by frog
The Prime Minister is in this morning’s Press telling Colin Espiner that the government’s woes are not its own doing:
“It’s made a particularly tough challenge because you have an international economic slowdown, the fallout from the subprime crisis in the United States which has impacted on mortgage rates here without the Reserve Bank lifting a finger, you have a huge spike in oil prices - none of these the fault of the New Zealand Government.”
That’s all true to an extent, but you could equally argue that the Government ignored predictions that all those things were coming. Peak oil theorists have been suggesting for decades that at about this point in time oil prices would begin to spike dramatically as we entered the point where we had used up more than half the oil on the planet.
Critics of the unrestrained free market, and some mainstream economists, have been warning that a global economic slowdown was coming as a result of the US economy being built on a sandcastle of constantly traded debt (a.k.a. the subprime crisis). And here in New Zealand there has been increasing concern that the Reserve Bank Act has been written in just such a way that it restrains the Reserve Bank from taking any course other than the one it is currently on.
The government can respond that National has also blocked its ears to warning about peak oil, debt driven economies and the Reserve Bank Act. Nevertheless the ‘it’s not my fault’ line is always going to be tough one to spin when you are in your ninth year of government.
Published in Economy, Work, & Welfare by frog on Tue, May 20th, 2008
Tags: , economy, Helen Clark, peak oil, prime minister, reserve bank act, subprime crisis
on the trolls and those who are unable to keep on topic
Calling the oil price rise a “spike” suggests that they are still thinking that this is just a temporary situation and that the prices will fall just as suddenly. Yeah right.
About as bad as Genesis thinking they will be able to get cheap gas next decade.
Trevor.
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Why does everyone call it the subprime crises trust me its not just the subprime thats melting down in the US the Alt-A is starting to implode as well. I have been following the US mortgage bubble for the last 4 years.
Wait till the prime browers see they are all upside down and decide to hand the keys to the bank then its going to get fun. Its very easy to get upside down when you didn’t put any money down its also very easy to walk away too.
Why are NZ’rs so insane when it comes to property, nearly every NZ’r will tell you that property is the greatest investment on the planet and that it can only increase in value.
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Seems fair enough to say “not my fault” – though it was principally Labour which launched us into the sea of international finance without a paddle with the consequence that the tides and typhoons will send us here and there in whatever capricious fashion they choose, without the government being able to do much about it.
Of course, the government can’t take credit for anything going right either.
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blah blah blah its nnnot mmy fault says Helen Clark the economically illiterate pseudo-socialist Political Lecturer.
It didn’t stop her or her government claiming responsibility for when the New Zealand economy was growing did it? But now we’re just starting to realise that the “growth” was in fact nothing but an illusion fueled by cheap credit, government policies that encourage “investment” (speculation) in the property market spurred on by an irresponsible and ignorant MSM, a consumption binge of epic proportions, and historically low fuel prices.
Now the chickens are finally coming home to roost.
Don’t expect the National Party to be able to do anything to save us, because they’re hands are effectively tied behind their backs due to the morons in the Third Labour Government handing the nation’s economic sovereignty over to unelected bankers in the form of the the Reserve Bank Act.
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Well, I’d say it’s not their fault per se, but it is their responsibility, and they neglected to consider outside views that were very pertinent to said responsibility, and that is their fault.
There are also parties in parliament that would have done far worse in the same situation. Can you imagine how National would’ve dealt with the sub-prime situation? Eww.
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Simple stuff, like the banks being required to see at least 5% equity before being allowed to offer a mortgage, might have worked, if the Finance Act hadn’t been rogered to the loan sharks’ content.
Currently, the leveraged property portfolios allowed here can create a sub-prime effect across multiple properties leveraged to give a net equity effect of less than 1%. Totally legal, but mind-blowingly stupid if the leveraging has had the effect of reducing the equity in the family home to zilch…
Somehow, I’m finding it hard to say which party is more to blame for that – National, for screwing the legislation, or Labour, for letting the chattering classes continue to pay real estate agents’ commissions on properties they shouldn’t be buying at that equity-to-debt ratio.
But definitely National, for the student loans scheme, which has seen a generation under 35 years old give up on ever owning a home, thus being rental fodder for the afore-mentioned speculators in housing investment.
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