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Open mike 19/10/2010

Written By: - Date published: 6:00 am, October 19th, 2010 - 50 comments
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50 comments on “Open mike 19/10/2010 ”

  1. RedLogix 1

    What we are facing.

    Still, as political pressure builds to reduce federal spending and budget deficits, other economists are now warning of “Japanification” — of falling into the same deflationary trap of collapsed demand that occurs when consumers refuse to consume, corporations hold back on investments and banks sit on cash. It becomes a vicious, self-reinforcing cycle: as prices fall further and jobs disappear, consumers tighten their purse strings even more and companies cut back on spending and delay expansion plans.

    “The U.S., the U.K., Spain, Ireland, they all are going through what Japan went through a decade or so ago,” said Richard Koo, chief economist at Nomura Securities who recently wrote a book about Japan’s lessons for the world. “Millions of individuals and companies see their balance sheets going underwater, so they are using their cash to pay down debt instead of borrowing and spending.”

    Just as inflation scarred a generation of Americans, deflation has left a deep imprint on the Japanese, breeding generational tensions and a culture of pessimism, fatalism and reduced expectations. While Japan remains in many ways a prosperous society, it faces an increasingly grim situation, particularly outside the relative economic vibrancy of Tokyo, and its situation provides a possible glimpse into the future for the United States and Europe, should the most dire forecasts come to pass.

    Deflation is not just economics, it’s changes everything and Labour need to understand this.

    • lprent 1.1

      I could see the same traits in my family in the generations who went through the depression in the 30s (and a few world wars) – my grandparents and great grandparents. They would hunker down and don’t spend when times get tougher.

      I grew up during the inflationary period, where the trait was more to spend before it devalued. I think that deflation looks a lot worse for societies.

      Bill English crowing about a recession nearly putting us into a deflationary spiral is a triumph of PR bullshit over commonsense. You don’t want to get into either extreme. You certainly don’t want to have a inflation that is low one quarter and really high the next, that is the worst of all worlds.

      • Colonial Viper 1.1.1

        The situation which is the killer is where a business is in a high level of debt at high interest rates. Then deflation hits, meaning that whatever industry they are in, they can only get less $ per unit of work done.

        So even as their interest bearing debt climbs and climbs numerically, they get less and less money in the door.

        End result: business goes under, the banks take everything (the banks never lose in this game that they set up) and a dozen people lose their livelihoods. Repeat a couple of thousand times and you have the Great Depression.

        • KJT 1.1.1.1

          One more reason why banking should be done by the community.
          Have a look at North Dakota and their State Bank. No coincidence they are coming out of the recession better off than other similar US states.

          When Goff is talking about monopolies he should look at the world wide criminal cartel that is private banks.

          • Draco T Bastard 1.1.1.1.1

            When Goff is talking about monopolies he should look at the world wide criminal cartel that is private banks.

            We wish. Although, with more and more information about how banks actually work and the fact that they’re a Ponzi Scheme becoming more widely known it shouldn’t be too long before our politicians can get rid of them. Of course, that doesn’t help us now.

    • Draco T Bastard 1.2

      What caused the Japanese economy to stall?

      I think you’ll find that as other Asian nations did the same as Japan the need for the massive productivity of Japan was lost. There was only so much demand and it was already catered for. As competition increased to the point of over supply (Well, over supply for the rich nations) demand decreased pushing down prices and profits in Japan as the hunt for higher profits from around the world shifted massive amounts of technology into other, cheaper nations. We got “growth” that benefited the few but at the expense of entire countries.

      There’s a reason why I say that every country should be producing what it needs and no more. Modern production is so productive that one nation can supply far more than itself leaving others to fight to bring in technology and businesses by cutting taxes, cutting environmental protections and generally asking their general populace to pay for the rich to become richer. It’s a fight that always ends in defeat.

      As I’ve said before, higher productivity when all else remains the same must result in deflation. Deflation isn’t bad as, in real terms, what it would mean is that people have more time to be with their families, to learn, research, to develop and to be engaged with the rest of society. It’s only “bad” when the sole purpose of life is to make more profit because that reduces everyone’s living standard except that of the rich.

      • ZeeBop 1.2.1

        Worse. As companies needed to throw out good designs to produce cheap crap, replacement selling, and so stimulate consumerism justifying the credit card culture, the sense that financial changes were producing wealth when in fact the middle east oil gult kept forcing governments to loosen finance.

        Its the classic gold rush! Gold is found, everyone rushes to the gold field, they make lots of mess and leave some disused old town behind after the gold dries up. This is peak oil, a gold rush on a worldwide scale.

        Find a nice place to live and hunker down it ain’t going to get better until the last nuggets force every last gold miner to give up their shirts finding.

        The Great Depression was cause by a growing energy glut, between two great wars.
        This one is nothing like that one.
        We’re be shrinking not growing through this one.

  2. Pascal's bookie 2

    Ask a tea party candidate for the senate questions: Get handcuffed by his hired goons

    But these guys are not a bunch of third rate dropouts from the shallow end of Thuggis Neanderthalis’ gene pool, so stop saying that.

    • Bored 2.1

      PB, read Kunstler this morning, it features his usual hilarious prose, have a laugh at this line…I can easily see functional limitations on something like the old dictatorship of the proletariat – especially when said proletariat has been reduced in this country to some kind of a lumpen slobeteriat of methadrine-addled, tattooed psychopaths with axes to grind.

    • Draco T Bastard 2.2

      Oh dear, politicians avoiding the media and aggressively avoiding being asked any questions. Yep, another nail in the coffin for democracy in the US (which also says something about the PM avoiding the media and questions here).

      • ianmac 2.2.1

        Pretty scary stuff joe. It still puzzles me that our PM avoids serious questioning. On one hand he says it is important for him to be with and amongst all people, (like a pop star/celebrity.) We might say he needs to respond at a much more serious level, or would the bubble burst if he did front up.

        • Draco T Bastard 2.2.1.1

          If he actually fronted up and answered serious questions the lies that NACT have been using for the last decade (Nanny State, democracy under attack, tax cuts cause growth, etc) would be revealed.

  3. National MP Tau Henare is all class.

    He bullies 18 year old union activist James Sleep.

    And I thought things were going to be different under Key?
    .

    • Scott 3.1

      They are different. Worse is different.

    • Crashcart 3.2

      Probably thought that he had found someone who wouldn’t just punch him if he went on the attack. Must rankle being famous for getting a bash from old Ducky.

    • Draco T Bastard 3.3

      More denial of reality from a NACT MP. What a surprise.

    • Lanthanide 3.4

      Reading the story, it seems that Tau was following a copy of what the guy was reading out, and says that what he was reading was different to what was written.

      To jump up and calling someone “a liar” over something like that is really the wrong way to go around it. More appropriate would be to interrupt and ask why what was read doesn’t match what was written in his copy – who knows, maybe he accidentally got a draft copy that didn’t match the final.

    • millsy 3.5

      Absolutely digusting.

      Little wonder Trevor Mallard decked him that time.

  4. Fisiani 4

    If you want a reality check on the latest populist burp re land sales read the following
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10681447

    • Draco T Bastard 4.1

      So, according to Gareth Morgan nobody actually wants the products we produce, they only want our land. Ok, we sell them anything then. It really won’t hurt us.

      Ban foreigners from buying our assets, though, and there certainly will be a sharp shock to the system.

      If foreigners can’t use New Zealand dollars to buy New Zealand assets why would they be willing to hold New Zealand dollars?

      He even answers his own question and doesn’t see it. Yes, the NZ$ will decline in value. Which would, if present economic theory has any basis in fact, decrease our imports and decrease our exports. But, of course, present economic theory is complete bollocks because the NZ$ is presently held high, not due to our productivity, but due to the delusionally high interest rates.

      Basically, what he’s saying is that Labour’s policy to strengthen policies for land sales to foreign owners will do more to rebalance the economy than any of NACTs tax cuts.

      If your creditors run out of patience with your indebtedness or doubt your ability to keep servicing it, they will insist on you selling some assets – they just won’t hold your IOUs ad infinitum with no prospect of them being convertible to real assets.

      They can insist all they like – we still don’t have to sell.

      • Draco T Bastard 4.1.1

        , decrease our imports and decrease our exports.

        Which is, of course, supposed to read
        , decrease our imports and increase our exports.

    • freedom 4.2

      so basically they are advocating selling the horse to pay the Farrier

    • KJT 4.3

      Self interested bollocks more like.

      The NZ dollar going down to reflect our real balance of trade is probably the best thing that could happen.

      Our industry is dying because of the double whammy of artificially high interest rates and an artificially high dollar because of speculation encouraged by the reserve bank act.

  5. j 5

    http://bowalleyroad.blogspot.com/

    Anyone like me who is still trying to digest what they’ve heard about the Labour party conference, and the apparent left-hand turn the party has taken, might find Chris Trotter’s take on it interesting.

    Like me, the words: “A place at the table for every New Zealander” moved him. You guys can laugh but it actually brought a tear to my eye because, if that has finally become what Labour’s about again, there’s reason for a lot more hope for our future together.

    I’m further left and more libertarian than the Labour Party is, but if Labour is back with us on the left, it feels like there is a lot more space for positive possibilities.

    • just saying 5.1

      Not trying to disown the above with a different handle, that just happens sometimes because I let my compupter fill in the rest of the wording beyond the first letters.

  6. Draco T Bastard 6

    Did you know we’re in a recession?

    This stuff isn’t National’s fault. There was a global recession. People lose their jobs, income takes a hit, consumption slows down. It’s what happens. But all this stuff about how we’ve suddenly become better off because it’s a National government is just a lie. Nothing magically happened when John Key took office.

    Keith Ng pointing out Blinglish’s latest lies.

  7. Lanthanide 7

    Geonet reports this 11:32am quake as 5.0, but it definitely felt a lot stronger than that. I dropped to the floor under my desk at work (hitting my head in the process), and the monitor fell off it’s stand and broke my keyboard.

    • Lanthanide 7.1

      Also another site that takes feeds from Geonet shows it as being 5.02, and 10th largest tied equally with one last Wednesday at 4:42pm. That one didn’t shake anywhere near as much as this one did. Possibly a different type of movement to blame (upthrust?). Also some of the shaking sensors on the main page of geonet show it as being 7, which I haven’t seen since the first quake (they routinely show up 4-5M quakes as being 6).

      • gingercrush 7.1.1

        That one was scary. Its because the quake was just 10km from Christchurch and at a depth of 9 km that makes the quake seem more severe. Add to that the length of the shake and OMG just scary. I love how they say the jolts are slowly disappear which is probably true but when we do get them they seem to be overly big jolts.

        • Lanthanide 7.1.1.1

          The quake last Wednesday was about the same distance, although in a different direction, and just slightly deeper (13km vs 9km). So distance and depth does not account for 100% of the very obvious difference in shaking.

          Also, I actually found the length of the shaking to be shorter than some of the others we have had. Then again I was hiding under my desk, which I haven’t done for any others.

    • Vicky32 7.2

      Oh, I am so nervous for you guys! (Selfishly glad not to be in Christchurch…) You must be well sick of it by now!
      Deb

  8. Colonial Viper 8

    Have just had the most depressing conversation with a final year commerce (honours) student. She is a NZ’er and leaving NZ to work in China at the end of the year. Out of the 8-10 students in her class whom she is closest to, she says that the majority will be leaving NZ at the end of this year to go work overseas.

    Reason: no opportunities in NZ, successive Governments uninterested in addressing the issues needed to keep young talent onshore, a declining low wage uninteresting economy, and Asia clearly the world economic hub of the 21st century.

    Qualified, educated young New Zealanders are talking themselves and their own peer group into leaving NZ, and doing so very effectively. Not for 6 month OE’s, but long term, for careers.

    This is what Bernard Hickey referred to at Labour Conference when he said that NZ has got to pull itself out of its dive, and has to do it with what is already a hollowed out workforce.

    • Draco T Bastard 8.1

      That doesn’t surprise me. The neo-liberal paradigm that we’ve been following for the last three decades has hollowed out the economy removing large amounts of interesting work. Industry has gone offshore to be replaced by farming (which requires less and less people) and most people don’t want to be farmers. NACT are making it worse with their cut and spend policies – why the hell would young people stay here when they know damn well that NACT are putting the entire bill on them?

      I’ve also decided that if NACT are voted back in next year I’m outa here as well. No point hanging round to get shafted even more.

  9. Carol 9

    Whoa! The Speaker is cross, and just said he hasn’t been at all happy with Question Time today. He said it had been a shambles and had been unproductive. He had threatened to throw Goff out of the chamber earlier. Just now he was threatening to throw ministers out, for not stopping talking when the speaker stood, and for using “patsy” questions to attack the opposition.

    So are Nat Ministers getting rattled by Labour’s strong change of direction at the weekend?

    • Colonial Viper 9.1

      Yeah I just heard the mp3 report off the parliamentary website, Dr Smith was highly unimpressed.

  10. BLiP 10

    As Anne Tolley goes about her job as sales executive and fund raiser for New Zealand private schools comes this news:

    Conservative estimates were that New Zealand stood to get over 300 students a year in fully-funded scholarships worth up to $30m, she said.

    Is this yet another example of the mathematics skills of our Minister of Education, or do some private schools actually charge up to $100,000 per student per year? I know Kings College charges less than half of that for a boarder.

    • Draco T Bastard 10.1

      She could be talking about total income , i.e. school fees + accom + other expenses. Still seems a little high but then people who send their kids away to another country for an education probably pay a premium to do so.

    • comedy 10.2

      secondary and tertiary………… fully loaded tertiary costs plus accomodation etc would get upwards of 100k per annum pretty fast.

      As as for the bomb making course well the sky’s the limit.

  11. ak 11

    Granny now (sorry too rushed to do linky thingy): “Labour said access had to be free and iwi should not be singled out.”

    Say what – did I miss something? Free access to all takutai moana from Labour? (as first proposed right here, ladies and gentlemen, on your very own Standard)

    I sincerely hope so. Absolute game-breaker.

  12. freedom 12

    a small item that some may not have seen today regarding the new Prison Uniforms
    “They are blue – to match other uniforms in the justice sector such as police.”

    in case everyone has forgotten, the uniforms were olive to make the clear distinction of Prison Officers from Police,

    this distinction is particularly important in court

  13. NickS 13

    Link Dump Time!

    Could Busting Unions Fix America’s Schools?
    – I do heart it when smart people say really dumb, evidence free things. Especially when it comes to education in the guise of “helping students”.

    What I Think About Atlas Shrugged
    – Epic trolling of Rand-bots is Epic. Or for teh lazy, Objectivism = Nerd Revenge Porn. Sociopathic Nerd Revenge Porn. And Rand was a hack writer.

    Sheepskin
    A post from one Charles Stross on the History of Education in the UK and it’s commercialisation and change it a “must have” instead of something you did to gain a useful specialisation or get into research. The historiography isn’t quite on the mark (Medieval Uni’s did teach more than Divinity…), but it is rather thought provoking.

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