John Key, if he wins the election, may be the most economically literate Prime Minister New Zealand has had in recent decades. I think he will have a far greater understanding of business and the economy, than most people realise. Why do I say this?
Clark and Cullen never lose a chance to scoff at his former job, and call him a money trader, a currency dealer etc. And they are right – he was (amongst many other things). In fact he was one of the most successful people in the world at currency markets.
Now think about people who are world experts in a market. Take for example someone who is a world expert on the price of gold – they probably know more about gold than 99.99% of the population. They know all about production, distribution, prices, costs, delays, environmental issues etc so they can correctly predict what will happen to the price of gold.
The same applies to the world experts on futures markets about say bananas. These people will know more about the banana trade than most people would think you can know. They’ll know the diseases they can get, the temperature they grow best in, the cost and time to transport etc etc. For if they didn’t know this they wouldn’t be so successful year after year in making money predicting the price.
Now John Key is not an expert on the price of gold or the price of bananas. He is an expert on the price of a country’s currency, which is heaving influences by a country’s economic performance. This means he knows, and has a 20 year track record of stunning success on what factors push a currency up and down – interest rates, employment, labour productivity, level of taxation, construction activity, exports, imports, balance of payments current account etc etc. You do not make $50 million by accident on predicting what will happen to currencies. You understand the economic drivers of a couple of dozen economies and are better than almost all your peers at understanding them.
Sunday did not begin auspiciously. We had agreed to interview Mr Key early. At 8.30 — so he could get a 10.00 a.m. flight to Wellington. Through either our stuff up or in Mr Key’s office, the Opposition leader arrived at 7.30. I got in just before 8 to find him in the Green Room with a press secretary quietly reading the Sunday papers. Shortly afterwards John Roughan and Vernon Small arrived and we were then treated to a fascinating 20 minutes from Mr Key as he explained (almost non stop) his own analysis of the American financial crisis and why it had happened. Along the way we got some revealing insights into the way Wall Street works and the mindsets of the traders in the markets. It was the kind of view only a top insider could give.
Today I have been talking to a former National MP who is close to Mr Key. He argues that the Opposition Leader has one of the sharpest minds he has ever met. That is not a view I have shared up till now. What I have seen of Mr Key has been pretty much what the public has seen; a warm, relaxed, sometimes bumbling person with a mind for numbers. But his talk in the Green Room revealed a different side and which today meant I could understand what the former MP meant.
John is very very sharp. Yes he is new to politics – only six years to Clark’s lifetime. But to say he is a fast learner is to put it mildly.
With the world facing the most difficult economic conditions in 70 years, I have absolutely no doubts about John Key’s ability to understand what is happening and to react to international economic events in a way of maximum benefit to New Zealand – not based on an narrow ideological system of beliefs, but with pragmatic responses based on two deacdes of experience.
So everytime a Labour MP scoffs at Key as a currency trader, just remember what that actually means – that John Key understands economies, and that MP does not.