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National’s war on the deficit – 2015

Written By: - Date published: 1:38 pm, May 30th, 2012 - 7 comments
Categories: capitalism, class war, debt / deficit, national - Tags: , ,

A while back Eddie had a post on how the Nats have abandoned any pretense of ambitious goals (“roaring out of recession”, “catching up with Australia”, “brighter future”). They have replaced it all with one and only one accounting goal, surplus by 2014/2015, a goal that anyone could meet. It reminded me of this old image (it works just as well in this new context I think).

National’s war on the deficit – 2015

7 comments on “National’s war on the deficit – 2015 ”

  1. Shona 1

    Ron Cobb ( pretty sure it one of his) was years ahead of his time with his political cartoons.

  2. Nick 2

    Yes, because the government ‘only’ spending 7.9billion dollars more than it made in tax revenue is a total disaster.

  3. AAMC 3

    “Why Can’t People Understand National Accounting?” from Economonitor today, please Bill English, David Cuniliffe & Russel Norman start taking notice of this stuff. You Defic it Hawkes are killing us!

    http://www.economonitor.com/blog/2012/05/why-cant-people-understand-national-accounting/?utm_source=rss&utm_medium=rss&utm_campaign=why-cant-people-understand-national-accounting&utm_medium=twitter&utm_source=twitterfeed

    “to move any sector balance in an open economy, you need to move the other two balances exactly opposite in equivalent measure. To reduce the government deficit in any period, the private balance and the capital balance must increase by the exact same amount in that period.”

    “The household sector will still attempt to keep its net saving, its surplus, high and so government cuts will be felt primarily in the form of reduced household consumption and increased private sector defaults.”

    “policy prescriptions are the economic input and the deficit is the output. Focus on the policy and policy goals, not deficits.”

    “The real policy question should be how to eliminate the malinvestment and reallocate capital investment to useful productive enterprises without creating a deflationary spiral.”

    • Herodotus 3.1

      From my understanding of the “closed” financial network, is that there is no mention of how a country makes up structural deficits/current account deficits, thru borrowing from offshore or selling assets. We in NZ have not yet had to face this issue as thru good fortune we have been able to pay the servicing costs of our spiraling debt, and the banks will continual to loan as long as we can service the borrows. When the banks start to worry then you will see this as there is a rush to repatriate the funds.
      http://www.tradingeconomics.com/new-zealand/current-account
      Continual and even increasing government deficits are not a concern as long as they are maintaining relativity with GDP. As long as there is a sound base that NZ GDP is built on, excessive property booms are not what growth should be built on.
      And as your link states “Focus on the policy and policy goals, not deficits.”.

    • Draco T Bastard 3.2

      So, in that context, attempts at austerity make things considerably worse. If the government cuts back, the private debt overhang will still be there and the private sector will simply have less money to deal with it. The household sector will still attempt to keep its net saving, its surplus, high and so government cuts will be felt primarily in the form of reduced household consumption and increased private sector defaults. In the context of a still weak banking system, that could create the kind of downward spiral we witnessed during the Great Depression as banks failed. It creates the kind of paradox of thrift that makes deficit reduction harder which we are witnessing in the euro zone as many of us including James Montier predicted.

      And that’s effectively calling for more government bailouts of the private sector, a call for the government to try and prevent the default on the private over-extended loans.

  4. MP, Eric Roy, crows in the Southland Times about the wonderful economic management that his party is delivering, however the world he is describing is not the one I am experiencing…
    http://localbodies-bsprout.blogspot.co.nz/2012/05/eric-roy-lives-on-different-planet-to.html

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