Well i would like to debate the advantage of being proactive rather than reactive but I dont think that would be very popular. I heard a national party Mp discuss letting councils sell bonds to raise money to help spend our way out of the recession.He didnt have an answer for the interest component of the spending, or how it would help business become more productive. I deducted from the speech that the National party have no idea what to do, they have inherited a mess and would like to blame Labour and suck their thumb in the corner. They have Zero answers and neither do many at todays talk fest. What they have got is the ability to make it much worse,id bet on that as the most likely result.
Look at the Uk where so much of our wine,butter and lamb is sold, this is our future.

http://www.telegraph.co.uk/finance/economics/4840735/Bad-day-for-UK-as-r...

The length of NZ cycle-way sounds like a lot of fun. If that goes ahead then the summit was a great success.

In tourism as a sideline and Cycle Way NZ is excellent idea...

brother - possibly the best comment this year

It seems international trade is already collapsing (see Japan) so the odd bit of protectionism won't go amiss. Pragmatism must be the order of the day rather than ivory tower theory.

Government spending should be on useful infrastructure rather than tax cuts that will be spent on junk or given to the Aussie banks in mortgage payments. How about tackling the 100 deadliest road blackspots around the country- that will reduce the road toll too!

Is the government well prepared for an epic crimewave and possible civil disobedience? In the 1930s there were huge riots in Auckland and Wellington- and people are far more violent now having watched thousands of murders on TV before age 10.

It sounded and looked like the priest talking to the community about the big, golden autumn harvest, before the storm of the year approaching.

Philbest it was the non keynesian policies in the beginning from 1929-1933 that made the great depression in USA so severe and long lasting, if you look at the statistics unemployment went from 4% to 25% and GDP dropped 25% during this period. Employment and economic growth only started increasing again AFTER FDR and his adoption of keynsian policies. If it wasent for the new deal who knows how bad things would of got.

It took so long for the economy to recover because it was allowed to get so bad to begin with (the period we are in now) The reduce spending, reduce debt, and protectionist policies between 1929-33 are to blame not the keynesian policies afterwards. Thankfully we are not making the same mistakes. You are the one promoting myths and not looking at the facts.

Mark maybe you could point out exactly where I have been untrue (I haven't read the pdf its too long) it sounds like an opinion, I take more notice of facts rather than opinion.

1929-33 Hoover reduced the money supply with reducing debt, increasing taxes and interest rates, artificial exchange rates and Laissez-faire policy of not intervening in private business his motto was "less government intervention the better"

After 1933 Roosevelt implemented keynsian and monetry policy with the new deal, doing away with the gold standard, floating the exchange rate, increasing wages (unions), government spending and debt.

This chart shows GDP dropped between 1929-1933 then increased after 1933
http://en.wikipedia.org/wiki/File:Gdp20-40.jpg

This chart shows the same, a decrease between 1929-33 increasing after 1933
http://en.wikipedia.org/wiki/File:US_Employment_Graph_-_1920_to_1940.svg

So who's policies were better?

We are in the same situation now as in 1929 (2009) thankfully Obama isn't making the same mistakes as Hoover or we would be heading towards an even greater depression than then.

Oh, and the New Deal deepened and extended the Depression, just as Obama is doing (but on a magnitude that is far more scary. And did you see his budget speech? Have you heard someone butcher economics quite like that before?)

I do so enjoy a neoliberal calling someone "closed minded!"

Mark- It was the leaders of the federal reserve during Hoovers administration who followed the Laissez-faire theory of Treasury head Andrew Mellon of "do nothing" ie don't lend to troubled banks or business so the weeds are killed off, reduce the money supply, increase interest rates, cut government spending and reduce debt to keep the balance sheet positive . These were the policies adopted during Hoovers time at the start of the depression. This lead to massive deflation, massive bank and business collapses, 25% unemployment, and 25% drop in GDP. - Fact

Are you saying Obama and the Fed should be doing the same?

Hoovers ideas and policies were the foundation of the New Deal but they were not fully implemented untill Roosevelt came into office. It was the New Deals policies in 1933 that stoped the depression from getting worse, thats when things started improving- Fact

Andrewj - 7.5% interest on the stockpile - funny how that hasn't made headline news here? Now I wonder why that is????

Mark Hubbard - you mention the revolt against the giant lurch to socialism in the US. The irony is perfect. An effigy of a banker was strung up in a London train station this week. That taxpayers have inadvertently come to the rescue of former RBS chief, and failure of the decade, Fred Goodwin (can't bring myself to attach the title of 'Sir') has pushed the public too far. Labour's golden handshake of his £693,000 a year pension payout as a reward for his failure has turned shock into rage. The backlash of protest expected at the April meeting of the G-20 will indeed be interesting as so many otherwise disparate groups will unite in protest against the free market philosophies of the last 20 years. The usual anti-globalisation protestors will be joined by the growing ranks of angry private pension holders, the newly unemployed, the newly dispossessed, over burdened and shrinking taxpayers, Tories & disillusioned Labour voters. Judging by the lock down measures being prepared for the city they will probably be joined by those that still have a job but just can't get there while the disruption take place. We live in the midst of a convergence of forces that brings a whole new meaning/power to 'flash groups'. Spring always bring the people back out onto the streets.

SharonV: the current bankers are not part of a laissez-faire free market. So alongside them you better be figuring on stringing up every bureaucrat and politician of the system in which they are part. Yes, an utterly failed, big state, Keynesian fraud.

You have not read my references Kieran. You are lazy. No economy has taken Mises seriously: look around you - this is the result. Your Keynesian wet dream: lovely ain't it. Seriously, there is no other valid explanation for how this has occurred. Read the damned Austrians.

What do you mean 'would I rather 'we' did nothing'. Who the hell is we? I'm working, making profits, and saving into productive capacity. That is the only thing that can get us out of this, not your big Government leading you around on a leash, on moronic work programs entirely unrelated to production. The answer to Depression is not PD programs making cycleways, it is laissez-faire, and get the government out of our economies and our lives.

Regarding WINZ, I repeat: No economy has taken Mises seriously: look around you - this is the result.

And get yourself up to speed. Every article in the Mises Bailout Reader. You are a dangerous person Kieran, because in your ignorance you would have me enslaved.

(Oh, before you finally move to economics, read philosophy, and not the damned neo liberals - the classical liberals and the Objectivists - they've figured it out.)

Yes, Matt, but the Welfare State is going to kill us all anyway. Note the violence on the news every night.

And libertarians don't advocate no government: it would not be possible to run a laissez-faire economy with no government. But what we have now is more than worrying, and where we are heading via Hayek's Serfdom principle, is terrifying. And lazy minds like Kieran's, are handing my head on a plate to the bureaucrats: I resent that.

And leaving charity to a compassionless government, against which I batter my head everyday also, is foolhardy.

... and anything beyond some tinkering of it is unrealistic

And the clock went tick tock and we were all herded into little boxes.

Tinkering got us to this point.

Mark - personally I don't go in for violence and have no desire to string anyone up, I was just commenting on the mood that is brewing here. Most hold government fully responsible for the mess. The FSA & the central bank were asleep on the job and the government spin is being rapidly unspun by an astute and unrelenting press - political heads will be rolling. Most taxpayers (regardless of their political or class affiliation) believe that too many have been gorging at the trough and they want this to change. Some have been rewarded for having no desire to carry their own weight and others have been excessively rewarded for their total incompetence, excessive risk taking and incurable narcissism. It's the majority of tax payers that are getting very angry - after all it is they who have to fund the cleanup and as stakeholders, it's they who will usher in a new age of accountability. I think the issues run far deeper than the ideological polemic that is being debated here - we are in unchartered territory. Like or it or not there is going to be a hell of a lot more regulation, tinkering and general belt tightening than there has been in the last 20 years. You are right of course that many freedoms will be lost in the process but obviously there will always be a struggle to renegotiate those freedoms. I don't subscribe to political theories that we are passive actors in a repressive, static, top down regime.

Mark - As I said that sounds like fairy tale land, maybe we can all live in houses made out of lollies, be princes and princesses, plant beanstalks, and have geese that lay golden eggs as well? Sounds like fun.

Steptoe(steps),
With all due respect, if I choose a surgeon to do a heart-lung opertion on me ( my analogy of what the economy needs at present), I do not want him to tell me AFTER choosing him that he actually doesn't have all the answers for my operation, and has to ask others, (who aren't actually surgeons, but know what hospitals are), what he should do!
At the very least I would expect him to say" Yep!I know what to do, but I will also seek the opinion of other surgeons as to the latest thinking" etc.
JK either wrote or had written for him, his opening speech, and for him to have been allowed to include the phrase "...we are here as a Government because we know we don't have all the answers" does not fill me with confidence in either the man, or his team of advisors.

Janet Says:
"JK either wrote or had written for him, his opening speech, and for him to have been allowed to include the phrase ""¦we are here as a Government because we know we don't have all the answers" does not fill me with confidence in either the man, or his team of advisors."

Or You could have someone like Muldoon and the young turks...who say "stuff you Im the PM and the min Finance and you do what I say"

The problem in NZ is the managers not even know the meaning of the word...managent is not a financial skill but one of motivation, leading people in a manner that they choose to follow..the absolute basis is even if you know the soln, listen, even give credit when someone comes up with your idea....
Key was not called the "smiling assassin" for nothing. The Summit is not just a brain storm session, it is a manipulation( normally used in a -ve manner, not here thu) of critical sectors and people to work as a team to get NZ out of the poo.

If anyone is familiar with 1960s/70s motivation, management methods, before the PC BS started, they will understand it in how Key operates... and he is good at it.

John Key: "You are here because you are doers."

They are there, because they were invited as part of the good ol' boys network and to engorge themselve on the free lunch handed out by John Key.

John Key: "You are ready to commit to doing something, either by yourself or with others, to protect and create jobs in New Zealand."

They are there to protect the profitability of their business and take advantage of the governments largess. Not to mention their attendance would be a boon for public relations.

John Key: I am keen to remove red tape, lower barriers and generally give some backing to the entrepreneurs and employers who, with a little bit of consideration from the Government, could do more to keep staff and create new jobs.

He's keen to pander to the demands of the business "leaders" for what they've been hoping for since the 1980s. Policies that further enrich themselves at the expense of the workers. Nothing like a crisis to provide the impetus for demands which priorly weren't palatable to be pushed through.
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10...

"The country's books are in the red. Debt is forecast to rise dramatically over the next few years."

Has he seen Britain's and the U.S.'s deficit? Ours is small fry compared (probably lowest level in OECD), so if the government isn't willing to borrow to fund today's production and the private sector isn't, who will?

If money circulation is not going to grow, or perish the thought, fall how are we going to pay for past debts plus compound interest let alone make investments in future production? All debt is issued in the expectation that the growth of household and business wealth will be sufficient to cover the principal and interest payments. Does anyone actually understand this fundamental principle?

Oh I see, a strategic defiict provides good cover for justifying the dismantling of currently provided social services. Good thinking, John. Don Brash has taught you well, padawan.

ctnz

"1) Stop the tax cuts and use every dollar of it to pay down debt."

Dude are you crazy? Why pay back public debt when its miniscule compared to private debt and its more secure because its backed by the ability of the government to tax following generations rather than the volaltile underlying value of our private collateral.

"2) Stop govt pension contributions and use every dollar of that to borrow less."

Good suggestion though how are we going to pay for the liabilities of the baby boomers soon to be moving into retirement? I don't think the pollies are going to be to eager to tell the oldies to manage their expectations in their retirement as they'll be making up the vast majority of the voting public.

"3) Reduce the cost of govt by dramatically reducing head count and admin and focus on absolute necessities."

Another good one, though what are we gonna do with all those former bureaucrats who have no viably transferable skills? Bloat the management of private enterprise rather than public institutions?

"4) Come up with 365 examples of how the virtues of being debt free can save us and broadcast it daily simultaneously on TV and print on Herald front page!"

That would be great if one doesn't want to invest in business, have a tertiary education or to own there own home. The rentiers would love it as it would restrict the amount of housing on sale and would serve to immesurably boost their capital gains.

PhilBest
"I believe that this era will be Keynesianism's last flare-up before its flame goes out for good. Did Muldoon make NZ prosperous?"

Dude you blame Keynesian's for trying after the monetarists have failed? Ben Bernacke merely followed Milton Friedman's playbook on what the Fed should have done in the Depression and it failed miserably. Why do you reckon they say, "we are all Keynesians now? They're fresh out of ideas, thats why.

"In this brief, clear, but extremely meaty book, Robbins sets forth first the Misesian theory of business cycles, and then applies it to the events of the 1920s and 1930s. We see how bank credit expansion in the United States, Great Britain, and other countries (in Britain generated because of the rigid wage structure caused by unions and the unemployment insurance system, as well as a return to the gold standard at too high a par; and in the United States generated by a desire to inflate in order to help Britain as well as an absurd devotion to the ideal of a stable price level) drove the civilized world into a great depression."

Of course its labours fault for the inflation of the money supply, absolutely nothing to do wth the greed of bankers and industrialists and the British theft of the Witwatersrand gold fields, and the California and Klondike gold rushes which caused the relative value of money to go down, thus forcing banks to increase money circulation and investment outside their own economies leading to massive overinvestment and overproduction? Or the build up of militaries by the great powers as they faced off to determine who would have the dominant role in world affairs. Well I guess World War I settled that, but not for long.

Now banks don't even need to hold reserves in banks as they write them off the balance sheets in SIVs which have so such requirements.

"A second development is the proliferation of non-bank credit. At present, when a bank extends credit, deposits are created on the other side of the balance sheet which have to be backed by reserves at the central bank. But bank credit has been steadily contracting as a proportion of total credit. Advances in data processing and the easier availability of information are likely to reduce the special advantages of banks in deciding on credit-worthiness. Moreover, even where banks still issue loans there is a trend to "securitisation". This means that the loans are sold to non-bank investors who are not subject to reserve requirements.

Third, reserves with central banks are often held as a necessary means of settling interbank transactions. This gives the central bank leverage to affect total deposits by means of small operations. Yet the evolution of private clearing mechanisms like the US net settlement system CHIPS threatens to erode the central bank role even here. The combined results of all these developments could well be to reduce, perhaps to the point of elimination, the need for bank reserves and even the need for banks and cash altogether."
http://www.samuelbrittan.co.uk/text14_p.html

"Laissez-faire, then, was the policy dictated both by sound theory and by historical precedent.

lol. there was never any such thing as the world, least of all in the United States just prior to World War II. The claim is patently laughable when you examine the evidence in depth. I mean there wasn't a true free market in the United States since at least Abraham Lincoln who eulogised Henry Clay, spiritual successor of the American merchantalist Alexander Hamilton and implemented the "American System". Of these reforms, none were ever dismantled hereafter.
http://www.mises.org/freemarket_detail.aspx?control=92

It was so bad that in the 1920s two economists felt compelled to remark, "In the 1920s, two preeminent historians spelled out the range of interventionism. "Broadly speaking," Charles and Mary Beard wrote, "the capitalists of the Northeast demanded from Congress a liberal immigration policy to assure an abundance of cheap labor, ship subsidies for the promotion of commerce, internal improvements in the form of roads, canals, and harbor facilities, a sound monetary system to guarantee that loans and interest would be duly met in values at least equal to the nominal figure in the bond, high tariffs for industries, and the preservation of the protected market area by the retention of the southern states in the Union" (1927:1, 664"“65). They added, "This was a heroic program which its sponsors could only realize by securing the possession of the executive and legislative branches of the federal government" (1927:1, 665)."

http://www.politicalcapitalism.org/book1/appendix-b1c6.shtml#b1_c6_6.1

"What do you mean "˜would I rather "˜we' did nothing'. Who the hell is we? I'm working, making profits, and saving into productive capacity."
"That is the only thing that can get us out of this, not your big Government leading you around on a leash, on moronic work programs entirely unrelated to production."

Dude, the market's oversaturated enough as it is, only our low exchange rates have insulated domestic producers from the deflationary forces that have been unleased worldwide. Following that trajectory will only lead you into bankruptsy. Good luck with that.