Canary in the Mine

Today delivered two very different views on the economy. On the one hand, the economy has won a strong report card from the OECD, which says New Zealand is on track to meet the Government's goal of a return to the top half of the rich nations club. The OECD says the economy has "continued to expand at a vigorous clip". After an expected slowdown this year, medium-term prospects were "bright".

On the other hand, Westpac chief economist Brendan O'Donovan said the economy is slipping toward recession, shored up only by a strong housing market and high employment. In some of the toughest talking for months, O'Donovan described New Zealand's present business cycle as "well past its best-by date". "Thank goodness the housing market hasn't yet hit the wall, or else the dreaded R word, recession, would be the topic of the day," he said. "Westpac has long been of the view that a record level of the exchange rate, rapidly dropping net migration, higher interest rates and an eventual tipping over of the housing market would knock the economy for six."

Meanwhile, long-term economic prospects were dealt a blow with news that traders on the New York Mercantile Exchange are betting on oil hitting US$80 a barrel.

Something remarkable is happening to China's financial system. Long the "soft underbelly" of China's roaring economy, recent measures suggest the Government has braced itself for some tough decisions. Reforms of the sharemarket and banking system have begun. This is a gigantic step away from micro-managing the economy and away from using national savings at its own discretion. [Which raises the question: when does a communist country cease to be a communist country (and just continue as totalitarian)]?

Don Brash says a National government may change New Zealand's anti-nuclear policy without a referendum. I wonder if this was a response to departing US ambassador Charles Swindell's hard-hitting call for "comprehensive dialogue" with New Zealand to repair a relationship the US implies has lacked trust and respect since the rift over anti-nuclear legislation in the mid-80s.

Prime Minister Helen Clark does not believe there is enough support now to force a referendum on changing New Zealand's flag, but thinks it will be possible in future.

I've changed my mind. If those pusching for a new New Zealand are trying to achieve this scenario, then I'm all for it.

Children who spend hours in front of the television are less likely to have a university degree in their mid-20s, a New Zealand study has found.