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Nats’ muddling earns credit downgrade

Written By: - Date published: 7:19 am, September 30th, 2011 - 107 comments
Categories: bill english, debt / deficit - Tags:

National has borrowed $37 billion in less than three years and delivered no growth for it. In fact, it has repeatedly failed to meet its growth projections and GDP per capita has fallen. That failure has now resulted in the credit rating agency Fitch downgrading our credit rating. Makes a lie of the Nats’ line that we’re in better shape than in 2008. Will Bill English resign?

Here’s some of what the Nats have been saying about the consequences of a downgrade:

“The No. 1 way to see New Zealanders down the road from their jobs is if their businesses cannot be funded. That is what happens when we have a credit downgrade,” – John Key

“learn something about economics, and then apologise to the New Zealand public for wanting to ensure that their credit rating was downgraded, that they had to pay more for their interest rates, that they could not borrow money, and that their jobs were put at stake. Those members are a credit card” – John Key

“Credit risk premiums for lower-quality debt have increased, and economically sensitive commodities, such as oil, have seen declines in prices, while gold, which is seen as a safe haven, has risen in price. Our markets are increasingly differentiating between the strong and the weak. New Zealand is among those countries that are seen as having strong creditworthiness” – Bill English

“there is no doubt that a credit downgrade would generally lead to somewhat higher interest rates. New Zealand faces that risk not just because of Government debt. In fact, the credit rating agencies would say it is the large private debt, alongside the Government debt, that gives them some concern about New Zealand. We are very conscious of the risks of a downgrade and believe that we are making the right considered choices to deal with those risks.” – Bill English

107 comments on “Nats’ muddling earns credit downgrade”

  1. TEA 1

    Prat English borrowed NZ into a downgrade Key needs to sack him pronto to save his own ratings.

    • just saying 1.1

      I’ve always thought demoting or sacking English is probably a long-identified contingency plan for if the opposition makes any serious inroads in public opinion regarding National’s management skills. English has long been National’s ‘fall-guy’, and many swing-nat voters dislike him, and blame him for problems, and can continue to maintain that Key is coping magnificently, as a result.

  2. We should not be surprised.  This is what happens where the extent of your plans for the economy consist of tax cuts for the wealthy and the construction of a cycleway.

    • Oops I forgot to mention perfecting your smiling and waving.

      • aerobubble 2.1.1

        Labour have overseen the decimation of unions, we can forgive them
        since neo-liberalism stole off with the wealth from cheap high grade
        non-renewable petroluem. National however should be
        held to account to the self-destruction of the financial sector
        leaving the retired and those about to retire with their savings
        decimated and their prospects grim. We can forgive Labour
        they never claimed to ‘represent’ the financial sector, it even despite
        when lousy lazy capitalism was revered by the MSM (and still
        is) yet left no debt on the government books.

    • Bored 2.2

      Quite…where is my cycleway?

  3. Red Rosa 3

    Built up over 9 years under Labour, blown in three under the Nats.

    • Jim Nald 3.1

      Geesoos.

      Look, John Key is not an economic builder but a financial gambler. His currency trading ability is in the same league as casino skills.

      Bill English and mates, quite frankly, do not know what they are doing except enrich their own bank accounts.

      Reject these parasites.

    • Bored 3.2

      Rosa,

      I grant Labour was able to retire debts and was far more prudent…in facdt if they had delivered the imprudent tax cuts Shonkey would be in the wilderness. They were lucky in their timing compared to the Nats, but having said that what Nact did with tax and resultant borrowing equates to jumping into cold water without the life jacket holding a lead weight. Gross stupidity OR perhaps a calculated rort?

  4. Craig Glen Eden 4

    So if this Government was a school you would have to say the National Government has not meet the required Standard and has therefore failed.

    Thats not good enough no excuses. Now we dont want to hear that the child was hungry and had no breakfast (world financial turmoil) we dont want to hear that English is their second language
    ( Christchurch Earth quake) this Governments job and its what we pay them for remember have been entrusted with our Childs ( NZ economy) future. This is a fail and the people who are responsible should be held to account. Its just not good enough we spend millions on this school ( parliament) and on the teachers (Mps) wages we expect and deserve results. These teachers ( MPs Paula Bennett) have have been sent on overseas courses for professional development for crying out loud at the tax payers expense to learn how to be better at their jobs I mean shit they are meant to be qualified already don’t you know.

    Look how long do we have to put up with this every single indictator (poverty levels unemployment job growth) has gone backwards since our child has gone to this school.

    Its time for a different approach because clearly after three years Mr Key (principle) our child (economy) is failing and you didnt tell us infact you said they where doing just fine and they weren’t.

    Fail Fail Fail Fail Fail Fail

  5. ak 5

    Well well well. So our “self-made” economic wizard who couldn’t remember how many tranzrail shares he had and who confidently predicted we’d be “coming aggresively out of recession in 2010” is not quite on target. Ah well, it’s only money and our international reputation. Besides putting our kids on terrorists’ lists forever he hasn’t done too much damage. Yet.

    • Draco T Bastard 5.1

      So our “self-made” economic wizard who couldn’t remember how many tranzrail shares he had…

      He remembered, you can tell that by the way he acts when TVNZ called him on it. He said 50 thousand to try and make his conflict of interest sound insignificant.

      • thejackal 5.1.1

        I would be interested to know how many shares John Key has in The Bank of America? They’re in trouble for hiding details from investors amongst other things:

        A private lawsuit of $50 billion was filed against Bank of America over its acquisition of Merrill Lynch. The charges include hiding details from the investors, including a $15.31 billion loss right during the acquisition, as well as failing to notify their general counsel, Timothy J. Mayopoulos, of the details of the loss. This is clearly not the kind of press they need or, historically speaking, can fight right now.

        Anybody know how we might find out about Key’s investment portfolio?

        • Jum 5.1.1.1

          The Jackal,

          Key, in his Parliamentary disclosure, on entering Parliament had mentioned a $1 million loan to the Bank of America. When I mentioned it somewhere, suggesting he should be helping NZ out not America, the figure disappeared and now it reads something like ‘business dealings with Bank of America’. Could have been coincidence… Knowing how he underplays his shares disclosure in other areas – Transrail it could be higher.

          Not much help, I know.

  6. Ianupnorth 6

    NZ ‘well placed’ despite downgrade according to Bill – how do you add a picture of an ostrich with its head in the sand?

    I await the responses of the RWNJ telling us we are all so wrong and it was Clark and Cullen who are to blame, not their tax cuts.

    • Jim Nald 6.1

      Clark and Cullen built a measure of resilience that Key and English have squandered.

      The past 2.5 years have been bloody wasted.

    • queenstfarmer 6.2

      Clark and Cullen did squander a decade of international growth, but they are not to blame for the international economic turmoil any more than the current Govt, or the Aust Govt, the Obama administratio, etc.

      • Lanthanide 6.2.1

        How did they squander the growth?

        • queenstfarmer 6.2.1.1

          Tax and spend for massive growth of government, and allowing the housing (& housing finance) bubble (and consequently the crash) to occur, both at the expense of the productive sector.

          • Lanthanide 6.2.1.1.1

            If they had tried to implement any sort of capital gains tax to curb the housing bubble, they would have been eviscerated by National, voted out and any legislation they did pass would have been repealed.

            The only reason NZ entered the global recession in a good a state as it did was because Cullen held off on tax cuts for so long. Remember Brash was promising big cuts at the 2005 election – that would’ve eaten up our entire safety net and we’d be even more screwed now (because as we’ve seen, big tax cuts aren’t efficient at stimulating the economy).

            Also I’d suggest that a lot of Labour’s spending policy was WFF, which is essentially a tax-cut aimed at those who most need it – families on low incomes.

            • Jum 6.2.1.1.1.1

              Lanthanide,

              Excellent points.

            • Pascal's bookie 6.2.1.1.1.2

              the other point about Brash’s tax cuts is that we can have a fair idea of what NZ would have done with them. Leverage them into a bigger mortgage. That’s what was happening with kiwis money and Brash’s complaint in 05 was only that the government shouldn’t be running a surplus at all, give the money back so kiwis can invest it.

              End result would have been a bigger bubble, more private debt, more govt debt. Fail parade.

            • queenstfarmer 6.2.1.1.1.3

              The only reason NZ entered the global recession in a good a state … would’ve eaten up our entire safety net…

              There was no “safety net”. Michael Cullen had spent it all – by the time the GFC hit, the cupboard was bare. And the housing & finance sector were collapsing by that time too.

              A near-decade of good international economic conditions had been squandered.

              • Lanthanide

                We got down to a net 0 debt position. That was done by paying back our debts instead of spending the money on tax cuts like Brash wanted.

                Duh.

                • queenstfarmer

                  Then that’s a different story. Paying back debts is a good story, but contrary to what many claim it is not any sort of acheivement (unless you’re Greece).

            • mik e 6.2.1.1.1.4

              QSFLabour had to cancel finance company regulation because of Dunne and Peters backing national saying the industry would be better self managed.Yeah right wing nut Job
              QSF after a decade of slashing the public service capability and replacing those public service people with National party hacks at 2to 3 times the income.Cost nearly $1billion in todays money
              QSF Cullen fund and kiwisaver without that National would have ag greek tragedy on its hands.
              QSF every other major economy we trade with has some sort of govt prop up for us to be pure would be economic suicide.
              ps cheque[blank] out blinglishes ecocomic record debt, record on downgrades, record unemployment 98 99 08 09 10, record people leaving to Australia.Broken just about every bad economic stat worst finance minister of modern times 5 years less than 1% growth.$77billion dollars debt he is racking up .Interest only on that debt has just cost the country another $600 million!

              • Jum

                Mik e,

                Thank you very much for that info. I had wondered why Labour hadn’t been more involved.

                It’s always the little back stories that give the truth of the matter, yet Key and co are using that now to pretend they are tightening up. Bastards.

          • Jum 6.2.1.1.2

            queenstfarmer 6.2.1.1 30 September 2011 at 11:18 am said
            ‘Tax and spend for massive growth of government, and allowing the housing (& housing finance) bubble (and consequently the crash) to occur, both at the expense of the productive sector.’

            So what would NAct have done queenstfarmer?

            Would they have immediately sacked the public service employees so that the unemployment would have shot up, thereby increasing the stress on people – meaning more sickness benefits, still existing since the last NAct government destroyed people’s lives, and because there would have been more people looking for jobs the private sector would have got them for less wages and therefore meant less money sloshing around for the retailing world?

            Or, would all those public service employees have suddenly gone into private business?

            Would NAct have legislated to stop the Australian banks loaning out money to people who could not afford to repay as were the cases I dealt with?

            Would NAct interfere with the freemarket push of low interest, lots of cash and get people hooked on debt? No.

            Did NAct believe then as now that making people unemployed with less cash to keep businesses afloat and giving all the 10%ers more tax cuts to save or spend on their overseas trips OR their new 7 mansions (Key) would really make New Zealand a better place.

            Or, would we have reached the place we are now at AA+ instead of AAA, even earlier?

            PS You forget; the productive sector has been melted down. It is mostly (soon to be completely) owned by foreigners or Fay and Co, (which is the same thing) and even more profits sent offshore.

            What Labour should have done was to force the foreign owners and Fayrotundtablers to replenish businesses in New Zealand, not be allowed to asset strip them – they did improve on that – and for those corporate managers to plough at least 50% back into those businesses, and not allow them to reduce employee numbers beyond a certain limit depending on the machinery safety in factories, the stress factors on all employees, blue collar/white collar. They should never allow any more land to be sold.

            Only new investment should be allowed; keep our valuable assets completely in all New Zealand hands.

            • queenstfarmer 6.2.1.1.2.1

              I suspect they would not have let public spending skyrocket (at the expense of the productive sector).

              • Ianupnorth

                Define ‘the productive sector’? I love that term; we ship everything that is ‘grown’ – milk, wood, produce, meat; we do not add value. You capitalist cronies have allowed most manufacturing to go to China so they can ship it back cheaply and flog it to the masses.

                • queenstfarmer

                  I take it you’re not saying that producing commercially valuable milk, meat, wood isn’t “productive”? NZ actually leads the world (or at worst, is near the forefront) on those things.

                  And there is considerable value added. The “wood value add” is mostly one of Anderton’s favourite myths (as if there’s all this money lying on the table that local businesses just don’t want).

          • Draco T Bastard 6.2.1.1.3

            Government (the people) is the productive sector. The private sector is the dead weight loss that caused this and all other recessions.

          • Blighty 6.2.1.1.4

            “Tax and spend for massive growth of government”

            Govt spending as a % of GDP when Labour entered power 31%. When they left power 31.2%

            Govt spending as a % of GDP today 36.4%

            • queenstfarmer 6.2.1.1.4.1

              Missing the point Blighty. GDP to spending does not measure the growth of government. Major things like the GFC, the collapse of the housing / finance bubble, the Canterbury earthquakes, affect that ratio.

              And in any case, Labour’s election policies will actually increase borrowing (for about 10 years I think).

          • mik e 6.2.1.1.5

            At no greater rate of lending than bolger shifpley govt you idiot QSF BS again infact exactly the same statistics nz. Labour saved heaps more money than national Cullen fund $20 billion Kiwisaver $6billion.bought bankrupt airline bankrupt rail network $5.5billion to fix antiques in Defence force. reduced child poverty not as much as I would like [child poverty up under bational up same during 90s, school achievements up from 14th in oecd to 4th under labour list goes on. Key and Natiuonal have blood on their hands, cat walks more important to the media while getting away with under delivering and under achievement which national have managed to fool even its most ardent and deluded supporters like you QSF look at the facts before you critiscise others!

      • Craig Glen Eden 6.2.2

        But the economic turmoil was with us three years ago and we had the AAA+ rating now we are down graded, whats changed? That would be the Governments handling of our Economy no excuses queeny thats a fail see 4 above. stop your spinning face the truth National are poor economic managers OUR situation has got worse our future is getting dimmer under National not brighter.

        • higherstandard 6.2.2.1

          Apparently no – according to the downgraders.

          It noted that New Zealand had one of the highest levels of household indebtedness among developed countries at 150 per cent of disposable revenue, which hasn’t declined significantly since 2008.

          “Nonetheless, New Zealand remains well placed among the world’s highly rated sovereign credits, with its creditworthiness supported by moderate public indebtedness, fiscal prudence, and strong public institutions,” said Fitch.

          PS I still think Bill English is fucking useless however.

          • Herodotus 6.2.2.1.1

            Sorry HS you should refer to this link. Non govt debt HAS decreased over the last 2.5 years. You are following the Bill English line here, private sector debt reduced by $20B. Same as Lab supporters do re govt debt decreasing under Lab. If you tell youself and others a lie it can become perceived as the truth. BUT it isn’t, it still is a lie.
            http://www.rbnz.govt.nz/statistics/extfin/e3/download.html

        • queenstfarmer 6.2.2.2

          But the economic turmoil was with us three years ago …whats changed

          What’s changed?! I suggest you start by looking up “greece”, “sovereign debt crises”, and “canterbury earthquake” for a start.

          We live in interesting times.

      • Colonial Viper 6.2.3

        but they are not to blame for the international economic turmoil any more than the current Govt, or the Aust Govt, the Obama administratio, etc.

        You must be fucking kidding. Bush, Obama and Brown were the three architects which allowed the GFC Mk I and the upcoming GFC Mk II to occur.

        The US Securities Modernisation Act and the repealing of Glass-Steagal were direct and major contributors to allowing investment banks leverage up the casino financial markets.

        Gawd you Righties know shit

        • Afewknowthetruth 6.2.3.1

          CV,

          Very true. The whole thing is a set up, as explained very clearly in ‘Inside Job’ and ‘Capitalism is the crisis’.

          But it goes back further. Freidman, Rumsfeld, Greenspan etc. pushed for deregualtion of everything in the Clinton years and got what they wanted, Gram-Leach-Bliley, which turned Wall St and the US government into a casino.

        • queenstfarmer 6.2.3.2

          You must be fucking kidding. Bush, Obama and Brown were the three architects

          I didn't mention Bush or Brown. I did mention Obama, and what I said about him is correct. You are simply repeating Republican talking points by blaming Obama for the turmoil (he can be blamed for not fixing it and squandering billions, but that is a separate matter).

          • Colonial Viper 6.2.3.2.1

            Dude what a laugh, despite your earlier assertions, the politicians in co-operation with the banksters ***are absolutely*** to blame for the GFC Mk I and GFC Mk II (upcoming).

            And AFKTT is quite right, this goes back quite a way, when the political leaders decided to stop acting in the interests of the people, and decided to become part of the wealthy bankster corporatocracy instead.

            You are simply repeating Republican talking points by blaming Obama for the turmoil

            Hey they got it half right by blaming the Democrats, and they’d get it full right if they included themselves in the criticism.

            The Democrats and the Republicans are after all, simply the same party representing exactly the same constituents – wealthy corporates and the top 0.1%.

          • Draco T Bastard 6.2.3.2.2

            he can be blamed for not fixing it and squandering billions,

            Capitalism, the fractional reserve banking system and individualism is the problem and can’t be fixed.

          • mik e 6.2.3.2.3

            BS again Bush is the culprit tax cuts for the rich wars in Iraq Afghanistan looking after his banking mates on wall st get your facts right right winger!

      • kriswgtn 6.2.4

        Clark and Cullen aint in power no more you dick- this is about the PRESENT government fuk wot a thicko

        DO you even comprehend the world financial games these money men are doing………………….

        nah didnt think so

        u shud get some professional help re your obsession over the previous government

  7. Sanctuary 7

    National is a one trick pony. Once borrowing for tax cuts for a trickle effect didn’t work, they were clean out of ideas.

    Which leads me to ask. Why are we the last nation on earth to have a finance minister and PM who still believe in that trickle down clap trap?

  8. TEA 8

    Stagflation coming our way . . . . . . . . .

    • Colonial Viper 8.1

      already here mate

      *real* inflation in the US has been running at between 5% and 11% over the last couple of years, even as 46M Americans are on Food Stamps.

      http://www.shadowstats.com/alternate_data/inflation-charts

      • joe90 8.1.1

        Goldman Sachs Sees 40% Risk of ‘Great Stagnation’.

        Investors and consumers across the world are worried that the global economy is heading back into recession, but analysts at Goldman Sachs are warning the risk of a “great stagnation” is bigger than you might think.

        Having analyzed 150 years of macroeconomic data, Goldman has found 20 examples of stagnation similar to those experienced by Japan in the 1990’s, most of which occurred during the last 60 years in developed economies.

        “During these episodes, GDP per capita growth hovers below 1 percent and is less volatile than usual. They are also characterized by low inflation, rising and sticky unemployment, stagnant home prices, and lower stock returns,” Jose Ursua, an economist at Goldman Sachs, said in a research note on Thursday. He predicts a 40 percent chance of stagnation in the world’s developed markets.

  9. AAMC 9

    Stiglitz at the World bank on the 26th

  10. tc 10

    Just like a family business built up by a generation who understood hard work and the value of money, how things worked and leaves the lazy generation with the results.

    The lazy generation with an understanding of casino markets and no callouses or sweat from building up what they inherited aside from whining that mum and dad never did what they wanted as they enjoyed a good education in a safe society.

    So here we have the born to rules squandering the position with no clue or care as to where it ends up……selling out and or broke kids like so many businesses in the hands of neo liberalists.

  11. tsmithfield 11

    The tenor of articles I have read on this site has been that NZ’s sovereign debt is low by international standards and we should be borrowing hand over fist since we have so much head room. Nice to see the back-flips starting now. 🙂

    Anyway, the decrease in the currency that has resulted is a benefit to our exporters at the moment, and manufacturers to the local market who will now be better positioned to compete against the imported competition. Also, since we have our own sovereign currency, the resulting drop means that it is cheaper for us to pay our overseas debts, unlike the likes of Greece who are wedded to the Euro. So its not all bad news.

    • Herodotus 11.1

      Nice spin ts pity we service & repay debt in foreign currency – So our funding costs go up (Just on todays NZ:US we now have increased the debt in NZ$ and servicing by another 2% !!
      And as long as we borrow offshore and have -ve current accounts not much help the depreciating NZ$. Just means that the govt will have to cut services or sell an additional asset or 2. But $7b of nz assets will pay off less debt today. Pity Lab did not pay off any debt as well

      • Lanthanide 11.1.1

        I’m pretty sure the debt is denominated in NZ $. That’s kind of the whole point of having your own sovereign currency.

        • Herodotus 11.1.1.1

          Lan our debt is reported in the papers in NZ$ but is borrowed (I asume in US$) so currency craps out, our servicing and the amount of debt in NZ$ increases $37b today nz dollar devalues 4% $38.5b tomorrow.
          Also NZ private offshore debt has fallen over the last 3 years from $234b 127% of GDP(Dec 08) to $213b June 11 106.4% GDP. The private sector/households are doing their bit to reduce debt, so why the use of mirrows by English it is all morgages to be blamed.
          Where is the media ??
          http://www.rbnz.govt.nz/statistics/extfin/e3/download.html

          • Colonial Viper 11.1.1.1.1

            ) so currency craps out, our servicing and the amount of debt in NZ$ increases $37b today nz dollar devalues 4% $38.5b tomorrow.

            Thanks Fitch for increasing our national debt, exactly as per the bankster occupation playbook.

          • Lanthanide 11.1.1.1.2

            Quite sure you’re wrong.

            What you’re suggesting is this:
            1. Government goes to some lender, lets say an US bank and gets $5M US.
            2. Government takes the $5M US and buys NZ $ with it
            3. Government spends NZ $ on whatever
            4. To make repayments, government buys US $ at the current exchange rate and gives it back to the US bank.

            I think what actually happens is this:
            1. Government has a bond auction where they want to raise $7.5M NZ
            2. American bank buys $7.5M NZ with $5M US
            3. American bank gives the $7.5M NZ to the government in exchange for a bond note
            4. When the bond is due, the government pays the $7.5M NZ + interest back to the American bank.
            5. The American bank can now choose what to do with the $7.5M + interest NZ that they hold, they could give it back to the government, give it to private NZ companies in exchange for ownership of the companies or buy US $ back at whatever the current exchange rate is.

            Can someone confirm which of the two scenarios is closer to what happens in reality?

            • Herodotus 11.1.1.1.2.1

              You maybe correct , I am concluding from the RBNZ stats that has oficial govt debt. Otherwise NZ govt would have no foreign debt??

              • Lanthanide

                I think “foreign debt” just means it’s foreigners who own the bond notes, that’s all. Note that bonds can be bought and sold on the bond market, so whoever originally buys the note (lends the money) may not be the same person that redeems it.

                Japan’s government debt is over 200% of GDP, but it is almost entirely domestic debt, that is money they owe to their own private citizens.

            • tsmithfield 11.1.1.1.2.2

              I think you’re right. I assume that the lending bank would have the nouse to hedge their bond to avoid losing money due to exchange rate fluctuations. If that is the case, then NZ can still gain the benefit of the lower exchange rate on existing debt while the lending bank still has their position protected through their hedge.

      • mik e 11.1.2

        Hero of lies to us Half truth from half brain interest costs why should Labour keep fixing national borrow and hope policies look at reply to QSF

    • Colonial Viper 11.2

      ts you’re pathetic, go back to your pathetic little life* and try and avoid being crushed by the foreign banking cartel.

      *Mirroring your own recent comment about Wall St protestors.

  12. Herodotus 12

    http://en.wikipedia.org/wiki/List_of_countries_by_credit_rating
    Note the link is not updated to take into effect NZ’s efforts of late. But interesting to see the ratings for individual coutries especially as we are now equal with the likes of Japan & Abu Dhabi.
    Pity neither of the major parties can tell us what the solutions are just that “we” are better they “they”. How can we improve when we are paid at best a livable wage with no ability to save ???

  13. Jan 13

    New Zealand National Party – Guilding a Blighted Future

  14. kenny 14

    But someone will do a poll and the Nat’s (and John Key’s) approval ratings will go up.

    Go figure.

  15. Colonial Viper 15

    Key point: Fitch, S&P and Moody’s are all corrupt tools of the bankster cartel.

    They rated toxic fake assets AAA so that the investment banks could unload them on to worker pension funds and make a bundle for themselves.

    The fact that they are rating NZ ***below*** what they rated this toxic financial timebomb shit demonstrates how fucking corrupt and untrustworthy they are.

    English is no financial genius but in this, the credit ratings agencies are once again shown to be the tools of the financial terrorists seeking to undermine sovereign governments.

    • Pete 15.1

      “Key point: Fitch, S&P and Moody’s are all corrupt tools of the bankster cartel.”

      That’s true, but their opinion matters because it will reduce the flow of credit into the economy. The modern capitalist system depends on the availability of credit – funding the startup of new businesses and business expansion into new areas. This is what creates new jobs (it’s a common meme that small businesses are job creators – really it’s new businesses that are). In fact, I would argue that the availability of affordable finance is far more important for the economic well being of the country than whatever the tax rate is. This is one of the areas where the Government has failed. They haven’t fostered an environment conducive to new business (e.g. getting rid of incentives for innovation), they’ve fostered one that caters to businesses that are already established.

      • Colonial Viper 15.1.1

        Come on, you’ve presented a mish-mash of ideas there without identifying a very simple assumption: that private sector growth is going to come along and create the jobs we need as a country, if we simply gave them enough credit (i.e. create enough cheap debt for new businesses to take on).

        That formula is not working any more, have you noticed?

        To make the changes you want and to gain independence from these corrupt ratings agencies, I suggest a very simple step: that the NZ government takes over direct control of the money and credit supply in this country, and cuts the ticket clipping bankster run financial system out of it.

        • Pete 15.1.1.1

          I am Keynesian in my outlook – I’m very keen on counter-cyclical stimulus, but the reality is that we have a government that has decided austerity is the order of the day and at present it has the support of the majority of the voting public. But still, the credit – or stimulus – must come from somewhere.

          This government has been very successful in creating a narrative that any new spending must already been costed – and that’s something the opposition – Labour in particular – has bought into when presenting its policies. But stimulus has to come from somewhere and if government can’t (or, more likely, won’t) provide it, then it can at least create the conditions where people can borrow money to develop private enterprise. The whole effect of the credit crunch was that it restricted the availability of credit. I agree there was a systemic failure there, but I am not perceptive enough to identify a practical and enduring solution to it.

          • Bored 15.1.1.1.1

            I am of the old school lorinorda mold when it comes to financial theft….Sharia Law suffices. Off with their hands, public stoning etc.

          • Draco T Bastard 15.1.1.1.2

            I am Keynesian in my outlook

            Keynes was one of two things:
            1.) An idiot
            2.) A stooge for the capitalists

            As he was actually genius level IQ I suspect he wasn’t an idiot. Although, his actual theory was misrepresented anyway and in such a manner as to entrench the power of the capitalists.

            …then it can at least create the conditions where people can borrow money to develop private enterprise.

            Borrowing money through the Fractional Reserve Banking system always leads to bankruptcy as it always leads to the banksters having all the wealth and everyone else in debt to the banksters due to the banks charging interest on money that they printed with no restraints.

      • Draco T Bastard 15.1.2

        In fact, I would argue that the availability of affordable finance is far more important for the economic well being of the country than whatever the tax rate is.

        It probably is but the most important is the supply of real resources. Without those (people, food for the people, machinery, etc) nothing can happen. We in NZ have those resources but for some strange reason we borrow money from overseas to access them.

        Governments should never have to borrow as they command all of the resources of the country.

    • Kevin Welsh 15.2

      And the rating agencies were very keen to point out during the congressional hearings that the ratings they give are just their OPINION. Nothing more.

    • mik e 15.3

      Key and double dipping recession english borrow and hope sell every thing of that will solve the problem BS . Put FTT and CGT to pay off debt. simple but no. Nact happy to borrow and hope

  16. Afewknowthetruth 16

    The first question is: who rates the credit rating agencies?

    It is wise to remember that credit rating agencies gave AAA ratings to what was shortly afterwards described as ‘toxic sludge’ -CDOs that were untradeable because they were riddled with subprime mortgages that were defaulting. In other words credit ratings agencies have no credibility.

    The second question is: who benefits from the downgrade?

    Almost everything is political these days and is ultimately connected to someone seeking financial gains, so it is wise to follow the money trail and decide who will benefit from this downgrade: money-lenders of course. Higher perceived risk equals higher interest equals more unearned wealth. Money-lenders would be happy to see every nation on the planet equally rated CCC so that they could charge risk premiums on everyone.

    The third question is; what will the long term effect be?

    This downgrade will alter nothing in the grand scheme of things, since the whole global system is engaged in a race to the bottom,.whilst at the same time TPTB are engaged in futile attempts to prop it up -the German politicians voting for further bailouts of the Eurozone being a good example. Creating money out of thin air and shuffling it from one hole in the dam to the next will do nothing to prevent the dam from bursting.

    The whole economic system is founded on wide-ranging fabrications and delusions, the most important being the belief in the infinite availability of resources which are past peak. Under such circumstances, global economic contraction is inevitable (though a few regions of the wolrd might manage some growth at the expense of other regions).

    And, as I have pointed out on many occasions, GDP is a fraudulent system which does not measure genuine progress at all but simply measures the flow of money form one place to another.

    The only sane response to all the nonsense we are told by bankers, politicians and economists is to disengage as much as possible and prepare to the collapse of the present system. After all, every day that passes the present sytem looks more and more like a sieve.

    .

    • Bored 16.1

      The most pertinent questions, well asked.

      The basic thing to note is that the current banking system is basically playing with deckchairs as the Titanic of overwhelming debt sinks down into the icy waters of the irrecoverable abyss. Later the flotsam (and some bloated corpses) will wash up on the shores of reality where astute observers will build fires with it, completing the cycle of thermodynamic dispersal from concentrated to diffuse energy.

  17. Tom Gould 17

    Turns out the other spin line, that people are paying down debt due to the tax switch, is also a big fat lie. Yet the MSM just sigh, and run the next batch of spin, to get their Tory masters re-elected.

  18. Jum 18

    http://www.stuff.co.nz/business/market-data/5708841/New-Zealands-credit-rating-lowered

    Bill English travelled to America recently.

    Now our credit rating has been lowered.

  19. Jum 19

    I think we need to accept now that Key is pleased we have had the downgrade; it allows him now to sell off our assets and people will be silenced.

    Key’s plan is working; unfortunately it was never about helping New Zealand. It was only ever about helping Key and his backers.

    • Draco T Bastard 19.1

      Key’s plan is working; unfortunately it was never about helping New Zealand. It was only ever about helping Key and his backers.

      Bingo!

      Key coming to NZ and becoming it’s PM was a serious downgrade from his previous life and so he must have had a reason to do so and it can’t have been to better NZ.

  20. andy (the other one) 20

    Hot on the heels of rival Fitch Ratings’ downgrade of New Zealand’s sovereign credit rating, Standard & Poor’s has followed suit

    Meanwhile John Key is hosting an hour of talkback (today 2-3pm ) on Radio Live. That 40million loan is sure paying dividends.

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10755588

  21. erentz 21

    Do these agencies consider the timing of their announcements? Or do they announce on a regular schedule or something? It just seems to be great timing in the middle of an election.

    • thejackal 21.1

      Yeah nah! I don’t think they specifically announce these things to try and damage a political party.

      Thankfully National doesn’t control when this happens, unlike the census, which they’ve put off until well after the election… because it would show National is failing New Zealand on a large scale.

      Interesting that statistics NZ hasn’t updated much information lately either. Ignorance is bliss I suppose.

  22. tsmithfield 22

    It is being reported on the radio that the credit rating agencies are downgrading NZ largely due to the effect the ChCh earthquake is having on the government’s fiscal position.

    Given that Labour plans to spend more on the ChCh earthquake thus worsening NZs financial position further in the eyes of the rating agencies. Does that mean if Labour wins the election we will get downgraded further?

    • Lanthanide 22.1

      It means National shouldn’t have given the tax cuts they did because they weren’t affordable then, and especially not now, and if they hadn’t then we could have withstood the earthquakes without the downgrade.

      Thanks for trying to divert attention, though.

      • tsmithfield 22.1.1

        I disagree. As has been pointed out by commentators here on a number of occasions, our problem is more to do with private debt rather than Government debt. Private debt which is much higher as a percentage of GDP. Therefore, by giving tax cuts the government is helping people pay down their private debt, right at the moment when interest rates are extremely low, so they have the best opportunity to do so.

        • Jum 22.1.1.1

          tsmithfield,

          Yet another comment from tsmithfield inside fantasy castle. The only people with enough money from tax cuts are those who don’t need to worry about debt.

          Those people wanting the average objects of modern life that they were manipulated to want by the greedy corporates because they ‘were worth it’ are the very ones that are either now out of work or have borrowed money to pay overpriced mortgages or televisions, fridges, ovens – that sort of 21stC need.

          They certainly never got the $50 per week tax cut that Key promised before the 2008 election.

          Kiwis woz had by Key.

          I do love hearing English telling Parliament how much better the AFTER-TAX wage is. He never mentions the GST increasing all prices and negating that AFTER-TAX extra. He never mentions that wages are actually stuck at $13 and NAct had stopped the incremental increases Labour was making on a regular basis and would have been about $15 by now under a Labour government.

          Not to mention those same people would have been spending that extra money in New Zealand.

          Nothing like blaming debt on people who want to have a comfortable lifestyle on the fucking pittance most of them get now thanks to Key and his ‘we’d love to see wages drop’ slime, when we all know the billions that are paid out to advertising agencies and types like crosby/textor who manipulate the gullible and trusting public.

          Greedy corporates would never pay billions for advertising if it wasn’t working. Not only should there be a financial tax on financial transactions by moneytrading nil-value conmen, but there should also be a tax on every $ spent on family-destroying advertising by greedy corporates.

        • mik e 22.1.1.2

          tsm no they have just consumed and borrowed more thats the top 5% that have benefited the rest of us are doing it hard and I bet your not in the top 5%.Otherwise you would have better things to do than tell BS on a left wing blog

  23. Richard 23

    I wonder if we could get an interview with Obama to talk about his pets…. /facepalm

  24. Why don’t people focus on WHERE public monies are being spent at central and local government level?

    This comment was published – then vanished from the NBR…………….

    I wonder why?

    “Open the books!

    How much money at central and local government level is being spent on ‘corporate welfare’?

    Where are the publicly available central ‘Registers of Contracts’ at local and central government level?

    Where is the ‘devilish detail’?

    Where are the names of the consultants/contractors – scope, term and value of private sector contracts which are paid for by public monies (rates and taxes) at both central and local government?

    Why aren’t these private sector contracting details published in the Annual Reports of both local and central government ‘Public Benefit Entities’ and ‘Profit Oriented Entities’ – so that they are available for public scrutiny?

    Where is the ‘cost-benefit’ analysis in NZ which proves that the ‘public is bad – private is good’ neo-liberal mantra is actually true?

    First-time ever research carried out by POGO (Project on Government Oversight) in the USA at Federal Government level has produced some startling and shocking results
    – the private sector ‘contractocracy’ costs twice as much as the public service ‘bureaucracy’!

    http://www.pogo.org/pogo-files/reports/contract…/co-gp-20110913.html

    “USA Project On Government Oversight (POGO)[1] decided to take on the task of doing what others have not—comparing total annual compensation for federal and private sector employees with federal contractor billing rates in order to determine whether the current costs of federal service contracting serves the public interest.

    Executive Summary

    Based on the current public debate regarding the salary comparisons of federal and private sector employees, the Project On Government Oversight (POGO)[1] decided to take on the task of doing what others have not—comparing total annual compensation for federal and private sector employees with federal contractor billing rates in order to determine whether the current costs of federal service contracting serves the public interest.

    The current debate over pay differentials largely relies on the theory that the government pays private sector compensation rates when it outsources services. This report proves otherwise: in fact, it shows that the government actually pays service contractors at rates far exceeding the cost of employing federal employees to perform comparable functions.

    POGO’s study analyzed the total compensation paid to federal and private sector employees, and annual billing rates for contractor employees across 35 occupational classifications covering over 550 service activities. Our findings were shocking—POGO estimates the government pays billions more annually in taxpayer dollars to hire contractors than it would to hire federal employees to perform comparable services. Specifically, POGO’s study shows that the federal government approves service contract billing rates—deemed fair and reasonable—that pay contractors 1.83 times more than the government pays federal employees in total compensation, and more than 2 times the total compensation paid in the private sector for comparable services.”

    Where’s the New Zealand version of POGO for both central and local government?

    Penny Bright

    ‘Independent Public Watchdog’
    Candidate for Epsom.

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