web analytics

Nats warn of credit downgrade

Written By: - Date published: 7:39 am, October 1st, 2011 - 17 comments
Categories: debt / deficit, economy, national - Tags: ,

The 2009 budget was another piece of well managed political theatre by National. Reneging on their irresponsible election bribe tax cuts, and knowing that they wouldn’t have anything much positive to sell, they set up the threat of a credit downgrade as the litmus test of success.

Before the budget Key confidently predicted that the political humiliation of a downgrade would be avoided.  Eddie started us off with a few choice quotes yesterday, here’s another from Key:

“If a downgrade were to happen, it would add 1-2% of interest on the amount the government borrows, which is around $600 million each year.

This, says Key, is to be avoided at all costs.  “That’s every homeowner, every business, everybody paying 2% more. That would be irresponsible in my view for the government not to act,” Key says. [emphasis added]

To make sure of the outcome, Bill English consulted with the ratings agencies (to the extent that even Tory commentators raised the alarm about Who’s writing the budget?).  Sure enough post budget the agencies duly held their ratings, and the government got to enjoy the mission accomplished spin.  They were still posturing (in well scripted uniformity) about avoiding a downgrade in debate on the 10th of August 2011:

STUART NASH (Labour) to the Minister of Finance: In what way is New Zealand “better placed to withstand” a financial crisis than 3 years ago given that before he came in to office the Government was running a surplus and core Crown net debt was just 1 percent of GDP and now the Government is running record deficits and net debt is 20 percent of GDP?  …

Hon BILL ENGLISH: I think it [the government’s credit rating] is on negative outlook, and that is remarkably better than the downgrade we would have faced if we had not changed the damaging and wasteful policies of the previous Labour Government. …

TIM MACINDOE (National—Hamilton West) : … Have those members not noticed what is happening in Europe, America, and elsewhere at the present time? Do the phrases “debt crisis” and “credit downgrade” mean nothing to them? …

AMY ADAMS (National—Selwyn) : … Of course, more recently we have watched the old superpower America teeter on the brink of complete collapse, and we have seen its economy not only downgraded recently, but also put on further negative watch. That tells us how important it is that we can present to the world the face of a strong economy that has its books in order, its debts under control, and, most important, is being led by a Government that knows how to run a strong economy and knows how important it is to keep the accounts in good order and keep us in good shape. We have seen over the three Budgets delivered by the John Key – led Government a story of returning this country to the strong position it deserves to be in, putting us on the front foot and putting us in a position where we are economically competitive internationally and where the world and the lending markets know we are a good bet. …

DAVID BENNETT (National—Hamilton East) : … What the Labour plan would deliver is more debt. Is more debt a good thing to have at this time? Labour should ask the Americans what more debt means. More debt means we get downgraded. When we get downgraded, what does that mean? That means we are going to be in a situation where we have higher interest rates for our people. The people in New Zealand do not want higher interest rates. …

Hon JUDITH COLLINS (Minister of Police) :… Well, we have seen this week in the United States what happens when a nation’s credit rating goes down. We have seen what happens. What happens is that interest rates go up—interest rates for the job creators, interest rates for mum and dad investors, interest rates for homeowners, interest rates for people with mortgages, and interest rates that translate through to everybody’s pocket. … There is not a word from the Opposition about how this Budget prevented a downgrade of our credit rating, which would have affected every New Zealander in some way. …

JAMI-LEE ROSS (National—Botany) : … They think that more debt will solve all those issues. Well, it will not. It will put us in a situation where we would have a credit rating downgrade if we continued along the debt projection that the last Labour Government left us with. It would be a shambles. … High debt levels would lead to a credit rating downgrade, and that would lead us back to the area of high interest rates for New Zealand homeowners. …

Fast forward to September and the Nats have suffered not one, but two separate credit downgrades.  I wonder how they’re going to explain away their boastful posturing and dire warnings now.  With a smile and a wave perhaps?

17 comments on “Nats warn of credit downgrade ”

  1. Irascible 1

    The finger puppet that is Key will, with Dipton, claim that this credit rating fail mark is not their fault but a result of being bullied by (1) economic policies outside of their collective ability, (2) fault lines in NZ geography, (3) The RWC impact on the economy, (4) the actions of insurance companies and finally (5) God. Thus, despite the posturing in earlier PR controlled “budgets” about the dire consequences of a credit rating downgrade on a policy less government this downgrade is to be seen as meaningless and an endorsement of the policy to sell off the country’s assets to appease the corporates who have contributed to the national debt but are not responsible.

  2. mik e 2

    Nats under blinglish New Zealands worst finance minister of modern times manges less than 1% growth in five years as finance minister .The double dipton managed double dip in credit ratings 1998 and 2011,now we have double dip recession from the double dipstick

  3. Afewknowthetruth 3

    Never a word of discussion about the fundamentally flawed system of fractional reserve banking and creation of money out of thin air to pay interest on the previous money created out of thin air, of course. The public debate has to be steered well away from all the fundamentals and focused firmly on the symptoms (or on the irrelevant).

    The whole bankers’ Ponzi scheme (which gave the facade of working in the past) is in the process of imploding, since the energy needed for economic activitiy is in decline due to peak oil (something else that is a taboo subject in official circles).

    Perpetual growth on a finite planet always was an absurd notion but while there were resources to be converted into waste at a profit, growth was possible. Now that particular game is very close to over.

    The role of central government is to attempt to maintian the myths that underpin the economic system for as long as possible whilst ‘shafting’ the common people. As things get generally worse, the lies we are told by politicians and mainstream economists will get bigger and bigger -that’s guaranteed! They will keep offering the false hope of ‘recovery’ for as long as the dumbed-down public believe the lies.

    One of the greatest problems for anyone telling the truth at this stage is that a large portion of the general populace wants to believe the lies

    • Ari 3.1

      The problem of peak oil is not so much that there’s not enough oil, but rather that what’s left is too expensive to fuel the economy the way it did before and will cause price shocks, even if we wanted to pollute the atmosphere with it.

  4. randal 4

    John Keys says he cant talk about it in public because the electoral commission says it is politicing. Now who the hell is running this country.Standard and Poors, the electoral commission or monnbeam the friggin cat.

  5. tc 5

    The hollow men are running da country…..obvious ain’t it !

    • side show bob 5.1

      “the hollow men are running the country”, Maybe but they beat the hell out of lunatic gay females who can’t keep their mindless musings to themselves. Mad butcher, I don’t think so, New Zealander’s know full well whose mad and what party the dropkicks belong to.

      • Draco T Bastard 5.1.1

        The lunatic females seem to be in NAct as well and the Mad Butcher does, as evidenced by his support of NAct, appear to be as mad as a hatter.

  6. Tombstone 6

    It’s about time our gutless media started to ask some serious questions of John Key because he’s running this country into the ground and getting away with it – the situation is getting dire and Key is at the helm. The excuses and deliberate attempts to avoid the hard questions has to stop and the media needs to grow a spine and start earning their keep.

  7. In interviews during the campaign, Key and English need to be asked, repeatedly, why a credit downgrade was such a dire prospect and an indication of bad economic management previously but now, presumably, was something ‘unavoidable’ (by ‘good’ economic management – i.e., their own), ‘a consequence of international economic conditions’, etc..

     

  8. Paul 8

    The Film ‘Money as Debt’ by Paul Grignon shows how the fractional-reserve banking system is not sustainable.

Links to post

Recent Comments

Recent Posts

  • Tokelau Language Week reminds us to stay united and strong
    Staying strong in the face of challenges and being true to our heritage and languages are key to preserving our cultural identity and wellbeing, is the focus of the 2020 Tokelau Language Week. Minister for Pacific Peoples, Aupito William Sio, says this year’s theme, ‘Apoapo tau foe, i nā tāfea ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • NZ announces a third P-3 deployment in support of UN sanctions
    The Government has deployed a Royal New Zealand Air Force P-3K2 Orion (P-3) maritime patrol aircraft to support the implementation of United Nations Security Council (UNSC) resolutions imposing sanctions against North Korea, announced Minister of Foreign Affairs Winston Peters and Minister of Defence Ron Mark. “New Zealand has long supported ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Pacific trade and development agreement a reality
    Pacific regional trade and development agreement PACER Plus will enter into force in 60 days now that the required eight countries have ratified it. Trade and Export Growth Minister David Parker welcomed the announcement that the Cook Islands is the eighth nation to ratify this landmark agreement. “The agreement represents ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Securing a pipeline of teachers
    The Government is changing its approach to teacher recruitment as COVID-19 travel restrictions continue, by boosting a range of initiatives to get more Kiwis into teaching. “When we came into Government, we were faced with a teacher supply crisis,” Education Minister Chris Hipkins said. “Over the past three years, we ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Border exceptions for a small number of international students with visas
    The Government has established a new category that will allow 250 international PhD and postgraduate students to enter New Zealand and continue their studies, in the latest set of border exceptions. “The health, safety and wellbeing of people in New Zealand remains the Government’s top priority. Tight border restrictions remain ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • First COVID-19 vaccine purchase agreement signed
    The Government has signed an agreement to purchase 1.5 million COVID-19 vaccines – enough for 750,000 people – from Pfizer and BioNTech, subject to the vaccine successfully completing all clinical trials and passing regulatory approvals in New Zealand, say Research, Science and Innovation Minister Megan Woods and Health Minister Chris Hipkins. ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • International statement – End-to-end encryption and public safety
    We, the undersigned, support strong encryption, which plays a crucial role in protecting personal data, privacy, intellectual property, trade secrets and cyber security.  It also serves a vital purpose in repressive states to protect journalists, human rights defenders and other vulnerable people, as stated in the 2017 resolution of the ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ministry of Defence Biodefence Assessment released
    The Ministry of Defence has today released a Defence Assessment examining Defence’s role across the spectrum of biological hazards and threats facing New Zealand. Biodefence: Preparing for a New Era of Biological Hazards and Threats looks at how the NZDF supports other agencies’ biodefence activities, and considers the context of ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020
    New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020 Hon David Parker’s response following Thomas Piketty and Esther Duflo. Good morning, good afternoon, and good evening, wherever in the world you might be. I first acknowledge the excellent thought provoking speeches of Thomas Piketty and Esther ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Kaipara Moana restoration takes next step
    A Memorandum of Understanding has been signed today at Waihāua Marae between the Crown, local iwi and councils to protect, restore and enhance the mauri of Kaipara Moana in Northland. Environment Minister David Parker signed the document on behalf of the Crown along with representatives from Ngā Maunga Whakahī, Ngāti ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Zealand and Uruguay unite on reducing livestock production emissions
    Agriculture Minister Damien O’Connor and Uruguayan Minister of Livestock, Agriculture and Fisheries Carlos María Uriarte have welcomed the launch of a three-year project that will underpin sustainable livestock production in Uruguay, Argentina, and Costa Rica.  The project called ‘Innovation for pasture management’ is led by Uruguay’s National Institute of Agricultural ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • 3100 jobs created through marae upgrades
    Hundreds of marae throughout the country will be upgraded through investments from the Provincial Growth Fund’s refocused post COVID-19 funding to create jobs and put money into the pockets of local tradespeople and businesses, Regional Economic Development Minister Shane Jones and Māori Development Minister Nanaia Mahuta have announced. “A total ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Health volunteers recognised in annual awards
    Health Minister Chris Hipkins has announced 9 teams and 14 individuals are the recipients of this year’s Minister of Health Volunteer Awards.  “The health volunteer awards celebrate and recognise the thousands of dedicated health sector volunteers who give many hours of their time to help other New Zealanders,” Mr Hipkins ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Community COVID-19 Fund supports Pacific recovery
    The Minister for Pacific Peoples, Aupito William Sio says a total of 264 groups and individuals have successfully applied for the Pacific Aotearoa Community COVID-19 Recovery Fund, that will support Pacific communities drive their own COVID-19 recovery strategies, initiatives, and actions. “I am keen to see this Fund support Pacific ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Community benefits from Māori apprenticeships
    Up to 50 Māori apprentices in Wellington will receive paid training to build houses for their local communities, thanks to a $2.75 million investment from the Māori Trades and Training Fund, announced Employment Minister Willie Jackson today. “This funding will enable Ngāti Toa Rangatira Incorporated to provide its Ngā Kaimahi ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Training fund supports Māori jobseekers
    Rapidly growing sectors will benefit from a $990,000 Māori Trades and Training Fund investment which will see Wellington jobseekers supported into work, announced Employment Minister Willie Jackson today. “This funding will enable Sapphire Consultants Ltd. to help up to 45 Māori jobseekers into paid training initiatives over two years through ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ruakura Inland Port development vital infrastructure for Waikato
    The Government is investing $40 million to develop an inland port at Ruakura which will become a freight super-hub and a future business, research and residential development for the Waikato, Urban Development and Transport Minister Phil Twyford, and Māori Development Minister Nanaia Mahuta announced today. The funding has been has ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Appointments made to Defence Expert Review Group
    Defence Minister Ron Mark announced today the establishment of an Expert Review Group to review a number of aspects of the New Zealand Defence Force’s (NZDF) structure, information management and record-keeping processes.  The Expert Review Group’s work arises out of the first recommendation from the Report of the Government’s Inquiry ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • No active community cases of COVID-19
    There are no active community cases of COVID-19 remaining in the country after the last people from the recent outbreak have recovered from the virus, Health Minister Chris Hipkins said today. “This is a big milestone. New Zealanders have once again through their collective actions squashed the virus. The systems ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Clean energy upgrade for more public buildings
    More public buildings will be supported by the Government to upgrade to run on clean energy, the Minister for Climate Change James Shaw announced today. Minister Shaw announced that Lincoln and Auckland universities will receive support through the Clean-Powered Public Service Fund to replace fossil fuel boilers. Southern, Taranaki, and ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Schools back donations scheme for the second year
    More schools have opted in to the donations scheme for 2021, compared to 2020 when the scheme was introduced. “The families of more than 447,000 students will be better off next year, with 94% of eligible schools and kura opting into the scheme,” Education Minister Chris Hipkins said. “This is ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Ruapehu cycle trails gets PGF boost
    The spectacular Mountains to Sea cycle trail in Ruapehu District will receive $4.6 million in funding from the Provincial Growth Fund for two additional trails, Regional Economic Development Minister Shane Jones announced today. “This is an exciting development for the local community, and one that will provide significant economic opportunities ...
    BeehiveBy beehive.govt.nz
    3 weeks ago