Oliver Hartwich: Brewing storm - Why NZ dollar faces toxic cocktail

New Zealand was on the brink of an abyss. Its smug and reckless government had burdened the economy with top-down planning, lost control of public finances and created a crisis of confidence in the Kiwi dollar.

A young deputy governor at the Reserve Bank at the time warned that the country’s currency was vulnerable to speculation in the event of a “significant political event”. And, sure enough, that event materialised in the turmoil of the 1984 election, creating a foreign exchange crisis.