Alex's politico-economic blogroll: Dirty electorate deals; Labour's dreadful polling (but give them a chance); Why an OCR hike does not mean the NZ$ will jump; Cartoons

Alex's politico-economic blogroll: Dirty electorate deals; Labour's dreadful polling (but give them a chance); Why an OCR hike does not mean the NZ$ will jump; Cartoons

Here's my blogroll for the week. Have a good weekend all. Plenty of good cartoons HT Bryce @ liberation.

Media blogs

1. I'll be your back-door man. Paddy Gower from TV3 was keenly doing the rounds in the Press Gallery for his blog this week, so here it is up the top. Dirty electorate deals. One of which will mean ACT gets back into Parliament, and if Don Brash at #1 on the list follows in on Banks' coat-tails, it's anybody's guess whether he'll try and demand the Finance Minister portfolio if ACT somehow holds the key to another Key-led govt.

Gower looked at a few of the deals that have gone down, including Epsom, New Plymouth and Ohariu (x2), which drew a response from Peter Dunne. Here's Gower on Epsom:

This deal involves John Banks the former National man standing for ACT and getting the nod from National for its voters to bring him in. This keeps ACT alive.

It’s pretty much out in the open this deal.

But it's still a shabby deal in my opinion because it is blatant exploitation of a loophole.

ACT most likely can't get 5%. The only way they can survive is if they win an electorate seat - then they get whatever party vote they chased.

I can see this rule being relevant if an MP genuinely won an electorate seat.

But in this case it’s a total jack-up, stitch up and a rort, so I don't think they deserve to get the party vote.

It benefits National, even if ACT poll dismally at 1.3% like they are now that could be two or three seats.

So the good people of Epsom roll over like a pack of schnauzers and do what they are told and vote ACT.

And just in case they don't get what to do, the National Party has chosen John Banks' biographer Paul Goldsmith as its candidate in the ultimate symbol of master and servant.

In another rort of the system Goldsmith will get a decent list spot at the election and a seat in Parliament as a reward for not being a proper candidate and deliberately losing.

Goldsmith has essentially said, in the words of the AC/DC lyrics: "For a fee, I'm happy to be your back door man."

2. They think he knows stuff about the economy. That's one of the reasons voters are gunning for Key apparently. Fairfax's polls in the last week have kicked off a bit of debate, with some commentators saying this could be the final nail in Labour's election-defeat coffin. John Hartvelt at Stuff has a look at why people like the PM so much.

Most of Key's backing is built on the idea among voters that he is a smart guy who knows a lot of stuff about the economy. And when most people look at the evidence - although there are always adverse figures about - New Zealand does appear to have weathered the global financial storm pretty well. Unemployment here is not moving towards double digits; growth is not sub-zero and our heads are not bouncing off a debt ceiling.

From the right

3. Big blow for Labour, and perhaps the Greens...if you can believe Winston Peters. Kiwiblog's David Farrar picks up on a comment from Newstalk's Felix Marwick that Peters has pretty much ruled out a Labour-Greens-NZ First govt. If this is true it is a big blow for Labour. Goff has adamantly not ruled out working with Winston Peters, saying ruling people out was an arrogant thing to do (he then ruled out working with Hone...).

Winston has not ruled Labour out per se, but has ruled out Labour, Greens and NZ First. This suggests he may do a repeat of what he did in 2005 (if he is in a position to do so) and veto the Greens from being Ministers.

The Greens would then have to decide between accepting being screwed over again by Labour, forcing a new election, or allowing a National-led Government to govern. None of them pleasant options for them. So I think the Greens will be hoping Winston doesn’t make 5%.

4. Why whine about the dirty deals? Homepaddock asks what Paddy's got his knickers in a twist over? If parties work together in Parliament under MMP, why not work together in elections too? But it should be all out in the open - the darkness around some of these deals is one of the things which worked Gower up.

One of MMP’s virtues is supposed to be that it encourages parties to work together to get concensus. If that’s good in parliament, why not in elections?

There’s nothing new about accommodations between potential allies and it’s better to have overt deals than covert ones.

There is a risk. National voters put Peter Dunne into parliament which allowed him to be part of the Labour government for nine years.

But if there’s going to be deals it’s better that they’re in the open. That way voters know parties’ intentions and can take them into consideration, or not, when they vote.

5. Make retirement savings compulsory so we can phase out Super. The Veteran at No Minister gives seven things he'd like to happen. I'd definitely agree with numbers 1 and 2. Will have to think about the others. Oh, and number 7, although I'm not sure I actually have a handicap because you have to have kept tab of your scores, and I usually give up counting half-way through each hole.

I reckon our three-year Parliamentary term is one reason we're in such stook. You get in, spend a year figuring everything out, in the second year you start working on proper policies, impliment a few, and by the time the third year comes around you have to start working on the re-election campaign. Forget a referendum on MMP, the referendum should be on electoral terms.

#1 Retirement savings made compulsory with matching contributions by the employer (or Government in the case of those receiving income support) leading to the gradual phase out of NZ Superannuation.

#2 A four year Parliament.

#3 Term limits for elected members (central and local government).

#4 Medical Insurance payments made tax deductible

#5 Private School fees made tax deductible coupled with a phase out of State Aid to that sector.

#6 Time limits for the dole and DPB payments.

#7 My golf handicap in single figures.

From the left

6. Hey, give us a chance! Eddie at The Standard argues Labour shouldn't be written off just yet. Watch for the dance to the minor parties perhaps? Will support for ACT rise from the doldrums as the election approaches? Will some of those Green-Nats go to the Greens?

Some are linking Labour’s polling to National’s in 2002.

Well, I think it’s worth remembering the other side of the 2002 polls. Labour’s support plunged 13% in the last month of the campaign from 50%+ support to the point where a Nat-led government was a real threat. Then, there was 1996, where Labour went from polling 4th to losing by a hair.

In 2002, it seemed like Labour might be about to put the stake through the vampiric heart of the odd foe. National was in the teens, while Labour polled into the late 50s with the Greens, Alliance, and Progressive as potential supporters to its left. Helen Clark was the most popular PM on record, with support levels the same as John Key’s today.

Then it all started to come apart. It wasn’t so much National, who regained only a few percent. It was the minors. People didn’t want to give Labour all that power but didn’t want National, whom they had just thrown out after 9 years.

7. Boggled by how the masses see National. Idiot Savant at No Right Turn can't figure out why so many more voters think National's better than Labour at economic management.

I'm absolutely boggled by this. To point out the obvious, we have a stagnant economy155,000 unemployed, and record high inflation. And the reason we have these things is because National's "response" to the recession was initially to do nothing, in the belief that the market would sort itself out, and then to try and cut our way out of trouble (with the expected result - an austerity-driven recession, just like 1992). By any empirical measure, they are failures at managing the economy - because they are ideologically opposed to the very idea.

And yet, somehow the fact of National's dismal non-performance can't penetrate the dogma that they're businessmen, so therefore they know what they're doing. Quite apart from the fact that most NZ businessmen don't know what they're doing - you have only to look at the dismal performance of NZ businesses to see that - this is simply false. The economy is not a company. Anyone trying to manage it as if it was (e.g. by "tightening our belts" in a recession) is going to drive it into the ground. Which is exactly what is happening now.

8. Trickle-down economics. Yeah right. Danyl at Dim Post isn't too impressed by Michael Hill's comment in today's Rich List that “Could not the Government give us a little freedom to be able to make common sense decisions for ourselves?” 

Cutting back on regulation to help the economy seemed to be a big theme of the rich-listers.

That’s fine. If you ask any selected cohort of people what the government’s policy settings for driving economic growth should be, most of them will (a) have no idea, so (b) answer that the most important thing to do is to have policies that advantage the members of that cohort.

The problem is when people mistakenly think that Sir Michael Hill’s expertise in setting up jewellery franchises means he knows anything whatsoever about macroeconomics, and that he isn’t just advocating deregulation out of pure self-interest in the hope that various suckers will be gullible enough to endorse or even implement his ‘advice’ and make him even richer.

Because we know from incredibly bitter experience that deregulation is not a driver of economic growth. We carried out massive deregulation for twenty years, and we’re routinely celebrated as the most deregulated, freest, best country in the world in which to do business – but instead of sustained economic growth, this reform led to catastrophic market failures like the ’87 share market collapse, leaky homes and the finance company debacle, all of which destroyed far more wealth than the deregulation created. And at the same time, robustly regulated economies like Australia and the Northern European welfare democracies left us for dead.

Economics blogs

9. Matt Nolan at TVHE says Bollard's comments on Thursday were pretty hawkish. I agree. He also has a go at all the people saying an OCR hike would send the NZ$ flying upwards. He's got a point.

Remember something here, the link between the exchange rate and the OCR IS NOT as clear as people act like it is.  Money doesn’t “flow in” to take advantage of “higher interest rates” when the RBNZ increases the OCR – as so much depends on the “demand” for said overseas loans.

Please god, lets remember that someone in NZ actually has to borrow the overseas money for a loan to be made – its doesn’t just wash up on our shores in a bottle and start aggressively lifting our currency through black magic.  Oft times the currency does get pushed up (especially pre-core funding ratio), but in of itself it will not always happen.

Video

10. Two of the greatest dudes and one of the greatest songs of all time. Dylan and Nelson with Pancho and Lefty. Have a good weekend.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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15 Comments

re poll results -It would be interesting if a polling company could conduct a poll ONLY calling mobile ph numbers as I believe the present polls are a little bit too good for Nats than realistic

Australian house prices fall for the SIXTH month in a row:

http://www.theaustralian.com.au/business/economics/house-prices-in-capit...

I enjoy reading what this guy has to say.

 

 

BazzaMcKenzie

59 minutes ago

 

 

I see cstan11, Mike Dunford and Villarreal are long on abuse and short on analysis.

For Villarreal's information, I have four degrees, including science and economics, and a PhD, plus more than 40 years working in and observing the real world.  That makes me rather more confident in my own informed judgement than most journalists, commentators and politicians have any right to be.

cstan11 is right when he says the debate over the debt ceiling is not an economic crisis. The actual crisis is that the US federal government is now borrowing 40% of what it spends each year, except there is no one able to lend it the money (and the command over real goods and services money implies), so instead the Fed has been printing money and buying US government debt, thereby stealing from everyone who has earned their money honestly.

The real US economic crisis is that perhaps 30%-40% of its working age population is gainfully employed.  By "gainfully" I mean making products or providing services for which customers are willing to freely pay.  Once you take out the huge number of real unemployed (16%+ in the US), the ones on lifetime welfare, a large proportion of public servants, the large numbers of students (and their professors) doing degrees that are proving worthless, the proportion of the private sector ("green industry, etc") that exists solely because it is paid by the government or performing jobs mandated by the government, you are left with about 30% - 40% of working age Americans productively employed.  And everyone else lives off them.

That is the real economic crisis (mirrored in most other Western countries) and all brought about by the corrupt depredations of government over many decades.  It was long hidden by the combination of government borrowing (consuming now what should have been productive investment for the future, and thus stolen from future retirees), an expanding working age population and, for a time, the desire of China and other Asian countries to grow their industry by providing loans to Western countries to buy the output (loans, which they now realize, will not be repaid). All of those ameliorating factors have now reversed and the grand ponzi scheme of post WWII Western governments is fully exposed.

That is the real crisis.

 

drjonathanwilson

Today 06:05 AM

 

Right on the money as usual Bazza - the problem is spending not income and the essentials can all be paid for out of current income. Absolutely no chance of a debt default unless Obama chooses to do so. 

The real risk lies in Obama not letting this "good crisis go to waste" and attempts to unilaterally take, in true revolutionary and dictatorial form, the power for himself to raise the debt ceiling

Jonathan

 

BazzaMcKenzie

54 minutes ago

 

 

There were a lot of people whose pensions depended on the "health" of Bernie Madoff's investment fund.  The didn't lose their money when his fund was officially found to be a fraud, they lost it over the years when the fraud was being perpetrated.  They just didn't know it.

The US stock market has been puffed up by Fed money printing, oh and by Apple's astronomical rise selling gimmicky electronics.  Take those out and the US market has been going backwards. Even including them, it has been going backward against commodities and precious metals.

Those pension funds dependent on the stock market have already done a large part of their dough.  They just don't realize it yet and it will be a blood bath once they do.

That has nothing to do with stopping the US government from borrowing (and printing) more money than it can ever repay.  It is already baked in the cake.  Only question is the point at which most of the community recognizes it.

 

 

BazzaMcKenzie

Today 04:49 AM

Ignore the rabid fear mongering of politicians, journalists and bankers.  There is no risk of the US actually defaulting (ie failing to pay interest owed on its debt).

The Washington Post has a nice interactive table (http://www.washingtonpost.com/... which clearly illustrates that the US can pay its interest, pay the troops, pay Social Security, Medicare, Medicaid, food stamps, and still have billions a month left over.

If the debt limit is not raised, which would be an enormous benefit to the US, then the federal government will just have to decide which of its enormous range of unconstitutional, wasteful programs to slash.

Suddenly America's credit standing will actually be sky high again and its $ will stop dropping because the Fed will no longer have to, or be able to, print the massive amounts it has been doing to buy up a large part of the expanding US debt.

BazzaMcKenzie

42 minutes ago

 

 

 

anthony, by all means go ahead.  I am not saying the markets won't crash, they go up and down all the time, and the only reason they are up now is because of US Fed money printing, which is simultaneously stealing from savers.

The crash of the markets is already baked in the cake, it is just a matter of when.  Especially once you realize that by far the largest US stockmarket sector is now the financial sector, which, in the main creates little value for the US (I exclude basic financial services, which are valuable, but are not the basis of the bulk of US financial sector profits) but have been very successful in ripping off enormous sums from the rest of society.

We have been in a crash for the last 4 years and the extend and pretend philosophy has just postponed the tough changes that have to come, while guaranteeing they will now be worse when they can no longer be postponed.

If you get into personal financial difficulties, you can put off the evil day by borrowing more, but eventually it has to be faced and then you discover you have made your situation even worse by the additional borrowing and by consuming the resources you could otherwise have used to help you through the transition you must than make.  No different for countries. 

People who think they can avoid reality by spending more and more they do not have are either dunces or grossly dishonest.

Cracker read from the Automatic earth

Ilargi: Perhaps the best way to distinguish a black swan event from a run of the mill incident is to ask yourself if your favorite fiction writer could have invented the scenario involved, and remained believable. If the answer is yes, obviously it's not a black swan.

The recent accident -and its consequences- at the Vasilikos power station on the Mediterranean island(-state) of Cyprus, forever torn between its Greek and it Turkish parts, would certainly seem to meet this definition of a black swan event. Vasilikos is the newest power station on Cyprus, which joined the EU in 2004 and adopted the Euro in 2008. The station is primarily powered by steam generated by heavy fuel oil, with some gas turbines. Though operating, it was still partly under construction when the accident happened.

 

At 05:50 EEST (02:50 UTC), on July 11, 2011, there was a huge explosion at the nearby Evangelos Florakis Naval Base. Wikipedia describes just how black this swan is:

In open storage on the base were 98 containers of explosives that had been seized by the United States Navy in 2009 after it intercepted a Cypriot-flagged, Russian owned vessel, the MV Monchegorsk, travelling from Iran to Syria in the Red Sea. According to leaked US cables through WikiLeaks, released in 2011, the US through Hillary Clinton exerted pressure on Cyprus to confiscate the shipment

The ship was escorted to a Cypriot port and the Cyprus Navy was given responsibility for the explosives, which it moved to the Evangelos Florakis a month later.[9] At the time of the incident in 2011, 

the explosives had apparently been

http://theautomaticearth.blogspot.com/

 

left in the open for over two years

The Cypriot government had declined offers from Germany, the United Kingdom and the United States to remove or dispose of the material, having feared an adverse reaction from Syria. The government had instead requested that the UN effect the removal, but claimed that its request had been rejected.

 

 

Matt in Auck:

Love it. Specially this.!

"He's becoming quite frustrated and cranky. He's getting quite boisterous, and the outlook for him getting off the island is pretty grim, because even if we don't get any more rain, the lake could be full for another couple of years."

Hodge travels to the area from his property 165km away to keep him alive.

"Some days we've had to hide behind a tree when we're feeding him, because he'll come running at us," he told the Australian Broadcasting Corporation.

cheers

Bernard

Bernhard announcing that he has become bullish would be one sure way of sending the market into a tailspin. The Hickey effect. Worth a crack maybe?

Who did the "Farce Side" cartoon? Brilliant.

 

Has to be seen to be believed:

http://www.wtfnoway.com/

Is this for real...the Dunedin City Council boondoggle financial games!

 "DCHL has already had to borrow to deliver projected revenues to council." stuff.......errrr say again...a council company borrowing to provide revenue to the council....is this not insane!

$8 million in the hole so it states....is this poor management..stupid socialism or is there fraud somewhere in the mix...who is paying whom how much for what?

Wally - no, it was a cabal of City Councillors, and the past Mayor, Peter Chin. Included were Michaiel Guest, Syd Brown, and some minor sycophants, who voted for the item at the heart of the debt. Two got the boot, others need it.

They were told, clearly and over a period of years, that debt was not a good idea, and you know what. I told them.

They were hell-bent on 'keeping things going' through the 'lean time' (which they presumably saw as temporary). They ignored the warnings. Arrogant or ignorant enough to not even try.

The Otago Daily Times had reporters at those hearings, over those years. They were also hassled and visited, all the way up to the Editor, Murray Kirkness.

Here's what the readers saw of that argument:

One op/ed - written by me.

The Stadium could never get off the ground without help, so the 'old boys' sent out the message to the Council-owned companies - tighten up for a year, give us a bigger divvy, and we'll seed this thing.

The National Government - note that Wally - the National Government, seeded it with 15 million - a gift. Of taxpayers money. Were we given the opportunity to vote that the 15 mill went to our hospital services? Nope. That stadium wouldn't have started without your beloved National Party. Eat it, Wally, it smells and it's brown.

It's nothing to do with socialism, Wally. It's to do with the old-boy network, and a fatally-flawed belief that growth will continue.

I call it criminal, at this point. Ignorance can only be excused for so long.....

I stand corrected PDK...shall we call it rampant stupidity!....poor buggers down there gotta pay now...or will JK bail them out.

Unusual comment from you Wally.... PDK seemed to be quite clear what was going on, and I don't think he suggested 'rampant stupidity' ... Is it the naming that you are wary of?

 

Got up this morning had a cup of Coffee and looked at the nz$ and thought 'whats gone wrong' .88 to the us. Then read  about the problems overnight.

 

 

Barack Obama warned that America's prized triple-A rating is in jeopardy and that the country is "almost out of time" to agree a deficit deal as GDP data showed the moribund state of the US economy.

 

Fears that a recovery in the world's biggest economy is running out of steam were heightened as official figures showed GDP in the US rising 1.3pc in the second quarter, against expectations of a 1.8pc rise. In a chastening statement the Commerce Department also downgraded first-quarter growth from an initial estimate of 1.9pc to just 0.4pc.

 

http://www.telegraph.co.uk/finance/financialcrisis/8671673/Barack-Obama-...

 

Denninger has gone ballistic

http://market-ticker.org/

 

 

 

jtm1961

Today 07:40 PM

 
 

 

1.9% to .4%..who'd have thunk it, with QE2 in place as well at the time and a debt ceiling drama unfolding..anyone would think this was planned. Not me..no siree, I'm no tinfoiler

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