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John Key: Business to blame?

Written By: - Date published: 9:39 am, September 24th, 2011 - 125 comments
Categories: business, john key - Tags:

John Key talking at the Champion Canterbury awards in Christchurch on Thursday night:

”We’re a $200 billion economy with 2.2 million fulltime jobs. In the end the thing that makes a difference is the business community – they’re the ones when confidence is high employs people and when it’s not they’re the ones that don’t and a lot of it is based on sentiment and if you don’t believe me go and have a look across the Tasman.”

Is he saying that if business had just kept the faith a bit more, the economy would be in better shape?

They’re the ones “that make a difference”. The government doesn’t need an economic plan; unemployment is because business has got a case of the jitters. If they just believed a bit more, everybody could be employed. It’s all based on sentiment don’t you know?

John Key knows. His years buying and selling currency means that of course he knows all about productive business*. And according to him, it’s all just a confidence trick.

*</sarcasm>

Although this post should be covered by the opinion section of electoral law and shouldn’t need authorisation, here’s mine anyway, just to be safe:
Authorised by Ben Clark, 54 Aramoana Ave, Devonport

125 comments on “John Key: Business to blame?”

  1. Carol 1

    “…they’re the ones when confidence is high employs people and when it’s not they’re the ones that don’t and a lot of it is based on sentiment and if you don’t believe me go and have a look across the Tasman.”

    Actually, I hear from some NZ businessmen who do business “across ther Tasman”, that business activity is more vibrant in NZ than in Oz at the moment. Aus business is apparently in a bit of a slump, albeit expecting that the Aussie mining industry will pull them out of the slump.

    • Colonial Viper 1.1

      Australia is at the start of their downturn.

      China is on a precarious path economically at the moment, and if China catches a cold, Australia will get pneumonia.

      BTW Key’s presumption that sentiment and confidence are all that is required only holds in a world where resource and energy availability is cheap and high. Neither holds today, nor for the foreseeable future.

      • Kevin Welsh 1.1.1

        Three negative quarters in a row for Chinese manufacturing is not good. Be interesting to see what they do about it.

        • Colonial Viper 1.1.1.1

          China already knows the answer, the question is can they implement it successfully in time. China can see that tradititional export destinations like the US and the EU are failing and they need to become more independent from them. Any why would you continue to ship real goods overseas in exchange for a river of printed paper flowing back in return (Euros and USD)?

          In recent years China has been trying to make up for the demand volatility from these foreign markets by massive internal infrastructure spending (some good, some bad e.g. the empty cities, the high speed rail which falls apart).

          Basically they have to move from a manufacturing export based economy to one where services and internal consumption become far more important.

          If China had sense they would also use a chunk of their cash holdings to create a public health system and double investment in their creaky very minimal social welfare safety net system.

        • freedom 1.1.1.2

          Gee i don’t know, what would China do if things got tight? Maybe call in the Trillions of dollars it has staked the USA and many other western Nations ? Perhaps it would sell some the world’s largest stockpiles of Gold? Or simply and most likely, China would carry on as usual as it has for thousands and thousands of years, watching calmly, as the western world heaves and grunts through the self centered idioms of the greed machine.

          Short of an ELE, China will be just fine.

          • McFlock 1.1.1.2.1

            Meh. Someone needs to buy the gold, and if people default on their debt because you called it in, you still get nothing.

      • queenstfarmer 1.1.2

        if China catches a cold, Australia will get pneumonia

        What, you mean it won’t be all the Australian Government’s fault?

  2. vto 2

    I don’t even understand what he said. He should speak clearly.

  3. AAMC 3

    Business & Government, hand in hand…..

    http://www.youtube.com/watch?v=hOyDR2b71ag&feature=player_embedded

    Based on business as usual, but as CV states it “only holds in a world where resource and energy availability is cheap and high. Neither holds today, nor for the foreseeable future.”

  4. ghostwhowalksnz 4

    Wasnt Key the one who made his mark early by sacking everyone before turning out the lights and getting an offshore job !

    Seems like he lacked confidence in his people to turn things around…… and just be a more happy face himself

  5. Craig Glen Eden 5

    This is the thing John Key is not a business man by that I mean John Key would have never taken his own money or borrowed from a bank and created a business.

    John Keys world is an already manufactured one.It is a total different set of skills to start some thing from nothing. I have watched this phenomena many times people who have worked in positions in big corporates like Sharp and Large accounting firms who decide they are going to set up their own business.In almost every case they fail, the reason they just don’t have the skills despite being successful in their corporate roles, they are not prepared for the graft and day in day out grind.
    They get disheartened pretty quick as the realization hits home that not only are they not bringing home the bacon but they could be grinding away for years.

    If these same people had say Daddy Morgan backing them they would be fine but they don’t.
    John Key is the typical corporate kid he has been successful in that environment put him on struggle street and he would fail.
    .

    • RedLogix 5.1

      Totally agree CGE. Not only are they not prepared for the sheer hard work involved; they’ve completely missaprehended how any success they met in the big corporate world was not really the result of their own talent and efforts… but a consequence of the collective effectiveness of so many people all focussed into one organisation.

      Without that collective supporting them… they quickly fail.

      • KJT 5.1.1

        They think their over inflated salaries, courtesy of the “cult of management” reflects their real abilities.

        Just to illustrate. Ports of Auckland just got a new general manager. He promptly sacked and disestablished at least two managers jobs..
        They have saved over $500 thousand a year in salaries and productivity has risen by almost a third.

    • queenstfarmer 5.2

      put him on struggle street and he would fail

      He was. He didn’t.

      • Craig Glen Eden 5.2.1

        When ?

        • queenstfarmer 5.2.1.1

          He was raised in a state house by a solo immigrant mum. That hardly makes him a “typical corporate kid” as you claim.

          • Draco T Bastard 5.2.1.1.1

            In a society that had decent social welfare – hardly struggle street.

          • prism 5.2.1.1.2

            @qstreet Where did Mrs Key immigrate from? And why – was it because NZ is regarded as a benign place for women alone bringing up children?

          • Craig Glen Eden 5.2.1.1.3

            So what, the state gave his mother a house to live my mother worked full time for hers and bought up two kids. Key is a corporate kid because thats the environment he was raised in career wise. He wouldn’t make it on his own he is to soft, this is the guy who gets the hired help to arm wrestle for his entertainment.

          • Vicky32 5.2.1.1.4

            She was a widow (hence, in the eyes of those around her, very respectable) and living in a State House wasn’t then what it is now. My Mum was on a widow’s benefit with her two youngest, and many of of our neighbours lived in state houses at the same time as Key and neither of these things was at all a big deal!In fact, there were other widows with children in our street in the 60s, and no one considered them “solo Mums” at the time!

            • Vicky32 5.2.1.1.4.1

              I’ve just Wikipedia’ed John Key, and learned that his father didn’t die until he was 6 years old, and that then his mother brought him up with two sisters in a state house. Not “struggle street” at all, really! Across the road from us when we were children at the same time – 1967 onwards, lived the woman my parents called “The Widow Bain”, a young woman with four sons.
              I know from my mother’s later experience, that a widow’s benefit with 2 or more children, was liveable. In fact my Mum resisted going on to National Super (she’d been an ‘elderly mother’ in medical terms) because among other things the widow’s benefit was more generous! (It took children into account.)
              http://en.wikipedia.org/wiki/John_Key

      • Zaphod Beeblebrox 5.2.2

        Didn’t Merrill Lynch go bankrupt?
        In what way was that a successful enterprise.

        • queenstfarmer 5.2.2.1

          Um, in that it didn’t go bankrupt. You may be thinking of Lehman Brothers.

          • Zaphod Beeblebrox 5.2.2.1.1

            Bank of America bought them out of their debts, as part of ther TARP deal- what else would you call it?

            • queenstfarmer 5.2.2.1.1.1

              A trade sale is the usual term – BoA bought them for US$50 billion, and it is still in business today.

              I love it that you first incorrectly claim (or suggest) that ML went bankrupt, and are now trying to redefine bankruptcy just so you have something to attack John Key with! Priceless!

              • Colonial Viper

                qstf is probably right on this count; Merill Lynch is doing fairly well by all reports.

                It’s BoA’s other activities, including their forced acquisition of Countrywide, which is going to destroy them.

                BoA has no reserves, and if it were forced to mark its ‘assets’ to actual market value, it would go under like the Titanic.

                • No actually Qtfr is not right.

                  BoA was bullied into buying Merrill Lynch by the then secretary of treasury and Goldman Sachs man Hank Paulson just like he bullied congress into giving the banks 700 billion while actually printing 16.1 trillion in give aways to his masters and now BoA is one of the five to big to fail actually failing big time with $ 53 trillion in worthless Derivatives on their books related to Europe’s collapse.

                  Greece is going to default and the European banks are going to claim their hedges with their American counterparts and that is the end of that. So not only was Merrill Lynch insolvent at the time BoA had to buy it BoA itself and 4 other banks are now on the precipice of total and unavoidable collapse.

                  All due not because of  some accidental bad loans but because of the scams they build on an unsustainable and fraudulent system which made a few individuals (And trust me John Key is just a food soldier with a food soldier income compared to the real winners here) obscenely rich while bankrupting the entire global economy.

                  Did John key know about this? Well, he was a member of the foreign exchange committee assisting the Federal Reserve of New York, a position he had taken over of his boss Stephen Belotti who shared this position with Robert Rubin who was instrumental in the repeal of the Glass Steagall act in 1999 making all this mayhem possible. John Key at the time was the head for Forex and European head for bonds and derivatives for Merill Lynch? He was right there right in the  epicenter when all this went down.

                  John Key met with Tomothy Geithner and Ben Bernanke in July. Geithner is the current secretary of Treasury and a former president of the New York Fed. He is also the protege of Larry Summers and Robert Rubin keeping Johnny boy in the loop so to speak.

                  So what do you reckon?

              • Zaphod Beeblebrox

                Can’t comment on JK at ML- he did what he could to feed his family as most people do. He did what he was paid to do.

                Just not sure how you can define the activities of investment banks in the 90′s and 2000′s in terms of ‘success’. Think you will find the $50b paid for ML was part of another set of deals, involving TARP and the fed.

          • mik e 5.2.2.1.2

            lehman bros didn’t have enough clout, with its lobbiests. ML had insiders like Goldman sachs who had an insider as treasurer.So they instantly removed the competition.

      • Puddleglum 5.2.3

        Qsf, I think you’re missing the point of the above criticisms of Key.

        He got out of ‘struggle street’ by hitching his wagon to the corporate world in a calculated fashion. (e.g., He chose accountancy as his major because he heard that accountants were the ones who dominated boards of directors.)

        Hi case is a shining example of someone getting out of struggle street by not creating a productive enterprise but by attaching himself to (and positioning himself within) an already created structure that gave disproportionate rewards to people in a certain place in the mega-machine.

        No innovation, just a keen eye for the cog that got the most oil. 

  6. Deadly_NZ 6

    Thats odd because this is what he said earlier. Not that he knows what he’s talking about. Or is he talking about just selling us to the Chinese..

    http://www.stuff.co.nz/business/industries/5674399/New-Zealand-will-survive-with-Asias-help

  7. Afewknowthetruth 7

    An industrially productive economy is primarily concerned with converting natural resources into waste. Sometimes the waste gets diposed of very quickly, as in the case of peishable food packaging; sometimes the waste hangs around for many years and converts yet more natural resources into waste, as in the case of a motor vehicle.

    A service economy is primarily concerned with moving people and waste from one place to another, using rapidly depleting finite resources.

    In recent decades the conversion of resources intio waste has become increasingly donminated by large corporations, which have become so powerful they now write most of the rules, either directly or via ‘donations’ to political parties.

    According to orthodox economic theory, the faster an economy converts natural resources into waste the better off we all are (even if we render the planet we live on uninhabitable for our progeny in the long term).

    This insane system will continue to operate until:

    a) the resources necessary to run the system are no longer available ( We are rapidly reaching that point.)

    or

    b) people wake up to the fact that everything ‘official’ is insane and Orwellian, and is founded on fabrications and lies. (Judging by the nonsense that is posted on this forum by some people and by what is going on in society, there is little evidence that people are bothering to become informed or are waking up.)

    Clearly, those who benefit most [in the short term] from the present bizarre set of economic and social arrangements will continue to lie to the general public in order to maintian the ‘trickle up effect’ which provides them with their totally unwarranted benefits….. John Key being a prime example (along with all his cronies).

    Therefore, we are now seeing billboards all around town telling us to vote for these cretins because they are ‘building a brighter future’ (the same old trick of neuro-linguistic programming that has worked so well in the past).

    Unfortunately, the uninformed masses who don’t think for themselves or can’t think for themselves will vote for these cretins (or other cretins with similar ideas).

    • KJT 7.1

      I think its more because we treat 00′s on a computer as if they were real resources.

      Until it gets to the stage where the 0′s becomes too large a part of the economy and they have to fall back on taking from the real producers to sustain the ponzi scheme. Then! it becomes obvious that the amount of real resources, that can be sustainably utilised, do not match the number of 0′s.

      • Oscar 7.1.1

        The banks were the first industries in the world to realise the value of computers – It became super easy to put another 0 on the end of what they (didn’t) have in gold resources.

        If we had someone with balls as a Finance Minister prepared to call on the banks and ask them for their total resources in all cash/gold/stocks and bonds, and compared that to their debt exposure, the entire fractional reserve banking system would crumble overnight.

        The removal of the gold standard started the inevitable decline, hence why this world no longer relies on cash, indeed, it’s all debt and assets.

        Methinks we should adopt the ‘silver’ standard as a way to effectively halve the wealth overnight of the top 1% and I daresay that the cost of living would drop correspondingly.

        10 years ago, a 2L jug of beer cost 3.50$ where the minimum wage was 9$. Still left 5.50$ to spend on a pie to blow on while walking home.
        Now a 2L jug of beer doesn’t come cheaper than 12$ and the minimum wage is $13. What gives? Pies are about $3.50 too so a good 1.5 hours of work just to get some beer and a pie is fundamentally wrong.

        Sometimes I wonder if we actually did drop the minimum wage right down to $2 an hour, whether or not the multinationals would go, “uh oh, guess we can’t make people work for 52 weeks just to afford an ADIDAS top. Perhaps 10 weeks is more realistic” /sarc.

  8. Adrian 8

    I’ve just come from town where I was speaking to 20-something nephews and nieces and they are pissed off. They got jobs, burger flipping etc, ( theres nothing else out there), but a fuulltime promise very quickly turns into a dimminished hours partimer. These kids (and adults I also know of ) are officially employed but are in fact under-employed. Why? Because it’s cheaper and easier to get rid of them? But how can it be, more workers doing less hours must surely mean there is more paperwork, ACC, Tax etc? There is a real growing anger amongst the young about being pissed around with. I know of kids being made bankrupt because of stand downs after part time work dries up means there is a 13 week stand down and so they never get a benny and they can’t pay rent ( or continue to pay rent under a contract ) hence being sued for hundreds of rent they will never be able to pay. One 20 year old only owes $1200, made up of rent and a training course that the authorities reneged on and so faces a bankruptcy hearing. For $1200 fucking dollars!

    • millsy 8.1

      I for the life of me dont see the point of the 13 weeks stand down period. It seems to me to be punishement for something that really wasant ones fault.

      • Colonial Viper 8.1.1

        Labour should have sliced that stand down period right back. Maybe to zero.

      • KJT 8.1.2

        Makes employees more willing to tolerate exploitation and sadism from the boss.

        Also the reason why benefits have been cut since the 80′s.

        • Oscar 8.1.2.1

          Stand down period is between 14 – 16 weeks depending on who you talk to at WINZ – even they don’t know the real period.

          As my partner said “might as well be dead if you lose your job”

          • RedLogix 8.1.2.1.1

            Yup.. one of our tenants is in their stand-down period now. No cash, no rent.

            No point in trying to evict them cos they can’t get another place, so I get to pay the mortgage out of my own pocket. Afterwards I’ll get no thanks, they’ll never be able to afford the back rent and it’ll all end in tears just the same. But if I don’t pursue it and the others find out they’ll all try it on … bugger it’s so damned bleak and predicatable.

      • prism 8.1.3

        @millsy It is all part of a deep seated belief that people wanting benefits are not prepared to look to their own resources and are turning to the government for a handout when they could organise something for themselves and stand proud, individual, manage their own lives, never ask for help from anyone, make their own way in the world without props etc. etc. All convenient propaganda and slogans as an excuse for creating a fragile and unbalanced trading economy that favours the wealthy.

    • KJT 8.2

      McD’s gets a subsidy for “training” unemployed for three months. After that the incentive is there to encourage staff to leave, by reducing their hours, so they can take on another subsidised “trainee”.

      Most McD’s permanent staff locally are only guaranteed 12 hours a week, but are expected to be available at short notice. Because of the irregular hours, their staff, especially young women, have to be subsidised by their parents to get to work.

      Far too many other employers are getting away with the same crap.

      A teenager who was illegally dismissed from another job, not McD’s is currently living with us as he has no money until the stand down is completed. Also. WINZ will not even talk to him without photo ID. Which costs at least $120 to get. Pub card. Which requires a birth cert and a passport photo. He doesn’t want us to pursue the illegal dismissal because we live in a small town and he is finding it hard enough to find another job as it is.

      Don’t even get me started on the farmers and orchards who like to employ immigrants, because they can be treated as virtual slaves until they get residency.

      Or the business owners who bleat to immigration they cannot get New Zealanders. When the reality is they do not want to pay or train people.

      How are people going to support new business when they are not even paid enough for food, housing and transport.

      Why should wage earners and small business owners, who are working their guts out, be making only enough to survive.

      • Draco T Bastard 8.2.1

        Why should wage earners and small business owners, who are working their guts out, be making only enough to survive.

        That’s typical capitalism – pay the workers as little as possible so as to boost the amount the capitalists can put into their pockets.

      • oftenpuzzled 8.2.2

        Thanks for comment these issues need far more publicity then they are presently getting, we are not hearing about them thru media, mind you most media is controlled by Fairfax any how and they couldn’t care less. How do we get this info into the public domain to wake people out of their closed state of mind?

      • Descendant Of Smith 8.2.3

        I ran into a guy yesterday who had been sitting out his 13 week stand-down that he believed he must get for losing his job due to being laid off as there was no work.

        This of course is not correct and I’ve encouraged him to go and apply on Monday. He’s not convinced though cause he’d rather believe what all his mates tell him.

        With the work that is done by my wife in the disability sector it gets most frustrating when incorrect information is provided, particularly as many of her clients have intellectual disabilities and get very stressed and worried, so every now and then I put my old advocacy hat back on and help her out with information.

        I’ve on the odd occasion done the same here as well. It’s a serious problem IMHO that bad advice and wrong mythology perpetuates cause it causes real people unnecessary hardship. The other favourite is that you have to spend all your money first. I’ve seen people spend their $50,000 redundancy pay and not apply cause they believed some idiot union delegate who told them that.

        For what it’s worth my bits of advice are as follows:

        1. Here’s the policy link to stand-downs for leaving your job.

        http://www.workandincome.govt.nz/manuals-and-procedures/income_support/main_benefits/unemployment_benefit/unemployment_benefit-263.htm

        2. WINZ must take into account both the employers and the employees reason for dismissal BEFORE making a decision. You can not be imposed a stand-down if the reason you left was “good and sufficient”.

        3. They can’t give you a stand-down unless you actually apply and this decision must be put in writing and you can appeal it. Never accept someone simply telling you you can’t get benefit for 13 weeks because you lost your job. Always apply.

        4. If a stand-down for voluntary unemployment is applied you must be offered a re-compliance activity. If they can’t offer you one then organise your own e.g. doing charity work and get them agree to it.

        The compliance activity certainly means you can get a benefit and have money to live off.

        Also it’s common to confuse stand-down period which is normally one week with entitlement date which doesn’t occur until you stop being paid e.g. you may finish work today but you get 30 days holiday pay so your entitlement date is 31 days in the future. Most people tend to think how long do I have to wait as the stand-down period which while colloquially logical is not quite correct.

        Anyway I tend to use the MAP links when giving advice as they are the policy that staff have to follow – pamphlets etc don’t give the same level of detail.

        Hope this helps.

        • Descendant Of Smith 8.2.3.1

          Just reading the policy again if you are/ become unwell you can also go on Sickness Benefit. The voluntary unemployment stand-downs don’t apply there – at least not as yet.

        • Vicky32 8.2.3.2

          2. WINZ must take into account both the employers and the employees reason for dismissal BEFORE making a decision. You can not be imposed a stand-down if the reason you left was “good and sufficient”.
          3. They can’t give you a stand-down unless you actually apply and this decision must be put in writing and you can appeal it. Never accept someone simply telling you you can’t get benefit for 13 weeks because you lost your job. Always apply.
          4. If a stand-down for voluntary unemployment is applied you must be offered a re-compliance activity. If they can’t offer you one then organise your own e.g. doing charity work and get them agree to it.

          Wow, valuable information DoS! I hadn’t known any of that… :)

      • prism 8.2.4

        @KJT Case histories like this would be compiled as evidence of the real sort of NZ we are living in though some people manage to avoid the rough side themselves, and ignore the reality for others who actually can not be blamed for their own circumstances, though that would be the wish of the comfortable.

    • Draco T Bastard 8.3

      But how can it be, more workers doing less hours must surely mean there is more paperwork, ACC, Tax etc?

      That’s what computers are for. All these people complaining about “red tape” are scaremongers and nothing more.

      There is a real growing anger amongst the young about being pissed around with.

      Good. The rest of need to as well. We’ve let the capitalists have their way for far too long and it’s costing us far too much.

    • prism 8.4

      @Adrian I think this story needs to be told in capitals.

  9. KJT 9

    Hasn’t anybody noticed yet.
    Whenever a more Neo-liberal Government is in power, business gets the jitters.

    It happened in 1987, the 1990′s and 2009.

    That is because real business people, not corporate hacks and gamblers in existing assets, know a low wage economy cannot support real business.

  10. Well, he is right of course! As long as we believe the bankster’s crap they’ll get richer and the rest will get poorer.
    Here is the excellent Max Keiser with the magnificent Stacy Herbert: Financial war and the bankster’s scams explained
     

  11. Bored 11

    Fucking Key, the gambler from the trading floor using other peoples money, not his own, placing bets..what a wanker to tell people who have to set profit and loss for their business, do actual sales, actually deliver etc that it is a matter of confidence. What a scumbag.

  12. Thomas 12

    Ben Clark: What are you complaining about? Pray tell us, what drives the economy if it isn’t confidence?

    Don’t underestimate the value of confidence. Heck, money is just paper without confidence in its value.

    Businesses won’t hire if they expect the economy to tank next year. Employing someone is a long-term commitment. But if they expect business to be steady they will invest in hiring someone. That’s why confidence matters.

    • Colonial Viper 12.1

      Don’t underestimate the value of confidence. Heck, money is just paper without confidence in its value.

      You’ve hit the nail on the head there.

      Fiat money is intrinsically worthless.

      And when people see the Fed, the Swiss National Bank, the Chinese, the ECB printing the shit at full steam ahead while they go along with the bankrupting of sovereign nations like Greece/Ireland/Spain/Italy (with France being next on the list), how are people supposed to have any ‘confidence’?

      • Thomas 12.1.1

        CV: You somehow managed to hit the hand you were holding the hammer with. I think you should lead the way: Go to your bank. Withdraw your savings. Set them on fire.

        Economics is a social science. The drivers of the economy are people and their beliefs and actions. Economic predictions can be a self-fulfilling prophecy. If you predict that the economy will collapse, people will “hunker down”, stop spending as much, and avoid risk; consequently, businesses lose income, investment slows down, and the economy slows down.

        The recession wasn’t caused by a natural disaster. It wasn’t caused by resources running out. It wasn’t caused by a war. And it wasn’t caused by political action. The major cause was a domino effect in people’s beliefs.

        If people lose confidence in a currency (fiat or gold), it collapses. If people lose confidence in a company, its share price drops. If people lose confidence in their job security, they buy less. If people lose confidence in a bank, a bank run ensues. If people lose confidence in the economy, they won’t create jobs.

        I’m glad that John Key understands this. For those that don’t understand this, the ups and downs of the economy will be an eternal mystery.

        • Colonial Viper 12.1.1.1

          Thomas appears to believe that the economy = the financial markets = psychology.

          Well you are full of it like the rest of the neoliberal economic banksters who have been gaming the system for the benefit of the top 1%, leaving the other 99% as debt serfs and wage slaves.

          • Thomas 12.1.1.1.1

            And CV thinks the economy is a conspiracy that has absolutely nothing to do with people and their actions.

            • Colonial Viper 12.1.1.1.1.1

              Conspiracies imply secrecy.

              But the shunting of GDP growth into corporate profits and shareholder dividends, and away from employment and wages, has been obvious for all to see.

        • Puddleglum 12.1.1.2

          Thomas, apart from aspects of some branches of theorising (e.g., economic psychology, evolutionary economics) economics is neither a behavioural nor social science.

          In fact, strictly speaking economics is empiricist (not empirical) in ideological orientation and its ‘theory’ amounts to a logical model (rather than a psychological or sociological – i.e., scientific – model) of human action (see Hayek, von Mises, etc. and Popper’s clear explanation of the logical character of the economic model of his friend Hayek). 

          The view that beliefs and preferences drive behaviour is now well and truly outdated in the cognitive sciences. Cognitive mechansims are seen to be developmentally produced and a lot of theorising, currently, emphasises the evolved and embodied nature of cognition as well as its susceptibility to social situations. 

          Certain conditions ‘drive’ the forms of cognition supposedly ‘held’ by individuals.

          Connecting all of this to the focus of the post, the insightful question is not “how do individuals’ confidence and beliefs drive the economy?” but, instead, “what sorts of economic arrangements and circumstances include expressions of more or less confidence, and beliefs A, B and C rather than D, E and F by individuals?” 

          This is clearly well over Key’s head. Simplistic – and largely tautological – nonsense about ‘beliefs’ and ‘confidence’ nicely excuses any serious thinking about the processes involved. 

        • mik e 12.1.1.3

          Thomas what your saying is capitalism is one big confidence trick.Which the tax payer bails out every time it runs out of steam [Tanks], communism you would call that I suppose.

      • Thomas 12.1.2

        As for printing money, a crude explanation is as follows.

        If people have confidence in money, then ‘printing money’ increases confidence. So printing money can help mitigate a recession.

        In a recession, people are unwilling to spend money. Everyone tries to hoard money, which makes money scarce. This is a chain reaction. The more scarce money gets, the more people try to hoard it, the more scarce it gets, etc. That chain reaction was one of the main drivers of the great depression.

        Printing money tries to break the cycle by making money less scarce.

        But you can only push this technique so far. Eventually people lose too much confidence in money, they don’t save, and the economy ‘overheats’.

        The purpose of monetary policy is to strike the right balance. NZ monetary policy is excellent—world-leading in fact.

        • Colonial Viper 12.1.2.1

          More nonsense from Thomas.

          Who has conveniently forgotten to mention that the new money that the Fed has printed has gone solely to one tiny group in the economy: the tight group of banksters who are the Fed’s Primary Dealers.

          Put it another way – the banks got the money, leveraged off that printed money to make huge bets against the economy, and have now left the rest of us in a situation worse than that of 2007/2008.

          You have no idea lameass.

        • Bored 12.1.2.2

          Hello Thomas, you must be the latest newbie on this site to recommend a BAU approach that backs blindfolded bravely into the future, blithely ignoring the cliff you refuse to see. Enjoy the drop.

          A minor recommendation is that you prepare for a future where the paradigms you obviously hold dear are rendered obsolescent by any number of factors you seem ignorant of, such as peak bloody everything, and international total insolvency.

        • Zaphod Beeblebrox 12.1.2.3

          World Leading implies creative, original and prescient. I’m struggling to see how anything the RBNZ does could have those descriptions.

          Remember these were the guys who raised interest rates last year in anticipation of the CC Rebuild/RWC boom we were going to get this year.

          Following the failed IMF prescriptions really shows how poorly we are served.

        • Liberal Realist 12.1.2.4

          @ Thomas

          “That chain reaction was one of the main drivers of the great depression.”

          Call and margin loans were the major causes of the great depression, it had little to do with investor confidence.

          During the Crash of 1929 preceding the Great Depression, margin requirements were only 10%. Brokerage firms, in other words, would lend $9 for every $1 an investor had deposited. When the market fell, brokers called in these loans, which could not be paid back.

          • Colonial Viper 12.1.2.4.1

            During the Crash of 1929 preceding the Great Depression, margin requirements were only 10%. Brokerage firms, in other words, would lend $9 for every $1 an investor had deposited. When the market fell, brokers called in these loans, which could not be paid back.

            In other words, market participants were often leveraged 9:1 prior to the Great Depression. For every dollar the stock market dropped in 1929, those players lost $9. And so it turned into a blood bath.

            Guess what. The largest banks in the world are now leveraged at between 25:1 and 40:1.

            They’re royally fucked. And for the last 3 years, all they and their government cronies have been trying to do is to impoverish entire countries, trying to make tax payers pay for bank losses caused by their insane levels of leverage.

            • Liberal Realist 12.1.2.4.1.1

              CV quite correct.

              The fractional reserve banking system and lax or non existent regulation of the financial system created conditions that have allowed the largest transfer of public wealth into private hands in human history.

              Private (toxic) debt driven from complex derivatives such as ‘options’ all of a sudden become public liability whilst the banksters continue to collect huge bonuses paid for with public money.

              Now we have a situation where the sovereign debt burden is being placed firmly on the shoulders of the tax payer in the form of reduced living standards (austerity), all while the gears of the global ponzi scheme continue to turn.

              • Bored

                When it all colllapses the digits in databases and the slips of promisary paper will be worthless: if you cant pay the heavies because you have nothing tradable to give them, they wont enforce obligations with their fists….so the “rich” will be one with us (the “poor”). What a mess.

    • Thomas 12.2

      I’m still waiting for Ben Clark (or anyone else) to explain what, if not business confidence, makes a difference to job creation. Perhaps someone can postulate an alternate explanation for the phenomenon of a “jobless recovery”.

      This post doesn’t actually rebut John Key’s statement; it’s just a bunch of hot air.

      • Draco T Bastard 12.2.1

        And I’m still waiting for someone to explain why we’re being held to ransom by the banksters. We have the resources that would allow us to ensure that everyone can have a good living standard but, for some reason, we let the banksters and the capitalists control those resources for their benefit rather than us controlling them for everyone’s benefit.

        • Thomas 12.2.1.1

          Presumably you keep your money in a bank. If so, you should ask yourself the question. Why did you willingly give your money to the bankers?

          • Draco T Bastard 12.2.1.1.1

            Was it willingly or was it because I had no choice? It’s impossible to operate in our society now without a bank account.

            Besides – I was talking about resources, not money.

            • Thomas 12.2.1.1.1.1

              Money and resources are interchangeable—you can sell resources for money and buy them for money.

              And I don’t buy the argument that you are ‘forced’ to use a bank. You can at least minimise your bank usage. Keep your savings in a vault at home or invested in something else. Just use your bank when you really need to.

              Well? What’s stopping you?

              • Colonial Viper

                Money and resources are interchangeable—you can sell resources for money and buy them for money.

                No you idiot, money and resources are not “interchangeable”, they are exchangeable.

                Just try stuffing your Porshche petrol tank with dollar notes and see how “interchangeable” with petrol that money is.

              • Draco T Bastard

                And I don’t buy the argument that you are ‘forced’ to use a bank.

                I’ll tell you some of what will happen if you try it:

                1.) Your employer will refuse to pay in cash (This applies to WINZ as well – you must have a bank account to receive any government assistance that you’re entitled to)
                2.) When shopping around for the best deals you will find that you can’t access most of them (this doesn’t seem important but do remember that we’re supposed to be this maximising entity getting the best deals rather than paying the most)
                3.) When you go on holiday you better make sure that you carry enough to cover unexpected breakdowns etc – and when you get robbed be prepared to hitch home (be difficult from overseas).

                Sure, in theory you can do without a bank account – in reality though, na, you can’t.

                And minimising bank usage isn’t the same as not being forced to have a bank account.

          • Colonial Viper 12.2.1.1.2

            Time to nationalise the utility aspects of banking, and for governments to take back control of the supply of money into the economy.

            • Zaphod Beeblebrox 12.2.1.1.2.1

              In NZ this is inevitable. The government will be taking over re-insurance in NZ (despite Brownlee’s denials) and I’m pretty sure they will be needing to counter the withdrawal of the big 4 Aussie banks when NZ is deemed too risky to lend to.

              Then again creating own money and not buying it off the Europeans and US banks- would taht be such a bad thing?

            • Liberal Realist 12.2.1.1.2.2

              Time to nationalise the reserve bank and take back control of our money supply.

      • AAMC 12.2.2

        ‘Perhaps someone can postulate an alternate explanation for the phenomenon of a “jobless recovery”.’

        Greed!

        Another crucial factor in the “jobless recovery” is globalisation. The jobs go to the cheapest supplier, China, Thailand, Cambodia, not America, Britian, NZ et al.

        You can not seriously contend that the recession is the byproduct of a “domino effect of people’s beliefs”, in 2007 people had endless confidence in seemingly endless and cheap debt, they bought big TV’s and houses they couldn’t afford. And all the while the financial industry was inventing new ways to make money insuring against default.

        The drop in confidence was the result of the ponzi scheme falling over, the artificial bubble bursting.

        Your dreaming Thomas!

        Prosperity without growth.
        http://www.sd-commission.org.uk/data/files/publications/prosperity_without_growth_report.pdf

        • Colonial Viper 12.2.2.1

          Maybe Thomas thinks that if you can medicate enough people with antidepressants and ‘uppers’ that the economy will start booming once again.

          Lets be clear – the kind of growth we have left in our current economic arrangements only helps the top 1% of people.

          Corporations now find it far more profitable NOT to hire staff, and NOT to expand operations in western countries.

          After all, why would you expand into countries where the middle class and their discretionary spending power was collapsing?

          The growing wealthy middle class is located in China and India. That is where multinationals (who after all by definition have no loyalty to any one country) are focussing now.

        • Thomas 12.2.2.2

          AAMC: So let’s indulge in your fantasy world:

          The capitalist overlords are greedy. They want more. So they hire more slaves to work for them. And that’s why there are so few jobs… oh wait.

          It is in no one’s interest to have high unemployment.

          Sure there is a first domino. But the size of the recession is out of proportion with the crisis in 2007. The key amplifier is panic.

          You’re dreaming!

          • Colonial Viper 12.2.2.2.1

            It is in no one’s interest to have high unemployment.

            Yes it is. Corporations restructure and layoff staff to boost earnings, and usually shareholders respond by boosting share prices.

            So your statement is plain ignorant.

          • AAMC 12.2.2.2.2

            I’ll concede that of coarse confidence plays an important part in the equation, but you are the one who’s dreaming if you won’t concede that the constant drive for further efficiency and larger short term profit doesn’t play an equal or greater part of the cause of unemployment. Which decreases demand.

            “The capitalist overlords are greedy. They want more. So they hire more slaves to work for them. And that’s why there are so few jobs… oh wait.” There are lots of slaves in Asia, who are really cheap, so we can increase our pile of gold if we make our local workforce redundant.

            Western jobs now reside in Asia! And the kicker, as we (all WASP nations) have demonized Government and underfunded institutions, China and India have been educating millions, and so we now compete with them not only for unskilled but also for skilled jobs.

            A reminder of where this crisis began…
            http://english.aljazeera.net/programmes/meltdown/2011/09/2011914105518615434.html

      • prism 12.2.3

        @Thomas It is sad to hear of someone throwing himself out of a sixth floor window in Seoul. The head of a a bank or large institution had just discovered that confidence alone is insufficient to run a business on and when his confidence left him, there was nothing substantial behind him to face reality with.

      • mik e 12.2.4

        Thomas your name must be Rumpelstiltskin.for the last 20 to 30 years the giant multinational corporations have exported the jobs to the cheapest places to manufacture. They are not coming back.Unless you expect everyone to work for 50cents an hour in sweatshops.Buying locally made might be a good start I buy as much as possible locally from banking to clothing, Earth Sea and Sky makes top of thew line outdoor and casual wear thats about half the price of its competitors.

    • AAMC 12.3

      “Pray tell us, what drives the economy if it isn’t confidence?”

      Demand! No jobs, no earnings, no demand = no confidence. The pursuit of efficiency and short term profit result in unemployment, unemployment reduces demand, a lack if demand reduces confidence and round and round we go.

      But we need prosperity without growth, otherwise we have great business confidence, and my kids end up with no planet.

      • Thomas 12.3.1

        And what drives demand?

        If you think you will lose your job later this year, you won’t buy as much. If you think you’ll get a promotion later this year, you’ll buy more.

        Confidence drives demand.

        • AAMC 12.3.1.1

          Confidence is a factor in demand.

          As is income, affordable food that hasn’t been inflated by commodities markets and affordable housing.

          • Thomas 12.3.1.1.1

            Excellent, you accept that confidence is a factor.

            Of course it isn’t the only factor. But remember, the recession is about demand shrinking by a few percent. So, even if confidence is only a minor factor, that is enough to make a big difference.

            • Colonial Viper 12.3.1.1.1.1

              The problem is that Key doesn’t get that its only a minor factor, and these days very secondary.

              The concentration of wealth amongst a very few, hyper-financialisation of the real economy and offshoring of decent paying jobs is what has been driving confidence downwards amongst everyone who is not in the top 1%.

            • AAMC 12.3.1.1.1.2

              I accept that confidence is perhaps an amplification and a symptom of a much more complex problem.

              But lets indulge YOUR fantasy. Lets say for a moment confidence is THE main factor. What has been destroying peoples confidence? The current economic narrative revolves around debt, default and Austerity. This is a meme that National has capitalized on – despite our relatively low public debt to GDP ratio in comparison to the PIGS or the US – and used to justify it’s borrowing and it’s cuts.

              Do you then acknowledge Thomas, that John Key and the National party and the narrative they’ve propagated are responsible for the drop in confidence?

            • Puddleglum 12.3.1.1.1.3

              Thomas, you’re not talking about confidence – you’re talking about predictions. If confidence were the driver of the recession then we could just run ‘motivational’ workshops and the recession would come to an end.

              What you are referring to is the general principle of adaptive responses based on the reduction of uncertainty, negotiation of risk, etc.. That’s not confidence, that’s a rough and ready attempt at an adaptive way of proceeding.

              Key’s comment made it sound as if the main issue was that people were ‘accentuating the negative’ (to reverse paraphrase that vacuous song that was once used by Saatchi and Saatchi – during the 80s or 90s?? – to get us all believing that everything was hunky dory when it wasn’t). It’s as if he believes that people just need to smile and wave like him and then everything will be ‘a okay’.

              That sentiment is ridiculous and assumes wishes make reality. It always amazes me when people say things like “perception is everything”. No it isn’t. Perception – if it’s worth its evolutionary salt – has to result in adaptive responses to reality.

              To think otherwise and, like you, claim that ‘confidence’ is what it’s all about is nothing but magical thinking.

        • AAMC 12.3.1.2

          Which doesn’t of coarse touch on the idea of peak demand, or a slowing of demand as a byproduct of western consumers filling their houses with new TV’s and computers and cars and phones and couches and so on an so forth, with all of that cheap debt that was around, and now the just don’t feel they need much more, the TV’s pretty good, do you really need anything bigger than 42inch, and it’s locked into a 48 mth interest free loan anyway, the couches have got a good few years left in them, iPhone still works for the moment, got a new computer 2 years ago, microwave still works…..

        • Colonial Viper 12.3.1.3

          Thomas hasn’t made it into a world where deleveraging is the first priority for many.

          When people are getting promotions, pay increases or companies making profits now, they are not spending more, they are deleveraging instead.

          There is at least 5-10 years of this to go, and by that time the world will be in severe energy depletion.

    • AAMC 12.4

      ‘Manifesto of the appalled economists’ for Thomas.

      “The neoliberal paradigm is still the only one that is acknowledged as legitimate, despite its obvious failures. Based on the assumption of efficient capital markets, it advocates reducing government spending, privatizing public services, flexibilising the labour market, liberalizing trade, financial services and capital markets, increase competition at all times and in all places…

      As economists, we are appalled to see that these policies are still on the agenda, and that their theoretical foundations are not reconsidered. The arguments which have been used during thirty years in order to guide European economic policy choices have been undermined by the facts. The crisis has laid bare the dogmatic and unfounded nature of the alleged “obvious facts” repeated ad nauseam by policy makers and their advisers. Whether it is the efficiency and rationality of financial markets, or the need to cut spending to reduce debt or to strengthen the “stability pact”, these “obvious facts” have to be examined, and the plurality of choices of economic policies must be shown. Other choices are possible and desirable, provided that the financial industry’s noose on public policies is loosened.”

      http://www.atterres.org/?q=node/13&page=2

  13. Richard 13

    Confidence is the reason gold prices went up and has now dipped.. people ‘believe gold has a value’

    • Colonial Viper 13.1

      No.

      • Thomas 13.1.1

        Yes. Gold is almost as worthless as fiat money. It can’t feed you; it can’t house you; it can’t warm you; it can’t do anything other than be shiny and hard to get. All that we ever do with gold is leave it sitting in a vault somewhere or wear it because it is shiny.

    • prism 13.2

      @Richard
      Confidence is the reason gold prices went up and has now dipped.. people ‘believe gold has a value’

      Lack of confidence is why gold prices went up. Gold represents a certain reality that pieces of paper or dark coloured symbols on a screen do not.

      Trust is what makes a society operate successfully. That is the word to use, trust; in the system, in that it will work as supposed, that the people who handle the credits that people build up from their efforts will act with probity, that those people will pay their legitimate taxes which support the properly functioning and fair system, and that the inevitable proportion of failures to meet standards will be small enough so the system can cope and absorb them. There is lack of trust now, and so gold has shot up in value but like housing it is solid, it can be handled, it has world wide recognition, it is sufficiently rare so the market doesn’t get flooded, and it can’t be replaced by other products to the same quality.

  14. Any jobs in Christchurch John Boy Pee said the soon to be laid off meat worker?

    What a sad country run by criminals!

    • mik e 14.1

      Oceana gold is looking at hiring 200 more workers at Macraes and Reefton.D4j. Excellent pay rates would suit freezing worker.

  15. tsmithfield 15

    Well, the IMF thinks that confidence is important for economic stability.

    It makes obvious sense. If people are confident about their economic future, they are more likely to spend and invest. If they lack confidence, then they are more likely to hold on to what they have for a rainy day.

    • AAMC 15.1

      And what gives them confidence…. A job?

      Also, the liquidity in Western markets has been a result of Asian economies losing confidence in the free Market, saving, and lending the money to us.

      Who is currently shitting themselves the most?

    • Zaphod Beeblebrox 15.2

      Partly. Stable, employment, health care, superanuation and having somewhere to live all help as well.

    • Puddleglum 15.3

      tsmithfield, it’s disappointing that you’re rushing – like Thomas – to excuse Key’s vacuous nonsense. I’m getting really irritated by all this talk of ‘confidence’.

      The inference that is meant – rhetorically – to be taken by foregrounding the notion of ‘confidence’ is that nothing structural, systemic or institutional is amiss. It’s just that everyone’s got some irrational colly-wobbles.

      Apart from being unbelievably patronising to the economic actors to whom – according to right wing neoclassical economics – we should supposedly hand over all economic decision making (via markets), it also ignores what causes the behaviour that is here being called (lack of) ‘confidence’. Generally, those causes are the immediate conditions that people are experiencing.

      Promoting this idea that it’s all about ‘confidence’ is simply a way of avoiding sheeting home the responsibility for what is happening to where it belongs – to the structure of the system and to particular historical efforts to remove financial regulations and the like (and, frankly, that the IMF ‘agrees’ is more a testament to their rhetorical and ideological role in the economic system than evidence that the discourse about ‘confidence’ amounts to sensible commentary). 

  16. Afewknowthetruth 16

    Thomas.

    You seem to have missed the crucial point yet again.

    Industrial economies run on cheap resources and cheap energy -primarily oil, with natural gas, coal and electricity (dervied from various sources, including fossil fuels) contributing.

    Once the point of maximum global extraction of cheap energy has been passed (2005/6) the system starts to implode, just as we have been witnessing since the end of 2007. No amount of ‘confidence building’ by ‘idiot’ politicans will alter irrefutable geological facts.

    The fact is, at the moment we have ignorant clowns who refuse to accept reality (or saboteurs) as leaders.

    There is a fair chance we will have ignorant clowns (or saboteurs) as leaders after the coming election.

    Silver has been mentioend as the foundation for a new monetary system. Chris Martenson notes in Crash Course that there was virtually NO INFLATION over a period of 120 years when silver was used as the basis of money in the American colonies. That was BEFORE the money-lenders imposed their fractional reserve Ponzi scheme on society, of course.

    • AAMC 16.1

      Of coarse you’re right AFKTT, but crucially, he’s misguided within his own paradigm as well as yours.

    • Draco T Bastard 16.2

      A fiat currency can work – just so long as the banksters aren’t allowed to print money without restraint through the Fractional Reserve banking system as they do now. In fact, the only entity that should be allowed to print money is the government.

    • Thomas 16.3

      Afew: Energy production has not decreased; it continues to increase. That is a basic fact. So that is not the cause of the recession.

      Take your half-baked conspiracy theory elsewhere. Until energy production actually decreases, no one could, would, or should take you seriously.

      • Colonial Viper 16.3.1

        Afew: Energy production has not decreased; it continues to increase. That is a basic fact. So that is not the cause of the recession.

        Ahem.

        Please look at net oil available for export production figures (the so-called export-land model), not gross figures.

        It seems you are wrong, again.

        • prism 16.3.1.1

          Tennis anyone? It is nice of the RW persuasion to have one of their cohort stepping up to the net and trying out their racket styles in the weekends against the LW persuasion team.
          Thomas, keep going won’t you, you are offering great opportunities for debate, argument and retaliation, or if you can’t, send in an equal substitute.

      • Afewknowthetruth 16.3.2

        In November 2010 the International Energy Agency admitted that conventional oil had peaked.

        http://www.energybulletin.net/stories/2010-11-11/iea-acknowledges-peak-oil

        The IEA, being a business as usual organisation, attempts to get round this inconvenient truth by declaring that unconventional oil and yet-to-be-discovered oil will miraculously maintain present arrangements far into the future, ignoring that the peak in discovery was around 1964 and that any oil discovered will be of low EROEI..

        http://www.chrismartenson.com/crashcourse/chapter-17a-peak-oil

        Bearing in mind that the system is already being propped up by energy sources that have a miserable EROEI (corn ethanol, tar sands etc.) and the extreme difficuly oil companies are now experiencing with unconventional oil (Deepwater Horizon being a prime example of a poor EROEI), and the peaking of high quaility coal in mant regions

        http://pubs.usgs.gov/circ/c1147/historical.html

        the question is how fast will we fall down the energy descent curve?

        The other important question is, is it worthwhile debating the crucial issues of our times with arrogant, uninformed boneheads such as yourself?

      • mik e 16.3.3

        The countries that have exported their jobs are living on ponzi money.And are not creating wealth but are merely consumers and service workers.

  17. Craig Glen Eden 17

    Right so if Confidence is the Key issue for business as Key and his little mindless followres seem to believe how does business confidence have any effect on our greatest exporter success Fonterra.

  18. randal 18

    according to National they are the party of business and John Keys is the man to make it all go boom. Well he is justa damp squib and he must stand in line like the rest of them and wait for the upturn. without getting to tricky or using esoteric political arguments the job at hand is to stop him and his cronies selling the states assets for their private gain down the track.

    • mik e 18.1

      The national party is run by failed businessmen and confidence tricksters .Thats why key is telling the truth for once, even his tricky spin can’t get the economy going but he is a good enough confidence trickster to get half of New Zealand to support him.Con artist KEY

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