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Gordon Campbell states the obvious

Written By: - Date published: 2:21 pm, March 8th, 2009 - 26 comments
Categories: bill english, capitalism, economy, national/act government, roger douglas, scoundrels - Tags:

english-100.jpgGordon Campbell has been having fun pointing the finger at Treasury in “How Treasury put us on the hook to finance companies“. Essentially the treasury and therefore Bill English appear to have been somewhat idiotic.

If a firm stopped taking deposits last September, and was heavily exposed in the current economic climate to a major loan to a Queenstown property developer, you’d think that might be ringing a few warning bells, wouldn’t you? Yet on 13 January Mascot Finance got Treasury’s nod for entry into the retail deposit guarantee scheme whereby it gets all its failed investments paid out bv the taxpayer, Barely seven weeks later, the taxpayer is on the hook for at least $10 million, and up to $70 million. Prime Minister John Key says that ‘with hindsight’ Mascot should not have qualified for a taxpayer bailout.Duh.

What the hell?  Surely the Treasury has been observing the successive collapses of finance companies over the last few years? Why am I as a taxpayer carrying the risk for these Southland bozo’s. As Gordon Campbell points out.

How on earth did Mascot ever qualify in the first place for this gold-plated bailout scheme ? After all, people who invest in finance companies are supposed to accept the inherent risk involved, in return for the higher returns compared to them leaving their money in the bank. The potential for failure comes with the territory. Now they get to keep the returns from these speculative investments if they win, and they get the taxpayer to meet their losses if they lose. Incredible. That’s sometimes called privatizing the gains, and socialising the losses.

I repeat – why am I having to pay for this Southland finance firm? I’d call it “the NACT nanny state for mindless investors”. After all it does seem to be a feature of this ‘free-enterprise’ government, that they take from the poor and give to the affluent. But of course it is a feature of the wingnuts from Act and the right of National. They of course still follow the precepts of the other part of Gordon’s article.

Celtic Tigers, Nordic Tigers

If you want a few minutes grim amusement, try Googling the words ‘Nordic Tiger’ and ‘Celtic Tiger’ these days. What you get are many enthusiastic endorsements of the economic policy in Ireland and Iceland dating from a couple of years ago, and written by the likes of the Cato Institute and other right wing think tanks. Huzzah for the low tax, de-regulated, privatization model that Ireland and Iceland were following ! Before, that is, they went down in flames. These days, the Irish are once again trying to emigrate.

roger-douglas-jul-1984.jpgThe think tank articles have all the hollow, doomed quality of a black box recording just before an airline crash. We know where these policies are leading to Ireland and Iceland, and Singapore and Taiwan becoming the basket cases of the global economy – but the authors don’t know this yet. Flash forward to New Zealand in 2009, and its as if the news hasn’t reached here yet. Politicians from the twilight zone Sir Roger Douglas, Rodney Hide etc continue to make the same zombie calls for de-regulation, lower taxes and reduced government spending, as if the global financial crisis had never happened.

Yep. Those nutters have been around this blog since its inception and they’re still here. They keep telling us of these wonderful and far away economies. For some strange reason their economies change over time. As they crash one economy then their yellow brick road passes another (soon to fail) economy. For some reason their favourite economies don’t have a lot of resilience in bad times. Probably because they stole the sinews of the state and gave it to their friends. Now of course they want the state to bail out their friends rather than helping the people who actually need help. But then we’ve always known that these neo-liberal ideas were really about the needs of the greedy and selfish..

26 comments on “Gordon Campbell states the obvious ”

  1. gobsmacked 1

    Speaking of neo-liberal disciples, John Key has given an interview to the Wall Street Journal. It’s not intended for domestic consumption, so there’s less of the empty smiley soundbites, and rather more of the good old right-wing economics:

    http://online.wsj.com/article/SB123638162497057661.html

    New Zealand’s government is out of step with the rest of the world. The overseas media can see this … but ours are still too infatuated to notice.

  2. aj 2

    It is South Island based not ‘Southland’ based. It orignated in Timaru and has offices in Christchurch.

    • lprent 2.1

      Take it up with Gordon Campbell – he said

      Frankly, its hard to see how a small finance company in Southland which had ceased taking deposits months ago and was fatally extended to a land speculator in Queenstown could meet these conditions. In practice it seems to be that if it had lent money and was still breathing, Treasury would sign it up for the scheme.

      Right now I’m still moving stuff so I don’t have time to dig through their back-history in the companies office.

  3. Ebolacola 3

    huh here was me thinking that Labour designed this scheme, ah well those tory bastards cant do anything right 😉

    its a shame that over 9 years Labour did nothing to improve upon the Ayn Rand fanclub that we call treasury

  4. Ianmac 4

    Thanks gobsmacked: Do you wonder why John Key has not spoken so eloquently here in NZ and instead to the Wall Street Journal? I wonder how many would applaud the indicated direction that Key intends taking NZ, and how many would say “is that what they meant during the election????”

    • Snail 4.1

      Ianmac,

      Did you get the date of that interview? Mary Kissel is asian office for the wsj and it reads like it was conducted in Wtn, published online March 6. Yet I’m wondering how old the copy is, how would/could we find out here..?

    • LOL.

      So now the party is over and the taxpayers of the world are left to underwrite in one form or another the liabilities and obligations of banks and, by extension, their hedge-fund clientele. John Key 22 Nov. 2008 APEC Speech.

      Also known as the “We bet, you pay” doctrine as embraced by the entire investment banking class. They already reserved a 150 billion to bail themselves and their rich buddies out here in NZ alone. That is $ 34.883,72 for every man woman and child added to our tax bill.

      That is 1764.79 times the ACC blow out of $ 85.000.000. and that only cost $37,- something a month.

      This is the biggest transfer of wealth out of our pockets to the super rich. To the Lord Ashcroft’s, the John Key’s and all the other bastards who have been betting in derivatives and the other make believe crap they came up with.

      It is daylight robbery and it will leave you and all your loved ones destitute while John Key and his mates will disappear into the sunset with all the money you worked for all your lives.

      How’s that change going for ya, NZ? LOL. But don’t worry, the rich don’t conspire and this was all just an accident and silliness on their part and they really do mean well. Honest. LOL

  5. sweeetdisorder 5

    Gobsmacked

    cheers for posting that link to the wall street journal article on Key. Fantastic reading.makes me feel very proud and fortunate that Key is in charge at the moment.

    I hope that article gets reprinted in the domestic papers here.

    • Pascal's bookie 5.1

      “I hope that article gets reprinted in the domestic papers here.”

      sweeetd sweetjesus, so do I.

      The wsj at it’s typicalist. Although to be fair, it’s usually the ‘wsj opinion’ that gets so much so wrong. The news side actually has an ok rep.

      but lordy. maybe the NBR would dare to run it, or the Northern Age, which is a little known wingnut spotters treasure.

      the JK quotes are certainly newsworthy, so perhaps they’ll get a run in the papers and they’ll edit out the bizzaro world take on NZ’s history.

  6. Ianmac 6

    Ebolacola: The scheme was agreed to by all. But you would have to be stupid to allow Mascot Finance to join the scheme, so it is not the vehicle, but the driver who is responsible!

  7. Tim Ellis 7

    I don’t understand your point, LP. Michael Cullen got Cabinet approval for the retail deposit guarantee scheme, which included the criteria for which companies were entitled to join the scheme. So either the scheme is flawed, or Treasury made an error in allowing Mascot to join the scheme. That isn’t a Ministerial decision, is it?

    There will come a time when National has to take responsibility for the incompetence of public officials, but I hardly think a wrong decision by a Treasury official two months after National is elected into government suggests incompetence by the National government.

    Do you think Treasury would have made a different decision on Mascot’s eligibility if Michael Cullen were still the Minister of Finance? I don’t think so. Should heads roll at the Treasury over this? I think so. Will Bill English force heads to roll? I hope so. Would Michael Cullen have forced heads to roll over this? I doubt it.

    See, we can both play partisan games over this, LP, but it’s not very constructive is it?

    • lprent 7.1

      What are you talking about? Think of the Shane Jones and the lightbulbs for one of the last examples in the 5th Labour government and many other examples. Every wingnut and National and Act said that ministers were fully responsible for everything that their ministry or department did.

      I intend to hold NACT’s ministers to that standard and more. After all if you set the standard, then you should also be held to it.

      The sub-text of that is that is what we said we would do – to follow the nutty C/T thousand cuts strategy, and now we intend to hold to that course. If the right can do something well like running long-term denigration campaigns, then I’m sure that we can do it better. Slinging mud from opposition is much more fun for blog writers than trying to defend…

      Bill English was one of the most obnoxious of the opposition MP’s on this principle. I’m sure that he is taking full responsibility in the way that he always said that Cullen should… (Yeah right)

  8. RedLogix 8

    For those of you with very short memories, you may care to recall that Michael Cullen expressed his very strong dislike for the deposit guarantee scheme, at the time he introduced it. He clearly stated at the time that he was ONLY doing because at the time the alternative of not doing so would have likely caused a massive capital flight from NZ financial institutions.

    He repeatedly said that these kinds of schemes introduce all sorts of ‘perverse effects on the margins’. And while it is pretty obvious in hindsight that Treasury should never have approved Mascot Finance, it was exactly the kind of dubious scenario Cullen anticipated.

  9. out of bed 9

    Printing money is the right way to get us out of this mess

    http://www.guardian.co.uk/commentisfree/2009/mar/08/will-hutton-recession-money

    • Actually it’s not. Just yesterday it was revealed that a trillion dollars was pulled out of the city of London with over half of that in the last quarter alone.

      Printing money out of thin air only dilutes the currency, inflating the value of that currency. Expect rising prices a la the Weimar republic.

      As inflation equals tax take this as more transfer of wealth from the poor to the rich.

  10. Ianmac 10

    Snail: The Key interview must have been fairly recent as the interview describes the actions already taken by the National lead Govt.
    Key says that there is nothing to be done to protect jobs now but the plan is to set up structures ready to take advantage of the recovery. Does this mean that the Job Summit was really worthless as the Nact have no real committment to job rescue at all? I hope that the interview flagged by gobsmacked gets a much wider airing.

  11. infused 11

    I love the article.

    To the core:

    “But while the U.S. and Australia broadly continued their economic liberalization programs under both right- and left-wing governments, New Zealand didn’t — until now. Over the past nine years, Helen Clark’s left-wing Labour government rode the global economic expansion and used the revenue surge to expand government welfare programs, renationalize industries, and embrace causes like global warming. As a result, the economy stagnated while Australia took off.”

    What did he learn in his former trade? “It taught me not to panic.”

    Something you guys might like to try

    • Snail 11.1

      Hey buddie, you infused with tannins or something..?

      In the herald-of-choice last year the PM himself admitted to making a tidy packet out of the business panic arising from Mr. Lange’s sacking of his Finance Minister.

      you also appear not to aprreciate (or likely understand and accept) how business failings and panic make big dough for derivatives dealers and traders..

      likely the truth of this appearance for the PM today runs something like when in Rome.. (supposed optimistic perception would be this emperor’s clothes, per the metaphor of course)

  12. ghostwhowalks 12

    if its true that mascots investors are mainly Southland based, theres your clue in why Treasury approved its application , ‘while under Southland MP Bill Englishs watch’.

    Whats the bet that the treasury secretary wont be held to account for this debacle by the SSC

  13. ghostwhowalks 13

    Infused , surely you havent seen the figures for NZs growth over the last 9 years compared to Australia.
    see the Reserve Banks graph. NZ tracks ahead of AU for most of the years since 2000, apart from the last few years when we are slightly behind( due to Australias benefits from mineral boom)

    http://www.rbnz.govt.nz/keygraphs/Fig2b.html
    When they are shown the numbers , the right says it was all due to the national govt of the 90s.

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