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442 posts

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#1149416 7-Oct-2014 19:12
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21brandon21: http://www.nationaldebtclocks.org/debtclock/newzealand The doom clock. The Debt is mathematically impossible to pay off.


If the figures in that debt clock are to be believed, I don't think we are doing too bad after all. Look at the % of debt to GDP, a quick glance at the USA, UK, Japan, South Korea.... doesn't make us look too bad, all things considered. And no doubt we took a bit of a hiding as a result of the Christchurch Earthquake, GFC etc. 

I feel a little better, time for a glass of wine.

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  #1149420 7-Oct-2014 19:19
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It's not just whether people think they are doing a good job as an absolute that decided how people voted, in many cases it's their view on whether they would do a better job than the alternative parties standing.

 

 

Regarding best practice, it's a bit more complicated for a government than an individual. You need a bit of stability in the budget - you don't want to slash spending or savagely raise taxes to cover a temporary deficit when there is a recession, nor should you spend like a drunken sailor in a boom just because the tax take is temporarily up. That's how you make the economic cycle worse, and create mass unemployment etc. Instead, you need to balance things over time - being prepared to run a temporary deficit when things are really bad, and having the political will to salt away surpluses rather than spend up in a boom.

 



 

Although I'm not a strong supporter of any particular party, I do think that they have a reasonable argument that running a deficit at a time when we have had a massive earthquake that needed to be responded to, as well as the worst international recession since the 1930s depression. As long as they have a plan to bring the books back into order and pay the debt down again, and the political will to implement it. I guess this term of government should answer this question.

 



 

@kiwirock - you really need to read up on the difference between money and credit, and divorce climate change from the monetary system. They are unrelated. For instance, the communist bloc didn't have fractional reserve banking, or a profit motive, and still managed to trash the environment. Conflating a grab bag of unrelated arguments does not an economic theory make.

 


 
 
 
 


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  #1149422 7-Oct-2014 19:25
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kiwirock: Just to quickly add to that: Waiting on the floor for 40 minuts at A&E on Sunday with a friend who was suffering extreme pain from inflammed gall bladder who should have had it out instead of passing out from the extreme pain is causes, is a great sign of why I didn't vote National.

People are so obessed with the dollar that the dollar always comes first. People will be allowed to die before coming up with a new monetary system or don't stop the runaway monetisation of every aspect of life.

My 50c worth, adjusted after inflation.

Yes, if only we raised taxes on the rich high enough, nobody will need to die!  Why didn't John Key think of that??

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  #1149436 7-Oct-2014 19:48
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Two things:
1 - there was a GFC and a recession.  The opposite of going into debt would have been austerity, mass unemployment and misery.  On the other extreme, moaning Russell would have us printing lots of money.  I think National and Bill English did a great job of treading the compromise line to keep the economy going without running up a vast debt
2 - is it more fair for current citizens to pay for stuff via interest that they can use in their lifetime, or pay to save up for stuff that won't be available until they are dead?  It's the same way as you don't save for a house for thirty years and then move in when you're 55, you get a mortgage so you pay for the house as you use it

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  #1149457 7-Oct-2014 20:05
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sxz: I am no politics expert, nor am I an economist.  In fact, I'm not even that intelligent :).

But it annoys me every time I see Bill English saying that their annual budget will be back in surplus soon.  What this means to me is that every year we are spending a lot more than the government makes, and that they planned to do it this way.

Wikipedia shows here: http://upload.wikimedia.org/wikipedia/commons/thumb/0/0f/New_Zealand_overseas_debt_1993-2010.svg/578px-New_Zealand_overseas_debt_1993-2010.svg.png that NZ Government debt has nearly doubled from 25 odd billion to 50 odd billion since 2007.  Every year they borrow a lot more than they make.

Surely it's best practice to take a loan when needed, sure, then pay it off ASAP so you are not stuck paying interest.  If the government doesn't make enough money, then they need to raise taxes.  

NZ already has some of the lowest taxes in the OECD.  See here: http://www.oecd.org/tax/tax-policy/taxing-wages.htm.  Fascinating site.

Why does everyone go on about John Key being a business man and knowing whats best?  Surely the best way to make money is to work hard & pay off debt - not live day to day on your credit card?

Now I'm not saying Labour (or anyone) is the answer.  Labour sat with government debt at 20billion for about 10 years then.  Why cant we work hard, raise taxes, pay off all the debt, then we can be the rich country who lends money to America and makes money off the interest by doing exactly nothing.

/Rant over.


The global financial crisis which began around 2008 and then the Canterbury earthquakes have had a massive impact on the economy, the ChCh earthquakes alone cost billions of dollars. People always seem to forget those two major events when claiming that National has increased debt etc.

Have a look at how the NZ economy has performed against our major trading partners, very well. The Aussie finance minister was only recently saying he was envious of the ability for the NZ government to get back into surplus in the next few years whilst they are looking at a much longer term to do the same.

Finally how could the National government not look great compared to the misfit bunch on the left. I have never seen such a disorganised bunch of idiots that populate most of the opposition parties and the election result showed just that. The truth is at the moment there is no vaild option other than National.

sxz



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  #1149470 7-Oct-2014 20:20
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Fred99:
Talkiet: Basically because the public won't vote in any party that proposes to increase taxes.

Cheers - N


They also won't vote in a party that proposed to cut core services to the extent needed to "balance the books". 
So perhaps it's unreasonable to blame "the government" - when it's the general public who are like turkeys voting for xmas.



I do blame the turkeys who vote (present company excluded of course, and the government for not presenting the full picture.

I for one think the government needs to raise taxes a lot.  I do not think core spending needs to decrease.  I actually think it needs to increase (more funding to science, conservation, environment etc.).  Certainly you can't spend without income.

What bugs me is the government and the media focus on tag lines like 'we are moving back to a surplus' which sounds like a positive, when in actual fact they have been digging a bigger and bigger hole - even if each shovel they take is slightly smaller than the last - they are still taking more money.  Be honest about it.

If it was me and my bank they would have foreclosed me a long time ago for behaving the same way!

sxz



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  #1149471 7-Oct-2014 20:28
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21brandon21: http://www.nationaldebtclocks.org/debtclock/newzealand The doom clock. The Debt is mathematically impossible to pay off.


This is cool.  And freighting. 

It looks like every country is in debt (japan's debt is 200% their GDP!)

Who are they borrowing money from?  Does every country just print money and call it a loan from themselves that they don't pay back?

 
 
 
 


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  #1149484 7-Oct-2014 20:46
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So much for surplus - now we found out that instead of the razor thin surplus, we have a bulky deficit of 2.9b.

Tax cut? No way, but there will be another promise just before election.







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  #1149489 7-Oct-2014 20:49
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nakedmolerat: So much for surplus - now we found out that instead of the razor thin surplus, we have a bulky deficit of 2.9b.

Tax cut? No way, but there will be another promise just before election.




There was never a forecast surplus for this financial year. Budget 2013 forecast a $2billion deficit.

ckc

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  #1149490 7-Oct-2014 20:50
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shk292: Two things:
1 - there was a GFC and a recession.  The opposite of going into debt would have been austerity, mass unemployment and misery.  On the other extreme, moaning Russell would have us printing lots of money.  I think National and Bill English did a great job of treading the compromise line to keep the economy going without running up a vast debt
2 - is it more fair for current citizens to pay for stuff via interest that they can use in their lifetime, or pay to save up for stuff that won't be available until they are dead?  It's the same way as you don't save for a house for thirty years and then move in when you're 55, you get a mortgage so you pay for the house as you use it


I want to point out that personally, we're doing well under National. But we'd do well under any government. So this isn't about us.

We (NZ) are doing austerity. This is why your government services suck, why the Ombudsman is underfunded, why they're doing their best to trim all benefits they see as superfluous, why they increased GST. Real cuts across the board. Hiring freezes. Public sector cap. Hey, even the police are being cut in some areas like HB, despite increases in crime. It also depends what you mean by mass unemployment, because it's currently at 5.6% but it's been above 6% for the majority of National's tenure in government. That's bad. That's probably twice what it should be in a healthy economy.

Sure, it's not as bad as last time they were in power, but public service cuts in lower level staff while the ministers and CEs remain handsomely compensated doesn't indicate a healthy system. I left the public sector because, well, all the good people left and we were being merged, so more jobs were going. Now I'm in academia and our department can't even afford to deliver tutorials for core modules. NZ university rankings have dropped since National were in power, too - because they can't afford teaching and research staff of the quality they need. And we DO have a vast debt. We have vast public and private debt. Net debt is currently about $20,000 per capita, nearly 40% of GDP and we didn't even have to bail out major financial institutions. Gross debt is something like 125% of GDP.

This economy has been so badly mismanaged it's unbelievable. The amount of money we missed out on when English suspended super is unbelievable. The amount of money that EQC missed out on because the government ignored advice to increase the levies has contributed to the debt increase too. I get so tired of hearing that earthquake excuse. Either the earthquake has improved GDP, or it's increased debt - and it's done both of those things, but hardly anyone refers to Labour's failure to increase levies - or the bad decision about funding EQC made by National in 2008 precipitating the funding gap. National are letting us be strongarmed by foreign companies on the basis that we're screwed without them. They take up money in subsidies for keeping factories open, subsidies that these companies don't need, while Women's Refuge operate on a shoestring.

Every single decision they've made has been based on voodoo economics - crap that didn't work 30 years ago in the US, that certainly isn't working now. Every time they've done something it's been because they've courted populism. None of it makes any real sense - suspend super, not making Kiwisaver compulsory AND not planning to raise the retirement age? That's barking mad. If I balanced my own finances like that, I'd be screwed in 10 years.

And if I managed my career like National managed what business the country does, I'd be screwed in less time. They have no ideas for innovation. They have no emphasis on green tech the rest of the world needs, that we could support with good money. They have NO ideas except merge, restructure, fire.

5 new taxes mantra during the election? Oh, we might cut taxes, maybe in three years. Jam tomorrow. And now guess what? The predicted surplus still isn't a surplus. Except unlike when English makes a thin surplus and National get to crow about it, it's now someone else's fault. No jam. Someone else stole the jam that National were going to give you!

I don't usually get into these arguments, because it's like pissing in the wind. But man. Hearing National doing a good job? Hearing that is like hearing Hammett did a good job at the Canes. It defies logic and observational evidence.

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  #1149513 7-Oct-2014 21:11
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marmel: The global financial crisis which began around 2008 and then the Canterbury earthquakes have had a massive impact on the economy, the ChCh earthquakes alone cost billions of dollars. People always seem to forget those two major events when claiming that National has increased debt etc.


While locally devastating, economically the Christchurch earthquakes are one of the major reasons we did so well despite the GFC - billions of dollars of funds were injected into our economy from international insurance firms, at exactly the time when most other economies were slowing down.  The quakes meant we ended up with an economy in a much better state than would have been possible with any anti-GFC tinkering policies available to government (of either stripe), and the plight of other countries meant that any economic mistakes our government might make would be much more likely to be forgiven.

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  #1149519 7-Oct-2014 21:16
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tieke:
marmel: The global financial crisis which began around 2008 and then the Canterbury earthquakes have had a massive impact on the economy, the ChCh earthquakes alone cost billions of dollars. People always seem to forget those two major events when claiming that National has increased debt etc.


While locally devastating, economically the Christchurch earthquakes are one of the major reasons we did so well despite the GFC - billions of dollars of funds were injected into our economy from international insurance firms, at exactly the time when most other economies were slowing down.  The quakes meant we ended up with an economy in a much better state than would have been possible with any anti-GFC tinkering policies available to government (of either stripe), and the plight of other countries meant that any economic mistakes our government might make would be much more likely to be forgiven.


Treasury have stated previously the net cost to the government is around $15 billion, total cost to everyone including insurers over $30 billion.

It did have a huge effect on the government coffers, there is no way increased taxes or GST on the rebuild is going to make up for that.

This thread is about the government running deficits, whichever way you look at it the earthquakes have played a major part in that.

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  #1149520 7-Oct-2014 21:18
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sxz: ...

If it was me and my bank they would have foreclosed me a long time ago for behaving the same way!


That statement sounds like it should make more sense than it does. Personal accounts are not much like national accounts.

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  #1149525 7-Oct-2014 21:22
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If earthquakes are so good for the economy lets have more of them

Not

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  #1149527 7-Oct-2014 21:26
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Hammerer:
sxz: ...

If it was me and my bank they would have foreclosed me a long time ago for behaving the same way!


That statement sounds like it should make more sense than it does. Personal accounts are not much like national accounts.


The old joke:

I you owe the bank $10,000, you have a problem.
If you owe the bank $10,000,000, the bank has a problem.




Sideface


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