Key’s leadership questioned again

Written By: - Date published: 11:26 am, October 2nd, 2008 - 26 comments
Categories: articles, john key - Tags:

When a commentator like Jenni McManus raises questions over Key’s leadership ability in troubled global economic times you know National should be getting worried. In today’s Independent Financial Review she writes:

Just as the United States House of Representatives this week rightly refused give a US$700 billion (NZ$1.04 trillion) blank cheque to Treasury Secretary Henry “Hank” Paulson, Kiwi voters should think twice about handing power to John Key….

Much has been written about Key’s failure to release policy detail — or even policy frameworks — in critical areas and his lack of a coherent economic vision to lead the country through the next three years.

Five weeks out from the election is simply too late for voters to absorb complex policy platforms. Is this actually what National wants?

Where, for example, are the detailed and decisive policies to combat the recession? Where was National’s strategy midway through last year when the US sub-prime market began to unravel? Where were Key and Bill English when the Kiwi property market tanked in March? How would they have handled the economy as increasingly desperate householders struggled with sudden increases in petrol, food and mortgage interest rates?

The simple answer is we don’t know. And the electorate needs to know these things before people can cast an informed vote…

Key might try to convince people that his five slogans are a plan, but voters are looking for more than rhetoric when deciding how to use their vote.

It’s time John Key delivered his main policy planks
The Independent Financial Review, 2 October 2008
By Jenni McManus

Just as the United States House of Representatives this week rightly refused give a US$700 billion (NZ$1.04 trillion) blank cheque to Treasury Secretary Henry “Hank” Paulson, Kiwi voters should think twice about handing power to John Key.

Congress reacted with what commentators have termed “visceral discomfort” at the thought of giving Paulson, himself a product of Wall Street, carte blanche to save the butts of his mates, all on the taxpayers’ bill.

There was an information vacuum bordering on arrogance about the bailout itself, said the scheme’s critics. There had been insufficient grovelling from Paulson and Fed chairman Ben Bernanke. Taxpayers should get more than “just the avoidance of the apocalypse” for their dollars.

Such was the level of anger in some quarters that one Washington research economist, noting the Bush administration had allowed the crisis to happen in the first place, said: “It’s almost amazing that they can do this with a straight face. Paulson has been totally wrong about almost everything.”

Some viewed it as the banks effectively recapitalising at the expense of the taxpayer; others described it as a reward for failure. Best comment of the week came from The New York Times’ veteran columnist Maureen Dowd: “Who would have dreamed that when socialism came to the USA it would be brought not by Bolsheviks in blue jeans but by Wall Street bankers in Gucci loafers?”

How does all this relate to John Key?

A lack of leadership at the top echelons of government and an arrogant refusal to be accountable to voters.

Like George W Bush, who took 10 days to front up to the American people with some guidance on the proposed bailout, Key — five weeks from our election — has yet to tell voters what he believes about anything and what he might do if handed the Treasury benches on November 8.

Like Paulson, he wants to be handed a blank cheque. Clearly, he expects voters to elect him with no real notion of his plans. He wants to skid into government with as few policy commitments as possible. And voters might be stupid enough — or so despairing of what the business community views as nine years of weak economic management and “crackpot social issues” (Independent, August 14, 2008) — to let him get away with it.

Much has been written about Key’s failure to release policy detail — or even policy frameworks — in critical areas and his lack of a coherent economic vision to lead the country through the next three years.

Five weeks out from the election is simply too late for voters to absorb complex policy platforms. Is this actually what National wants?

Where, for example, are the detailed and decisive policies to combat the recession? Where was National’s strategy midway through last year when the US sub-prime market began to unravel? Where were Key and Bill English when the Kiwi property market tanked in March? How would they have handled the economy as increasingly desperate householders struggled with sudden increases in petrol, food and mortgage interest rates?

The simple answer is we don’t know. And the electorate needs to know these things before people can cast an informed vote.

Like the Senate Banking Committee, which heard the initial arguments on the US bailout plan, New Zealanders are being offered a pig in a poke.

For the past year, Key and English have been dodging anything that smells like policy commitment, telling private business dinners in Auckland and in Wellington that many of these matters will be decided when they get elected — or words to that effect.

Not only do we have no detailed policy in key areas such as the economy, health, education and the environment, but National has failed so far to spell out its plans for the Resource Management Act (a contentious issue for business), the Employment Relations Act (another key bone of contention), infrastructure development (becoming urgent as two power companies increase their prices this week), a new regulatory regime, dealing with crime and the long- promised referendum on MMP.

Nor will the party disclose what it will do about relatively straightforward matters such as the future of the Serious Fraud Office (SFO) and, more contentiously, whether it will repeal the SFO Act, thus allowing fraud suspects the right to silence when interrogated by the SFO.

Unemployment will be another big issue. Alasdair Thompson, chief executive of the Auckland Employers and Manufacturers Association, says 25% of the work being done by his organisation is helping employers who want to downsize.

These are not big companies; the layoffs are coming from small-to- medium sized businesses. So far the redundancies have been done quietly but the total is expected to be evident in the next quarter’s employment figures.

As a Washington commentator noted this week when discussing the proposed US bailout: “One might thank God that the cavalry is coming but what exactly is the cavalry going to do?” Ditto New Zealand. Five weeks from the election only one thing is certain. As always, we will get the government we deserve

26 comments on “Key’s leadership questioned again”

  1. randal 1

    hey hey hey. calm down. not all is lost. not yet anyway. allthough sooner or later the whole thing will go into meltdown. dont forget the part we as consumers played in demanding goods and services! this is the way we run our system and its add hoc with no gurantees. John Key does not have the skills necessary nor the team to run this government properly. Nor does he have a coherent vision.That means that though he can cheespare and chisel he cannot yet create. bummer. He is not going to get the chance to learn on the job either. Tough titty jk. The country requires a steady hand at the moment.

  2. lukas 2

    Readers digest version anyone?

  3. Felix 3

    lukas are you saying you want someone else to read it and explain it to you?

    Fuck it then, just vote National, eh?

  4. Matthew Pilott 4

    C’mon Felix, it’s not that hard!

    Here: “National have not once demonstrated that they could manage the economy better than Labour, so you’re an idiot if you vote for them.”

  5. vto 5

    Am I missing something? Haven’t seen anything concrete from Cullen or Clark over this meltdown either.

    But either way no politician will really have a lot of sway except to keep the social welfare coffers topped up as it seems they are about to be drawn on.

  6. Matthew Pilott 6

    vto, Cullen is managing it, right now. National haven’t said what they would do, whether they’d do anything different, or done anything to give the slightest indication they could be trusted to continue to manage the economy.

    So what you’re missing, common on the right these days, is that there is a difference between Government and the Opposition!

  7. Dancer,
    Did you find this article online and if so any chance of posting the link here.

  8. vto 8

    Well obviously that’s the case there MP. How any person would manage such an event in the event they become PM etc I don’t believe can really be understood until they are in fact in that position. Within reason. What I have seen from Key so far imo points to an ability to handle such an event.

    So what has Cullen done to manage it? Curious.

  9. randal 9

    vto…you never had it so good so just stop the whingeing will ya. If you dont like it here then go to Australia.

  10. vto 10

    sheesh its hard on here when you’re a so-called rightie. it’s enough to make me go and have a cry. randal i don’t think i actually complained about anything. other than certain politicians. which is what the site is about. what you getting at ya sausage?

  11. DeeDub 11

    Of course National are relying on the ignorance of the electorate to a large degree. They know full-well that if they spell out what they intend to actually do if elected, the wavering middle-classes will desert them in droves.

    If they’re elected (God forbid!) I’m sure we’ll just see more of the same old, failed Friedmanite ideas dressed up in new clothes.

    Everything else from the eighties is back in vogue….. so let’s have ‘retro’ economic policy to go with our jump suited synth-pop.

  12. r0b 12

    So what has Cullen done to manage it? Curious.

    I’m not an economist re what is happening now, but a large part of it has been a matter of good preparation – being cautious and prudent over 9 years, building the fundamentals, getting debt down.

    Now that the chickens are coming home to roost NZ is well placed to weather the international financial crisis. See for example this Treasury summary:

    Economy well placed to meet challenges in 2008
    The New Zealand economy is well placed to meet challenges in 2008 but uncertainty and market volatility is likely to persist in the short term. In addition, the current high inflation environment further complicates the outlook for 2008. However, the sound fiscal position; the prospect of tax cuts; and the ability of the Reserve Bank to move quickly on interest rates, if growth and inflation drop more quickly than expected, mean that the New Zealand economy is well placed to meet potential challenges over the next year.

    Or how about Reserve Bank Governor Allan Bollard in January this year:

    New Zealand had responded positively to significant global shocks in the past few years, and there was no sign of those shocks abating, Dr Bollard said.

    “We have enjoyed a decade of growth, the longest period of economic growth since the post-World War 2 era. Inflation has been low, averaging 2.2 per cent since 1998. …

    “We have been able to absorb recent shocks reasonably well because of the improvements in our economic institutions and policymaking frameworks, avoiding the boom-bust cycles of the 1970s.”

    Though it is very early days even new policies like KiwiSaver are starting to show their potential in this respect:

    According to funds industry performance analyst FundSource, net outflows for the quarter of $48.6 million would have been much uglier without KiwiSaver inflows of $353 million. … Mr Atkins said the high voluntary uptake suggested a big proportion of the funds would be invested in growth assets. “This will provide a boost to the financial services industry, with greater funds under management also potentially boosting local equity markets.”

    Labour led governments have been good managers of the economy – thanks Dr Cullen!.

  13. vto 13

    ha ha well done r0b. I will concede that Cullen’s particular management has been ultra-conservative and that that is always good when bad times roll around. However there are other management styles which would have no doubt been equally as effective while contributing more than Cullen has done in other areas of the economy. There is more than one way to skin a cat.

    Big topic, but I have to depart. The whitebait are calling. Later

  14. vto 14

    r0b, I actually meant what is he doing right now when the storm is intensifying? Not what has he done over the last few years. Right now. We are all aware of what the US govt is having to do at the moment. What is he doing? right now? with banks and bollard and etc etc??? I am actually curious, but gotta fly.

  15. r0b 15

    r0b, I actually meant what is he doing right now when the storm is intensifying?

    Again, I’m not an economist up on details. But I can tell you one thing he’s doing. The same cautious prudent fundamentals. Like say not promising huge electoral tax cut bribes that have to be paid for by borrowing at the worst possible time of international crisis. No one in their right minds would do something that stupid, right? – Oh, but – wait…

  16. Matthew Pilott 16

    vto, r0b has provided far better examples than I could, but when you’re back I’d be interested to know why you think Key (or English) could do as good or a better job, and why they’ve chosen to share exactly none of those thoughts with us.

    For example: try and give me one example from the last few months where either of those two have said: NZ is in a bad way because of ‘X’. ‘X’ is because of/exacerbated by Labour’s policy/action ‘Y’. If we’d done ‘Z’ we’d be better off.

    We’re talking about the economy, but in my mind you could do the exact same for anything and still come up dry.

    Here’s my best attempt: people are dying in hospitals. this is because Labour has spent too much on bureaucrats. We’d get rid of the bureaucrats and have more doctors.

    Now that, to me, is incredibly weak – it proves nothing. In my mind, get rid of the bureaucrats, and the doctors will have to do their work, and spend less time seeing patients. Hence I think National sucks.

  17. randal 17

    vto if you are that curious then go to his web site…stop whingeing on blogs. then you can come back and tell us all with your newfound wisdom and information.

  18. Pascal's bookie 18

    Is there any way of doing back of the envelope calculations on what the government’s books might look like if Brash had been PM for the last three years?

    There’d be no kiwisaver, and we’d have had bigger tax cuts, which in all likelihood most of us would have spent on crap. I’m guessing inflation be be chugging on a little bit higher.

  19. Bill 19

    Farrar and co are desperately trying to spin the U.S. meltdown as the result of leftist pressure for affordable housing. They are very aware how damaging the crisis is to their Merrill Lynch poster boy.
    Here is how the argument goes:

    “the vast accumulation of toxic mortgage debt that poisoned the global financial system was driven by the aggressive buying of subprime and Alt-A mortgages, and mortgage-backed securities, by Fannie Mae and Freddie Mac.’

    “It is important to understand that, as GSEs, Fannie and Freddie were viewed in the capital markets as government-backed buyers’

    ‘ In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of “affordable housing.’ They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse.’

    “By late 2004, Fannie and Freddie very much wanted subprime and Alt-A loans. Their accounting had just been revealed as fraudulent, and they were under pressure from Congress to demonstrate that they deserved their considerable privileges.’
    http://www.aei.org/publications/pubID.28664,filter.all/pub_detail.asp

    …..and the rebuttal:

    First the time line. The market for SIVs had been on the boil long before Fannie Mae entered it in “late 2004″. It had nearly doubled in 2003.

    Second, Fannie and Freddie were not “viewed in the capital markets as government-backed buyers’ as these citations from Deutsche Bank and Wikipedia attest:
    Neither the certificates nor payments of principal and interest on the certificates are guaranteed by the United States government. The certificates do not constitute a debt or obligation of the United States or any of its agencies or instrumentalities other than Fannie Mae.’
    http://en.wikipedia.org/wiki/Fannie_Mae#Guarantees_and_subsidies

    “Despite the fact that Fannie Mae is not explicitly backed or funded by the US Government, nor do the securities it issues benefit from any statutory government guarantee or protection, most investors believe that, because it is a “quasi’ governmental agency, it has an implicit government guarantee. But Fannie Mae receives no direct government funding or backing. And Fannie Mae securities carry no government guarantee of being repaid. ‘
    https://www.dws-investments.com/EN/market-insight/fannie-mae-freddie-mac-are-no-laughing-matter.jsp

    Thirdly, Fannie Mae only ever absorbed 40% (if that much) of subprime at its peak in 2007 – had little when the thing took off in 2003.

    Lastly, even if the above were to be the case, it would not excuse the behaviour of the Banks. Nobody forced them to ignore the creditworthiness of their customer and thereby break what few regulations were left at the time.

    Here is a link to another good rebuttal:
    http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_crisis

  20. Pascal's bookie 20

    Bill. Thanks.

    It’s worth noting that the argument has a lovely little dogwhistle, where “affordable housing” equals Blacks and Hispanics. The PC liberal government made the banks loan cash to swarthy types and now your retirement savings are gone. Lee Atwater still owns the GOP.

    Another rebuttal here:

    http://online.wsj.com/article/SB122282690823092989.html

  21. Draco T Bastard 21

    Pascal’s bookie:

    Is there any way of doing back of the envelope calculations on what the government’s books might look like if Brash had been PM for the last three years?

    At an educated guestimate I’d say:
    Wages would be down in real terms
    Government borrowing would be up with total government debt between 23% and 25%
    Inflation would be between 5% and 6%

    And then we would have had the sub-prime crisis.

  22. Draco T Bastard 22

    In the spam trap again 🙁

  23. “questioned”…? Wow.. are kiwis going somewhere.. at last?

    Catching up fast Curtains UP!! Definitely for all those who will get to see.. the whole story.. and nothing but the whole story..

  24. T-Rex 24

    “and we’d have had bigger tax cuts, which in all likelihood most of us would have spent on crap.”

    By which I assume you mean housing 😉 Afterall, that’s where large sectors of the country have put the money they DID have.

    And those who were the benefactors of the boom have (by the looks of our balance of payments) largely also sunk it into crap (cars, boats, electronics).

    Poor old Rod Donald.

    Thank christ the govt hung onto it! Now we have kiwisaver, Cullen Fund, and non-completely-ridiculous foreign debt.

  25. randal 25

    god reading this thread is worse than watching ‘waiting for godot’ as performed by the waikikamukau players…think I’ll stick to fantasy comics.

  26. Paul Robeson 26

    are they doing a touring version? sounds hilarious

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