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Small mocks sunnyside Key

Written By: - Date published: 12:19 pm, September 27th, 2011 - 28 comments
Categories: Economy, john key - Tags:

If New Zealand’s economy could be powered by empty promises and pollyanna-ish optimism, then John Key would have the best economic record in the country’s history. Actually, he has one of the worst. Vernon Small today mocks Key’s unwillingness to put a downer on the RWC vibe by confronting the emerging global crisis.

His deputy Bill English will return from the International Monetary Fund today with tales of debt woes, double-dip recessions and fears the global slowdown will peg back our key export markets in Asia. But yesterday the prime minister was looking on the bright side of life:

Our country sits close to some very strong economies. The chances of Greece defaulting on its debt are “better than 50 per cent”. (As in, higher than 50 per cent? Or worse than 50 per cent? Some even say 90 per cent, or inevitable. But that is not the Key way.)

A double-dip recession? Unlikely. And there is no reason to resile from plans for a Budget surplus by 2014-15.

The worst news was that the pesky crisis had killed his weasel-cunning plan to return to surplus even earlier. In Keyland even when things get gloomier, they don’t get worse; they just stop things getting better.

So there will be no cuts to programmes, no spike in taxes, no stimulus package, no plans for U-turns if countries default. Just a can-do PM who will “roll with the punches”, stay optimistic about Asia and trust that investors will be “discerning” (unlike in 2008) between good and bad companies, good and bad countries.

You would think that with a better-than-even chance of Greece defaulting he would be twisting advisers’ arms to forecast its impact, and prepare contingency plans. Not yet, it seems.

Why would you need to be forecasting and preparing for the downside when downsides are impossible, eh Mr Key? As long as China keeps growing…. oops:

As the American economy appears to teeter on the edge of another recession, Europe struggles with a financial crisis and emerging markets like Brazil and India show new weaknesses, China may appear to be in better shape than most countries, economists say. But “better” is relative.

On the surface, economists at the International Monetary Fund and most banks are still estimating China’s growth rate to be over 9 percent this year. China continues to run very large trade surpluses. New construction starts have soared with a government campaign to provide more affordable housing.

And yet, the country’s huge manufacturing sector is starting to slow and orders are weakening, especially for exports. The real estate bubble is starting to spring leaks, even as inflation remains stubbornly high for consumers — despite a series of interest rate increases and ever-tighter limits on bank lending.

Because China’s mighty growth engine has been one of the few drivers of the global economy since the financial crisis of 2008, signs of deceleration could add to worries about the global outlook.

28 comments on “Small mocks sunnyside Key ”

  1. randal 1

    So where are the jobs then? Key boosted himself as the magnate and mogul that would transform New Zealand but all he has done is run this piddling little sideshow. What a bringdown.

  2. tc 2

    watch that spin drx, rcycling Rick took a bunch of gov’t money to create ‘new’ jobs at EDS (before slinging his hook back to TVNZ)…..whilst about the same/more were being shed out the back door….Nett jobs is the key measure.

  3. freedom 3

    On a related matter. The Stuff story which was posted at 05:00 has not had a single comment posted.

    Anyone else find this hard to believe?

    • I’d see it as total disbelief, and folk simply can’t be bothered to comment. Much like ACT-related news stories. They atrtract bugger-all respondses. People just don’t care.

      It’s a curious response to Key’s “smile & wave” brand of populism…

    • Deadly_NZ 3.2

      Well at 2:18 am on the 28th there are only 6 comments. And 2 of them were from Frank Macskay. Now tell me that no one else cares. And my comment had vanished into a big black censorship hole.

  4. Richard 5

    i commented on it freedom… who knows if it will be published

  5. Colonial Viper 6

    The American economy “teetering on the edge of another recession”?

    Pull the next one. The last two years have been a very slight plateau from the nose dive, but for most ordinary American workers and families there hasn’t even been any levelling off. Only Wall St has benefitted, and they only from the massive free cash injections from the Fed.

    This is the same recession as 2008, writ large.

    • Draco T Bastard 6.1

      Yep, The Great Depression didn’t start in 1929, that was just when the stock market initially crashed causing a fairly major recession. Governments around the globe went for austerity and plunged the entire worlds economy into a depression in about ’32/’33. It was the build up to war and the war itself that pulled the world, especially the US which hadn’t been bombed back into the stone age, back out of it. This time, although there will be war, we won’t be coming out of the “depression” as there just won’t be the available resources to support the necessary growth to pay for the banksters fractional reserve banking system.

      • Afewknowthetruth 6.1.1


        Slight correction. Not the entire world, just those economies closely linked to western banking sytems (or their intended victims) were dragged down by the Wall St Crash. Germany prospered through the mid-30s, partly because Americans banks and corporations were investing there instead of at home. Japan was ‘extremely busy; in the mid-30s.

        I do agree entirely that we are witnessing the beginning of the end. There will be no recovery OF the globalised economic system, just a partial revovery FROM the globalised economic system (depending on how much environmental destruction occurs over the next few years). The cheap and abundant resources necessary for the function have mosty been consumed. Corporations are now scraping the bottom of the barrel in desperate attempts to maintain BAU.


  6. randal 7

    frank mac. I feel like I have been juxtaposed too. everybody is saying that. so just how do juxtapose 45,000 jobs against rising unemployment. The red queen is still on a mushroom binge methinks.

  7. Rich 8

    [China’s] huge manufacturing sector is starting to slow and orders are weakening, especially for exports

    Well yeah. They’ve already got a very high market share in almost everything they make. It’s hard to see where any growth is going to come from, especially as their customers are having their spending power reduced.

    (which is why China would never dream of stopping lending to the West. They have to if they want to keep their factories busy and workers docile).

    Half of the Chinese workforce are still farmers. Their ability to grow their middle class is limited by the consumption of their export customers. You’ve got stories of riots and ghost cities.

    If China crashes, there’s likely to be huge political instability (for the third time in the last 60 years) – they’ll likely turn inward and commodity demands will drop substantially. Which, apart from anything else, isn’t going to be good for our “rock-solid” Aussie banks.

  8. John D 9

    If the markets are going to crash, there’s probably bugger all we can do anyway

  9. JS 10

    DTB – I’ve been thinking this is more like 1932/33. That is when the desperation and riots really set in. But the misery, poverty and public service cuts of the early 1930s also led to the first Labour government’s landslide 1935 election win, and the creation of the welfare state. So a similar transformation may not be too far away.

    • Afewknowthetruth 10.1


      There will be a huge transformation but it won’t be towards a welfare state. The resources that permitted the establishement of the welfare state no longer exist. For instance, in the 1930s and 1940s US oil extraction was rising….even through the 1950s and 1960s. But US oil extraction peaked in 1970 and has been declining since ( with a short term reduction in the rate of decline when Alaska came on stream). Britian, Australia, NZ, Indonesia, Norway……. practically every nation has peaked in oil extraction, with just a few nations (plus a bit of ‘unconventional oil) holding up the system.

      We could hope for a society that is not dominated by fascists, but hoping probably won’t be enough: people will have to get off their arses and fight for democracy, otherwise what little remains of it will vanish in overnight.

      Unfortunately, many NZers seem more interested in rugby than in their own futures.

  10. Richard 11

    Ahh that article finally had some replies published

  11. Richard 12

    Btw, i HIGHLY suggest watching this

    In a scary and painfully frank interview a freaked out BBC interviewer is visibly shaken when market trader Alessio Rastani predicts that the “Market is Toast.”

    • Carol 12.1

      Richard, as far as I could see, the BBC interviewer was not so much shaken by the prediction of a major market crash, but by the way Rastani said he’d been looking forward to it, because he saw it as an opportunity to make major bucks just like people did in the 1930s.

    • Thank you for that, Richard. (I think. I need to go change my underwear after hearing that trader.)

      It is precisely what I needed to counter Key’s vacant optimism, as expressed today in Parliament.

    • Deadly_NZ 12.3

      Yep but he is in the mold of another Key. But finally we get one telling the truth. They DO NOT CARE what happens as long as they make money!!!!! Fucking vampires…

      • AAMC 12.3.1

        I thought towards the end he looked scared too, I’m gonna make money, I’ve been dreaming of this, then… Goldman Sacs runs the world, estrone should get prepared to loose their savings an houses.

        The earlier part was bravado, the truth showed as he progressed.

  12. Richard 13

    yeah thats partly true, i also think alot of it was shock at the openness in which he said that what the governments do wont affect what they do… in the end, the markets are about making money… its just rare that a trader will be so blunt

  13. Afewknowthetruth 14

    The banksters will do whatever they can to keep their Ponzi scheme going. You have to admire their sense of humour: ‘big bang’. A bit more money created out of thin air to replace the money created out of thin air that people have lost confidence in:

    Independent UK.

    Eurozone members look at ‘big bang’ plan to overcome debt crisis

    Bailout fund may be given increased powers, says ECB, as German Chancellor seeks support for cash injection to Greece

    By Stephen Foley in New York and Tony Paterson in Berlin

    Tuesday, 27 September 2011

    In an interconnected world, chaos in the eurozone threatens the global economy. If Greece defaults without back-stop support, the financial system could well freeze over and business confidence would collapse as it did after the implosion of Lehman Brothers three years ago. Banks would stop lending, trade would grind to a halt and another recession or a depression would result

    Under pressure from the US and the rest of the international community, eurozone officials are considering a “big bang” plan to dramatically increase the size of the European bailout fund to tame financial markets and bring the sovereign debt crisis under control.

    A European Central Bank (ECB) board member threw his weight behind a plan, first mooted by the US Treasury, to increase the size of the European Financial Stability Facility (EFSF) by allowing it to borrow additional funds from the ECB.

    The comments, by Lorenzo Bini Smaghi at a conference on the sidelines of the International Monetary Fund, were the first hints that a plan to leverage up the EFSF is being considered by the ECB and the eurozone governments which are contributors to the fund.

    The EFSF was conceived as a fund to channel bailout money to eurozone countries that were having trouble servicing government debt, but its ability to fully contain the sovereign debt crisis has been in doubt almost since its inception. Contributors have pledged up to €780bn (£675bn), though ratification through member countries’ parliaments is slow and uncertain.

    The plan emerging last night would widen the scope and dramatically increase its size, providing additional funds to buy government debt from any countries that might be frozen out of the financial markets, a major fear for core eurozone members Spain and Italy. It would also be able to inject money into any European banks that get into trouble because of losses on government debt, such as are likely to occur if Greece defaults on its debt – something that markets now view as inevitable.

    Markets around the world achieved a degree of calm yesterday on rumours of the big bang approach from the eurozone, and new reports on the details of the wider, bigger EFSF sent the US stock market soaring last night. Turmoil in the eurozone is the biggest single threat to the global economy, traders believe, and they have watched political wrangling on the continent with alarm. There was also disappointment that the G20 and IMF meetings over the weekend ended with no major policy announcements, though it was clear that work was continuing at a frenzied pace behind the scenes.

    That the solution is by no means secure was underlined when Germany’s Chancellor Angela Merkel took the rare step of appearing on a television chat show in an attempt to halt a dramatic decline in public support for her coalition’s plans to contribute to the Greek bailout. Opinion polls suggest that between 75 and 80 per cent of Germans oppose more cash injections for Greece. Several leading members of Ms Merkel’s coalition also oppose the plan.

    However, Ms Merkel warned during her television appearance that Germany’s failure to help Athens could result in a domino effect which could spread throughout the eurozone. “We have to be able to put up a barrier,” she told viewers, adding that she wanted Greece to keep the euro.

    The Chancellor’s made her remarks before a key parliamentary vote in the German Bundestag on Thursday over plans to approve increases to the lending capacity of the EFSF. With opposition increasing from within her own ranks, particularly among her liberal Free Democrat coalition partners, Ms Merkel cannot be absolutely certain of a majority.

    The Chancellor has indicated that she may have no option but to rely on the votes of opposition Social Democrats and Greens to get the measure through parliament. Some observers have predicted that if she is forced to take this course, she could be forced to hold a parliamentary vote of confidence in her administration which would almost certainly result in the collapse of her coalition. However, Ms Merkel insisted during her appearance that she was confident of obtaining a majority during the vote. “I want a majority of my own and I am confident about getting one,” she said.

    Ms Merkel was due to meet Greek Prime Minister George Papandreou in Berlin tonight for renewed discussions about Athens’ ability to cope with the crisis caused by its deepening debt problem.

    What a Greek default would mean for…

    The world economy

    In an interconnected world, chaos in the eurozone threatens the global economy. If Greece defaults without back-stop support, the financial system could well freeze over and business confidence would collapse as it did after the implosion of Lehman Brothers three years ago. Banks would stop lending, trade would grind to a halt and another recession or a depression would result.


    Some argue that default and leaving the euro would not be a disaster for Greece. After all, it would then be free of austerity measures that threaten to keep the country in a spiral of spending cuts and weakening growth. It would also have a weaker, more competitive currency. But with no one willing to lend it money, the country, which is led by George Papandreou, pictured, would have to print money and risk hyper-inflation. Unpleasant as it is, the proposed bailout may be the best compromise for Greece.

    The banks

    Europe’s banks would go into meltdown if Greece defaulted in a “disorderly” fashion because they have large holdings of bonds (or IOUs) issued by Greece and countries such as Italy and Spain. A full default would leave Greece’s bonds worthless, causing banks huge losses. France’s banks have sparked the greatest fears because of concerns about their exposure to Greek debt and the market thinks they need more capital. UK banks have smaller holdings of Greek bonds but would face trouble if panic spread to Ireland and Spain.

    The euro

    A chaotic Greek default would almost certainly see panic spread to the sovereign debt of Italy and Spain, which are too big to be bailed out under current arrangements. That scenario could trigger the break-up of the single currency. The package under discussion is intended to replace past patch-ups with a decisive plan to shore up confidence in the eurozone’s political resolve.


    The UK needs this plan to work, hence the urgent calls from David Cameron and George Osborne for action. Europe is by far this country’s biggest trading partner and economic catastrophe there would choke off exports that the Government and the Bank of England are trying to encourage to boost growth.

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