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Open mike 31/08/2010

Written By: - Date published: 6:00 am, August 31st, 2010 - 25 comments
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25 comments on “Open mike 31/08/2010 ”

  1. Jenny 1

    While National MPs claim there is no money to pay teachers or doctors. The government prepares to hand over up to half a billion dollars to private investors who bet on a lemon.

    The lie is, that this must be done for the good of the economy.

    It didn’t make any difference in the US and it won’t make any difference here.

    Sinking deeper and deeper into recession, the American example shows that the idea that private sector bailouts are good for the economy is pure unadulterated bull. The only ones to benefit from public bailouts of private investment companies and bad banks, were private investment companies and bad banks and their overpaid managers and fat cat shareholders.

    The US government and the country at large were impoverished by multi- billion dollar the bailouts of bad banks and investment companies.

    While wealthy investors were looked after, tens of thousands of average Americans who had their jobs and homes taken from them, due to the malfeasance of these same finance companies and bad banks, were shown no such largesse.

    Why can’t New Zealand learn from what has what happened overseas?

    The truth is that saving the economy is not what private sector bail outs are all about.

    Taking care of the well off, at the expense of everyone and everything else, including the economy, is what it, is all about.

    Liam Dann the Herald’s business editor, describes how the National government has deemed Alan Hubbard’s “Bad Bank” as a New Zealand’s version of “too big to fail”.

    Liam Dann on Hubbard:

    Put the probe into his personal financial entities to one side. The real story is South Canterbury Finance – the $900 million liability hanging around the taxpayer’s neck…..
    Hubbard lost control of that company earlier this year after it had breached its trust deed. He was removed from the board and given the sentimental title of President for Life.

    By that point the Government had already effectively decided the company was too big to fail.


    The bad loan “bank” is up to its neck in $600 to $700 million of debt on assets that may yield as little as half of that when they are realised.

    When it is euphemistically said that South Canterbury failed to “stick to its knitting” it is the bad bank that people are talking about.

    For working people suffering the pain of minimum wages barely enough to pay the rent, stalked by the fear of unemployment, without the luxury of spare savings to invest in high finance. It’s a bitter irony that wealthy and middle class investors, should have their speculative losses made up, by a government that viciously opposed raising the minimum wage.
    What do these people know about hardship?

    While the government continues to do nothing about joblessness and low wages, the question is, how many more millions of dollars will they uselessly throw investors way, as the recession deepens and more finance companies go under?

    • Bored 1.1

      Jenny, in the current paradigm what you say makes perfect sense BUT the world is changing. The recession you mention is different to the previous ones because we have had “growth” to raise the bar and cure all ills. To date this has worked but no longer as it has been based upon the availability of vastly underpriced energy.

      We have reached a tipping point here, energy and resource demand will from now on exceed supply. The implication is that the money required to pay for increases in salaries is going to be in higher contention. Its now a fight over a shrinking wad of cash. Real wages and real living standards will fall, our principle question is how we allocate the distribution of less.

      Unfortunately National MPs are correct when they say there is no money to spend on pay rises, its already been allocated to tax cuts for the rich, and the tax take is failing to meet demands. The marginalised and jobless cannot hope for support from this quarter, but they wont see much hope from the traditional left (Labour) either which purports to represent the interests of “middle” NZ. The unfortunate reality is that nobody in our major institutions are prepared to call it as it is, and state that the standards of living are going to fall, and then try to assign the decline equitably. Expect trouble as reality comes home to bite.

      • Lanthanide 1.1.1

        “We have reached a tipping point here, energy and resource demand will from now on exceed supply.”
        This has not yet happened, although it may be as close as 12-18 months away, or more likely 2-3 years, or possibly even 5+ years.

        • Bored

          I suggest you have a read of some less MSM orientated sites, start with http://energybulletin.net/ . We have reached peak in many places, oil in particular, interestingly the US Dept of Defense picked up on this very early. The US Geological Survey also saw this. When I see responses of your nature it reminds me of CCDs, the dates for particulars dont matter as much as the trends. A closer examination might frighten you, be brave.

          • Lanthanide

            I’ve been reading energy bulletin, peakoil.com and the oil drum for the last 3 years, thanks.

            There is no definitive proof that we have peaked.

    • Lanthanide 1.2

      Jenny, as part of the government guarantee, the companies seeking it had to pay some money back to the government. To date the government has come out ahead, but now the money will have to be paid back out for SCF. Exactly what proportion of the $900m fund available is from tax and what is from the banks hasn’t yet been made widely known, although Radio NZ said this morning that they will probably follow up on that today.

      So, don’t think that the full $900m fund is coming straight from tax payers and therefore could’ve been used for other purposes, because it isn’t.

      • Draco T Bastard 1.2.1

        So, what you’re saying is that there was $900m sitting there and the psychopaths managed to find a way (with help from the psychopaths in government) of getting their hands on it?

  2. KJT 2

    The private sector have proven to be totally inept at running financial institutions.

    • Draco T Bastard 2.1

      The private sector have proven themselves inept at running anything. The profit motive ensures that anything they touch will collapse.

      • BLiP 2.1.1

        True – but you gotta admit, some in the private sector have been doing very well out of all this.

      • KJT 2.1.2

        Don’t agree totally. Markets and private sector capitalism work well on a micro-economic scale. The problem is when the market model is applied to things which become natural monopolies or one sector is allowed to capture all the profit.

        • Bored

          I reckon the private sector are bloody good at capturing the wealth, even if it causes cyclical collapse…you dont see the Bernankes of the world suffering during “market corrections”, its all salted away nice and safe. Its the people who suffer, which is why the profit motive is both beneficial and bloody destructive. We wont ever get rid of “markets” and “trade”, what is really necessary is a realistaion that they are not the central “raison d’etre”, they should be made to serve.

        • Draco T Bastard

          It doesn’t work on a micro-economic scale either and for the same reasons
          1.) Profit is a dead weight loss (it actually removes wealth from the economy)
          2.) Individuals don’t have enough information to make a rational decision.

          Result is an economy that slowly comes to a complete stop as all the wealth is concentrated into the hands of the few and the decisions made by the market are irrational (i.e. all the worst decisions have been made).

          • Bored

            Some really fascinating numbers from the New York Times today…..the DOW has now declined to about a 4 % gain for the year which means that the bail out money from last year has frittered away and the post crash low is fast approaching. Consumer deposit rates for 6 months are sub .75% which means that money in the bank is getting nothing for depositors…mortgage rates have dropped 1.5 % or so over a year and demand is low as properties are not selling even at base level prices…oil is hovering between $75 and $80US indicating a balanced supply and demand…the amount pumped has declined since the high of 2008. Gold has gone up 27% for the year reflecting uncertainty in cash markets, corn is again increasing rapidly to the high of last year as Russia puts a hold on exports post the fires.

            As the Chinese say, we are living in interesting times.

  3. joe90 3

    A bloke with the patience of a saint interviews attendees at the Beck hatefest, watch it if you can stomach the stupid.

    edit, and the cash register is ringing already.

  4. joe90 5

    Have a look around for a site called ‘the woodpile report’ KJT,
    I’m certainly not going to provide a link but find the site and have a read and you’ll see what’s wrong.with that part of the world.
    Hint, a black man in the house.

  5. RedLogix 6

    Kathryn Ryan interviewing Joe Bageant. He’s been referenced a few times here before. Currently in Aussie, and is due at a ChCh Writer’s Conference next week.

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