nz credit rating

"New Zealand lost its top credit grades at Standard & Poor’s and Fitch Ratings, the first Asia- Pacific nation in a decade to have its local-currency debt cut from AAA. Government bond yields rose by the most this year.

The outlook is stable after the long-term local-currency rating was reduced one level to AA+ and foreign-currency debt was cut to AA from AA+, S&P said in a statement. New Zealand’s dollar extended its biggest quarterly drop since 2008 after Fitch announced similar moves yesterday. Both credit assessors cited concern that government and household debt is expanding."

http://www.businessweek.com/news/2011-09-30/new-zealand-yields-surge-as-ratings-cut-by-s-p-fitch.html

The bottom line is that NZ is not generating enough wealth and that is causing sufficient concern for Fitch to downgrade NZ.

Clearly NZ needs projects that will generate material wealth, one of which is the BTU proposed project. This is coming down to a situation of a green lobby or allowing an environmentally responsible project to proceed, the direct benefit being to 500 plus households. Of course this does not include the indirect benefit of jobs ranging from ancillary service to employment for environmental inspectors to monitor the project. I would love to hear the green lobby's proposals to generate such wealth as an alternative to the BTU project, snail inspectors maybe??

The situation is getting ridiculous and it must be very clear to the government that they are hardly encouraging environmentally responsible projects.

I think this downgrade is going to bring a few people in power to the realisation that they cannot pander to a minority green lobby over the interests of straight forward average kiwis who simply want to do an honest days work for an environmentally responsible company and feed, house etc their families.

There are votes in both cases, the green especially when wealth is being generated left right and centre and the government can afford it. the reality is it cannot.

The downgrade has led to increased debt funding costs. This means funds initially meant for schools , health etc must now be diverted. This of course will eventually result in a drop in living standards.

If the project is delayed sufficiently long, prices may drop and of course everyone, especially the local economy loses out. Maybe the downgrade will inject a dose of reality.

Cheers