By Bernard Hickey
Prime Minister John Key proved this week he is our enabler-in-chief.
He was like the nation’s reassuring friend who calmed our fears and nerves about spending more than earn.
Don’t worry so much, said John Key this week, as he justified the sale of our largest privately owned group of dairy farms and foreshadowed heavier foreign borrowing over the next couple of years.
Relax.
We can always borrow some more and sell some assets, he said in a soothing tone. After all, he said, we’ve only sold 1% of our land so far.
Chill.
Our foreign creditors will keep lending to us because we are the friendly, smiling borrowers who have everything under control, he crooned.
We are the lucky country with grass galore, close connections to China, a flexible currency and the ability to grow our way out of trouble, he said.
But excuses and reasons are easy when you’re trying to justify holding on to an addiction. Foreign debt and asset sales to foreigners are the nation’s enablers.
New Zealand has been spending much more than it has earned since around 2000.
In the last 12 years we added around NZ$100 billion of foreign debt and sold off a bevy of private assets to ensure we could maintain our lifestyles.
All the while falling productivity and the growth of government undermined our ability to export our way back to prosperity.
When is someone going to stage an intervention to shake us out of our trance?
John Key is not the Prime Minister to do it. He has presided over a government that has financed a blowout in its deficits funded by foreign creditors, including the Chinese Sovereign Wealth Fund that has bought our bonds, along with Kim Dotcom.
Key campaigned to extend a programme of state asset sales that will see significant portions end up in foreign hands.
The only way to end our addiction to over-spending is to throw out the enablers of foreign borrowing and selling assets to foreign interests. The proportion of our national income that has to be siphoned off to foreign creditors and asset owners has risen from 2% of GDP in the early 1970s to around 8% now.
Eventually we will not be allowed to borrow more and will not have anything left to sell.
Who will reassure us and enable us then?
Overseas debt
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90 Comments
There is the fourth way..instruct the RB to print to buy govt IOUs that will never be paid off ...and the fifth way is to impose fines on citizens for whatever they want using the police and courts and prisons to extract the money...and the sixth way is to confiscate private property...especially gold silver and anything of value, which yes would include land.
The idea of cut taxes to stimulate the economy comes from the right/voodoo/american(?) economics and seems to be well proven as a failure......
You missed a valid "5th" workable option.....set a tax rate thats "neutral", ie over tax a bit in a boom and SAVE...in bust that tax take will drop but you have savings...also if needed spend some of the savings down...........Instead the Govn(s) look at the "too much tax" in election year and "give it back" to make us feel happy......and vote for them....
The above isnt new, I think the asian economies do it this way...and that tax rate could be set by the RB as an alternative to a punishing mortgage rate...take it out of the pollies hands.....
Its in-competant how our Govn is run financially....IMHO...
regards
What choice does JK have , when the voting public is educated and addicted to voting for welfare programmes ?
....... the first political party to campaign on fiscal restraint , will be the last party to get elected !
JK knows that chopping out rubbish policies such as WFF or rental supplements ( which each cost the tax-payer well over a $NZ billion p.a. ) will get him booted out of office .....
...... what's your solution , Bernard , to this political impasse ?
Hi Gummy Bear,
Think you might be a bit off key there (no pun intended). You see JK does to the buisiness comunity what welfare does to others.
JK tells the buisiness comunity
"Don't worry about creating real jobs, just hire cheap labour and we will subsidise it with working for families. Or maybe you prefare rental property, well dont worry, we will pay the rent with the accommodation suppliment. Maybe you prefare to invest in a finance company, well don't worry we will guarantee your deposit and return. Maybe you prefare one of our many thousands of consultancy jobs with high income and no responsibility. Or you may want to go into a partnership with the government and we will take all the losses while you reap the profits. Or, Better stil, just buy one of our great assets. And if none of that suits you, don't worry there's lots more where that came from.
So you see Gummy what incentive is there for buisiness people? None i suggest.
The end is nigh...!
"With the country on the brink of a default, Christine Lagarde, the director general of the IMF, said that a new "fiscal compact" was set to be signed by European Union members at the vital leaders' summit on Monday that would centralise budgetary powers.{ also known as the fiscal farce by those in the know}
Greece is under increasing pressure to give up control of its budget. A document released over the weekend revealed German proposals to force Greece to pass all its spending decisions with a "budget commissioner".{ who will likely be German.yoiks}
In an angry reaction from the Greek government, the education minister, Anna Diamantopoulou, a former EU commissioner, slammed the idea as "the product of a sick imagination" in an interview with local television.
On Saturday, Chancellor George Osborne said that the eurozone will have to put in place permanent fiscal transfer mechanisms such as eurobonds or direct payments.{ and the money will come from where?}
In what were described by officials as his strongest words on the issue, the Chancellor said that transfers of wealth from creditor countries such as Germany to those struggling with debt, such as Greece and Portugal, were necessary."...{oh look up there...flying pigs}
You can always tell when Bernard is struggling to find something interesting or controversial to say, this is an example of one of them. I give creditability to such articles only when they provide constructive ideas about what needs to be done, and ideas that are:
-specific
-have some economic sense behind them
- and are politically "doable" - no point in starting them and then getting thrown out of Govt on the back of them for the next guy to take it to pieces again
Grant - the problem is none of the possible "solutions" are politically palatable,at least not for National. That's why we need courageous and fearless leadership. We don't have it. So we'll keep going downhill til a crisis arrives, then we'll be forced to do something radical ala Europe
The country needs capital but we have to get it from others.
It's clear the way to wealth in not be be busy, but to own your own stuff.
So how do you get to both of those. No amount of financial acronyms can get around the neccessity to spend less than you spend. For a while.
And kiwis aren't as dumb as is made out. They know this. I think they would vote for it.
Yes. We do need that intervention Bernard. And it's a politician who will articulate some reality. It ain't Key.
.... hmmm , shall we line up a few ducks ? .......
Bernard now favours a centrally planned economy & currency ...... he sidles with the heavy hand of justice , upon societie's fringe elements , such as tax minimisers ....... he praises the efforts of the justice system to shut down free information sharing and innovation ..... he's happy for the NZ government & police to be complicit in assisting their US counterparts , to extradite NZ residents ( and even said of those residents , " throw them to the wolves at the FBI ! " )
...... need we guess libertarian / communism , or just join the ducks ? ..... bang bang ..
I wouldn't bother asking him anything Mr Bear, I'm still waiting to hear from him wether he has the written consent required to reproduce telegraph.co.uk articles on a commercial basis, after he laid into Mr Dotcom et al. Put it this way, I am not holding my breath.
I have no problem with Berno having wacky ideas, he has talked about import/export restrictions and subsidies too.
I do have a big problem with willfully avoiding the conversation though.
Berno is every bit to blame as John Key is. Berno is a hypocrite, he will not talk in anyway about peak oil, the unsustainibility of debt, the eneviatably of fiat currency collapses, individuals exposure should a currency event take place globaly. Just completly avoides it!
I would love to see him write an article with any of the following titles;
"The nz$, given it is borrowed into existence is it sustainable?"
"Is gold money? If not why do centeral banks hold it?"
"Are there any KiwiSaver funds capable of withstanding a currency event?"
"Can we survive in a world of $500/barrell oil?"
"Is it possible for the US$ could collapse?"
Come on Berno, I want to see you talk about some of the elephants in the room, rather than taking stabs at John Key for doing the same.
No offence to Bernie , but if you asked those questions of Wolly you'd get better answers , or at least , damn sight funnier ones .....
....... Hickey's been absent alot , since Christmas . Methinks he's in discussions with GM about how to extract maximum profit by selling interest.co.nz to either of Fairfax or Kiwibank .
No middle ground Matt. Think about it, why would the middle be more 'right' than the the two extremes. Something is true, or not.
I'm free or I'm not. I'm not. And it pisses me off. And Bernard is the enemy. Just like Gareth Morgan :)
I don't believe in simple dualities in any area of life, whether it be economics, politics, science, religion / spirituality.
I see no problem with an approach that looks to increase taxes to increase revenue, and to cut some forms of wasteful spending.
Libertarianism is a nice utopian theory but there's no way it can work in the real world, hence I'm not interested in fantasy
I don't believe in simple dualities in any area of life, whether it be economics, politics, science, religion / spirituality.
And that, Matt, is why the free West was lost. There's right and there's wrong. There's the Big Brother welfare state, and there's freedom. We became the violent slave state because free men were voted down by the tyranny of the majority. You.
The Greeks & the Brits are demonstrating the problems of a welfare state reaching 50 % of households ....... people start to get ratty when their sense of " entitlement " is jeopodised by fiscal necessity .....
..... the previous government in NZ set about gathering as many of the citizens into the welfare net , without actually bankrupting the economy . JK & Wild Bill are borrowing hand over fist to sustain those policies because the government is in a cashflow deficit . Expenditure exceeds revenue . We are bankrupting ourselves .
...... and all to maintain some previous finance minister's ideology of " a fair share for all . "
Typical reigious extremeism.
I found the linked video by Tony Benn an interesting perspective.
http://www.youtube.com/watch?v=poO5BgU2PZo
I immagine Tony Benn would be enemy number 1 to Tribeless as well, even though he is essentially supporting efforts where people can influence and select the power structures around them.
This appears to be driven by an extreme fear of anything labeled socialism. Unfortunately the socialists are literally surrounding him, because socialist ideas and policies have a huge and wide support base in a democratic system. Well at least we don't need to accuse him of paranoia, I think he has every reason to 'fear' ending up in a 'socialist' society once the publics opinion is restored to its rightful place shaping government policy.
He (tony benn) would be close to my no1 enemy as well....Im afraid if you asked me to name say the top 10 or 15 UK Pollies in the "reigious extremeism" mold, he'd be on my list.
ie He's a raving leftie.....hard core socialist...if you will....certainly I am a socialist to a degree, as are most NZers.....but looking at how NZers vote and the lack of support for the Alliance (or even further to the left) or similar its pretty clear someone of TB's ilk wouldnt be voted for....
The youtube mentions right wingers at the start, yet the left like Mao and Stalin killed far more....yeah sure Bush etc with their voodoo economics and wierd right wing politics are almost as fanatical....the result is the mess we see today.....but really its a consemnation of any Govn that goes for "religion" (of whatever ilk) and not logic....
regards
Stalin and Mao were not socialists. You have to look at their policies, not the rhetoric however. This is because the two largest propaganda industries in the world the US and USSR both decided they were. But their policies are not socialist, or in any way democratic.
The first page explains a lot of what Socialism is about.
I never said they were.....
Tony Benn is of a similar mold however.....ie he believes in central control.....he is a throwback from the 1970s.....the crazy policies didnt work then and wont work now.....
In effect he is as bad as Bush....different voodoo economics, but the same end result, a mess.
regards
The old divide and conquer, again. Conjure up an enemy and try and pick a fight. What you claim to be true needs to questioned, and tested, even then you cannot prove something to be true, you can only fail to disprove it.
Einstein famously said, 1000 experiments will never prove me right, but one experiment can prove me wrong. In the late 1920's, a young German physicist, Werner Heisenberg, mathematically came across the most astounding result. No matter how precisely we measure a system, we can never perfectly known all of its details.
Think about this, how can you have the monopoly on truth, and be the arbiter of right and wrong. You will never be free, every action has an equal and opposite reaction. Everything you do has an effect on someone else, and every action by everyone else has an effect on you. No reason to be angry, learning and understanding is required.
Matt - I hear what you say, but without a crisis (and in truth we have issues but not a crisis in NZ at the moment) it would be terminal as you sugegst, and the next guy won't do it anyway. In europe when things got bad enough, and they have now for many, the public finally understands the problem and will mostly grin and bear it to a degree for the greater long-term good. I tend to agree with Kerry Hand, the public mostly isn't dumb, but they are human and won't in numbers accept pain until its obvioulsy needed. So until then, you're probably right, but what's the choice, musical chair Govt's (not that we have that much time) ?
I believe that Key is taking us down the right road, but ever so slowly as he has to take the public with him or the entire effort is wasted - frustrating, but really a reflection on democracy than any time else, but as they say, the alternative to democracy is far worse.
I think the public in the EU and Greece have known for a time that all is not well but dont want to lose what they have.....and yes I think it will take crisis to make Pollies take hard choices.....and yes the voter will wear it, but not for long......trouble is we are looking at decades of this as we power down....
Have you watched the film Tailer, tinker, soldier, spy? apart from the great film it is I saw how little personal energy they used.....clockwork alarm clocks for instance.......
Key, well he's clueless, he like the others is proming us growth via expolitation of our one off resources.....even though Peak energy is stearing him in the face....I think his Govn is willfully ignoring the information because it says no more growth....ever...
regards
Here I will give you a glimpse of NZ in a few years time...
http://globaleconomicanalysis.blogspot.com/
We are not that far removed from the 'Greek Rathole'
Hope has forsaken these lands.
From Davos World Ponzinomics Forum
Dystopia, the opposite of a utopia, describes a place where life is full of hardship and devoid of hope. Analysis of linkages across various global risks reveals a constellation of fiscal, demographic and societal risks signalling a dystopian future for much of humanity. The interplay among these risks could result in a world where a large youth population contends with chronic, high levels of unemployment, while concurrently, the largest population of retirees in history becomes dependent upon already heavily indebted governments. Both young and old could face an income gap, as well as a skills gap so wide as to threaten social and political stability.
And from Steven Erickson
Now, the nature of fanaticism can be likened to that of a tree – many branches, but one tap-root.'
'Inequity.'
'Or at least the comprehension of and the faith in, whether such inequity is but imagined or exists in truth. More often than not, of course, such inequity does exist, and it is the poison that breeds the darkest fruit. Mundane wealth is usually built upon bones, piled high and packed deep. Alas, the holders of that wealth misapprehend the nature of their reward, and so are often blithely indifferent in their ostentatious display of their wealth. The misapprehension is this: that those who do not possess wealth all yearn to, and so seek likeness, and this yearning occludes all feelings of resentment, exploitation and, most relevantly, injustice. To some extent they are right, but mostly they are woefully wrong. When wealth ascends to a point where the majority of the poor finally comprehend that it is, for each of them, unattainable, then all civility collapses, and anarchy prevails.
Why are people gonna revolt , when successive governments have turned them into welfare recipient milksops ?
..... NZ has become the land of the long white blancmange !
Only by taking back their freedom , demanding to have the free market system restored , and by accepting personal responsibilty for their actions , will Kiwis re-grow their backbones .....
1) Stop megalomania - 4 million NZpeople use:
New Zealand has a State Highway network of 10,895 km. These link to 82,000 km of local authority roads, both paved and unpaved.
Historically very car-dependent, as of 2010, transport funding in New Zealand is still heavily dominated by money for road projects – the National government proposes to spend $21 billion on roading infrastructure after 2012, yet only $0.7 billion on other transport projects (public transport)
All be maintained to a safe standard – daily.
2) Stop megalomania - 4 million NZpeople use:
Prime Minister John Key supported the working group yesterday, saying rising levels of "welfare dependency" were a major concern and that at least some of the group's final recommendations would be adopted. In a report to be issued today, the working group, led by former Commerce Commission head Paula Rebstock, says that if changes are not made, the 356,000 working-age adults on a benefit will eventually cost the country $50 billion.(2010)
3) Stop megalomania - 4 million NZpeople use:
New Zealanders are impulse spending $16.1 million a day according to an online survey commissioned by Westpac New Zealand. Across the 18 year-old+ population that equates to nearly $674,000 an hour; $16.1 million a day. Supermarkets, cafes and fast food outlets are the main places where impulse spending takes place while bigger ticket items such as computer and video games, shoes and perfume are also purchased on a whim. NZ is 23rd out of 29 in the OECD for national savings rate (household, business, Government). Those below NZ are Slovak Republic, USA, Hungary, Iceland, Portugal, Greece) NZ households owe, on average, $1.60 for every $1 earned.
4) Stop megalomania - 4 million NZpeople use:
Social security and welfare: $25.3 billion
Economic and industrial services: $18.8 billion
Health: $13.1 billion
4 examples clearly explain the situation. Under the current worldwide circumstances we cannot carry on like that. For better economic/ financial performance we need to cut back our standards of living and government spending. For a better society we need ethical principles.
Currently more worrying signs of megalomaniac behavior of the government paint a somber picture of our future. Assets sales, sales of major businesses, especially farms and the intense actions of exploration of minerals of our land/ sea aren’t sustainable. Massive operations by foreign companies, mostly under stress already, do not guarantee financial success and are often combined with risks. Often our authorities cannot fulfill financial, technological and operational safety requirements.
How much more are we going to lose here in beautiful New Zealand ? What we need is quality of life, not just for a few buddies PM – but for the majority of the hard working NZpublic.
The only way out of this mess is to raise tax from a financial transaction tax, set at say 0.5% or so but have a target of raising 4 billion per year. This cash is electronically collected daily and ready to spend, we then spend the entire amount funding infrastrucure projects giving our young opportunties and hope for the future. Spending like this will get the economy turning and the flow down effects are huge. A small cut from share purchases, fx trading, derivatives, land purchases and all financial transactions is all it would take.
But no John you keep borrowing billions,cut spending, sell everything, smile, wave and we will all be just fine.
Why oh why does NZ continue to sell its cash-cows? It is such a short-sighted move. The way to make a nation wealthy is for governments to grow the SOEs it owns, have them run efficiently, take a percentage of the profits to invest in growing new businesses (creating jobs and investment in people and communities) and so on. That way the government wouldn't have to borrow off-shore because it would have dividend upon dividend of its own money coming in. It's hardly rocket science. Selling assets for a short-term, one-off, windfall of cash is criminal.
I visited Russia just before communism fell. The ordinary Russian was struggling to find affordable food, queues were around the corner yet millions were being spent restoring former Russian palaces with gold-leaf and furniture. It seemed grotesque to watch. I asked the female tour guide about it and she said: 'And if we all had more bread but not these palaces then what?' She realised that assets like that are part of the heritage of the people, and they brought in much needed money as well from tourists. In short it paid dividends.
It's time we stopped borrowing and lived within our means, while we still can because what do you sell after everything is gone - the country? Good infrastructural investment, managed well and run efficiently, with profit used to reinvest in more cash-producing businesses is the key to growing the country and cutting debt.
Key won't do it because he lacks the drive (or ideas) to sell this ambition to the people, Labour probably won't either unless it reinvents itself as a party NOT giving a free handout to everyone. The age of entitlement is over - and that goes for fat cats ripping off the tax system as much as for the person who says a benefit is their right. Nothing for nothing in this world. You want a handout? Work for it.
P-child - close, but not quite close enough.
Yes to good infrastructure, and 'living within means'.
Unfortunately, that means removing 'profit' from the equation, you see; profit demands more to be bought with it, which means you have to live further and further beyond your means.
Until we account fully for externalities (the finite nature of physical assets being a primary example, unmitigated pollution another) then any appraisal including something like the current idea of 'profit', is a waste of thinking-time.
Interesting example, Blue Cod I saw last week at $47 a kilo, fillet Steak is $43 a kilo and thats grown and harvested as opposed to just harvested....
Ditto the losers who say that oil can be extracted at $20 so we shouldnt be paying $100....cant create oil of course.....
wierd...
regards
I read a piece last year that said close to 50% of China's "magic" growth was due to it exploiting/destroying/using up its environment....so actually when you look at their real growth ie when you allow for our RMA, Health and safety etc it was little better than ours........that doesnt even get down to sustainable....
regards
Was looking at pictures of pollution in China the other night. Cancer the #1 cause of death now... not hard to see why.
http://www.ibtimes.com/articles/281081/20120112/china-pollution-photos.htm
http://www.chinahush.com/2009/10/21/amazing-pictures-pollution-in-china/
Air pollution as seen by satellite:
http://gizmodo.com/5875972/chinas-pollution-is-so-insane-you-can-see-it-from-space
An excellent satire on the Greek and maybe our future. http://hat4uk.wordpress.com/
Don't you lot ever get sick of banging on about debt.
The sky hasn't fallen in and we've just been through the worst global economic crisis in the history of the universe.
Doesn't that tell you something. Have a look around all the statistics, OECD, IMP, WB and see if you can find higher interest rates at less risk.
When you can start banging on about debt, otherwise stop thinking facts up.
... it's in the nature of the beast , you see , the website's called interest.co.nz .....
But we could gloomsterise about house prices , if you prefer ....... ooooooh , the gang love to bang on about house prices ......
..... Elley & me prefer to swap chocolate recipes . But that annoys the gaffer , Captain Calamity Hickey ...... he wants us to flap on endlessly about debt .......
Look at the Great Depression, it was a credit/debt event.....today the debt is far far worse....we face similar......
Sure the sky has not fallen....yet.....your attitude is like jumping off a cliff and saying "look it hasnt hurt yet" or "Im still alive"...BEFORE you hit the ground.....
This crisis isnt over, the Govn's are can kicking....the payback/dfault has just been delayed...
How about start thinking.....
regards
You are right , of course , though Hickey couldn't call the site " the doom & gloom report " 'cos Marc Faber has something similar .......
........ but the world does seem to muddle along , doesn't it ........ previous world ending financial collapses of the 1970's , 80's , tech wrecks , asian swoons ...... they've all been overcome , and are a part of a receding memory .
All that matters is now .... this moment in time . This time is different . This time is the end !
...... unless it isn't , it never was before .......
All were events on the way up the energy bell curve......now we see events at the peak and on the down side before us......this is going to be a lot different......but Ive said this for years and for years you are content to continue to gamble.......your choice of course....
regards
I am glad you stated it is your point of view because it certainly isn't a position based on sound and rational evidence. Manipulated news of a fraudulent system, being pure fiction for those gullible enough. Big club you are in though so you won't be alone. Pop over to USGS for some real life stats about minerals that won't underwrite your fairytale for much longer.
Ransome - you take a lot for granted. Perhaps you should question more things, more often.
I'll start with "been through". Says who?
It can't tell us anything, if it isn't true.
There are others here who do what you do - start from what they want, and cherry-pick 'stats' to 'support' their hypothesis.
http://www.eurekalert.org/pub_releases/2012-01/uow-cin012612.php
How can I win, if I quote the stats, you'll say I cherry picked, if I say where you can find them and suggest you "go through" them, I'm still wrong.
I didn't just wake up one day and say all this stuff about debt is nonsense.
I just went and had a look. If you don't want too Okay but please stop thinking up facts to support your emotional argument.
To start with stats are history......they tell you a trend that MAY continue....
The biggest stat though is the debt accumalated and the growth needed to pay it back......growth needs energy.....we are at peak energy.....so there will be no more increase in energy output....
So there will be no more growth....not across the board....best that can be done is rob peter to pay paul.....Jospeh Tainter is a fasinating person to listen to......his comments on the fall of the roman empire and complexity and energy are shall we say chilling.....youtube is your friend.
So yes Im afraid waking up one day and thinking debt is nonsense, is nonsense.....
regards
Cherry picking stats can be identified, what you do to identify it is generalise the statistics, and see if that claim still meets your hypothesis. If it doesn't you have either support for a specific sub-hypothesis (from your stats) which applied given situations of equivalent conditions, or a faulty hypothesis based on cherry picked statistics.
Debt matters, the monetary system is debt based, therefore the amount of circulating money depends on the level of debt. This is basically not controvertial from the regulations around the monetary system, and to back that up there is empirical evidence. This point is however basically in-controvertable, borrowing money ought to create additional spending power, and low and behold it does. Literally every central bank supports this, by counting credit in their monetary statistics.
The only question is does this effect the economy? Well to first look at this we should realise that the neo-classical school of economic thought does not think that debt matters. This is not a reasoned argument based on something they have observed however, its a naive argument. They claim that debt doesn't matter because one mans debt is anothers loan so its a transfer of spending power. What you can observe from this is that neo-classical economics doesn't model a real economy, because their assumption is not based on what literally every central bank agrees money is. To summarise, if you think money is the stuff in your bank account and the cash you can spend then neo-classical economics doesn't model your economy.
Now if you want to prove that debt doesn't matter you need to create a model with a debt based monetary system and show that regardless the level of aggregate debt demand is independent. This would be the scientific approach, but would probably result in the conclusion that debt does in fact impact economic activity.
Unsurprisingly when economic models are modified to model a debt based monetary system they make more sense of the economy than non-debt based ones do.
Ransome - nothing emotional about it. It's a case of physics trumps economics. Not surprising: note that the only way the Nats can 'grow', is to dig more,faster.
Some homework:
http://physics.ucsd.edu/do-the-math/2011/09/discovering-limits-to-growth/
All physical resources get extracted in a gaussian manner (start somewhere, stop somewhere, peak in the middle). You're not in trouble when they 'run out', you're in trouble when you go over the peak, typically half-way through.
Debt is not the problem, the repayment of it is. On the way down the Hubbert Curve (the gaussian) there is no way it gets repaid, and certainly no 'growth'.
Linch-pin of them all is energy - without which nothing else happens.
No need for emotion - leave that to the the unresearched optimists. There's a few around here.
The world is not linear it's random, however, it looks like we've passed peak oil at least in so far as the "easy pickings" are concerned.
As for research I suggest you do some reading on optimal debt and growth.
Abheek Barua & Shivom Chakravarti: Deconstructing debt A recent working paper arrives at quantitative thresholds beyond which debt goes from being 'good' to 'bad' Abheek Barua & Shivom Chakravarti / Jan 23, 2012, 00:50 IST
http://business-standard.com/india/news/abheek-baruashivom-chakravarti-deconstructing-debt/462543/
What gets me is this endless wailing about debt and the use of it to advance discreditted Chicago school hair shirt economic policies.
Sure I'm an optimist - but I do my research and reading.
4) That's crazy.....however Public health care, 1/2 the cost of the USA, does everyone and you live longer in NZ. Public education, costs 1/2 of the private one....may not be better outcome though.....
2) Thats silly.....no consumer credit at all or its meaningless, that will happen soon anyway.
3) It will happen, Pollies will see to it....its a done deal and they have i) nothing else and ii) they said they would so thier egos wont let them stop......we will get shafted.....like duh.....but we voted for it....
1) Wont work, take a look at say california.
A Govn isnt a business....both have advantages, both disadvantages, use them both to get what you want.
regards
I have done a lot of reading on the GD, and my parents and grand parents told me about it....they were there first hand.
Lets be serious on the causes, over indebtness by private entities such as ppl and companies. This is not the Govns fault, unless you accept they should have regulated to keep credit in check.....no voter or company wanted that...and we had virtually no control....here is the mess we asked for.......we embraced voodoo economics......
Why QE? because they dont want a GDepression mk2.....which they/we are going to get....
Globalisation is dead....there isnt the energy for such complexity....standby to become very localised.
regards
The Great Depression was caused by the FED allowing the extendtion of too much credit. Period.
And the reason it carried on for so long was because the government failed to allow for the debt to be liquidated, kept propping it up through intervention in the market.
Stop reading those mainstream economic manuals!!!!
Thanks but I'll stick to sound economics and logic.....
The Fed didnt extend credit, it was private debt taken on in the mistaken belief that it was manageable and there were good/better times ahead.....as it is now.....
How would you suggest private debt is liquidated? a jubilee? "sorry its cancelled mate, tough" how does that punish those stupid enough to take the debt on? or those depositors who find their life savings wisked away and left with no income? how does that help them? Throughout the GD Govn(s) did little, it took the ww2 armaments build up to do it.....ie huge govn stimulus....
but instaed today we are going to make the same mistakes like hayek/mises......or worse actually, total voodoo economics....
regards
The Fed didn't extend most of the excessive but they allowed the extention of credit.
The last time Austrian solutions were appled to the real world was in 1921 8 years before the Great Depression. This was when the economy crashed to practically the same extent as the first downward leg of the Great Depresion. The Austrian solution was applied, the US government budget was halved, and everything that was in trouble was allowed to go broke and zero stimulas! And what do you know it was over in 18 months.
The problem with the Great Depression was Hoovers' intervention then FDRs further intevention, all that paying people to did ditches then paying other people to fill them in again, and paying farmers to destroy crops whilst people starved.
Seriously I think you may have an issue understanding the scale of the situation, a comment of your from previous post;
"consider, how big is the US economy? roughly 10billion....how much of that is consumerism? roughly 70%....how much has the USGovn stimualated/printed so far? 700million?"
Actually the US have stimulated around $16 trillion since 2008, not 700 million, big difference between $700,000,000 and $16,000,000,000,000, you are out by a factor of over 22,000!!!
The US GDP is around 14.5 trillion not 10 billion
Based on your earlier asumptions I might of agreed with your deflationary outlook, but having revisited your assumptions I am sure you must now have to draw another conclusion?
I think we are begining to identify why so many climate change denialists, from an economics background, are so skilled at their spin. They have had a lot of practise,
http://en.wikipedia.org/wiki/Depression_of_1920%E2%80%9321
One typical ploy (frequently used) seems to be miss-quoting the time of key events.
Every post. Every single post you make, Bernard.
"John Key is bad." "John kill is evil."
Stop blaming him on the problems in your pessimistic mind. You sound just like a 20 year old young-Labour member - full of unjustified hatred for our prime minister. It's weird to see it in someone of your age though.
Have you been sharing needles with Fenton or something?
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/90478…
AmbroseAs the old but true saying advises;
"Just follow the money"
So lets follow the money that Draghi is printing.
Step 1: The ECB creates a liability (€580bn to €832bn since early November) on its balance sheet with a corresponding asset called cash
Step 2: The ECB gives this cash to 532 PIIGy banks across EMU with two conditions - that they (a) buy PIIGS sovereign debt that is being rolled over plus any new debt to cover current fiscal deficits in the PIIGS, and (b) they hand over the PIIGS bonds as security for cash the 532 PIIGy banks borrowed from the ECB. The 532 PIIGy banks are allowed to keep a fat commission on the "carry trade".
Step 3: The PIIGy banks duly oblige by turning up at PIIGS treasuries to buy their sovereing debt.
Step 4: The PIIGS treasuries use the surplus between the rolled over debt and the total fresh issue to fund further PIIGS government deficits.
Step 5: As the PIIGS governments hand out this new ECB money in the form of social payments, entitlements, apparatchiks and general welfarism then M3 beings to improve and Ambrose Evan Pritchard declares that Super Toxic Mario Draghi is a genius!
Ambrose even my 8 year old son can tell you two things about such madness (a) that such Keynesian state spending is a total illusion of wealth creation - indeed coupled to quantitative easing it is the utter madness of destroying wealth before it has even been created! and (b) that the ECB has created liabilites and matched those liabilites with assets that are worth a fraction of those liabilites and that such action is an act of deliberate bankruptcy.
Tell us, Ambrose, just which taxpayers are on the hook for the level of insolvency of the ECB that Draghi is created? - because the Germans certainly are not. Perhaps you believe in magic fairy godmothers.
Ambrose no matter how much you profess not to be a Keynesian your analysis and conclusions here are indistinguishable from pure Keynesian lunacy - rather your position is worse - you are using monetary policy to support Keynesian deficit fiscal spending, the very motor driving sovereign nations into bankruptcy.
Jonathan
I don't see any talent at the leadership level that can replace John Key or David Shearer to lead NZ out of the quagmire. We need tough leaders who are not afraid to make tough decisions and do the right thing for the country. People of the calibre of UK's Margaret Thatcher or Singapore's Lee Kuan Yew.
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