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Re: [sharechat] Update on the 'heroic' US consumer

From: "mrgoodall" <>
Date: Sun, 1 Jul 2001 20:41:44 +1200

As  always  we  tend  to  follow  rather  than  lead,  a  tax  cut  is  going  to  help the  Americans,  why  cant  we  do  it ?  that  would  lead  to  more  money  flowing  into  the  economy.
look  at Singapore  they  have  companies   entering  their  country    they  dont  have  to pay  tax   for  the  first  five  years  , why  cant  we  do  the  same  (    this  would  help  our  economy , we  must  remember  if  a  company   employs  a  thousand   people   (    creates  new  jobs  )    they  are  paying  tax!!
Look  at  Ireland  10%   company  tax  rate   their  economy  is  booming!!.
We  dont  need  to  follow  everyone  else   if  we  lead   they  will  come  here
what  are  the  powers  at  be  afraid  of     ,  maybe  they  just   dont  have  the  foresite, even  if   they  cant  come  up  with  any   new  ideas   why  dont   they  just  copy   the   best  economies  ??.
very  frustrating
Mike G
----- Original Message -----
From: Peter
Sent: Sunday, July 01, 2001 7:52 AM
Subject: [sharechat] Update on the 'heroic' US consumer

A few weeks ago I related US consumer's 'heroic' efforts in stopping the US from sliding into recession.
The Fed gave them a pat on the back the other day by lowering interest rates only 25bps - the Fed obviously thought that these 'heroic' US consumers were winning the battle.
Are they? Read this bit of startling research from MGIC Capital Markets Group

"American homeowners are in the process of rewriting the traditional rules of refinancing: rather than getting a new mortgage at a lower interest rate, they are taking out larger loans at rates slightly higher than what they were paying before. After a statistical analysis of recent refinance transactions in a 14 million-loan national database, mortgage market researchers report that the average borrowers in the current refinancing boom took out loans $41,000 larger and at an interest rate 0.6 of a percentage point higher than they had prior to the refinance. Why would people do that? Because they have credit card debt and other debts that at even higher rates! And it's getting harder and harder to pay them"

Only time will tell whether the 'heroic efforts' of the US consumer will win the war over recession.

We in NZ should follow this battle closely. If the 'heroic' consumers lose the war we are in trouble.

A recent paper from WestpacTrust says that any slowdown in the US is likely to exert a significant negative impact on NZ's growth prospects. One piece of data form the report was that a 1.5 percentage point drop in US activity would reduce NZ GDP growth by 0.9 percentage points - from the effect on trade alone.

After yesterdays announcement of nil GDP growth in the March quarter we don't have much to play with - do we?

Come on you 'heroic' US consumers - keep spending and avoid this poor (literally) country of ours down here in the South Pacific getting poorer.  You need to save us because we have already made our 'heroic' efforts over many decades to spend our way out if trouble  - and it didn't work. You need to save us because the policies of our current coalition government have failed to deliver growth - but we still live in hope.













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