National the party of economic lunacy

Written By: - Date published: 10:02 am, February 10th, 2016 - 166 comments
Categories: debt / deficit, economy, national, tax, you couldn't make this shit up - Tags: , , , , ,

Really? I mean – really??

Prime Minister John Key outlines the Government’s priorities for the year

Prime Minister John Key has revealed a $17 billion hole in the economy from falling dairy prices but says the Government remains committed to tax cuts.

A “$17 billion hole in the economy” (kinda puts the supposed benefits of the TPP into perspective doesn’t it).

An estimated $18 billion lost because National stopped investing in the super fund.

A record national debt – $118 billion and counting.

And we’re still talking about tax cuts? Lunacy!


Yes, Labour has earmarked National’s budgeted tax cuts to pay for its free tertiary education policy. In my opinion Labour will have to raise taxes, e.g. back to the levels of 2008.

166 comments on “National the party of economic lunacy”

  1. One Anonymous Bloke 1

    Lunacy? Does that mean they can plead insanity in the event that our derivatives exposure (which has increased since then) turns toxic?

    Or can we jail the fuckers?

    • Keith 1.1

      Lets put this firmly in perspective before the it’s all Labours fault before, right now and forever in the future brigade begin (although they already have).

      National cut top teir tax.
      The hole in revenue was so bad they broke the first of a plethora of John Key promises by raising GST.
      They have raised fuel excise tax at least 5 times.
      They raised ACC levies for nearly everything.
      We had a credit rating downgrade.
      They demanded much greater dividends from SOE ‘s that in no small way helped Solid Energy go broke.
      They made social services like Housing NZ amongst others borrow more to pay higher dividends, which to any sane person is the same as hiding your debts using another organisational front to mask what you are doing and is like paying your bills with your credit card with no money to pay that.
      The demand for higher dividends either reduced the ability of such SOE’s to provide services and or meant me and you ended up paying more.
      They cut spending on nearly all government depts including essentials like police and then froze those budgets for good measure.
      Then they sold off the big assets and lost dividend revenue streams forever.
      They continued on with asset sales after 2014 in contrast to John Keys hollow assurances but creatively and sneakily this time its State Housing and land.
      And from the get go they started borrowing big time.
      And now we are on a credit downgrade watch.

      No so much lunacy then as con men who have no idea and but sheer lunacy now and all this from the National Party!

      • Liberal Realist 1.1.1

        Con men, crooks and thugs. Yes, however the lunacy is firmly with the National voters i’m afraid. Nats wouldn’t be in power if the punters didn’t vote ’em in, against their own interests I might add.

    • AmaKiwi 1.2

      One Anonymous Blokes’ link to treasury’s derivatives exposure is frightening.

      Derivatives are “side bets” made without guarantees. Example: the government borrows overseas in USD but it intends to repay the loan using NZD raised from taxes.

      If the NZD drops significantly against the USD, we will be struggling to repay our USD loan with our now less valuable NZD. So the government gets someone to guarantee the exchange rate. That guarantee or insurance policy is called a derivative.

      The problem arises if the people who issued the insurance policy (derivative) go bust. Lots of them did in the GFC because the derivatives market is largely unregulated.

      From March 2014 to Sept. 2015, the NZD dropped from 0.88 USD to 0.62 USD. If the derivative seller goes bust, USD borrowed in March 2014 will cost us 42% more NZD to repay than we budgeted for.

      This is casino financing. We could find ourselves in the same situation as Greece.

      • One Anonymous Bloke 1.2.1

        How many tank divisions do Goldman Sachs have? Is a jubilee worse than a blitzkreig?

        Iceland’s experience suggests that a good solution is to forgive debt and issue arrest warrants.

        • vto 1.2.1.1

          Yep Iceland did it the right way and now they steam ahead.

          We here in NZ often imagine ourselves as an Iceland, or a Singapore. Jeez I remember it even being described as a south seas Switzerland. All these calls made by the likes of John Key, Michael Fay….

          Funny thing is we aint nothing like that. Not with the sycophant Key at the helm.

          With arse-licker Key at the helm we sure aint one of them strong, independent small nations, what we are is the used shit paper of David Cameron.

          Used toilet paper.

          Like them North Koreans fired over to South Korea last week.

          There is no way in hell anything grand or strong or independent will happen with Key at the helm.

          John Key has no fucking idea.

          • Expat 1.2.1.1.1

            NZ has lost it’s identity over the last seven years, NZ used to command respect for our ability to stand up for what we believe in, now we’re just another americanised state.

            • Colonial Viper 1.2.1.1.1.1

              yes its gotten worse lately but you’re mistaken if you think this happened over just the last seven years.

  2. Colonial Viper 2

    Raising taxes on working households earning $50K to $100K pa is going to lose Labour a whole lot of voters who are struggling to make ends meet.

    Raising taxes on households earning over $100K pa is not going to raise much money.

    And we’re still talking about tax cuts? Lunacy!

    No, I have to disagree with your analysis here. National is gearing up for an election in less than 18 months and tax cuts, as always, will be a core part of their campaign.

    Is Labour really going to go into this same election promising tax increases?

    And we’re still talking about tax cuts? Lunacy!

    It’s worth remembering that the NZ Government has the power to issue NZ Dollars for useful and necessary spending.

    It does not need to tax or borrow all of the NZ dollars it requires; it simply chooses to at this stage.

    • BM 2.1

      Is Labour really going to go into this same election promising tax increases?

      Last election is was raising the retirement age and capital gains tax.
      I’d say there’s a very high probability of that happening.

      • lprent 2.1.1

        Is Labour really going to go into this same election promising tax increases?

        Last election is was raising the retirement age and capital gains tax.
        I’d say there’s a very high probability of that happening.

        I doubt that they will need to. As Keith pointed out in 1.1, they have been raising non-headline taxes rapidly since 2009. He missed a pile. Like the little charge increases for government services.

        But more importantly, they haven’t changed income taxes downwards since 2010. So we have now had 5 years of bracket inflation as more people creep more of their income into the upper tax brackets from increasing wages from cost of living allowances.

        Similarly there has also been price inflation. With about half of the income from taxes derived from GST which is now at 15%, they are reaping increased revenues from that as well.

        Effectively I’d expect that all of the income tax decreases of 2009/10 have been negated already and they are getting a vastly increased revenue from GST.

        The only people now who have profited from the tax changes National brought in are the income rich. Because the top rate was removed (rather than its bracket being raised), they are a whole lot better off. We need to add a top bracket in for the 2-3% of top income earners (probably including me) to prevent the excessive concentration of wealth. Then we need to address the question of tax bracket creep in a structured way.

        • One Anonymous Bloke 2.1.1.1

          the little charge increases for government services.

          Gone by lunchtime. They belong to us already: we paid for them in the first place.

        • ropata 2.1.1.2

          Those holding loads of property are still effectively untaxed on capital gains
          There are still huge loopholes re:negative gearing
          There ought to be a cap (or higher tax bracket) on super profits that banks and utilities siphon from kiwis
          Big corporations are still getting away with paying f*ck all

          #googletax The workers of Britain are being taken for fools
          Tax dodging
          Tax evading
          CORPORATIONS
          Make Britain POOR
          pic.twitter.com/TlnAMJ308i— Sid (@red13charlie) January 27, 2016

        • pat 2.1.1.3

          the truly “income rich” are not the wage and salary earners captured by the graduated tax system….the income rich are those that arrange their affairs to utilize the loopholes to avoid tax, even GST….this is the area to attend to…if Labour has the inclination, which is an unknown at this point.

          • greywarshark 2.1.1.3.1

            I thought that was the good thing about GST – that everyone paid it and it was rare that there was an exclusion.

            • pat 2.1.1.3.1.1

              there is blanket recovery of GST paid for business activity…..most income rich individuals are…..?

    • r0b 2.2

      I said it was economic lunacy, not electoral lunacy (though it should be both of course).

      I also note that in 1999 Labour won an election on a platform that included raising taxes.

      • Colonial Viper 2.2.1

        I also note that in 1999 Labour won an election on a platform that included raising taxes.

        that was on the back of National implementing slash and burn Ruthanasia.

        In contrast, notice how carefully English is continuing to spend into the economy.

        I predict lots of nice prezzies for the electorate in this coming Budget.

        • AmaKiwi 2.2.1.1

          It is electoral suicide to campaign promising to raise taxes.

          I repeatedly warned my Labour MP but the caucus (or whomever) is too arrogant to listen.

          2014 campaign and a reporter ask David Cunliffe: “If elected, will you raise taxes on the rich?”

          Cunliffe: “You betcha.”

          CHC tv debate 2014: John Key holds up his hand with fingers spread: “Labour is going to bring in FIVE new taxes.”

        • greywarshark 2.2.1.2

          Ooh will I get a nice prezzie card?

    • aj 2.3

      Surely time will come that we have a version of the Tobin Tax.

      http://www.bbc.com/news/business-15552412

      “Eleven EU member countries have said they wish to move ahead with introducing a financial transactions tax. The nations – which include France and Germany – intend to use the tax to help raise funds to tackle the debt crisis”

    • Korero Pono 2.4

      @ CV

      “Raising taxes on working households earning $50K to $100K pa is going to lose Labour a whole lot of voters who are struggling to make ends meet”

      I am not a fan of the flippy floppy Labour Party but totally disagree with you on this one. I think that a lot of people would rather a few extra bucks come out of their wages to ensure the infrastructure is in place for the social good. I imagine that most Labour voters vote for Labour because their social policy is a little kinder to the less blessed in our society.

      Which voters do you imagine you represent with your views CV?

      “No, I have to disagree with your analysis here. National is gearing up for an election in less than 18 months and tax cuts, as always, will be a core part of their campaign”

      Tax cuts are lunacy given that the average ‘middle’ New Zealander realises they are no better off with the previous tax cuts and those on the lowest incomes know they are worse off. Tax cuts may well be an election bribe going into the next election but the voters who lose out are a lot smarter than some believe they are. Not everyone is selfish enough to assume that we can live in tax-less society, except perhaps the 10 percent who believe they are entitled to their tax dodges while the rest of us pay.

      “Is Labour really going to go into this same election promising tax increases?”

      If they do at least that is honest and your thinking assumes that most voters are too selfish to see the benefits of paying a fair amount of tax. Most tax payers understand that any functioning society, equitable society requires taxes to support the things we deem important.

      • Colonial Viper 2.4.1

        I think that a lot of people would rather a few extra bucks come out of their wages to ensure the infrastructure is in place for the social good.

        Your statements are very reasonable and once upon a time I would have agreed with them wholeheartedly.

        However, we are not in that world at the moment, and those people who agree with you were counted in 2014, with the result that National was returned to power.

        I expect Labour to to come in at the next election +/-3% from their 2014 result i.e. 22% to 28%, which will be insufficient to form a government.

        Which voters do you imagine you represent with your views CV?

        None, at this stage…

        • just saying 2.4.1.1

          CV, Most people in that ‘middle of the middle’ demographic are going downwards. (and pointless though it may be, I’ll remind you there are more women in that grouping than men).

          There is one thing I think we agree on – they’re feeling it and fearing it even if many haven’t even put it anything clearly into words in their own minds, yet.

          As I see it, there are two choices: Try and leverage a way up into the few available (and evermore desirable) spots in the higher-class life rafts,
          Or accept that we are all in this together and act and think accordingly.

          A few will get aboard those life rafts of course. They will be mostly the most ruthless rather than the lucky though, imo, and it wont come without a different kind of cost.

          • Colonial Viper 2.4.1.1.1

            I dont disagree with your analysis. Next question: do those people feeling the pressure trust Little and Robertson to do a better job managing the economy?

        • Korero Pono 2.4.1.2

          “those people who agree with you were counted in 2014, with the result that National was returned to power”

          Those people were probably not counted in 2014 and likely formed the missing voters that no one gives a damn about because it is assumed they are politically irrelevant. These are the disenfranchised voters, who by all accounts appear to be forgotten by politically backward thinking. I reiterate that most voters (bar the very selfish minority) would gladly pay a few extra dollars every week if it is for the greater good. Not all people are selfish and most people want a fair society – even some National voters I would imagine, I don’t think they are all arseholes.

          • AmaKiwi 2.4.1.2.1

            When running for office, never say you will raise taxes on anyone (except possibly taxes on people who can’t vote.)

      • greywarshark 2.4.2

        Korero Pono
        If they do at least that is honest and your thinking assumes that most voters are too selfish to see the benefits of paying a fair amount of tax. Most tax payers understand that any functioning society, equitable society requires taxes to support the things we deem important.

        fair and suitable level of tax t is a basic for a well functioning country. Unfortunately we are credit bingeing and living above our means. Talk about necessary taxes, and the electorate will I think give that party the cold shoulder. There is no strategy in the voting at all.

        If voters had shifted one lot after one election when they had done a few things promised, put in the other lot and squeezed some reasonable results out, then reversed that if the oppo were offering something good etc. then we would not be more unstable than we are. We would have got some movement towards the things we both need and want. And pollies wouldn’t be going around looking so damn pleased with themselves. But NZrs stopped criticising a long time ago and I feel that there will be a law brought in against it soon. Can’t rock the boat, or even silently point to the hole in the hull.

        • AmaKiwi 2.4.2.1

          There is no such thing as a “fair” tax.

          Your personal values determine whether you think it is fairer to tax wages, investment income, people’s homes, investment real estate, cars, travel, financial assets, luxuries, necessities, petrol, or alcohol, blah, blah, blah.

          Why would anyone be stupid enough to think a politician with dictatorial powers will implement taxes I think are “fair.”

          Labour promising new taxes will be electoral suicide.

  3. Expat 3

    The Taxation regime needs a total overhaul, reform is necessary to improve the whole economy, the first thing is to reverse the GST changes, and even consider reducing the range of cover ie no GST on food, education or health (NZ is the only country in the world to charge GST on 97% of all goods and services, we were sold a lemon that has crippled the economy, look at the figures above for evidence of that). The short fall in revenue can be improved by cutting out all the current loopholes that allow corporations and businesses to contribute almost nothing and the tax rate of 33% for millionaires is just a joke, the poor kid at 17 on $9 or $10 an hour and pays 20c on the first dollar they earn (and then another 15c in GST on the remainder, that’s 35c on every dollar earned) and then the millionaire who pays just 13c more on their income (if your lucky) is a prime example of how out of whack the taxation system is after all the changes introduced by the Nit Wit Govt, borrowing to make up the shortfall (average of nearly $15B a year).
    This Govt has left NZ in a very poor and vulnerable position if the Global economy deteriorates as expected, this will most likely lead to a change in Govt, albeit, way to late.

  4. Macro 4

    I think this assessment is a bit unfair – to be honest National could possibly run a piss up in a brewery.

    • mac1 4.1

      Only if the brewery organised it. At $90 a head. Free grog for the media. No workers invited. Young Nats especially welcome.

    • Expat 4.2

      Macro

      “to be honest National could possibly run a piss up in a brewery.”

      I agree with you, especially when you consider the funding they receive from the Liquor Lobby Organisations, beer from supermarkets in NZ is exactly half the price paid in OZ (yet petrol is half the price of that in NZ), the social issues resulting from cheap liquor is a drag on the economy and infrastructure in terms of family violence, motor vehicle incidents, loss of productivity ect, like cigarettes, there should be a tax to offset the social harm.
      I don’t mind a few beers myself, but cheap grog leads to abuse.
      This is just another example of the Tax reform required in NZ.

    • BM 4.3

      Who are the economic/business geniuses within Labour who are going to “transform” the NZ economy.

      Andrew Little?
      Grant Robertson ?
      David Parker?
      Jacinda Ardern?
      Richie Cunningham?

      There’s no one within Labour who I’d feel comfortable running a corner shop dairy, let alone a country.
      The whole party is a complete joke.

      • savenz 4.3.1

        How about a currency speculator with a ‘double dipper’ guy that’s never had a real job running the country. An arrogant drunk trade negotiator in tow. How’s that working out for us?

        • BM 4.3.1.1

          If you consider only working for the public service as a negative, you’ve just pooed on 95% of the Labour Mps.

          • Whispering Kate 4.3.1.1.1

            Since when did Savenz say this about public servants, just because the double dipper Dipton and the drunk trade negotiator are public servants, please do not insult the rest of many public servants, our teachers, the police force our nurses – all paid from the public purse and not near enough for the work they do. What a wank you are BM, why don’t you shut your gob occasionally because you make such an ass of yourself. As for the currency speculator – all he has ever done with his commerce degree is shuffle other people’s currency around, bloody useless the 3 of them.

      • Expat 4.3.2

        BM

        “Who are the economic/business geniuses within Labour who are going to “transform” the NZ economy.”

        They wouldn’t even have to be “geniuses” to do far better job than the existing num sculls, remember, Labour have a proven track record for lifting NZ out of the S**t after a Nat govt have screwed it, history is on my side, not yours BM, history proves the poor economic performance of right wing govts, and nothing has changed, it’s your kids that will have to pay back the now $118B debt and growing, if you consider that as genius economic policy then you need to take a look in the mirror, where is the long term economic plan to get NZ out of the S**t?, exactly, there isn’t one, my point.

        • savenz 4.3.2.1

          @Expat – in fact people with sub bar IQ could probably do better than Key and English. Let alone canvas for genius. I could settle for sound stewardship…. NOT National obviously, speculating up a storm and giving copious corporate welfare to boot. How’s the Saudi Abattoir and Sky City gambling welfare going??? Growing the economy??? New Natz business practise paying people to not trade with us or encourage more gambling…..

          • Expat 4.3.2.1.1

            savenz
            With you all the way, what was Key’s last election policy?, that’s right, “We’re on the cusp of something great”, sounds like some thing you’d hear from a Gypsy looking into a crystal ball, not a PM hoping to lead NZ into the future.

            • AmaKiwi 4.3.2.1.1.1

              @ Expat

              Is there a difference between a Gypsy looking into a crystal ball and a politician trying to get elected?

              Both know you’ll only like them if they give you good news.

              • Expat

                Yeah, there is a difference, especially if you’re the PM, not all politicians lie as compulsively as JK, in fact, some are quite honest by comparison, election bribery only lures the foolhardy and weak minded.

        • Whispering Kate 4.3.2.2

          Expat, when you talk about BM’s kids – he comes across to me as a young idiot, probably still being spoon fed an allowance from his parents, wouldn’t know his arse was on fire. I may be wrong but if I am he is a very immature older person.

          • Expat 4.3.2.2.1

            Whispering Kate

            ” he comes across to me as a young idiot”

            He most certainly is an idiot, but I don’t like to discriminate on age……

            • Whispering Kate 4.3.2.2.1.1

              You are quite right, I should have explained myself a bit better, he comes across as some one without a lot of life experience, a privileged sort of person, but I still feel he is young by the way he expresses himself. Point taken thanks.

              • Expat

                Whispering Kate

                You’re right of course, It was really a bit sarcasm, it seemed funny at the time.

      • Macro 4.3.3

        Actually BM you named some very competent people there – not that I think any of them would want to own a dairy. But have you actually considered who amongst National have any real experience of running a dairy? They certainly can’t run a country. They might manage a piss up organised by their brewery mates, but apart from that! The country is going to the dogs, borrowing is out of control, kids are having to sleep in cars on the streets, more and more kids are ending up in hospital because their parents are stressed out of their minds and can no longer cope, and Key has just signalled that he and his mates no longer want to run the country and have handed over the wheel to Big Business. But yep! as far as you’re concerned she’s all good!

        • BM 4.3.3.1

          Still have National any day,

          Will Labour cut WFF, NO
          Will Labour cut benefit rates, NO

          Will Labour borrow a shit load more, and then try and bribe people with it, YES

          • dv 4.3.3.1.1

            Will lab bribe
            SCF
            Rio tinto
            saudis

            etc etc?

            DEbt 120 billion

            Yep Nats are really really good.

            • BM 4.3.3.1.1.1

              Yep, they are, they keep the deficit to a manageable amount.

              If Labour had been in charge of the economy I’d be buying my coffee with a million dollar note and getting no change.

              • dv

                BUT the debt is 120 billion!!!!!

                Thats OK

                • BM

                  So what.

                  Would you have preferred tough austerity measures?

                  • dv

                    Nope
                    no tax breaks – No bailing out SCF, rio etc etc

                  • Colonial Viper

                    BM: I think you have given fair warning to the Left about some of National’s likely attack lines.

                    By 2017 I predict that GFC 2 will be in full swing.

                    The electorate will gravitate towards Key and English being the safe pair of hands. As opposed to Andrew Little and Grant Robertson who have zero experience in finance or even in government full stop.

                    • dv

                      When the tax cuts and gst rise happened in 2010 crown revenue was around 50 billion.

                      Now it’s around 70 billion.

                      Yippee
                      BUT the dept is still 120billion!!!

                    • BM

                      Would you feel comfortable with those putz’s running the country, if things start to go pear shaped?

                      You need experience and skill at the helm, not financial first years, that’s a guarantee to put NZ on the rocks with the loss of many lives.

                    • Your shit needs a warning for anti-labour toxicity – at least your good mate bm can keep you company – ffs

                      edit- bm – as usual spouting thickets – loss of many lives – ahem how does that go again?

                    • Colonial Viper

                      Seriously MM? How do you think the Finance debates on telly Grant Robertson versus Bill English are going to come across? With Grant Robertson desperately trying to remember the lines that David Parker gave him?

                    • BM

                      You don’t want to find out

                      JK 2017 -the good times will never end.

                    • Colonial Viper

                      BM: the Left are not even correctly appraising the challenges they are facing come the 2017 fight. In theory, a tired rudderless third term National Government with an even more tired and over it John Key at the helm should be easy marks for Labour.

                      Thats not how it is working out.

                    • BM

                      In theory, a tired rudderless third term National Government with an even more tired and over it John Key at the helm should be easy marks for Labour.

                      I disagree, Key wants 4 terms, that will make him one of the longest serving PM’s ever and then you retire undefeated with the opposition in complete turmoil.

                      Once Little is gone, what’s left, Robertson, he’ll never be PM, so that’s another term for National at least after Key retires.

                      Next left leaning PM will be some time in the 2020’s, not sure what party they’ll be from.?

                    • “The electorate will gravitate towards Key and English being the safe pair of hands. As opposed to Andrew Little and Grant Robertson who have zero experience in finance or even in government full stop.”

                      right wing memes – safe pair of hands – BULLSHIT, zero experience – BULLSHIT

                      Running a country is not like running a business, it is not like being an accountant, a farmer, a lawyer, a greedy money changer. It is a whole different ballgame. Some skills are necessary – taking advice, keeping your mouth shut, poking a stick at your mates on the other side.

                      now sure the right wing arseholes will push those memes – why? They want THEIR side to win – not rocket science cv. Are the memes true – it DOESN’T matter. What to do if you want the left (or its near enough proxy labour) to win – show the bullshit of their lies.

                    • Colonial Viper

                      Marty Mars sorry mate but it’s absolutely true that Little and Robertson have never ever held even the most minor Ministerial portfolio let alone run or built their own business.

                      As for understanding finance and economics both rely on crib notes from David Parker.

                    • AmaKiwi

                      CV, if GFC2 is in full swing, the voters will go radical.

                      Radical right (Republicans, UKIP, etc.)
                      AND
                      Radical left (Corbyn, Saners, Yanis).

                    • pat

                      “By 2017 I predict that GFC 2 will be in full swing.

                      The electorate will gravitate towards Key and English being the safe pair of hands. As opposed to Andrew Little and Grant Robertson who have zero experience in finance or even in government full stop.”

                      couldn’t possibly agree with that analysis…if as you say (and I’m inclined to agree) we are in financial crisis by the next election the government will change irrespective of perceived experience (or lack of)…..incumbents always wear the responsibility for a deteriorating back pocket whether they are responsible or not (and this will be an admin seeking a 4th term, difficult in itself)…..the fact this current lot are incompetent won’t determine the result but it will be highlighted during the campaign.

                      If the Nats are as politically astute as some claim we may well see an early election in an attempt to preempt the impact

                    • Colonial Viper

                      couldn’t possibly agree with that analysis…if as you say (and I’m inclined to agree) we are in financial crisis by the next election the government will change irrespective of perceived experience (or lack of)…..incumbents always wear the responsibility for a deteriorating back pocket whether they are responsible or not

                      If these were conventional political times I would agree with you.

                      However, the proof will come in 2017 who is right.

                    • AmaKiwi

                      CV, Pat is right.

                      2,000 years of history prove she’s right. When the sh*t hits the fan, incumbents get trashed.

                      There are no exceptions from ancient Rome to Helen Clark in the midst of the 2008 market crash.

                    • Colonial Viper

                      Hi AmaKiwi

                      That is the conventional wisdom, I agree.

                      Just like it is conventional wisdom that the tide will go out on National, and come in for the Opposition, and all the Labour MPs need to do is wait and twiddle their thumbs and wait some more…

          • marty mars 4.3.3.1.2

            “Will Labour cut WFF, NO
            Will Labour cut benefit rates, NO”

            why would you want to cut these? It is just idiotic you babbling fool.

          • One Anonymous Bloke 4.3.3.1.3

            Why will Lab6 need to borrow more when they will increase taxes, and (since the economy goes better under Labour governments) revenue too.

            Their nine year record of paying down government debt was praised directly by Bill English and the Prime Minister soon after they took office in 2008.

            Please can you try a little bit harder to confine your assertions to things that actually happened on Earth?

      • David H 4.3.4

        Well, except for Ritchie Cunningham any of those mnames would be better than. Mickey Mouse, Donald Duck, and Goofy, that are ruining the countries finances at this present time.

  5. National is the loony right!

    Yep they don’t care about crippling the economy because they just want to be elected and get personally very rich and enrich their mates and sponsors with all their dirty deals. They are not planning to live in NZ much longer – off to Hawaii to play golf.

    Labour need to get really smart. Promising tax increases did NOT go down well last election. If they could have been a bit more believable as a party maybe it would not have sunk them as much as it did, but personally as a cautious person who hates the Natz I think Labour need to abandon increasing any taxes to win. Otherwise the election will be the Natz reducing taxes and labour increasing taxes. Most people are not logical and the thought of paying more taxes when already stretched (and the middle classes are stretched too with high mortgages and student debt for example and low by international standards wages). For the unemployed or working class it would be hard to survive with less money.

    The only way it would work for Labour if they wanted to raise taxes from the top 100 super rich people and corporations who swap their money turning over millions in revenue but somehow avoid paying tax. This would be a popular policy for most people.

    Labour could also look at a stamp duty and capital gains tax on offshore and non resident investors buying who have not resided in NZ in the past 5 years. Introduce policy that to be resident you have to actually live her for 2/3 of the year. This only affect a very small percentage of people (and some like overseas investors don’t even vote here), would slow property investment but not stop it. It would be popular with Kiwis who get sick of having off shore money flooding, few taxes being paid and not actually being able to afford to live here ourselves with the low wages and cost of living.

    And Labour properly committing to overturning the TPPA which will be the Natz big problem. There is a world wide movement against the TPPA and Labour need to decide now to go with it, not say ignore it. Clinton’s sort of No to TPPA is not believable either and personally hope Sanders gets in. Then we don’t have to rely on NZ Labour ha ha.

    Hard to be against charter schools if you support the TPPA for example. Labour needs to shorten it’s TPPA message to NO to TPPA not ignore TPPA, because it enrages smart people who want to vote Labour. The people are a lot smarter than the politicians seems to think and inconsistency is what will cost Labour the election.

    Little doesn’t support TPPA but Shearer and Goff do, is not really a consistent viable message to go on with.

    They also need to go hard on the Natz for their mismanagement of the economy and pushing NZ into debt and their Charter schools and Serco and Social bonds!

    They also need to collaborate with ALL the other opposition parties.

    • Expat 5.1

      savenz

      +1

    • Nic the NZer 5.2

      “I think Labour need to abandon increasing any taxes to win.”

      Increasing taxes isn’t even a sensible economic policy right now. There is an anticipated spending hole in the economy (the 17 billion), why would any body therefore think a sensible response is to remove income from the economy?

      Fortunately in NZ the government is able to increase spending without increasing taxes, which comes from having a NZ currency. That’s the policy that is required.

      • Colonial Viper 5.2.1

        Thank grod someone else is speaking sense here.

        The Government pulling more money away from households and small businesses in taxes is absolutely the last thing we need during a time of recession/deflation.

        • Nic the NZer 5.2.1.1

          I can’t understand how the left fails repeatedly to grasp this very simple concept. There are even plenty of people claiming that they are against the governments ‘neo-liberal’ actions while demanding that they cut the deficit immediately. It’s nuts.

  6. adam 6

    Just one more reason why the parliamentary system is a bad joke.

    Socialism is only possible, without authoritarianism, petty games, and silly men who like power far to much.

  7. Neil 7

    So much for Key & the national party being fiscally responsible.

  8. Neil 8

    Wait for it….., it wont be long before Key will trot out his favourite line, “Its Labours fault”

    • Expat 8.1

      Neil
      “Its Labours fault”

      I don’t understand how the public and the media can buy into that argument after how many years, in Oz, 18 months after the election of Abbott, the public and media (not all) did not accept this as an excuse for anything, when you’ve been in govt that long, you’re responsible for every thing, no exceptions, it’s a sign of good leadership and management skills, something sadly lacking from the whole NZ Govt.

  9. Richard@Down South 9

    They should make businesses pay the designated rate… no loopholes so Apple/Google/Facebook/NZX can pay cents in the dollar on what theyre supposed to pay. Then Tax law for businesses is easier to deal with, less chance of tax fraud, and the Government revenue goes up…

    Introduce a proper CGT on housing, exemption if you live in your house for the first 3 years, no exemption for a second house, and get rid of the tax differences in family trusts… set the taxes there at the highest rate…

    Reverse the GST change to 15% which was supposed to be ‘revenue neutral’ but turned out to miss the mark by a fair amount, leaving the Government short and the lower income struggling more

  10. dave 10

    national are looters and thieves and will continue until we reach collapse they know nothing else james shaw put it well yesterday they collected 510 billion in taxes spent 555 billion and take out rebuild and house speculation we have zero to show for it there looters. its always the same labour will have to clean up the mess again 1984,1999,and here we go again well i say raise taxes on the looters and there greedy supporters pay back is a bitch

  11. weston 11

    dont see why we have to raise taxes on this sector of society or that that lot ova there i think it would be a lot less alarming simply to introduce a sugar tax and a plastic tax for starters and maybe raise alcahol tax a bit as well

    • One Anonymous Bloke 11.1

      It wasn’t broken until National broke it in 2008. I say learn from the past, plus do more to dampen the housing market by building lots and lots of houses and maintaining the existing stock.

      Start adapting to serious climate change.

      Repair all Tory vandalism enacted since 1984. Yes, all of it. Where things weren’t working, take guidance from international best practice (as measured by outcomes, not intentions).

      Be nice to have Germany’s housing market and labour relations, for example. Finland’s education system. Tino rangatiratanga and the BoRA entrenched. The rule of law.

      Dreams are free. On Earth we’ll have to fight tooth and nail for them 😆

      • Colonial Viper 11.1.1

        “Repair all Tory vandalism enacted since 1984. Yes, all of it.”

        Such a Labour Party could win the next election.

        • UncookedSelachimorpha 11.1.1.1

          I’d vote for that!

        • AmaKiwi 11.1.1.2

          CV, “Repair all Tory vandalism enacted since 1984. Yes, all of it.” Such a Labour Party could win the next election.

          No. It will be “a curse on both your houses.” NZ politics will go radical. Anger at ALL mainstream politicians. Winston and/or The Greens might survive because they are seen as outsiders.

          Unless Labour has a major leadership turn around (Corbyn/Sanders), I don’t expect them to fare better than National.

  12. Nic the NZer 12

    Unimpressive and unhelpful criticism.

    The 17 billion hole in the economy is a gap in spending. To fill this gap the government will need to spend more or tax less (or both). National should bring the tax cuts forward and the left should be congratulating them on this. But the left won’t explain the reality of government deficits, instead its going to carry on with the main political narrative of neo-liberal ideology.

    • Colonial Viper 12.1

      Labour loyalists are still banging on about “deficits bad, surpluses good”

      Not understanding that that strategy will crash the economy double quick.

    • Expat 12.2

      Nic the NZer

      ” National should bring the tax cuts forward and the left should be congratulating them on this.”

      Greece here we come, only a dipstick would contemplate tax cuts in the current financial environment, recent history (2010 tax changes) demonstrated the serious economic harm that it could cause, sorry, how’s the unemployment rate going, one of the best indicators of a prosperous economy, $18B deficit and $120B debt (50%of GDP). If tax cuts were to occur prior to the election, it would be a last stand to fatten a few wealthy wallets before their booted out of office.

      • Nic the NZer 12.2.1

        “Greece here we come”, let me just stop you there.

        NZ is not like Greece, Greece is part of a currency union and as a result has to answer to higher powers about its government budgets.

        What happened in Greece, first they started experiencing a recession, then the higher powers stepped in (The EU, IMF etc…) and insisted that they adjust their budgets in Greece to cut (try to cut) their deficit, then unemployment went over 25% in Greece and the deficit actually increased initially as the Greek economy collapsed. The IMF later admitted that their forecast (which had the government cutting the deficit and the private sector picking up) was wrong by 180 degrees, oops! But that’s the underlying mechanism, and that’s why Greece still has more than 25% unemployment.

        In NZ the tax changes increased the budget deficit (collection of GST didn’t rise as much as income tax fell), but that was the only significant consequence. There is no observable economic harm from NZ’s government debt levels, and there are no agencies to step in and force the government to re-arrange their budget due to debt levels, so the budget of NZ is basically up to the government. Its also not a serious consideration (though there are mechanisms by which the government could keep the budget deficit without issuing debt, if wanted). This basically comes from issuing NZs sovereign currency. Unemployment can be reduced by government spending (of course) but NZs unemployment rate is still quite high as NZ has been cautiously but definitely pursuing a budget surplus, and absolutely not because the budget deficit is too large. Total spending on GDP goes dollar for dollar up in the direction of government budget deficit, and down in the direction of government budget surplus. Its an accounting fact, it’s not even remotely debatable.

        Note the IMF got this wrong in their forecasts due to some more sophisticated supposed behaviour (known as the confidence fairy) which failed to materialize.

        • pat 12.2.1.1

          there are however disturbing parallels between Greeces position within the EU and NZs within TPPA…a severely curtailed ability to legislate in the country’s best interests, the implicit threat of exit from the arrangement and the relative scale of economic and political power…..their economies are similar in type as well being based on agriculture and tourism within a industrialized grouping…..Greeces problems stem from a trade imbalance and it is entirely conceivable NZ could find itself in the same position

          • Nic the NZer 12.2.1.1.1

            There are definitely issues where the TPPA constrains NZ sovereignty. But they are different to the issues with the European Monetary Union.

            Greece problems stem from them being members of the EMU, as do the other countries in a similar position Ireland, Portugal, Italy, Spain which are all notably members of the EMU. Its got little to do with trade imbalances, and everything to do with Government deficit conditions. Why do we know this? Because the EMU treaty requirements explicitly say you will run no more than a 3% of GDP budget deficit or we will send in the IMF and submit you to excessive deficit procedures, this is also what we saw happen in Greece and the other countries mentioned, to various degrees.

            Fortunately NZ does not face this problem. There are simply no such institutions which constrain the NZ governments sovereignty in this manner. NZ can never find itself in the position of Greece.

            • pat 12.2.1.1.1.1

              I beg to differ, as do the IMF
              “Explanations of the large current account deficits for the euro area periphery and the Baltics in the run up to the crisis revolve around two main factors: deteriorating export performance or demand driven booms. We add that there were important movements in transfers and net income balances. While export performance remained relatively stable in most countries, for some countries, when transfers declined, households and firms borrowed so as to maintain the same level of spending. This was part of a persistent failure to adjust to trade deficits, which, along with rising net income payments, led to growing current account deficits. All of these factors played varying roles in the development of current account deficits across these countries”

              While it is true NZ is not constrained by the likes of the Growth and Stability pact, the TPPA encourages the conditions where NZ is increasingly opened up to overseas providers to extract profits offshore through standardized systems and provision of access, accentuated by the threat of ISDS…we are particularly vulnerable in the area of service provision , one of the few areas of growth in advanced economies (think Serco, Novapay and the like)
              We have remained largely untouched by these threats since opening up our economy by the fact we are a small market a long way from the rest of the world, as a member of a homogenised trading bloc this protection is greatly reduced. A prime example is the fact all our major trading banks are Australian owned with their profits a drag on our balance of trade….TPPA is CER on steroids.
              The route may not be identical but the destination is very possibly the same

              • Nic the NZer

                That doesn’t mean what you claim it means. The current account deficit is a trade deficit. Shifts in the current account deficit remove income from the economy reducing aggregate demand and increasing unemployment, and typically countries will respond by expanding their government budget deficits to replace this spending and increase employment. That’s an accounting fact, its not debatable, and its what the IMF are discussing happening in the Euro-zone.

                At this point in the EMU the IMF and others step in and invoke excessive deficit procedures and the like on countries for expanding their government budget deficits, which is likely to result in those countries having control of their national economic policy taken away. In NZ no such thing happens, the government budget deficit expands and contracts largely as parliament see’s fit to increase or decrease its spending and taxation.

                This still functions even if masses of profits are sent of overseas (pushing a current account deficit up). The only question is does a government budget deficit cause harm to the economy. The IMF says yes and they promise cutting the deficit will decrease unemployment, based on some theoretical equilibrium economic models. In practice they (and others) have repeatedly been 100% incorrect again and again, because the theory is completely wrong.

                But carry on, remember when Treasury in NZ was predicting a ‘Rock-Star’ economy based on similar steps cutting the NZ deficit. Clearly this is going well.

                • pat

                  you seem confused…..

                  ‘ That doesn’t mean what you claim it means. The current account deficit is a trade deficit. Shifts in the current account deficit remove income from the economy reducing aggregate demand and increasing unemployment, and typically countries will respond by expanding their government budget deficits to replace this spending and increase employment. That’s an accounting fact, its not debatable, and its what the IMF are discussing happening in the Euro-zone.”

                  that is exactly as I outlined

                  you continue to state

                  ‘At this point in the EMU the IMF and others step in and invoke excessive deficit procedures and the like on countries for expanding their government budget deficits, which is likely to result in those countries having control of their national economic policy taken away. ‘

                  indeed the EMU and IMF did not step in and seize control of Greeces affairs until AFTER Greece sought assistance from these bodies in reaction to the market effects of the spiraling cost of servicing that debt….it was the market effect that drove Greece to the ECB, not the regulations.

                  Those same market forces would have the same impact here…..unserviceable amounts of debt and subsequent default….or cap in hand to the IMF…..we’ve been on the edge of that before……it is how the neolibs got their knees under the desk here in the first place.

                  • Nic the NZer

                    “Those same market forces would have the same impact here”

                    This is however wrong. Greece needs to borrow funds because its central bank is not under the control of Greece, its at the ECB. In NZ the government sits above the RBNZ. This, it turns out, makes a big difference in the risk of lending to either.

                    Notably the ECB has been reducing the interest costs for Greece, Italy, Spain, etc… through its securities markets programme and Outright Monetary Transactions programme, though its ability to do this has been challenged in the European courts. So even in the EMU they don’t really have a government debt problem if the countries involved would allow more help from the ECB.

                    In NZ if the government wants such help from the RBNZ then its simply implemented. So, still no such issues. If parliament wants additional funding from the RBNZ, directly, it can either legislate for it or probably just a quiet word from the finance minister would be enough to secure it.

                    Market forces are simply irrelevant in this setup, take for example Japan with close to 230% of GDP government debt, pays extremely low interest rates on it and this causes no issues for their economy. If anything inflation is too low for their liking, not too high. Or take other examples, the UK is a good one. Not part of the EMU but with drawn out drag from financial crisis. Did the rates on UK govt debt go through the roof following a large deficit to GDP rate and fairly large govt debt to GDP ratio? No absolutely not, because the BOE has control and parliament sits above it.

                    The previous issue with the IMF was a currency crisis and associated with fixed exchange rates, which NZ moved away from.

                    • Colonial Viper

                      most Lefties don’t understand that central banks can always hit their interest rate target using a variety of monetary operations. As you say, market forces are irrelevant in this set up.

                    • pat

                      “Market forces are simply irrelevant in this setup, take for example Japan with close to 230% of GDP government debt, pays extremely low interest rates on it and this causes no issues for their economy ”

                      Japan has the second largest foreign currency reserves (in excess of 1 trillion US) and have been running a positive trade balance for nearly all of the past 20 years….of course they pay low interest, that is a very different compared to a country running a trade deficit and only 17 billion

                      would suggest your faith in a floating exchange is also misguided…the floating exchange operation is slow and inaccurate…like all markets it moves from under to over valued, seldom resting in the sweet spot and is manipulated from within by parties with no interest in our economy…..by the time the benefits from a weakened exchange rate accrue the damage has been done.

                      Yes our RB can simply print more money, and why not the US, EU, UK and Japan are but I expect you realise as well as I that as more than a temporary seldom used measure that is not a realistic option for NZ….unless of course you want double or triple digit inflation…deflation may be worse but that sort of inflation aint much fun either

                      We are a bit player and the markets will treat us as such…..despite what CV may say…if we wish to trade we cannot debase our currency to any great extent….unless you wish to devise a new world economic model…..that the rest of our trading partners agree with

                    • greywarshark

                      pat
                      I feel that you treat these remedial measures to managing the currency as if they were permanent. If controlled carefully they could add stimulus without inflation I believe.

                      Even fixed exchange rates could limit volatility to a particular point in time, and then it would settle again and there would be more stability for exporters.

                      I am not a trained financial student but I think my point of view can be considered seriously when I see the results of those with training.

                    • pat

                      @ greywarshark…I agree we could “quantitively ease” from time to time , particularly for projects that are likely to show a return e.g. the ChCh rebuild or a public transport system….but as a basis for a trading economy it is simply unworkable for the reason outlined above…..we are in a zero/negative interest rate world where the powers that be (and we aint one of them as much as JK likes to cosy up to the US corporates) are desperately trying to kickstart growth/inflation because that is the basis of the world economic model…..what happens if they are successful? (i don’t believe they will be) ….interest rates will rise….and we have 120 billion debt and are constantly in a trading deficit…..and by joining TPP we only increase the chances that trade imbalance will increase, AND we restrict our ability to take measures to mitigate that…..now you tell me….dosnt that sound a little like Greeces position within the EU?

                    • Colonial Viper

                      pat you are using a completely wrong model of monetary and economic policy.

                      The model you are using is the one the elites have been promulgating which ends in an ever increasing share of real and electronic wealth going to them, while governments have to continually cut back on nice things for ordinary people because they are “unaffordable.”

                      Well, I’ve had enough of this “there is no alternative” thinking and so have shitloads of other people.

                      Japan, USA, UK, Europe, China, have all been issuing massive amounts of new currency and so has NZ.

                      FFS just look at the Reserve Banks statistics on M1 and M2 growth over the last 20 years.

                      Where do you think those new stocks of NZ dollars came from???

                      Also I have no idea why you are so scared of inflation when you have clearly pointed out that the problem facing all of us around the world now is a debt driven DEflationary spiral and where negative interest rates are being used to DESTROY money from ordinary peoples savings.

                    • Colonial Viper

                      pat:

                      M2 Dec 2013: $119.2B
                      M2 Dec 2015: $150.2B

                      An increase in the NZ M2 money supply of 26% over just two years.

                      Where did all those billions of new NZD come from?

                      Where did they go?

                      Who holds them?

                      How come the M2 money supply expanded so greatly yet inflation in NZ stayed so low?

                      Further you need to get it into your head that central banks carry out monetary operations to hit any interest rate target that they want.

                      Where it falls apart for countries is when they rely on global financial markets to source their own national currency from transnational corporates, which is utterly stupid, because a sovereign can issue its own national currency at will so why would it go out and beg and borrow it from others at interest?

                      http://www.rbnz.govt.nz/statistics/c1

                    • pat

                      CV as long as this is the model the world is operating under AND you wish to trade in that world then you cannot ignore the realities….

                      “Also I have no idea why you are so scared of inflation when you have clearly pointed out that the problem facing all of us around the world now is a debt driven DEflationary spiral and where negative interest rates are being used to DESTROY money from ordinary peoples savings.”

                      I have no fear of “controlled” inflation…indeed under current model it is required…but what you propose would produce rampant inflation and that destroys economies (and human lives) just as efficiently as deflation

                      I draw your attention to my final comment in a previous post…..
                      “….so its pretty much the end of the road for the economic model”
                      I dont support the current model, in fact I advocate its removal…I just haven’t worked out yet what will replace it

                    • Colonial Viper

                      Also, so what if issuing more of our own currency causes a NZD devaluation of 10% or 20%?

                      It would finally bring our dollar down to a more realistic level.

                      Our exporters will love it, our farming sector will love it, and it will force NZers to stop sending our currency overseas buying more petrol, more pointless foreign holidays, and more imported crap from China and Korea and Vietnam that we do not need, while encouraging local industries to provide more locally made goods and services.

                    • Colonial Viper

                      CV as long as this is the model the world is operating under AND you wish to trade in that world then you cannot ignore the realities….

                      our major trading partners China, UK, USA, Japan are all printing shitloads of their own currency while we act all naive and innocent pretending that we aren’t actually creating lots of new NZDs when in fact you can see by the RBNZ’s M2 measure that HUGE amounts of new NZD have been created over the last two years.

                      Yes one problem is that the world is operating under a fucked economic and monetary system, but another problem is that NZ refuses to play that system to the max like other countries do in order to get ahead.

                    • pat

                      as previously stated you can QE for a purpose occasionally and the markets will cut you some slack and see how it turns out but do it often and for no benefit (growth) then you will be priced out of the market…..it is not a basis for an economy to operate under on a continuous basis

                      Unless you happen to be the worlds reserve currency

                    • Colonial Viper

                      I just haven’t worked out yet what will replace it

                      The game won’t be replaced over night but at least NZ can play the game smart not dumb like we are doing now.

                      So my top three suggestions on this front:

                      1) Allow the government to borrow money from the RBNZ equivalent to no more than 5% of the tax take, to be used for social spending and benefits.

                      2) Allow the government to borrow new money from the RBNZ for major infrastructure projects, where the money given to build the infrastructure is swapped for equity in that same infrastructure once it is completed, instantly eliminating the debt.

                      3) Take measures to completely undermine the attractiveness of both the NZD and of NZ property as vehicles of financial speculation.

                    • Colonial Viper

                      as previously stated you can QE for a purpose occasionally and the markets will cut you some slack and see how it turns out but do it often and for no benefit (growth) then you will be priced out of the market…..it is not a basis for an economy to operate under on a continuous basis

                      Unless you happen to be the worlds reserve currency

                      Nah, disagree.

                      Firstly I am not talking about “QE” at all (QE is the central bank buying crappy financial assets off the private sector using new money).

                      I am talking about a sovereign issuing new money for spending into the general economy.

                      Secondly, what on earth reaction do you think “the markets” are going to do to NZ if we issue 1%-2% of GDP in new currency per year (say $4B pa) for government spending? The term “sweet FA” reaction comes to mind.

                      Thirdly, how on earth did you conclude that adding new money is “not a basis for the economy to operate under on a continuous basis”?

                      Did you not see the RBNZ figures which show you that the NZ money supply is expanding at a massive rate any way and has been for years???

                      FFS what is your problem with taking some of that $30B increase in new money and spending it on Kiwis???

                    • pat

                      QE does not necessarily require any private sector involvement, it is merely a method for increasing money supply by action in a field not normally invested in by the RB….say state houses….market forces are not irrelevant …..ever….nothing happens in a vacuum…you cannot constantly increase money supply and expect to have no impact on interest and exchange rates…it is simple supply and demand…although markets can become detached from reality (current sharemarkets are a good example) inevitably reality sets in and there is a correction, usually a massive over correction.
                      If you released your 2% additional monetary supply every year you will feed inflation locally which will flow into exchange rate and create a disconnect between local and imported supply…now you may say thats fine 2% inflation, but it is 2% additional inflation compounding….on top of natural or imported inflation…the markets would be well aware of the debasing of the currency and it would be factored in to the exchange rate reducing your buying power (and debt servicing ability) and therefore your cost of credit creating the risk of an inflationary spiral.

                    • pat

                      a point i should have made which is obvious….if the level of QE (or money printing if you prefer)…are at the sums you suggest they are so small you would be better raising the additional 1-2% through taxation and greatly reduce the risk of any inflationary /exchange rate impacts.

                    • Colonial Viper

                      where the hell do you get your strait jacket orthodox economic ideas from pat? Look at the RBNZ M2 measure for goodness sake: it has been expanding at far more than the 2% pa annum rate you are warning about! Yet no one has said that the RBNZ should end that trend!

                      You say that you understand that the current economic system needs to be changed, then you stick to the most conservative lines of economic thinking.

                      For starters, QE 1 through to QE4 as practiced by the Fed has and will involve the Fed expanding its balance sheet by buying crappy low quality financial assets off the private sector.

                      Secondly, the NZ money supply has been expanding massively over the last ten years: pray tell where all these adverse interest rate and fx effects you predict are?

                      Thirdly, the point of issuing new money is so you do not have to deplete the income and savings of households through taxation, nor do you have to go cap in hand to “the market” to borrow at interest the NZ dollars that you can issue for free.

                      If you want to promote an alternative economics you will need to stop espousing the conventional pro-establishment economics which have led the world to this dreadful and unstable point.

                    • Nic the NZer

                      “Markets can become detached from reality”

                      I beg to differ, markets cant become detached from reality. But theory can become detached from reality. If real world markets dont function as theoretical markets thats a problem with theory, and there is nothing there to cause them to come back to theory. At that point your just making wild prognostications devoid from the real world.

                    • lprent []

                      I don’t know what world you live in. But I suspect it has very little to do with reality.

                      I remember the Black Monday of 1987 and the lead up to it quite well. The people participating in it were crazed as they tried to play hot potato with the money of others and so was the absurd market that they created. Same in the GFC.

                      If you think that either market had anything to do with reality, then I’ll add you to the list of ideological lunatics.

                    • pat

                      “I beg to differ, markets cant become detached from reality. But theory can become detached from reality.”

                      Really? I’ll give you two examples that you should be familiar with…..Auckland housing market and most of the worlds sharemarkets currently.

                    • Nic the NZer

                      “If you think that either market had anything to do with reality, then I’ll add you to the list of ideological lunatics.”

                      Wait a minute, your saying these events actually happened (which they did) and yet this had nothing to do with reality? Obviously you have interpreted ‘reality’ slightly differently to the meaning in my statement.

                      I believe the point your trying to get across is the same as my point, that the markets don’t have to behave according to either fundamentals or economic theory in practice. Clearly we have to deal with this, and as a consequence I suggest we should try to base our economic practice on what actually happens and not some theory of what will happen if that theory can’t show that it applies to reality.

                      So as an example in theory exchange rates strongly influence domestic inflation, in practice there is basically no correlation between the two (let alone a causal mechanism). So should we worry about the influence of government spending on foreign exchange markets because that will cause (purely theoretical) inflation? Because that is the essence of what Pat is arguing.

                      http://bilbo.economicoutlook.net/blog/?p=32922

                    • pat

                      the reality you ignore nic is the theory is always borne out….just not instantly as you seem to require…..it is the period between cause and effect that is the time of market disconnect…..not a difficult concept.

                    • Nic the NZer

                      Incorrect, read it again there is no lagged correlation either.

                    • pat

                      i have skimmed his article and his one on public/private debt…..interesting , but submit that his position is no different than mine….he advocates a new system, he hasn’t suggested this can work as an aberration within the current system as far as I can see but concede more reading would be required.

                    • Nic the NZer

                      “what happens if they are successful? (i don’t believe they will be) ….interest rates will rise….and we have 120 billion debt and are constantly in a trading deficit”

                      You are aware that the RBNZ can control any NZ$ interest rates right? So if interest rates rise its because the RBNZ wants them to rise and clearly the government is not fundamentally against that happening at the time. This makes the billions of debt effectively irrelevant because the RBNZ can basically control the interest rate so its manageable by the government. Though they could stop issuing the debt as an alternative of course.

                      As I said the ECB has been using this to ensure that Greece, Ireland, Italy, Portugal and Spain etc don’t face market driven interest rates on their government bonds at present (through its SMT and OMT program). It was never anticipated that they would need to do that due to some economic theory which said that market interest rate adjustments on government debt will lead to economic stability in the currency area (which turned out to be fundamentally incorrect).

                      How do we know that the RBNZ can control interest rates? Because we see it doing so. Recently the finance minister was blaming the reserve bank for increasing the OCR rate which he claimed (highly debatable) had caused inflation to be too low. As can be seen the OCR has fairly obvious effects on government debt rates anyway without direct intervention into government debt markets. As previously mentioned the market influence on government debt is basically irrelevant for currency sovereign governments.

                    • Nic the NZer

                      He’s not advocating a new system, he is describing the existing system and advocating that the policy should be different. Nothing needs to change about how central banks function today it already happens.

                      All that’s really being suggested is that a lot of mainstream economic theory is based on incorrect assumptions of how the economy works.

                    • pat

                      the RBNZ only control local interest rates……they have no direct control on overseas financing rates…..overseas funds are vital if you wish to be a trading nation.

                      Have been reflecting on your link and have a thought or two…..Bill Mitchells theory is fine within the current system if you are happy for your economy to gradually isolate itself from the rest of the world.
                      Now you may be happy to do that but consider the real life impacts….NZ gradually loses access to the latest technology and services ….no internet, no computers, no (or severely restricted overseas travel) etc…unless of course you believe we are so clever are able to both design and produce all our required items in isolation and at a level of sophistication at least equal to the rest of the world… if we can do that we would have the rest of the world knocking on our door and be as wealthy as Croesus
                      i would suggest what is far more likely to happen is we would gradually become more and more antiquated and ignored by the rest of the world which may be fine if you wish to revert to a pre industrial society that has no appeal to our offspring who would depart in ever greater numbers ultimately causing the demise of the country
                      Ask yourself when considering exchange rates, why do NZ dollars have any demand (or value)…it is because they represent that we have something others want….if we have nothing that others want the NZD has no value…..when was the last time you wanted a Zimbabwe dollar?

                    • Nic the NZer

                      “Mitchells theory is fine within the current system if you are happy for your economy to gradually isolate itself from the rest of the world.”

                      Are you suggesting NZ, Australia, US, UK, Japan etc… have been gradually isolating themselves from the rest of the world? Because that’s not an observable fact.

                      “Ask yourself when considering exchange rates, why do NZ dollars have any demand (or value)…it is because they represent that we have something others want….if we have nothing that others want the NZD has no value…..when was the last time you wanted a Zimbabwe dollar?”

                      and neither is inflation being driven by exchange rates an observable fact. The ‘correct’ response to a lack of correlation between foreign exchange and inflation is not to assume the correlation (your pet theory). Its to reject the theory which says there is a correlation. Sorry the theory is wrong, find another one which isn’t.

                    • pat

                      “and neither is inflation being driven by exchange rates an observable fact.”

                      if you cannot understand the simple mechanism between exchange rate and inflation/ deflation then there truly is no hope….there is no such thing as a perfectly balanced economy..some are more balanced than others…ipso facto the effects of currency fluctuation are not equal or across the board

                    • Nic the NZer

                      “if you cannot understand the simple mechanism between exchange rate and inflation/ deflation then there truly is no hope”

                      To quote somebody else,

                      “It doesn’t matter how beautiful your theory is, it doesn’t matter how smart you are. If it doesn’t agree with experiment, it’s wrong.” -R. Feynman

                      No correlation, means there is simply no cause there.

                    • pat

                      I wish you luck with your own experiment…..I’ll stick with the empirical evidence displayed by the real world to date.

                    • Nic the NZer

                      “I’ll stick with the empirical evidence displayed by the real world to date” – pat

                      What evidence? and what are the implications for the earlier statement?

                      “the reality you ignore nic is the theory is always borne out” – pat

                      A brief statement on the combined implications of your argument on most people,

                      “Economists are not rewarded for studying the economy. That is why almost everyone in the profession missed the $8 trillion housing bubble, the collapse of which stands to cost the country more than $7 trillion in lost output according to the Congressional Budget Office (that comes to around $60,000 per household).

                      Few if any economists lost their 6-figure paychecks for this disastrous mistake. But most economists are not paid for knowing about the economy. They are paid for telling stories that justify giving more money to rich people. Hence we can look forward to many more people telling us that all the money going to the rich was just the natural workings of the economy. When it comes to all the government rules and regulations that shifted income upward, they just don’t know what you’re talking about.” – Dean Baker

                  • pat

                    “Few if any economists lost their 6-figure paychecks for this disastrous mistake. But most economists are not paid for knowing about the economy. They are paid for telling stories that justify giving more money to rich people. Hence we can look forward to many more people telling us that all the money going to the rich was just the natural workings of the economy. When it comes to all the government rules and regulations that shifted income upward, they just don’t know what you’re talking about.” – Dean Baker”

                    The economist Dean Baker may well be right…..by happy coincidence I am neither paid for my views nor an economist

          • Expat 12.2.1.1.2

            pat
            +1

        • Expat 12.2.1.2

          The problem in Greece is that there simply wasn’t enough TAX being paid by everyone to support the economy, and you’re promoting the very same problem, low TAXing countries have almost no social, health, education or infrastructural services, pretty much 2nd or 3rd world, the prosperous countries have relatively high taxes, but a much higher standard of living.

          Greece’s economy sunk because the govt was shelling out more than it was taking in and had to borrow to make up the shortfall, sounds very much like the NZ economy to me.

          The TAX changes in 2010 have failed the NZ economy, and borrowing has been going on ever since to make up the shortfall, why else would you be borrowing.

          What about the 7 years of trade deficits?

          Put forward a valid reason to cut TAXes, only problem is, there isn’t one.

          • Colonial Viper 12.2.1.2.1

            “The problem in Greece is that there simply wasn’t enough TAX being paid by everyone to support the economy”

            No, that was one of the problems, but not the major one.

            The major one was that the Greek Government gave up its currency sovereignty and handed over control of its money supply and its monetary policy to Brussels Eurocrats focussed on the wellbeing of Germany and France.

            • pat 12.2.1.2.1.1

              “The major one was that the Greek Government gave up its currency sovereignty and handed over control of its money supply and its monetary policy to Brussels Eurocrats focussed on the wellbeing of Germany and France.”

              disagree,having a common currency merely restricted their options in dealing with the crisis but wasn’t the cause….the cause was excessive borrowing for non productive activity fueled by a trading imbalance, mainly within the EU, and was deliberately overlooked until it was too late (overlooked by all parties including their creditors and the markets)

              And then the markets passed judgement just as they would do here when they decide we are not a viable unit

              • Scott M

                Some thoughts:

                – why not remove speculation in NZ Currency. Entities can only exchange currency when an actual transaction has occurred in the real economy.

                – why does government printing money create inflation, but banks creating credit out of thin air doesnt? Its just not credible.

                • pat

                  theoretically the banks lending is for productive activity and the return pays the interest….if defaults get too high the bank stops lending (creating money)…governments printing money for operating expenses doesn’t create a return so it is viewed differently by the markets.
                  That is part of the problem now, the QE which was supposed to go into the productive economy and create jobs, demand and return (growth) has instead been used to create asset bubbles and no demand….mainly because there is nowhere with the capacity to grow so no one will invest…China has kept the world going by a massive (one off) infrastructure spend since the GFC and they have now got so much excess infrastructure and productive capacity they are shutting down factories and trying to carefully deflate property values…the US has hollowed out its middle class, the usual source of consumer demand so no growth there, the EU are in austerity mode with dodgy banks and debt, high unemployment, excess capacity and static populations so no growth there, South America is in recession, Japan has zero pop growth and an aging workforce….which really only leaves India as a potential source of increased world demand….and India is a dysfunctional nightmare….so its pretty much the end of the road for the economic model

              • Colonial Viper

                disagree,having a common currency merely restricted their options in dealing with the crisis but wasn’t the cause….the cause was excessive borrowing for non productive activity fueled by a trading imbalance

                Oh FFS

                Just listen to yourself

                Let me reword your statement not from the standpoint of Greece the “irresponsible borrowers” (that’s been Germany’s PR line against Greece from the start – why are you re-using Germany’s anti-Greek propaganda?) but from the standpoint of the counter party to all this borrowing:

                So, who the fuck approved the excessive lending to Greece when it was clear that those loans would be used for spending on non-productive activities?

                Pat, would your bank lend you excessive amounts of money beyond your income level in order for you to spend it on non-productive activities?

                Dunno about yours, but my bank certainly wouldn’t.

                So why did large international lenders agree to loan irresponsibly to Greece on such a massive scale?

                Of course the answer is simple: Greece was in the Euro, so Greek lending risk looked just as low as lending to Germany or France, and the value of the Euro was assured by the economic power houses of Germany and France, unlike the value of the drachma.

                In other words, being in the Euro made it very easy for big corporations to lend irresponsibly huge sums of money to Greece for as you put it, “non-productive activities.”

                • pat

                  if you reread what i said you will note I haven’t apportioned blame ….I have simply stated the cause as I see it…..you are quite right that the banks would not behave in that manner with you or I, and the fact that Greece was a member of the EMU undoubtably influenced the creditors behavior…..neither of those observations are relevant to cause
                  Yes the Germans and to a lesser extent the French, used Greece to their own advantage……do you think the US or Japan would be any more concerned about our well-being?..I suggest not.

                  • Colonial Viper

                    Please explain how the Reserve Bank has allowed M2 money supply increases of 10% or more a year without the blow back of FX and interest rate disruption that you keep referring to.

                    • pat

                      what is the source of the alleged 10% annual increase in M2?

                    • Colonial Viper

                      From the highest source of course, the Reserve Bank of NZ:

                      http://www.rbnz.govt.nz/statistics/c1

                    • pat

                      if there has been a 10% pa increase in M2 over the past couple of years I would guess it would be from 2 main sources….the Reinsurance monies from ChCh and direct foreign investment, mainly in real estate…..and the result has been?…..massive inflation in the real estate market and inflation in the Canterbury construction industry.

            • Expat 12.2.1.2.1.2

              CV

              What your saying is not what the previous Greek finance minister is saying, the simplified version is there was not enough income to cover the out goings and had to borrow the difference, a trade deficit as well, and there was a very low TAX take, an ingrained problem with TAX evasion, benefits being paid were too high, (retirement starts at 50 in Greece and I’ve been told by local Greeks that the pension in Greece is equivalent to $4,000 AU monthly) difficult to sustain, Greece, Spain, Italy were all in trouble before the GFC, NZ wasn’t.

  13. tc 13

    It’s not lunacy if your objective is to increase foreign debt you’ve no intention of dealing with and put more cash into high income pockets.

    It’s what their MSM shills will call ‘smart politics’ because it’s all about winning with the right not consequences.

  14. Observer (Tokoroa) 14

    At what point in time will the men in white coats come and take our unhinged Treasurer away ?

    His economic train is running like a rogue steel monster, gathering debt by the Billions. Toot Toot. Toot Toot.

    He will be okay in the Nat Asylum with BM and CV.

    But New Zealand will never recover.

    • Colonial Viper 14.1

      English is spending those billions largely on keeping benefits and super and universities going.

  15. Donut Know 15

    Off-topic but why can’t the Neo-liberals go and start their own party? What’s stopping them? I don’t understand any of this crap

  16. ropata 16

    More rorts

    Ooh and it makes us wonder – the Ministry of Education's $2.5 mil stairway to heaven: https://t.co/SAmU5lbCpA— New Zealand Labour (@nzlabour) February 10, 2016

    We now have unit chasing tax fraud but it's still easier to spy on ppl on the benefitMore: https://t.co/GiOtnr5bUW pic.twitter.com/RBxNTrtt81— ActionStation (@actionstation) February 10, 2016

  17. linda 17

    why not arrest and jail tax evaders if we can arrest students we can dust the crooks

  18. Richard@Down South 18

    My favourite quote about ‘market forces’ and/or safeguards is from Limitless (2011)

    Eddie Morra: [at a party] … Well sure, you’d get a short-term spike, but wouldn’t that rapid expansion devalue the stock completely in two years?

    Kevin Doyle: No, ’cause there are safeguards!

    Eddie Morra: Against aggressive overexpansion? There aren’t because there are no safeguards in human nature. We’re wired to overreach. Look at history, all the countries that have ever ruled the world – Portugal, with its big, massive navy… All they’ve got now are salt cods and cheap condoms.

    [crowd laughs]

    Eddie Morra: And Brits? Now they’re just sitting in their dank little island, fussing over their suits. No one’s stopping and thinking, ‘Hey, we’re doing pretty well. We got France, we got Poland, we got a big Swiss bank account… You know what? Let’s not invade Russia in the winter, let’s go home, let’s pop a beer and let’s live off the interest.’

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