Trillions have been plowed into bailing out banks, investors, and whole countries during the economic crisis. The cost easily exceeds total investment in tackling climate change. Is it, as George Monbiot argues, that elites just look out for themselves, or are humans just incapable of perceiving the danger of large, slowly-building problems?
National will pass a Spending Cap Bill, under the cover of its Confidence and Supply deal with John Banks. The question isn’t if this Bill is a farcical idea that would hurt NZ if ever enforced (which it wouldn’t be) – even the arch-neoliberals in Treasury oppose it. The question is why National has no better ideas for Parliament’s precious time.
Tax take is down, deficit is up, growth forecasts for next year are down. Nice to be told all this one week after the election, eh? Still John and Bill are relaxed and optimistic that the future will still be bright.
In May, they were promising growth would be 4.2% in 2012. By October, it was 3.3%. November, 2.5%. December, 1.5% …. with ‘downside risks’ aplenty. Looks like we’re going to be waiting on that brighter future a while longer. Vernon Small points out there’s no way National’s going to keep its promise to get back into surplus in 2014. When will they tell the truth?
National would get the books back into the black with a $1.5b surplus 2014/15. It’s on their ads, it’s in the PREFU. So, it’s gotta be true, eh? Well, we already know they’ve cooked the books by claiming both that they would have the revenue from asset sales and the dividends from those sold assets. Now, their ETS changes have opened a second great big hole in their budget.
Last year and the year before, the portions of the assets National wants to sell paid over $400 million in dividends. Labour estimates lost dividends from those assets would total $11 billion by 2026. That’s an $11 billion hole in National’s budgets they haven’t accounted for. When will National front up and show us the money?
It’ll be interesting to see the full fiscal details from Labour today. National is planning to borrow too, the question is how much they differ by. Only $2.6b in the first term with both having net debt about $50b. That’s the alternative to selling our profitable assets to pay for capital investment. The Nats’ $17b claim is riddled with basic errors. Updated with more bad adding from Key
National have a rubbish short-term plan for Government debt: Asset Sales.
But they have no plan at all for the private debt that is forecast to blow out worse than ever under their policies. Bit like the economy in general really.
Dear Mr Key: “We are the generation born between 2002, when you became an MP, and 2011, when you won your second of four terms as Prime Minister. We wonder why you insisted on spending our inheritance to ensure you were voted back in.”… Bernard Hickey presents a chilling vision of the future. The way to avoid it is make sure that Key only gets one term.
The PREFU paints a pretty dismal picture of the economy. The worst case scenario is catastrophic, and (at one in five) I think that Treasury has significantly underestimated the odds. Do you feel lucky?…
In response to tough economic times, Government austerity programmes do more harm than good. It’s a pretty simple equation based on the debt / GDP ratio. With an election coming up soon, NZ needs to look for economic competence and a willingness to try new ideas, rather than muddling along deeper into the austerity death trap.
Bill English: “a change in the credit ratings could push interest rates up … about 0.1 percent.”
Nek minnit: Since the double downgrade, interest rates on new government bonds have risen by 0.2 per cent for bonds maturing in 2015 and 0.4 per cent for bonds maturing in 2023 … this will cost $100 to $150 million extra per year.
This family budget is in terrible shape. I can’t see any way out, can you?
National are seen by many as the party of business, and thus the party of the economy, who know what’s best for the country’s wallet. But the statistics don’t add up. Their reputation is undeserved.
This press release from the CTU deserves wide discussion.
Key says an anonymous emailer told him that S&P said a Labour Government would make a downgrade more likely (more likely than ‘actually, already happened?’). S&P categorically denies saying any such thing. We can now reveal the identity of the anonymous emailer.
We’re witnessing, once again, the results of a government whose disaster management is focused on keeping blame off itself, rather than acting. It bears remarkable resemblance to their approach to economic management. National didn’t cause the natural and economic disasters it faces but its handling of them has inevitably made them worse.
John Key’s economic credibility was shattered by the double downgrade. Now, his personal credibility has been lost after he claimed that Standard & Poor’s said a Labour government would lead to another downgrade. S&P could not have been more blunt: “At no stage have we said that a rating downgrade was more likely if there were a change of Government”.
The lies keep flowing as National desperately tries to limit the damage from the double downgrade. First, it was ‘doesn’t matter’ – Treasury says it does. Then, “hey, it’s just private debt” – the agencies’ reports say otherwise. Then it was just an international problem – less 1/4 of the OECD has been downgraded. Then, somehow, it was all Labour’s fault and would be worse under Labour – S&P says they’re lying on that too.
Will double dipping double downgrade Bill English have the guts to heed his own warning?
Prime Minister Moonbeam clearly broke the law on Friday on the radio show he chose to run instead of dealing with the downgrade crisis. The law is clear: Key wasn’t allowed to make political statements. He did. He made a promise on broadcasting policy and gave the Nats’ first cut spin-line on the downgrade.
The Nats have indulged in a long series of boastful posturings and dire warnings about the risks of a credit downgrade, many of them as recently as August 10th. Now that they have suffered not one, but two separate credit downgrades, Mr Smile and Wave has some explaining to do.
National has borrowed $37 billion in less than three years and delivered no growth for it. In fact, it has repeatedly failed to meet its growth projections and GDP per capita has fallen. That failure has now resulted in the credit rating agency Fitch downgrading our credit rating. Makes a lie of the Nats’ line that we’re in better shape than in 2008. Will Bill English resign?
Update: S&P downgrades us too. English’s resignation letter being drafted on 9th floor to stem political fall-out for Key.
It’s not often that ‘bald truths’ escape the filtration of the msm. The video below is an example of one of those rare moments.
National did not cope well yesterday when their economic record was held up to the light. John Key was all at sea as he tried to dismiss new statistics showing 47,000 jobs have been lost under his watch. He cited instead another statistical series, which he has previously rejected when it showed 56,000 more people are unemployed under National.
I’ve just read Vernon Small’s piece today and I actually learned things from it, other than opinions plucked out of thin air by the author. Small explains the fiscal and economic challenges now existing that the next government will have to cope with and, with a nod and wink, tells us National is going to push out its date for getting back to surplus.
Free trade is meant to be about opening up markets for our exports so that we can improve our trade balance and, ultimately, become less indebted as a nation. Yet the opposite seems to be happening. Darkhorse shows that this is the experience of all countries that lower their trade barriers in a still largely protectionist world.
I came across this blog called Howdaft written by Darkhorse recently. It consists of five posts written in June. Five of the best pieces of leftwing economic thinking you’ll see anywhere – something we’ve been short on recently. I’ve tried to contact Darkhorse, but no luck. If you’re out there, drop us a line. In the mean time, here’s one of the posts.
Before the government launched its asset sales policy, the Treasury told it that “significant participation by foreign investors” would be “essential” to provide “pricing tension”. In other words, if they can’t sell to foreigners at a high price, they wouldn’t get the revenue they want. So, the second global financial crisis should scupper the plan, eh?
BBC Radio 4 in the UK has a very interesting debate pitting followers of Keynes vs those of Hayek
The neoliberal myth is that government economic policy doesn’t really matter, it can’t affect the economy – apart from being an anchor on growth. The truth is, government is the biggest actor in our economy. What it does matters. Bernard Hickey has listed 10 ways that the government could act to get the exchange rate down.
The PSA is launching its election campaign this evening. Our big challenge is to break through the government’s narrative (now reaching mythic proportions) […]
The media are reporting the chance of the US defaulting as a ‘debt crisis’, as if the problem is too much debt and people won’t lend to them. It’s not. The US is still borrowing at half the cost we borrow at. The problem is the debt ceiling. A purely political invention that lets lawmakers cut taxes, add spending, and then refuse to allow the resultant borrowing.
We keep getting told that government is the problem and that the private sector is the answer. But the reserve bank numbers clearly show that it is the problem. When are the private sector going to deal with their burgeoning debt levels?
Bill (and John and the entire National caucus) have been telling us that we are required to borrow $380 million each and every week. Apparently we aren’t.
