On Thursday / Friday I wrote a long piece trying to make more sense of the credit crisis. Well that post snowballed and I kept making updates. This means some of the regular visitors may have missed parts.

For that reason I have cut the post into 2 sections – here is Part 2 which is more focussed on NZ and Australia.

All markets are not the same and that is an opportunity.

The velocity of change is a bit scary but just as we now learn of bad news early there are also pockets of recovery in markets that are more stable.

It is a tough time for banking regulators. If they act in haste it looks bad for confidence but if there is a big time lag the uncertainty can delay lots of business decisions.

“Governor Alan Bollard yesterday ruled out an early review of the official cash rate, saying the New Zealand financial system was working satisfactorily and moves to help it over the past year had been “sufficient at this stage”. Bollard on 10 Oct

“Westpac economist Dominick Stephens supported Dr Bollard’s decision.

He said interest rates were being cut not only because of the economic situation, but also to shore up confidence.

“In New Zealand there is no crisis of confidence in our banking system, therefore why go early?”

There are linked institutions for sure and we are facing down a black swan here, so there is a magnitude of linked risk that is hard to unravel but partly because we are all affected in some way I remain positive that a problem shared can be solved.

And hopefully we can all think about how to build a stonger morer sustainable economy with a lower risk profile. I must say that I like the list of positive actions from NZX chief Mark Weldon titles below go there to read the full version at NZX and David Skilling of the New Zealand Institute.

We need insightful leadership and the risk in NZ is that the general election fudges the short term for vote catching when we should be taking a longer term view.

“Political parties were not adequately discussing it and were instead playing “tick tack” over small amounts of money to taxpayers that will only fund consumption.” Source:NZX

Ironically the impression is that Labour hasn’t done too badly over the past 3 terms and National are struggling to differentiate themselves despite John Key having been a big cheese at Merrill Lynch. Weldon was also famously at McKinsey and is a qualified economist in the hot seat so his (and Davids”) suggestions make the RB and other look a bit sleepy.

Also congratulations to NZX who have finally got a blog on WordPress as well so that is even better.

1. Defer all provisional tax payments for next 24 months.
2. 100 per cent depreciation of capital investment.
3. Bring talented Kiwis home.
4. Attract new firms to New Zealand.
5. Retain the R&;D tax credit, to ensure that R&D investment is made in New Zealand.
6. Converting KiwiSaver, currently a voluntary scheme, into a compulsory retirement savings plan.

From Economy on the edge: Swan dive or belly flop? A draft strategy for coming out of the crisis stronger –Download Full Document

Note: I should make it clear that I am not a qualified economist – however I do read very widely on the topic and John Ralston Saul, George Soros, Nassim Talib, Hazel Henderson, Paul Ormerod, Lester Thurow, Jerry Mander, Edward Goldsmith and many others have made it very clear that deep change is needed.

If you enjoyed reading this you may also care to check out these other posts

• John Ralston Saul in Wellington
• Thinking Global (JR Saul)
• Seen Any Black Swans Lately? Noticed a few people searching for the manifesto Few & Far Between (by Nassim Taleb – you may download here) which has been made available by www.ChangeThis
• Banks Falling Like Dominos – Thanks Raf.

Update: Oct 11 – Dave McClure is based in Silicon Valley where it is always tough – but you need to be positive to get through. Among other thinks he references the litany against fear…

• Fear is the Mind Killer of the Silicon Valley Entrepreneur (we must be Muad’Dib, not Clark Kent):– Dave McClure – make a lot of very good points – caution -this post uses very forceful language which might get stopped by your firewall – but its passion and essence is right on.
  

  “while i don’t profess to understand credit or capital markets, i do know that internet startups cost less money than ever to get started. and unless i missed something, there are more people online now than ever, spending more money online than ever.

  and i doubt any of these trends will likely reverse in the long-term — lower costs, more people online, more e-commerce. doesn’t that seem like a pretty good environment for building new online businesses?”

And special thanks to Noric for listening to some of these ideas and making better sense of them.

Finally – today is the start of year 3 for this blog. More about that later in the week but somehow I have posted close to 100, 000 words over the past 2 years and getting a second wind now.