple of half gallons of milk, juice, a few bananas..... you get the idea. She would have probably spent 50 bucks at home for what she bought.

The exchange rate points to another problem for the Kiwis, and it is completely counter-intuitive. The New Zealand dollar is experiencing historic highs right now. For one of the first times ever it is trading almost 1:1 with the Australian Dollar. You would think that would be great, everyone wants their currency to be strong, right? Not necessarily - in the case of NZ - they have an export economy. Everything they produce is exported. In order for them to sell their products (timber, wool, meat and dairy products, wine, etc.) they have to ship them vast distances to get them to market. This affects the price, so they need their products to have value built in by virtue of the exchange rate. If the NZD gets too strong, no one will buy the product, and the economy suffers. For example: a wool buyer in Australia is not going to buy a bale of NZ wool if the price is the same per ton as a bale of Australian wool because he also has to pay the cost of shipping it across the ocean. If, on the other hand - the bale of NZ wool costs the same number of dollars as the Australian wool, but the NZD is not worth as much as the AUD, it may be that the NZ wool is the better value (after figuring in freight). This principal applies to all of the products that NZ produces. If it doesn't make sense, let me know and I will try to explain it again a little better, or better yet - ask me in person some time....

Interest rates are in the 8 to 9% range! One of our friends was telling us that they are having a bit of a mortgage crisis similar to the one back home. Development seems to have slowed significantly since our last trip (3 years ago). On that trip, the amount of development that had taken place in the previous 2 years was astonishing. It was as if the nation had leapt forward in time by about 20 years in 2, this time things seem pretty much the same as on the last trip. I think that's a good thing. New Zealand doesn't need to catch up any more with the rest of the world - they were doing just fine without KFC and Subway...