by frog
Should I be happy?
The glass is half full: a fellow Green Party has helped form a coalition government at the national level.
The glass is half empty: it’s in Iceland, a very small country with a very large economic crisis.
Iceland’s financial meltdown is of biblical proportions. Cue the locusts.
And cue the Greens, more specifically the Left-Greens, to clean up the mess.
Is this a half-full, poisoned chalice or does it represent a chance for Green progress? Will shouldering responsibility for this almighty mess, burnish or tarnish the reputation of the worldwide Green political movement? Is it selfish to think this way?
Arguably, this is the way of the world. The Right is wrong and the Left gets to clean up.
I spent some time in the US and watched Clinton fix an economy blighted by Reagan’s war-mongering. Now of course Obama has received the mother-of-all hospital passes from W. In New Zealand I’ve watched Lange try to untangle Muldoon’s mess (with mixed results although that’s another story).
It seems to be a universal and it seems to be the bigger the mess, the further to the Left you look for help … and so to Iceland.
What can the Left-Greens possibly hope to achieve in the face of catastrophic economic failure? For starters, tackle the multitude of problems linked to the financial breakdown, launch a public works program, revise the constitution, reform government, help homeowners with their mortgages, encourage the unemployed to upskill and oh yes find some time to save the whales.
The Left-Green & Social Democratic Alliance Government has bought forward the next election to April 25. They’ll have something like 80-days in office. If they can triage the Icelandic economy and progress any social or environmental issues, it will surely be further proof that Green solutions are universally viable, no matter how tough the conditions.
Gangi þér vel!
Published in Justice & Democracy by frog on Thu, February 5th, 2009
Tags: government, Iceland, politics, rescue
on the trolls and those who are unable to keep on topic
>>in New Zealand I’ve watched Lange try to untangle Muldoon’s mess (with mixed results although that’s another story).
Erm…it was *Douglas* who untangled Muldoon’s mess. Lange was a rudderless stage performer.
Isn’t it strange how the left think the right hand them a hospital pass, when in NZ, it’s clearly the other way around.
Granted, Muldoon was a destructive force, and Labour cleared up, but then Muldoon was obviously a control-freak socialist, and Labour were enlightened new right at the time.
Funny old game….
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frog said: Gangi þér vel!
Where the hell did you learn Icelandic frog? It is one of the most obscure languages imaginable, although is related to other Northern European ones.
Anyway, it took me 10 minutes of internet searching to find out what this means. So I’ll put the rest of the readers out of their misery – it means “Good Luck!”
Which is a sentiment I share with frog – the Icelandic Left-Greens have made a big call here to take on trying to reconstruct an economy that is an absolute shambles. Let’s hope they succeed. And let’s hope they also put whaling far back into the annals of Icelandic history where it belongs too.
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I would contend that the new labour right of the ’80′s was as starry eyed utopian as Muldoon was a starry eyed utopian control freak. Neither were grounded in reality and both have caused so much unnecessary suffering.
Pure laissez-faire capitalism is as ridiculously utopian an idea as communism ever was. Both have interesting ideas to offer to the debate around governance, but both lead to absurd concentrations of power in the hands of elites. Neither, IMHO, should be held up as an ideal, but rather used to inform the debate in the more sensible, middle ground.
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>>both have caused so much unnecessary suffering
What nonsense. We had a debt to pay down, and the “service” levels of state owned, union controlled enterprises was atrocious. Good riddance to those horrid days.
>>Pure laissez-faire capitalism
Since when have we ever had that?!?!
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>>the Icelandic Left-Greens have made a big call here
Will be interesting to see what a party not used to ever dealing with economic reality does when faced with, well, economic reality.
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please name a country that uses or used laissez-faire capitalism frog.
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The icelandic government will have to cut spending and let all the bankruptcy run through their system.
Of course since this is a carebear government they will prop everything up and spend spend spend by taking money from little unborn icelandic children by going further into debt from the world bank.
What sort of government makes a blanket guarentee of deposits when those deposits are worth more than nations GDP.
How large was the liability made by the NZ government.
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Phil U was right about the left taking over.
http://whoar.co.nz/2006/the-left-goes-for-the-mortgage-french-def-death-grip-on-the-green-party/
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“I spent some time in the US and watched Clinton fix an economy blighted by Reagan’s war-mongering.”
I suspect you spent the entire time stoned if you believe that rubbish.
No doubt you conveniently overlook that the very reason we are suffering a financial crisis is down to Clinton and a lesser extent Hussein Messiah Obama.
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And BTW, does this Green/Left coalition have any actual costed policy? or are they about to do what all socialists desire and tax the hell out of the productive citizens?
It is going to be interesting watching Iceland implode under this Green/Left government, very soon the people will come to realise that socialism is not the answer, actually the same will happen in the USA, Messiah Obama will lose his gloss very quickly, he will definitely be a one term President, history will more than likely judge Messiah Obama even harder than peanut Carter.
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“No doubt you conveniently overlook that the very reason we are suffering a financial crisis is down to Clinton and a lesser extent Hussein Messiah Obama.”
Well, as a Blue Dog Democrat, Clinton did cater to the right wingers far too often, so he deserves some blame. But how on Earth does Obama rate a mention when there are so many other worthy candidates who were actually involved in the decisions? Sounds like your Obama Obsession peeking through again.
“Phil U was right about the left taking over.
http://whoar.co.nz/2006/the-left-goes-for-the-mortgage-french-def-deat h-grip-on-the-green-party/”
Ha, that post was fun to read, the comments too. Just goes to show how badly people got Russel wrong. Yes, Dr Norman, whose main campaigns have been on the traditional leftie issues of river water quality, toxic site cleanup, sewerage leaks, waste minimisation, diary intensification, tourism and public transport. He’s a red for sure.
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Frog…what;s going on? how come there’s nothing on Tolley’s release on healthy food in schools? I thought Kedgley’s release came across as angry and reactionary. Did she not notice that Tolley’s decision was based on anecdotal evidence (read idealogy) but Sue came straight back with ‘anecdotal evidence’ too. What about the hard evidence? Mary Wilson on Checkpoint came up with some compelleing stats. For crying out loud, were you guys asleep? Surely better to have taken some time and picked Tolley’s release to bits before responding? Maybe better to have had a reply from the leadership too?
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Yiu might have noticed I’m pretty down on Sue Kedgley. This will annoy Valis bit I reckon her time is time. She has marginalised herself and could be damaging the party now. What not leave and become a food safety advocate outside of politics and open up a space for someone new?
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Apologies for the grammatical and spelling errors in my last post. I’m pretty annoyed about the ineffectual response to an issue I’m passionate about – healthy food in schools. Hopefully there will be some opinion pieces/followup in the media over the weekend.
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Eh? I don’t share your view that she should leave Parliament, but I’ve no particular gripe with your post.
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Cheers Valis. No gripe with the grammar or spelling either I hope
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‘twould be a waste of our time.
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Sorry who’s time?
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Everyone’s
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“Yes, Dr Norman, whose main campaigns have been on the traditional leftie issues of river water quality, toxic site cleanup, sewerage leaks, waste minimisation, diary intensification, tourism and public transport. He’s a red for sure.”
yes but there is a hefty preponderance of people who are a drag on support (ie don’t see things like the rest of us). The result is (being) off target and behind the curve.
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“I spent some time in the US and watched Clinton fix an economy blighted by Reagan’s war-mongering.”
Except that the economy wasn’t ruined by Reagan’s war-mongering, it was ruined by a Congress who refused to allow the pork cuts that were needed to match Reagan’s tax cuts.
Also, who was in charge of Congress while Clinton was President……
Yes, our friends, the Republican Party.
Also, I have to say that it can take a number of years before a policy has the intended effect; it took over a decade before Rogernomics started contributing to New Zealand
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I am not an economist, so perhaps some of you could enlighten me on these questions:
1) We hear so much in the news about governments going into deficit in order to “spend themselves out of recession”. In fact, we hear a whole lot of stuff about debt. Now for every person, company or government who has a debt, someone must be lending the money. My question, where is all the money to fund this debt coming from?
2) What would happen if a country said, “we’re not going to pay any debt”? I guess if it was a small country, trade sanctions etc would follow. But what would happen if a bigger country decided to just ignore all debt, and start over with a “clean slate” so to speak? Of course no one would want to lend to that country in the future, but then again, if you budget and save wisely, why do you need debt at all?
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All of the times ive interacted with Russel he has come over well versed and well reasoned; we have argued on some of the minor points and at times he does come over condesending, but all-in-all i have a good deal of respect for the man. He doesint deserve the same critque as bradford, they are not even comparable. As for kegley, i may not agree with some of the things she says but she atleast does focus on issues which may be seen as green and she does have a significant arena throughout the green movement, she is still an asset. Bradford and Delahunty however i perceive as massive liabilities. Ive read abit of kennedy’s stuff and he quite appeals to me, though i havint met him personally so i cannot really make too much of a judgement. Kevin; my first impresions are not so good, but having not met him i have yet to form a proper opinion. And it hardly needs to be said that I think Jeanette and Metiria are choice, prehaps our greatist assets.
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“yes but there is a hefty preponderance of people who are a drag on support (ie don’t see things like the rest of us). The result is (being) off target and behind the curve.”
Who’s this “us” you’re talking about. You’re not a Green, so your target is not the one we’re trying to hit.
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“Except that the economy wasn’t ruined by Reagan’s war-mongering, it was ruined by a Congress who refused to allow the pork cuts that were needed to match Reagan’s tax cuts.”
The biggest pork by far is defense spending, which Reagan increased hugely. He argued tax cuts for the rich would get reinvested into the US economy. Instead much of it was invested in other countries and the deficit became the largest ever within two years.
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There is no Party or individual in NZ I have come across who is “Left”. Those ‘stars’ in Muldoons eye’s were Gin old boy…
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Who’s this “us” you’re talking about. You’re not a Green, so your target is not the one we’re trying to hit.
…………
“us” is people concerned about growth, sustainability, values etc, the broader “green movement”.
Notice you talk about “a” Green not “green” [means red].
The target you are trying to hit is ……………..?
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“There is no Party or individual in NZ I have come across who is “Left”. Those ’stars’ in Muldoons eye’s were Gin old boy…”
There would be but they don’t poll well (Socialist Unity). By the left using the environment as cover you stymie open thinking because you limit possible solutions.
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“1) We hear so much in the news about governments going into deficit in order to “spend themselves out of recession”. In fact, we hear a whole lot of stuff about debt. Now for every person, company or government who has a debt, someone must be lending the money. My question, where is all the money to fund this debt coming from?”
The money is coming from thin air; an invention of the politicians. I’ll be willing to bet that when all is said and done, the Americans are going to have a horrible bout of inflation.
“2) What would happen if a country said, “we’re not going to pay any debt”? I guess if it was a small country, trade sanctions etc would follow. But what would happen if a bigger country decided to just ignore all debt, and start over with a “clean slate” so to speak? Of course no one would want to lend to that country in the future, but then again, if you budget and save wisely, why do you need debt at all?”
No country could do that, not even the Americans. The world is far too interlinked to allow for it, and there could easily be trade sanctions against larger countries.
“The biggest pork by far is defense spending, which Reagan increased hugely. He argued tax cuts for the rich would get reinvested into the US economy. Instead much of it was invested in other countries and the deficit became the largest ever within two years.”
Valis, that increased defense spending helped stop the Cold War, which itself was beneficial (and would have been even more so, had the US pulled out of Germany).
Defense spending isn’t pork though. Pork is those things that single politicians put in to bribe their voters and keep them happy. Unfortunately, the defence spending bills are usually filled with them, because everyone knows that defence spending will be unlikely to be vetoed. Get rid of the pork, and you’ll get rid of the deficit rapidly.
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The US wont default on their debt instead the US will inflate the debt away, the person who gets burnt will be the people who own the US debt since.
Their was a time when you could have a nice middle class lifestyle with 1 income, now you need 2 after this latest round of inflation you will probably need to send the children into the workforce as well.
End the Fed, end the inflation tax!!!
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JH: “You” meaning who? – I was talking about Parliamentarians – should have made it clearer sorry.
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samiula,
Government debt is aquired through the issuing of things such as government securities, bills, bonds, etc. The money that is raised is the money which is spent purchasing said securities from the government. Most of these eaither pay dividends or are offered at a discount and can be redeemed for a specific amount at maturity. They also serve to set the minimum interest rate as they are seen as carrying zero default risk.
Government debt cant be defaulted on but wont be, esspecially by the USA, as the people and companies whom own that debt are the same big money that funds the campeigns and effectivly chooses the president.
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“us” is people concerned about growth, sustainability, values etc, the broader “green movement”.
You talk like there’s some uniform group out there that you are a part of that agrees on what it is to be green, but this is nonsense. Just in the small microcosm of this blog, I can’t think of one other person who has espoused the array of issues and positions that you have. Apart from your interest in immigration and phobia for anything left, I haven’t much been able to figure you out. You certainly have not reflected a broad concern about green issues like others have, so I’m pretty comfortable not using you as the standard by which to judge greenness.
“Notice you talk about “a” Green not “green” [means red].”
The phobia again. Your conclusion that the Green political movement (which is similar world-wide) is just a front for the left is myopic to say the least.
“The target you are trying to hit is ……………..?”
The targets of the Green Party have been articulated many times in speeches, press releases and on the web site, including this blog. It is mischievous to suggest you have no clue what we stand for.
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hmm – sometimes silence speaks volumes. I just note that the Green Party in Mexico is campaigning for Capital Punishment.
I have a good friend (an Oxford Grad) who visits NZ regularly on business, and we spend a little time investigating culture history and politics here (amongst a plethora of other issues).
I gotta tell you he was absolutely gob-smacked by what was considered ‘Left’ here. By NZ definitions, O’Bama is a foaming at the mouth Left-Wing Greenie.
Mind you the ‘right’ media there are calling him Comrad, and a socialist et al.
This kind of labelling is a default mode for actual thinking.
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“By NZ definitions, O’Bama is a foaming at the mouth Left-Wing Greenie.”
Well, he doesn’t foam at the mouth, but the rest of it is perfectly accurate.
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Yes, Muldoon’s starry eyes were perhaps most inspired by gin, Mark. Probably best immortalised by the night he called the snap election!
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Ireland looks like its in a lot of trouble too.
http://www.globalpost.com/dispatch/ireland/090203/ireland-the-game
How are the people going to react when the NZ government comes out and reduces civil servants pay by say 5%.
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“I spent some time in the US and watched Clinton fix an economy blighted by Reagan’s war-mongering.”
Clinton did indeed had to do a hell of a lot of debt reduction after Reagan. The American Enterprise Institute seems to think that:
So doesn’t look like Reagan had THAT much trouble with reducing spending. Those debt figures are massive though! Bush did a lot of damage allright, but this time it doesn’t really look like the Obama is going to cut spending, does it…
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john-ston, nearly missed this:
“Valis, that increased defense spending helped stop the Cold War, which itself was beneficial (and would have been even more so, had the US pulled out of Germany).”
Perhaps (and I’d argue it was not decisive and that its part was not worth the cost), but we were talking about the economy.
“Defense spending isn’t pork though. Pork is those things that single politicians put in to bribe their voters and keep them happy. Unfortunately, the defence spending bills are usually filled with them, because everyone knows that defence spending will be unlikely to be vetoed. Get rid of the pork, and you’ll get rid of the deficit rapidly.”
You don’t know the US military industrial complex very well do you. There simply is no bigger pork, probably anywhere in the world. By chance I just yesterday came across this article by Chalmers Johnson that not only puts the case well, but also shows how damaging the corrupt practices have been not only to the US economy, but to its security. Its a long piece, but well worth the time.
http://www.tomdispatch.com/post/175029/chalmers_johnson_economic_death_spiral_at_the_pentagon
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frog, BB. Please pass what you’re smoking.
frog,
“I would contend that the new labour right of the ’80’s was as starry eyed utopian as Muldoon was a starry eyed utopian control freak. Neither were grounded in reality and both have caused so much unnecessary suffering.
Pure laissez-faire capitalism is as ridiculously utopian an idea as communism ever was.”
Come now. I’d expect that you’d find that both Muldoon and Douglas were far more pragmatic than you give them credit for, because each of them were responding to crisises as ably as they could and acting on the best advice and knowledge available to them at the time even though their approaches (fascism, fake small government) were diametrically opposed. Their commen concern was to save the capitalist system from itself through ameorialating the worse consequences of the systems inherent contraditions and to forestall civic strife as Hoover and FDR had attempted to do in the 1930s, similarly to what Bush and Obama have been doing recently.
“I spent some time in the US and watched Clinton fix an economy blighted by Reagan’s war-mongering.”
As loath as I am to admit it, I actually concur with BB. Bill Clinton is hardly the mythical saviour of the working class and the US economy that you paint to be. In fact many of his policies laid the foundation for the economic crisis that we found ourselves in. He has now tacitly admitted the culpability of his party.
Community Redevelopment Act
http://www.liveleak.com/view?i=647_1230447448
His welfare “reform” that incorporated many of the elements from Newt Gingrich’s Contract with America, which destroyed the bargaining power of labour and thus forced the new working poor to become increasingly dependant on the finance sharks in order to meet basic needs like health and buying groceries.
http://www.filife.com/stories/the-choice-between-home-and-health
http://www.commondreams.org/archive/2007/06/09/1766
The Enron Loophole, which exempts most over-the-counter energy trades and trading on electronic energy commodity markets from government regulation.
Repealed the Glass-Steagall Act which had hithero assured at least partial transparency in the conduct of US financial institutions.
BB
“It is going to be interesting watching Iceland implode under this Green/Left government,”
What kind of bubble have you been living in over the past six months? Iceland is ALREADY BANKRUPT and they faced widespread civil unrest due to the meltdown which stemmed in a large part from the vulnerability of Iceland’s economy due to its misregulation of its finance sector. And worse, the country’s rulers were only too cognisant of the risks. Like many other small nations that used the “liberalisation” and reregulation of the finance sector as a panacea to resolve the inherent contractions within the capitalist economic system they have become exposed to the chaotic impulses of the predatory international investors, which has had similarly devastating effects for the citizens of their country as experienced by similarly unfortunate individuals in the former Soviet bloc countries in the early 90s, the Mexicans in the 1980s, and various South American and Asian countries in the 1990s.
Expect the civil disturbances in the former “Baltic Tiger” economies that occured in January to spread like wildfire around the world as the global economic meltdown deepens.
“….Will they load everything aboard and sail off, like the Vikings in the past, with what they have managed to gather up, and look for shelter with their bounty against real or imaginary threats? If this happens, might the high-yield countries suffer a shock? And if so, will that shock be felt the most by the smallest countries, where investors naturally have the least knowledge and confidence?”
http://www.sedlabanki.is/?PageID=287&NewsID=1491
http://www.huffingtonpost.com/max-keiser/who-could-have-predicted_b_145920.html
john-ston
“… it took over a decade before Rogernomics started contributing to New Zealand”
Contributing what to New Zealand?
One of the highest levels of indebtedness in the world?
One of the most volatile currencies in the world?
Vanishing “wealth” as the housing market and equities markets nosedive.
An export economy that is still overlydependant on external finance and a limited range of primary products.
All we’ve managed to do is substitute public debt for private debt which actually costs us MORE.
“I guess if it was a small country, trade sanctions etc would follow.”
I think that trade sanctions would be too slow and appear too weak as a means of defending the creditor nation’s prestige so as had happened in the Gilded Age, the creditor nation would engage in “gunboat” diplomacy to ensure the payment of the repudiated debt.
“But what would happen if a bigger country decided to just ignore all debt, and start over with a “clean slate” so to speak? Of course no one would want to lend to that country in the future, but then again, if you budget and save wisely, why do you need debt at all?”
In that case, hold your breath, because we’re about to find out as Ecuador has repudiated its foreign debts.
http://sattan.org/feed/search.php?q=repudiate%20foreign%20debt
samiuela.
“In fact, we hear a whole lot of stuff about debt. Now for every person, company or government who has a debt, someone must be lending the money. My question, where is all the money to fund this debt coming from?”
I’ve been banging on about this issue for ages now and no one appears to have listened. Our governments borrow money at interest from private banking establishments who create the money “out of thin air” by the simple expedient of the double entry bookkeeping system and the Reserve Bank monetises this debt through its Open Markets facilities. Now they don’t even require cash bank reserves, but in addition to accepting corporate debt as capital, because the international credit markets have seized they are monetising their own debt!
“Alert: 16/12/08 – Further to the RBNZ’s announcement to extend it’s eligible securities list (collateral for TAF and reverse repo liquidity injections) to include corporate debt it added it’s own debt in the form of RB bills.
Monetising one’s own debt is the AAA version of premier pyramid schemes.
Under the accounting rules of repurchase agreements these so-called sterilisation securities issued by the RB to offset previous ‘thin air’ liquidity injections against other eligible collateral will in turn be monetised and will not be withdrawn from the cash recipient’s balance sheet.
Shades of Mr Madoff’s scheme, but with a “get out of jail free” clause. View the latest RB bill issuance here.”
http://www.omo.co.nz/
Now that I have concrete documentary evidence as to my claims’ truth, perhaps people will believe me?
“Of course, [banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers’ transaction accounts. Loans (assets) and deposits (liabilities) both rise [by the same amount].”
– The Chicago Federal Reserve, Modern Money Mechanics (last updated 1992)
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“I spent some time in the US and watched Clinton fix an economy blighted by Reagan’s war-mongering.”
“As loath as I am to admit it, I actually concur with BB. Bill Clinton is hardly the mythical saviour of the working class and the US economy that you paint to be. In fact many of his policies laid the foundation for the economic crisis that we found ourselves in. He has now tacitly admitted the culpability of his party.”
Don’t worry, I don’t think you actually do agree with BB. I don’t think you understood what he meant and my post didn’t help as I deliberately misrepresented him. He doesn’t mean that Clinton acted with right wingers to sow the seeds of the current problems. No, he was trying to say that Clinton, as a left wing commie or worse, caused the problems by reversing wonderful Reagan/Bush policies, just as Obama would be doing now.
So just the opposite of your position, as I’m sure you’ll be relieved to hear.
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I blame Reagan/Bush/Clinton/Bush/Obama and both the democratic and Republican controlled congress.
Only one member of congress I don’t blame is Ron Paul since he votes no on most legislation.
over 30 years of deficit spending is going to bite the US this year. Just look at what obama and the democrats are doing, we could be looking at 2 Trillion worth of extra spending this year. No one is going to buy 2 trillion dollars worth of debt.
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In answer to your question Frog: Yes! You should be happy.
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Last time they counted, the US was seven trillion under – all accomplished during the last eight years (Clinton left a 3 billion surplus).
Now – no one can even guess what the scale of the deficit is, so they’re just calling it Bad.
If that 2 Trillion is spent to slow halt and then reverse irresponsible Government – then people will have to embrace it, because the alternative is an imploding disaster that few care to contemplate.
It is partly why Nations are flocking to join the Euro-union. The Iraq oil war was designed to keep the US$ as the world’s benchmark currency – it failed (on a number of levels), and with terrible consequences for the US – the Oil Price Hike was their last roll of the fiscal Dice – well the Oil Boys have had to leave Vegas.
I see that epitome of Human Rights – M.Ghadaffi now wants a new USA – the United States of Africa.
ps; Frog – as a former marketing drone, I’d love to use Muldoon’s ‘Snap Election’ footage – just think of the ad’s you could make – everything from “It’s How We’re Drinking” to Viagra.
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The Greens think they will pick up gains due to the financial meltdown. This assumes people perceive the greens as understanding the problems and issues* rather than what ever solutions are evolving in the ether.
*Last election I heard Katherine Ryan remark (more than once, I think) that the Greens are seen as “impractical”.
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Oh Mark how can a government spend 2Trillion dollars it doesn’t have and call it a halt to irresponsible government.
The spending of 2Trillion dollars is irresponsible government at its finest.
You can’t spend your way out of debt.
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Good response to those who imagine we live in anything like a capitalist world:
http://www.cafehayek.com/hayek/2009/02/regulation-of-financial-markets.html
“The notion that we have an “unregulated free market” is false.
If we had an unregulated free market, the organizations and individuals that made stupid investment decisions — those “jokers on Wall Street” — would now be bankrupt, to be replaced by more competent organizations and managers. Instead, under the current system, they are “bailed out” — at your expense — and allowed to continue operating.
If we had an unregulated free market, the investment rating agencies that rated securities containing subprime loans as “AAA” would be disgraced, bankrupt and out of business — no one on earth would deal with them any longer — they wouldn’t be able to pay people to use their services. Instead, under our current system, not only are all those rating services still in business, the S.E.C. requires that all issuers of investments use those rating agencies.
If we had an unregulated free market, no one would be forcing bankers to make riskier loans than they wish to, as is currently done by legislation such as the Community Reinvestment Act and threats of lawsuits from organizations like ACORN and from the Federal Government‘s Justice Department (Clinton‘s DOJ filed 13 major lawsuits against banks for failure to lend to “minorities“).
If we had an unregulated free market, there would be no central banking entity in charge of a fiat money supply with the ability to:
a) Make vast amounts of credit available at below-market interest rates.
b) Follow such a persistent policy of inflation as to convince virtually everyone in the country that purchasing a house is “a good investment”.
c) Eliminate ( or at least significantly reduce) risk aversion by guaranteeing bankers that they (the Fed) will always be there as “lender of last resort”.
d) Condone and make possible a preposterously over-leveraged fractional reserve banking system under which banks currently hold total reserves of only about 4% and are thus extremely vulnerable to any sort of a run or loss of confidence in the bank.
If we had an unregulated free market there would be no quasi-government entities like Fannie and Freddie and the FHA to insure that trillions of dollars of that cheap credit made possible by the Fed was directed into the residential housing market, producing an unsustainable boom in housing construction, which, when it ends, leads inevitably into an economic bust.
If we had an unregulated free market, the Federal Government would not now be contemplating looting the American taxpayers of another trillion dollars or so to pay off various special interests that helped the latest collection of looters get into power.
We don’t have an unregulated free market. We have a “mixed economy”, with a few elements of capitalism struggling under the weight of literally thousands of pages of rules and regulations and dozens of government agencies interfering in virtually every aspect of our economic lives.
And under this set-up, it is you, the “little guy”, the individual who doesn’t have a powerful lobby in Washington to get the rules bent in your favor — you, who cannot command an audience with Congress to beg for your personal bailout — you, who can do nothing as government uses your funds to save the incompetent and the dishonest from the consequences of their own actions — it is you who gets screwed.
We don’t have an unregulated free market; we have an out-of-control government intent on looting us blind.”
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Hello Turnip; Well – in the Yanks case, they are planning to create jobs. You’d be surprised how easily Govt. (with the will) can do this.
Yeah – someone’s cryin’ cos O’Bama’s gonna go Green. Fantastic and good luck I say!
About the only thing they haven’t lost is Confidence; If that goes; If that fails – it’ll be truly Historic, for all of us.
Then, they could always close a dozen or two of the overseas Cities their military has built.
Appreciate the costing of each base at some billion dollars.
My time there taught me one main thing; this is a ‘can do’ people. With the right attitude and goals, Americans can come to an enthusiastic unity that seems beyond, well, we anzacs for example.
Wat: Was a totally cost effective Capitalist all my working life.
regards.
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Mark,
How can the government “create jobs,” by which I mean real wealth-creating jobs rather than wasteful make-work schemes?
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“The Greens think they will pick up gains due to the financial meltdown.”
Who said that? I don’t know any Greens that would.
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big bro Says:
February 5th, 2009 at 8:32 pm
> “I spent some time in the US and watched Clinton fix an economy blighted by Reagan’s war-mongering.”
> I suspect you spent the entire time stoned if you believe that rubbish.
Reagan came to power at the end of the second oil shock, so the economy was bound to improve while he was in power, whatever he did. Despite that, his term was characterised by an increase in government debt, an increase in inequality and nothing any good in terms of environmental protection either. He had the good luck to be president when a peacemaker come to power in the Soviet Union, but he didn’t exactly extract the full potential from that situation either.
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# Valis Says:
“The Greens think they will pick up gains due to the financial meltdown.”
Who said that? I don’t know any Greens that would.
………………..
I think we can conclude that from Frogs post:
“It seems to be a universal and it seems to be the bigger the mess, the further to the Left you look for help … and so to Iceland.” The Greens are the left. Is not Ken Douglass one of your MP’s?
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Frog’s claim is debatable of course, but even so, he was talking about Iceland and made absolutely no prediction for NZ, nor would he be silly enough to I think. Ken Douglass (sic) has been many things, but is not an MP, nor a Green.
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He would only need to join the party and start a compost heap.
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We know Nandor’s religion: he believes Halie Selassie is God. He is also a Treaty Educator, meaning he sells Treaty Hair shampoo and Treaty Soil Additive (as a sideline).
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Wat
If the government buys stuff, people have to work to create the stuff. If the stuff the government buys has lasting value, it isn’t money wasted. It isn’t ideal but it does work. It puts a floor under things and the people who still have work are able to buy stuff which helps other people fo find work.
The difficult thing is that the economy got so far ahead of itself that it is unlikely to catch up in less than a decade.
BJ
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“Contributing what to New Zealand?”
A reversal in our economic collapse. Prior to the late 1980s, we were slipping in the OECD rankings and had done so for the best part of two decades. Rogernomics arrested that, and by the late 1990s, we had actually started climbing again; the Fifth Labour Government and its policies stopped that climb though, while squandering the dividends of the hard work and suffering that had been done in the 1980s and 1990s.
“One of the highest levels of indebtedness in the world?”
That cannot be blamed on Rogernomics; that can be blamed on a variety of other factors, not least of which was the 1987 Crash. The 87 Crash made the populace nervous about sharemarket investing, and that process was being reversed in the late 1990s by the privatisations of Auckland Airport and Contact Energy, a process that was again stopped by the Fifth Labour Government.
“One of the most volatile currencies in the world?”
That cannot be blamed on Rogernomics, but instead our love of residental property as an investment vehicle – that love originated because we saw $8 shares become 8c shares in the 87 Crash.
“Vanishing “wealth” as the housing market and equities markets nosedive.”
That cannot be blamed on Rogernomics either, but instead flawed government policy enacted overseas. The housing bubble was due to burst anyway, and that bubble was caused by guess who -
Yes, the state. Those MULs that drove up the price of houses in the cities that had them. The cities that never had MULs never had the sharp spike in house prices, and now aren’t having the sharp slump in them either.
“An export economy that is still overlydependant on external finance and a limited range of primary products. ”
How can that be blamed on Rogernomics? That is more caused by the fact that corporate tax rates are too high, and until last year, were higher than those of Australia. No wonder businesses wouldn’t start here, they were being robbed blind by the taxman.
“All we’ve managed to do is substitute public debt for private debt which actually costs us MORE.”
Oh really – what would happen if we couldn’t get more public debt, a situation we faced in the 1980s? Simple, we would see the printing presses start and before long, we would end up like Zimbabwe. At least with private debt, there is a point were it all comes to a halt.
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Sleepy Treehugger- “I’ve been banging on about this issue for ages and no one seems to have listened.”
Maybe they gave up reading- it’s like you put all the sentences in a jar and shook them up. Shame, because you are making some very interesting points. Well, with some editing they would be points. Interesting blunts?
Thanks for the links, but.
Samiuela- try reading Michael Rowbotham or Dierdre Kent, who ask the same questions as you.
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john-ston
“A reversal in our economic collapse. Prior to the late 1980s, we were slipping in the OECD rankings and had done so for the best part of two decades. Rogernomics arrested that, and by the late 1990s, we had actually started climbing again;”
The slippage in the OECD rankings and the ensuring economic crisis were inevitable and unavoidable due to the dependance that our economy had on a narrow range of primary exports that we traded almost exlusively with Great Britain who entered the ECM in the 1970s. It takes a very long time to diversify an economy and was hampered dramatically by the external shocks stemming from the “Energy Crisis” in the 1970s and the transition from fixed to a floating exchange rate regime, that was taking place after Nixon abolished the convertibly of the US into gold in 1971.
“the Fifth Labour Government and its policies stopped that climb though, while squandering the dividends of the hard work and suffering that had been done in the 1980s and 1990s.”
I beg to differ. The initial improvement in OECD indicators (which relies on the measurement of primarily financial data e.g. represented by GDP) observed during the mid 1990s stems in large part from the massive capital inflows that entered the economy in order to purchase the formerly State Owned assets when the New Right privatised them, but what you’re neglecting to recognise is that from then on, our economy was susceptible to even more massive capital outflows due to the income from foreign ownership of local assets exceeding income from New Zealand owned assets from overseas.
“However, New Zealand’s GNI per capita is around 7 per cent below our GDP per capita. This difference between GDP and GNI reflects the fact that income accruing to foreign investments in New Zealand exceeds the income accruing from our own overseas investments. New Zealand’s investment balance and external position are discussed further in Chapter 3.”
Ministry of Economic Development, Economic Development Indicators 2007
“That cannot be blamed on Rogernomics; that can be blamed on a variety of other factors, not least of which was the 1987 Crash. The 87 Crash made the populace nervous about sharemarket investing, and that process was being reversed in the late 1990s by the privatisations of Auckland Airport and Contact Energy, a process that was again stopped by the Fifth Labour Government.”
The stockmarket is inherently suspect as publicly traded stock in corporations are inherently open to conflicts between shareholders and management due to the seperation of control and ownership which is corraborated by this description of a research paper published by
Julian Franks, Professor of Finance and Director of the Institute of Finance and Accounting at London Business School.
http://www.cepr.org/pubs/bulletin/meets/524.htm
I bet that if an economist here would do a similar study of the “investment” trends of the 1980s, using a similar methodology he would discover that very similar dodgy goings on were a major contributing factor to the ’87 Crash here, alongside the preposterous state of affairs where people gamble on the sharemarket with their credit cards in the hopes that they could sucker some other smuck into buying the shares before the bill came due.
Not to mention its also susceptible to investment manias like the dot com bubble.
“That cannot be blamed on Rogernomics, but instead our love of residental property as an investment vehicle – that love originated because we saw $8 shares become 8c shares in the 87 Crash.”
Actually Rogernomics can be blamed as the faction of the Labour party caved into the IMF’s insistence that the country should adopt the fully floating foreign exchange regime even though as early as 1978, Paul Volcker, head of the US Federal Reserve recognised that the floating exchange system represented a lack of, rather than a coherent economic policy, a state of affairs that was more due to the notable lack of agreement and consensus, amongst the great economic powers, on how a new, sustainable system to replace the Bretton Woods agreement would or should operate.
“That cannot be blamed on Rogernomics either, but instead flawed government policy enacted overseas. The housing bubble was due to burst anyway, and that bubble was caused by guess who -”
See above. TPTH knew the flaws in the floating exchange rate regime, with other countries adopted a hybrid regime that incorporated elements of the fixed rate one. By a small open economy adopting a pure floating rate regime they exposed our economy to wild, unpredictable fluatuations and gyrations from overseas. Not to mention the retarded bundle of legislation that is the Reserve Bank Act. Though I guess, from my perspective, at least it recognises that the central bankers don’t understand the system that they are supposed to manage and in the OCR they have single instrument with which they can muck things up. Even the Bank of England recognises, that the interest rate is a “blunt instrument” with which it must control something as dynamic and complex as a national economy.
Oh really – what would happen if we couldn’t get more public debt, a situation we faced in the 1980s? Simple, we would see the printing presses start and before long, we would end up like Zimbabwe. At least with private debt, there is a point were it all comes to a halt.
I will address the rest of your points later, but for now the above will have to suffice.
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“The slippage in the OECD rankings and the ensuring economic crisis were inevitable and unavoidable due to the dependance that our economy had on a narrow range of primary exports that we traded almost exlusively with Great Britain who entered the ECM in the 1970s. It takes a very long time to diversify an economy and was hampered dramatically by the external shocks stemming from the “Energy Crisis” in the 1970s and the transition from fixed to a floating exchange rate regime, that was taking place after Nixon abolished the convertibly of the US into gold in 1971.”
While some slippage was inevitable and unavoidable, nevertheless, it wasn’t helped by a massive explosion in the size of the state under Muldoon, and the attempts by the Third National Government to stop the inevitable.
Furthermore, governments knew from the 1960s that Britain wanted to join the ECM; instead of hindering the process, perhaps it would have been far better for them to have focussed on getting the New Zealand economy ready.
Irrespective, there wasn’t any serious attempt to diversify the economy until the Rogernomics process saw the elimination of subsidies, freeing up resources for other industries (notably dairy farming and viticulture). To diversify an economy at the very least requires the elimination of distortive subsidies.
“I beg to differ. The initial improvement in OECD indicators (which relies on the measurement of primarily financial data e.g. represented by GDP) observed during the mid 1990s stems in large part from the massive capital inflows that entered the economy in order to purchase the formerly State Owned assets when the New Right privatised them”
Privatisation stopped in 1993 and only started again in 1998 though. With privatisation, shouldn’t it have shown up as an improvement in the OECD rankings almost immediately?
What the GDP increase in the 1990s represented was that the New Zealand economy was no longer held in a strong straitjacket of regulation and business was allowed to grow and expand. That process stopped with the election of the Clark Government in 1999, and went into reverse.
“but what you’re neglecting to recognise is that from then on, our economy was susceptible to even more massive capital outflows due to the income from foreign ownership of local assets exceeding income from New Zealand owned assets from overseas.”
I’ll agree that our economy is susceptible to massive capital outflows, however, I would say that as a phenomenon, it has only occurred since around 2000. The cumulative deficits of the 1990s were not all that great compared with what we have seen in the last half decade.
Furthermore, it doesn’t help that for a decade, New Zealand had a higher corporate tax rate than Australia – that drove many of the businesses that New Zealand once had overseas.
“Actually Rogernomics can be blamed as the faction of the Labour party caved into the IMF’s insistence that the country should adopt the fully floating foreign exchange regime even though as early as 1978, Paul Volcker, head of the US Federal Reserve recognised that the floating exchange system represented a lack of, rather than a coherent economic policy, a state of affairs that was more due to the notable lack of agreement and consensus, amongst the great economic powers, on how a new, sustainable system to replace the Bretton Woods agreement would or should operate.”
So you would prefer having a fixed New Zealand Dollar? I believe that the New Zealand Government was forced to ask ambassadors to use their credit cards to help out in propping up the New Zealand Dollar. A fixed New Zealand Dollar didn’t benefit New Zealand at all, and probably failed to help in the diversification of our economy (as it was always fixed at a higher rate than the likely market rate).
Furthermore, fixed exchange rates are really no good when you don’t have a Gold Standard; I doubt you could have had a post Bretton Woods agreement.
“See above. TPTH knew the flaws in the floating exchange rate regime, with other countries adopted a hybrid regime that incorporated elements of the fixed rate one. By a small open economy adopting a pure floating rate regime they exposed our economy to wild, unpredictable fluatuations and gyrations from overseas. Not to mention the retarded bundle of legislation that is the Reserve Bank Act. Though I guess, from my perspective, at least it recognises that the central bankers don’t understand the system that they are supposed to manage and in the OCR they have single instrument with which they can muck things up. Even the Bank of England recognises, that the interest rate is a “blunt instrument” with which it must control something as dynamic and complex as a national economy.”
So, not only do you want to go back to the failure of a fixed exchange rate, but you also want to go back to the inflation inducing Reserve Bank policies of the past. While interest rates are a blunt instrument, nevertheless, they are the only instrument that central bankers have to control the beast of inflation. If people didn’t go out of their way to spend like mad, then it wouldn’t have a negative impact on our exporters.
Also, just before you wonder, I did agree with most of your points re: 1987 crash.
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Wat: Holidays sorry – can’t give you that info without say, $500K cash?
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Anyway, what’s the eleven yr old Keif got to say then?
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“Irrespective, there wasn’t any serious attempt to diversify the economy until the Rogernomics process saw the elimination of subsidies, freeing up resources for other industries (notably dairy farming and viticulture). To diversify an economy at the very least requires the elimination of distortive subsidies.”
I have actually come across some reputable sources, which say that common claim by neoliberals is not true at all. According to Bryan Easton, John Gould has reported that New Zealand had diversified its exports to the greatest extent as measured against other OECD nations, during the 1970s.
http://www.eastonbh.ac.nz/?p=520
“While some slippage was inevitable and unavoidable, nevertheless, it wasn’t helped by a massive explosion in the size of the state under Muldoon, and the attempts by the Third National Government to stop the inevitable.”
Earlier I said that Muldoon, like Roger Douglas had to deal with a crisis that emanated from beyond our shores as best he could, armed with the best advice available to him at the time. Of the two, I think Muldoon was the most honest, though his actions were inevitably informed by political expediancy or perhaps its just that Roger Douglas’ advice was provided by people entangled in conflicts of interest.
“Privatisation stopped in 1993 and only started again in 1998 though. With privatisation, shouldn’t it have shown up as an improvement in the OECD rankings almost immediately?”
To be honest with you, I have failed to find any claims that New Zealand was climbing in the OECD rankings in my search of the internet, so I really can’t adequately address your argument.
“Furthermore, it doesn’t help that for a decade, New Zealand had a higher corporate tax rate than Australia – that drove many of the businesses that New Zealand once had overseas.”
I think you’re overstating the importance of the corporate tax rate in businesses moving offshore, especially when compared to other factors for example closeness to their owners and a far greater market, not to mention the fact that the Australian government is far more willing to provide inducements to businesses to establish a presence there in contrast to ours which prefers to provide a “level playing field” unlike virtually every other country in the OECD.
“So you would prefer having a fixed New Zealand Dollar? I believe that the New Zealand Government was forced to ask ambassadors to use their credit cards to help out in propping up the New Zealand Dollar. A fixed New Zealand Dollar didn’t benefit New Zealand at all, and probably failed to help in the diversification of our economy (as it was always fixed at a higher rate than the likely market rate).”
Well not technicially no, though I believe it to be the lesser of the evils as it can be convincingly argued that China’s refusal to bow down to pressure to demands that it floated its currency insulated its economy to the convulsions that were inflicted on its neighbours in South East Asia in 1998 during the Asian Crisis, though it can be argued that Japan and America’s adoption of a hybrid regime are responsible for the current economic crisis as both held down interest rates far lower than was prudent with devastating consequences for small, open economies like ours.
“So, not only do you want to go back to the failure of a fixed exchange rate, but you also want to go back to the inflation inducing Reserve Bank policies of the past.”
Actually if you look carefully I expressed my relief that the Central Bankers have only a single tool with which to manage the country’s money supply as they don’t understand the system that they are supposed to manage. For example the misconception that the quanitity of money is the chief determinant or even source of inflation when in actual fact it is almost irrelevant. Inflation is actually merely a reflection of the inadequacy of competition and market failures as businesses are able to take advantage of their freedom from competitive pressures. A Central Bank’s attempts to contract the availability of new credit actually exacerbates the problem, because as a result of the lack of money companies go bankrupt and close, thus as a consequence it results in a contraction of production and consolidation of industry. This is bourne out by a rather contrarian analysis of the exploits of Paul Volcker during the 1980s.
“Contrary to modern accounts of that period suggesting Volcker’s policies whipped inflation, the markets had as mentioned already “voted” on them with gold having reached an all-time high in his early years at the Fed. The weak dollar that gold signaled was itself inflation, not a cause of the latter, and with Reagan’s election and its policy aftermath having boosted the dollar, inflation was effectively contained.
Sadly, Volcker did not agree. Seeking to tighten further through futile attempts at managing the various monetary aggregates, his actions sent the economy into a major recession which led to the ’82 electoral rout, and which made Reagan’s 1984 re-election prospects increasingly dicey.”
http://www.realclearmarkets.com/articles/2008/02/the_paul_volcker_myth.html
My obvious opposition to the policies of the Rogernomes certainly doesn’t necessarily indicate that I support those of Robert Muldoon. In fact I oppose those policies as strenuously, if not more so, given that I’m a free-market anarchist. What I object to most strongly is the neoliberals claim that the State has shrunk after their “reforms”, when in fact when it hasn’t actually grown, it has merely been restructured or reorganised with the involvement and collusion of large corporate enterprises. Profits have become privatised, whilst costs remain socialised.
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I remember one of our financial Guru’s, Gareth Morgan, praised Iceland’s economy when he visited there on his world motorcycle tour. Now, in the Listener, he is advising us on how manage our money in a recession. Who can you trust?
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E-prophet,
To answer that truthfully, you need to know what changes were bought in AFTER Gareth Morgans visit.
He saw an economy on the up. What changed to cause it to fall. Have you asked him?
Come back when you have, be an interesting scenario.
Also ask him what he would have done differently.
Just to blindly and blithly tie two untrelated events together is quite bluntly, silly.
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I don’t see anything much in Gareth Morgans article
Lasting Impressions of Iceland
http://articles.garethmorgan.com/lasting-impressions-of-iceland_1176.html
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To Gerrit I say, yes it would be good to get Gareth Morgan’s analysis now. I was attempting to make the point that an expert did not question Iceland’s situation and if you set yourself up as an expert it would be good if you report on any signs of instability, not give a rosy glow report. It is easy to say what was wrong after the event. I do not see it as “two unrelated events” surely 3 months before Iceland’s bankruptcy the signs of risk were there.
To Gerrit and jh I have to say I was going on my memory of the Listener articles GM wrote and mixed up the Norway and Iceland
articles. The Norway article does extensively praise their economic management and compares it to NZ. This is worth reading. Here is an extract:
NZ Listener 16/8/08 “Imagine a country that has natural , resources – oil and hydro electricity – in such abundance that it can earn as much as it wants in world markets, and although these industries alone don’t employ everybody, there is plenty of money to go around. This country has generous welfare benefits and full (paid) maternity leave for men and women, and 12 weeks’ annual leave is common. Further, there’s a commitment to extensive free health care and education for everyone.
This country isn’t without its challenges, though. The topography is difficult, and the small population – about the same as New Zealand’s – is spread across an area of a similar size. As a result, the cost of financing a First World transport infrastructure is not insignificant, but again a hallmark of this country’s success is its extensive netvvark of tunnels and bridges that link the numerous fjords, ravines and valleys where people live.
Our country of abundance has a strong historical and sentimental attachment to traditional farming, even though the small plots, with housing for their few livestock during the long winters, are unviable internationally. This country overcomes this challenge, however, by using some of its overseas earnings to provide subsidies.
In the end, this country still has money to burn, its currency is one of the strongest in the world (as a result of earning so much more than it spends) and, despite the generous welfare system, its unemployment rate is only 2%. ”
The Iceland article does not praise its economy but only gives a brief outline with no criticism. Here is an extract:
NZ Listener 2/8/08 “The country has been making good use of these assets, with aluminium smelters the most popular way to convert vast energy resources into export earnings. Icelanders are debating whether these developments should be expanded.
Despite the abundance of hydro-electric power and the delivery of room and water heating straight from geothermal fields into many homes, Icelanders still have one of the highest carbon footprints in Europe. This is the result of private vehicle use. Although the population density is only a fifth of New Zealand’s, the standard of living is high, so they drive cars. The Government plans to end fossil-fuel use by 2050, however, so vehicles and fishing boats are already being converted to hydrogen.” So GM’S only error was one of omission. I won’t say it was “quite bluntly, silly.”
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