By Alex Tarrant
The US economy is set to "take off" as energy prices collapse and policy makers there navigate around the fiscal cliff issue, New Zealand ambassador to the US Mike Moore says.
Speaking on TVNZ's Q&A programme on Sunday, Moore said he thought the US would "work it through" its current economic challenges
"Even the modest growth rates America’s got now that people are critical of, that beats the pants off Europe; Japan, which is flat," Moore said.
"I think the American economy will take off, frankly. They’ll get over this fiscal issue. It won’t be pretty, but they’ll get over it," he said.
"Seventeen of the top 20 universities, 80% of the Nobel Prize winners, 40% of the world’s expenditure on science and innovation in this country.
"The energy costs are stunning. In the next couple of years, they’ll produce more oil than Saudi Arabia. In the next couple of years, the unit price of energy input to industrial product will collapse," Moore said.
No exemptions for TPP
Meanwhile, New Zealand was demanding no exemptions from the Trans Pacific Partnership trade agreement in its quest to get trading partner agricultural subsidies scrapped.
But it may give a bit on the intellectual property and investment side to achieve this, Moore said.
"In a couple of weeks, 500 negotiators will descend on Auckland, and this will be the next round of our negotiations. The President [Barack Obama] has been forward-leaning. He’s used the word “comprehensive”.
"We’re saying no exemptions. This is not easy for anyone. There are certain sensitive products that America has that America has to face – issues like sugar. That’s not important to us, but it is to our friends in Australia. And we all have to work this through," Moore said.
"We’re hopeful that we can tie the negotiation up by the end of next year, in terms of the APEC meeting, and then it’ll be another year or so to get it through Congress. But the Congress has been supportive of trade deals. They have done Colombia. They have done Panama. They have done Korea. And this is a good for the American economy," he said.
Congress would sign up to TPP as long as it was seen to be balanced.
"As long as in [the] American Congress, people can say, 'Listen, we’ve got something on intellectual property here. We’ve got something on investment. That means we have to do something in ag or some areas,'" Moore said.
The government was firm on its position over drug-buying agency Pharmac.
"Well, we have our red lines. Our government has said that the idea of us centrally purchasing offers for our public health system is going to be preserved," Moore said.
"Now, you might do some transparency or signal some stuff, but the core concept of a publicly centralised single purchaser of pharmaceuticals in New Zealand is a red line for New Zealand – as it is for Canada, as it is for Australia, and both those countries have done deals with America," he said.
Japan will slow TPP signing
Also interviewed on Q&A was Mike Green, senior vice-president for Asia at the Center for Strategic and International Studies. Green helped Mitt Romney's US Presidential election bid with advice on Asia issues.
He said he was confident TPP would be completed within President Obama's second four-year term.
"I don’t think it’ll be finished this year, which is the goal, because I think Japan will start to come in and it will be worth accommodating Japan. It’s a huge economy. And I think countries like Vietnam and so forth are going to have some political difficulties," Green said.
"But in the next four years? Yes. I think the President knows – and there's bipartisan appreciation of this," he said.
41 Comments
The US is less riskier to invest in than China over the next few years and particularly China will have a difficult 2014. I think there is good value in the US economy with government policy of money printing that will be favourable to property price appreciation in the US. The US is currently in a better position than Europe but both are going to have very slow growth over the next 5 years, but in this time some parts of the economy will be doing well and other parts will be doing badly. The bears wil be out in force for 2013 and 2014. Oil prices could be attractive in the short term but as soon as Israel makes a move on Iran, oil prices will double.
he's an idiot living in la la land and has just proven it.
"The authors argue that "oil is an essential precondition for the continued viability of many modern technologies." They believe that many processes simply won't work and many devices can't be produced below a minimum supply of oil. They also assume that substitutes are difficult to make. This outlook spikes the price of oil by 400 percent in real terms over 20 years."
At least the IMF looks at it globally...
"[I]f it really only takes a one third of one percentage point increase in oil supply per annum to support additional GDP growth of one percentage point, then it must also be true that it would only take a one third of one percentage point decrease in oil supply growth to reduce GDP growth by a full percentage point. And the kinds of declines in oil supply growth that are now being discussed as realistic possibilities are far larger than one third of one percentage point."
Those declines range from 4 to 8% as realistic...with 12~14% possible....
regards
Um, ...I'll go with Moore on this , Wolly, knows his way round the traps, well connected and knows whats going on around him.
So you will excuse me if I don't take your unquantified statement as gospel......care to put a difinitive time on their cliff dive...?
You see Wolly ,it's a bit like the E.U....everybody knows it should implode, everybody has a reasoned argument as to why it should.....but there it is , still dragging along three years later and no sign of total collapse.......save in Bernard's regular column updates, but hey sells newspapers and keeps investors on the fly....don't it just.
The problem with physics is people, people always looking to.."buck" the laws of it.
BTW...good to see you round a bit now....it helps.
Come on Count give Wolly a break, this predicting the future business is hard work :-P
Having managed to put some sort of mathematical model to the money supply it is clear that there is plenty of headroom to print for a few more years yet. Eventually the stats will all plot parabolic, and while certainly late on the curve I would say we should see at least double or even triple the quantity of money currently swimming around.
A black swam event could bring the cards down earlier but I reckon civil war or a coup within the EU is the magnatude required. Again, plenty of headroom there also. 4-5 years perhaps. If I recall the BIS have changes scheduled for 2014, so you would have to look at that as stacking the deck I reckon.
Christov - you should be able to think deeper than that.
For a start, Moore is an ideologue, and the ideology involved is a nonsense - makes no allowance for the finite nature of anything, but expects growth ad infinitum. Clearly horseshit,
The only question is one of when it 'flies off the cliff', and the answer is half-way through the first resource that is (a) essential, and (b) irreplaceable. Displacement-at-a-certain-cost, doesn't work for energy, unfortunately.
And it is telling that he has to put up a mistruth to attempt to validate his statement. The USA peaked in 1970, and even that was short of current Saudi production.
Anyone with 'critical literacy' skills of even a moderate nature, have to be able to see through this:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10842990
Can yo spot it?
His other wee problem is that prices are only low, in this cherry-picked, dwindling-quality essential, because of lack of demand. If the US 'takes off' (and it's 25% of global oil consumption, right there) the price at the margin will ramp, and that will abort lift-off somewhere around the end of the - now potholed - runway.
His is a dead ideology - though you would have known that.
So right.
Dont know if you can see this. It encapsulates everything you have been posting about. If you havent seen it before, watch closely when it gets to bit about corn production and fertiliser use, and irrigation and the total lack of concern about the leachates going into the aquifiers, pity those sucking the hind teat .. and the hormones used to bring young beef cattle to market in 6 months ..
Some of us try PDK. What do you think of my own mental gem?
Over in another thread, Scarfie has been having a discussion with Stephen L about the nature of banking and 'savings' which for some reason we always think of as a monatary phenomenon.
Stephen L has been discussing the main stream economics understanding of money (of course a deeply incorrect notion, what else should we expect from the main stream), but some time ago I did have a brain wave about this. Oil (at least oil reserves) are probably the only thing we know of which actually resembles 'savings', e.g its something you can conserve and which actually makes the economy run more efficiently when you 'invest' it.
If only Moore was a bit clued up, and wasn't advocating a bender (which he thinks will make everything better long term).
A genuine brain wave, if I do say so myself. Would you agree?
I think PDK you are having a different point to make than the one I was making to Wooly, I have no argument to support growth infinitum, in fact you know my opinion to be quite the reverse.
In the case of imminent financial destruction of the U.S. economy, as in the ability to adapt to change both forced and naturaly occuring, yes, I do not agree with Wolly and further believe on purely an investment basis it pays to heed people who are well connected to movements in global financial affairs....whether they be idiots or not., not to mention the inexaustable supply of low life in high places.
If I take at the table of those who continue the farce, I don't see it as a contradiction to my beliefs or ideology, just a measured opportunity to capitalise on the game at hand.
Purely a financial comment , not an ideological shift in opinion.
Less is more....the numbers have to come down, growth for growths sake will be the doctrine of mans demise as a species....clearer..?
Another la la lander....energy prices wont collapse,
"The authors argue that "oil is an essential precondition for the continued viability of many modern technologies." They believe that many processes simply won't work and many devices can't be produced below a minimum supply of oil. They also assume that substitutes are difficult to make. This outlook spikes the price of oil by 400 percent in real terms over 20 years."
Ergo if he thinks that then the opposite should hold true....as above from the IMF working paper which is also supported from Robery Hirsch's work in 2005....
regards
So Mike Moore is going to help shaft us,
""As long as in [the] American Congress, people can say, 'Listen, we’ve got something on intellectual property here. We’ve got something on investment. That means we have to do something in ag or some areas,'" Moore said."
Great, just great.
regards
Having lived there, and still with biz ties, Moore is mirroring my gut feelings. In being reset down so savagely since GFC, much of the BS has been removed, whether it be high RE values, or employees who think they're irreplaceable. Given their dollar is reserve currency resting on crude, there really is no way to ex them out completely, rather just a matter of if they are OK, or OK'er. This leaves NZ's turn for a similar reset wanting.
Pitty not everybody is on board
http://www.zerohedge.com/news/2012-11-10/foodstamps-surge-most-one-year…
http://www.telegraph.co.uk/news/worldnews/northamerica/usa/9670585/US-g…
I went to a local gun shop Saturday and the parking lot was full. I had to park down the street and once in the shop, the aisles were full. It was 3 pm and the gal running the register told me this was their best sales day ever and they had 3 more hours before closing ! They were sold out of .223 ammo.
And people said Obama wouldn't stimulate business.
Yep that one stood out loud and clear amongst the rhetoric, in fact it was the only part that wasn't.
Someone handed me a November Lifestyle Block magazine the other day and I see your contribution :-) Have you got yourself a regular column there? You know the one thing I can't wait to see is the sharing of machinery. Around these parts it is a weekend playground for Aucklanders and every third bach has a big boat and a tactor to lauch it. Seems nuts to me as they are used so infrequently. Agricultural and horticultural equipment would be in the same boat.
Yea, things that will always hold America back a bit as a lifestyle option, from Kiwi perspective (in order of importance);
- Out of control, trigger-happy cops with guns and impunity.
- Bitter politics, extreme right-wingers and any type of zealot.
- Health system ranking needs of patients quite low.
- Labyrinth IRS code.
- Poor quality of processed foods.
- Criminals with guns.
- Being surrounded legions of loud and obnoxious.
- Long queues, offhand customer service and ridiculous amount of time on hold.
Any others I forgot?
Politicians bought and paid for by and for the benefit of Big Banks, Big Business and Big Military.
Hysterical obsession with virtually non existant Islamic terrorists
The suspension of Habius Corpus executed by Presidential Decree
Frisk searching little children and old ladies at every opportunity.
Despite that most Americans are OK,(well the ones I've met anyway) as well as being among the most entrepenurial. They'll bounce back. Their Government, though, look more and more like an out of control locomotive. Can't change course, can't slow down. In a word;Scary.
From one of the posters on that article - apparently, if Jesus were alive today he'd be packin' an AK-47;
And that's the problem. I look at everything through the prism of my
faith. No apologies. I am a Christian who happens to be an American,
and not vice versus, there is a difference. Since I believe that God is
sovereign in all things, I view the election as God's judgment against
what America has become.
I am deeply troubling in the temporal, but not in the eternal. It is
appointed to man once to die and then face judgment. Among other things,
we will be judged by the character we render in the times in which we
have been ordained to live. May God grant me the grace and mercy to
live in these times in a manner that will honor and glorify His holy
name.
I don't find gun ownership to be contradictory with my beliefs and my
faith. I find that most people that throw Jesus into the balance of
this equation haven't read the Bible. Jesus was not a warm and fuzzy.
An honest reading of the gospels should quickly dissuade any0ne from
that notion.
Haha yes these types are quite humourous. One thing that Jesus never did was engage in politics, even right to the end he shunned it. Under questioning from Pontius Pilate his response was "my kingdom is no part of this world. If my kingdom were part of this world my attendants would have fought that I should not be delivered up to the Jews. But, as it is my kingdom is not of this source." John 18:34
I love the bit from Pilate in the same converstation. "What is truth?".
It won't happen. Not with 10,000 baby boomers going into retirement every day, taking their earning and spending capacity with them. The United States would have to produce double Saudi Arabia just to meet its own needs, much less "more than Saudi Arabia." He makes no mention that Russia produce more oil that SA, which too matters. He also did not mention that the #1 source of imported oil is Canada, and the SA fields are getting old, not producing like they used to.
The US has been importing energy for 40 years. That doesn't change in 2, assuming this mythical energy source reveals itself. More propaganda. Things are going to get worse, much worse. This is the end of the beginning.
The whole idea of energy getting cut in half is a pipe dream. Yes, it might get cut in half...as in the last Depression, because people were going on foot and by train to save!
Mike Moore is correct on the oil. America has more oil than saudi Arabia thats a fact
peak oil is a myth. North Dakota has over two hundred years of oil under it at lest
and thats at current drilling rates. The us goverment surveys discovered vast oil
reserves in the US in the 1970s but have sat on it for geo political reasons manly to
peg the oil trade to the US Dollar . The Arabs are finished the times are a changing
PDK just watch and see what happens in the US oil production in the next few years.
The biggest oil rig ever built is sitting off prudoe Bay in Alaska NOW just waiting for
the go button.
BAZ
It almost doesn't matter if whether North Dakota is completely true or not, but something is definitely happening there. Might have to take a drive next time I'm up. Depending on who has more 'torque' in the markets will make the difference, and there seem to be quite a few believers. If the US bulls get purchase on this, that's a big sell signal for NZ.
no effort required really its quite comical the stuff that is repeated over and over again
on this blog the facts are there America is drilling big time go look not in the dom post
nz herald .go on the net investigate what the mid size oil drillers are doing.exon and
conco philips, bp are buying up vast amounts of land to get a share many smaller oil
drillers have purchased the rights to drill and are doing very well.the world is changing
oil is going to have a massive effect on the US economy Barack Obama is against this
of course but he wont stop it. most of media is spin and lies peak oil my arse theres
plenty .
Baz
ASPO etc has investigated, its a ponzi disaster......Mike Moore might be well thought of, but he's swallowed the oil industrys spin hook line and sinker (for good reason his ideology is toast).....and using it as an excuse to see us shafted by the USA in the trade deals.....
So lucky us, we get to sell them the odd carrot they get to pillage our high value tech industry and knee cap whats left, a NZer job killer if ever there was one....
You are totally right on oil's effect on the US economy Baz, just not in a positive way, it will toast it....
regards
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