It’s a bit of a worry that the PM seems to be clueless about the complexity and interdependence of the world economy. Only from a state of blissful ignorance could Key be claiming that she’ll be right:
PM not too worried by IMF’s alarm bells
Prime Minister John Key is apparently not too alarmed by the IMF’s declaration that the global economy has entered a dangerous new phase. …
“We have a vastly different position to Greece. I mean our Government debt is about 20% of GDP, their’s is well over a hundred percent,” he said. “We’re much more conservative. We’ll be back in surplus in three years, they’ve got no chance of being back in surplus probably for 20 years.”
Yes indeed, we can all thank the last Labour government that we went in to the global recession with zero net debt. That gave National plenty of room to run debt up again without reaching dangerous levels. But to brush off the IMF’s warning (coming just days after the World Bank warning) displays a fundamental lack of understanding. Perhaps Bill English could take John aside and explain it to him:
Bill English predicts hard times for the economy
Driving the government’s austerity is the fundamental goal of getting back into surplus by 2014/15 after running some of the biggest deficits in the country’s history following the global recession.
“At the moment we’re on track for that,” English says. “But there are any number of circumstances that would put pressure on that goal – potential disruption in European financial markets, a slowdown in developed economies, and maybe China.
English is plodding along with unimaginative and destructive policies, the wrong solution to the wrong problem, but at least he understands that the New Zealand economy is a tiny insignificant cork tossed on a turbulent global sea. He should take John Key aside and explain to him that we will not be immune to the rapidly approaching Recession II.