Suspend payments into the “Cullen fund” – that’s the fund that helps pre-pay superannuation for when all the baby boomers retire in the next twenty years, and therefore makes national super sustainable.
Justify that decision on the basis that the global economic downturn means that the government is fresh out of cash, and would need to borrow.
Quietly overlook the fact that the share market was really low at the time and that that is precisely when smart people buy.
Forgo a huge profit opportunity for the “Cullen fund” as a result, leaving the future of national super uncertain, yet again.
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Argument confined to investment vs borrowing hardly looks at what Nact is doing.
Cutting taxes for the profit takers does not reduce debt but increases it.
No controls on importation increases unemployment and Govt outgoings.
Immigration is another ongoing cost.
Borrowing from the bankers costs us all dearly
But wait a minute isn’t our temporary PM a banker.
Would wiping superannuation and all citizen ploughing their life’s savings into insurance companies be OK then.
We could become the 51st state and dump out health system also.
“Any ideas for industries which fit this profile?”
Sure, industries which can be displayed to have a durable competitive advantage fit into four categories:
- Businesses that fulfill a repetitive need with a consumer product with brand name appeal, eg.
* Brand-name fast food restaurants
* Patented prescription drugs
* Brand name foods
* Brand name beverages
* Brand name household products
* Brand name clothing
- Advertising
* Advertising Agencies, provide a service that manufacturers must continuously use to persuade the public to buy their products
* Television (Network and Cable)
* Newspapers (with a regional monopoly)
* Magazines
* Direct Mail
- Businesses that provide repetitive consumer services that people and businesses are consistently in need of
* Pest control
* Cleaning
* Landscaping
* Security
* Tax returns
* Credit cards
* Rental companies
* Business Infomation companies
* Billiboard companies
- Low-cost producers and sellers of common prodcuts that most people have to buy at some time in their life
* Low cost insurers
* Basic low risk banking services (accounts, conservative home mortgages and small business loans, etc)
* Furniture producers and retailers with regional monpoly
* Large retailers carrying low cost products with a regional monpoly (Wal-Mart, Warehouse, etc)
* Low cost producers of plumbing and building materials
* Large jewelry chains
That’s all I can think of now… None of these are in sexy industries but make money hand over fist because they have low (or non-existent) plant costs, can scale the size of their business to match demand easily and have large returns on equity…
NZ has many of these businesses (think PAMS, Sky, Michael Hill, Fletcher Building, etc) and the Cullen fund could acquire those which it perceives have an opputrtunity to create a regional SE Asian monpoly or brand name and inject capital…
Lots of comments. To those who think that ‘borrowing to invest’ is bad, please reflect that with a fiscal deficit ANY expenditure could be said to be paid by borrowing. Of course the classic is two rounds of tax cuts, for the rich, since the election. Borrowed money that was. No doubt the Keynesian defence can be mounted but that doesn’t explain why only the rich are allowed to play. As to the remarks about timing, buying at the bottom is time honoured. Ask Warren Buffet. Or John Key. He bought Transrail at the bottom of the market even as he used his position as an MP to ask questions of the company; could be why he never declared them till TV1 cottoned on.
No doubt tax cuts when running huge deficits is dim, like asking for a pay cut when the family is overbudget…
Warren Buffet and John Key didn’t borrow to invest in the sharemarket, high or low, it really is that simple…