KEY POINTS:
Leading business figures assess the impact of the global crisis on this country and outline some of their views on ways of getting through it
Paul Glass, Brook Asset Management fund manager
"The threat to our economy is serious," Paul Glass says.
He advocates an immediate OCR cut of at least 150 basis points to 6 per cent, and is surprised the Reserve Bank hasn't moved. "It's very clear New Zealand is already in a deepening recession. Look at Australia, they are cutting aggressively and are not in a recession.
"At 6 per cent, monetary conditions would be at best neutral ... The lesson central banks globally are learning is that they need to act early and aggressively before the problems spiral out of their control. The world has changed, inflation is no longer the threat, deep recession is. NZ's economy is particularly exposed given our dependence on the very overvalued housing market, our large current account deficit and the collapse of half the finance company sector".
He wants the Government to bring forward key infrastructure projects such as the building of new roads and a second harbour crossing, and to allow the building of new power stations and electrification of Auckland's rail network.
Glass says that would provide work for many in the construction industry facing job losses.
He also says it's important the Government stays close to the banking system, to give whatever support is necessary to keep confidence.
Medium term, Glass says households have to change their mindset about debt. "For too long people have borrowed too much. I think we may see a generational shift in attitudes towards debt."
John Waller, advisory partner at PricewaterhouseCoopers
John Waller thinks the headlines are overly negative in New Zealand at the moment.
He told a breakfast seminar in Auckland this week that his firm's mergers and acquisitions department is actually very busy.
Up until a few months ago, private equity buyers were paying considerably more than trade buyers for New Zealand businesses, he says.
But now that values have come down, trade buyers are becoming more active, and are out there looking to aggregate.
"They can grow their businesses in these types of markets, which I think leads to a more efficient and better market going forward," he says.
One of the issues in these times, however, is establishing how much those businesses are worth.
"That's I think what the market is trying to determine and understand, whether it's property, whether it's equities, where is value?" he says.
Waller believes some balance is called for. While we need to be cognisant of the overseas situation, parts of provincial New Zealand are still doing well and the rural sector - plus our ability to innovate - will be our saviour, he says.
"We do not have the big capital available to us to really have the high capital intensive projects. But I think around agriculture, we're now exporting IP back around the world, which I think is fantastic, and we lose sight of that."
Henry van der Heyden, chairman of Fonterra
As head of the co-operative that accounts for a quarter of the nation's export revenue, Henry van der Heyden believes New Zealand needs a bipartisan approach to agreeing long-term policies which will drive productivity.
That productivity will secure the country's future. "I think this financial crisis creates that opportunity to be able to do that," he says.
People need to eat and food production is a good place to be.
"But agriculture also needs all other parts of New Zealand to be strong, including the R&D sector, including the IT sector and everything that feeds off agriculture."
New Zealand is more insulated than other countries with banks here better capitalised, but businesses need to stick to the basics, he says.
"It's time to be conservative, it's time to be prudent, just watch your costs, just make certain anything you sell you collect that money as quick as possible," van der Heyden says. "Just come back to the business fundamentals."
Lloyd Morrison, managing director of Infratil
"It's very black out there - everyone is bearish. The reality and extent of the crisis and attendant economic consequences is coming home clearly and being fully priced by markets.
"The only people really capable of solving these problems are central banks and market supervisors - the actions by the Bank of England this week, for example, have been superb. They are acting and appear fully committed to using every power they have to assist solving this crisis and the economic consequences of it.
"The gravity of the situation appears to be fully understood. In this context, there is ground to believe that we are seeing the worst and darkest hours right now. Infratil bought S&P option packages late last year to ameliorate some of the market falls - our view and timing was.
Carmel Fisher, chief executive of Fisher Funds
"I don't think we can protect ourselves entirely from it. It's a bigger thing than any one country, or one government or one central bank," Carmel Fisher says.
"I find it easier to think about it economically. What would a business do in difficult circumstances? Shore up all avenues, pay down debt and use cash resources to pay off the expensive debt first. Focus on the aspects of the business that are most resilient and that make cash."
Fisher says New Zealand is better placed than a lot of other economies.
"This crisis is as much about fear and panic as anything fundamental. We don't have to make fundamental changes because it is not fundamental problems we are dealing with. Confidence will come through an orderly approach."
Fisher says open communication is the key to helping to restore confidence.
Is it as bad as it looks?
"It's bad because none of us have ever seen it before. We would normally look to someone to give leadership. But there is no one to do that. It's bad because of the uncertainty. But I don't think it is as bad in day-to-day lives. Life does go on for individuals and for businesses."
Andrew Barclay, country head of Goldman Sachs JB Were
Andrew Barclay believes there is cause for optimism.
Global credit and equity markets are a year-and-a-half into a synchronised and painful structural adjustment, he says, and inevitably markets will emerge on a more stable foundation.
"Whilst it is certainly too early to call the end of this adjustment, there are signs of value beginning to emerge. Investors like Warren Buffet making strategic investments in Goldman Sachs and General Electric gives some confidence.
"Value is definitely out there - you just need to know where to look and what to do when you find it."
A stronger regulatory framework aimed at investor protection is needed to deepen New Zealand's capital markets, Barclay says.
He says we haven't seen the growth in the size and breadth of our share market that we would have hoped for. The lack of a pool of capital available for investment and confidence of investors to diversify away from housing are two reasons.
"Again there is cause for optimism here too. As KiwiSaver and the likes of the NZ Super fund begin to create a pool of savings that will be looking for investment opportunities, companies will again be attracted back to the share market.
"Given where we are at in the credit cycle and the likely impact of the current adjustment in credit markets, many businesses may well consider equity issuance as a more efficient way to raise capital as opposed to issuing debt which has generally been the preferred option in recent times."
Barclay says falling house prices will also highlight to investors that diversification is necessary.
Dick Hubbard, chairman of Hubbard Foods
"Firstly, to me business cycles are absolutely inevitable and it is not a case of 'if' but rather 'when' the peaks and troughs occur.
"Secondly, with all business cycles it is a fundamental fact that the higher the peak the lower the bottom.
"Thirdly, like any good farmer does, all businesses should make and store hay in the sunny weather and have feed reserves on hand for the stormy weather that always comes. Those that are in trouble now are those who have ignored these very basic principles.
"I also believe in the ancient Chinese saying that 'crisis equals opportunity' or to put it more topically 'When the going gets tough the tough can really get going'. I started my business in the middle of the last depression of 1988-90 and the tougher times then actually helped us. Right now at Hubbard Foods we would regard ourselves as too busy to have a recession as we have so much on the go."
John Bongard, chief executive of Fisher & Paykel Appliances
John Bongard says it would be naive to think any country is immune to the financial meltdown.
The manufacturing sector in New Zealand is probably shrinking, he says, and won't lead the country us out of the crisis.
"The economic conditions even prior to the credit crunch were not that friendly to manufacturing here in New Zealand and I don't think that's changed."
New Zealand should look at manufacturing sectors in which it could be competitive and attract foreign investment, including the use of tax breaks and grants.
"I think New Zealand could easily do the same but there doesn't seem to be any appetite for that at the moment," he says.
The New Zealand economy is still dependent on farming and tourism, which will be the big indicators for how fast New Zealand comes out of the current climate, Bongard says.
