Governments quite often set the criteria by which they want their policies or budgets to be judged. In his Budget speech in May this year John Key was very clear about how he judged his Budget to be a success- the accolades of Standard and Poor’s. So how should we judge the Government’s success, given the double downgrade?
Fair comment Grant, the problem for you is, no one seems to want to hear it. While paintgate was earth shattering news for weeks on end lying about the role of the SAS, flip flopping on the economy etc apparently is ok, cos “we like him” – those who post here in his defence, also railed over at other blogs in 2008 about alleged lack of integrity, corruption etc
On this issue I do think the media have picked up that the double downgrade is a major problem for Key and English, and it is their responsibility, see Armstrong. O’Sullivan etc in the weekend.
So do the ratings agencies agree with Labour then? Do they suggest an increase in government spending to help our debt problems?
I suspect not.
The ratings agencies said the government is doing the right thing. Its private debt that is the issue according to both agencies
Grant I asked before when David posted on this but he must be too busy today because he didn’t answer, are you saying that if David had been finance minister last week, under your policies, that the downgrade wouldn’t have happened?
Doesn’t matter Thomas, Labour has never said that a key performance measure for New Zealand’s economy is keeping ratings agencies happy. The only people who said that it was important were John Key and Bill English. The National/ACT government set their own performance measure, and have failed at it.
Much like the way National said that a key performance measure for a New Zealand government is low emigration figures of New Zealanders to Australia, and failed at that measure.
Then there is the unemployment figures, Bill English said his 2010 budget was going to create 170,000 jobs. Where are they then, the same place the 170,000 jobs he promised in the 2011 budget ended up? Those budgets have set the government’s measure of performance, and they have failed.
Mind you all John Key has to do is turn up, smile and wave, and the media will just forget all his broken promises.
@Sean “Mind you all John Key has to do is turn up, smile and wave, and the media will just forget all his broken promises.” First the media are not the entire voting public. Secondly if that were true, doesn’t it say a great deal about Labour’s ineptitude to connect with the public then? If thats all National have, as you claim, why aren’t Labour riding high in the polls and running home with a wet sail? Instead they suck the life and fun out of every room they enter, resort to type and complain about … well everything. As you have just exhibited. You’d almost get the feeling you’d prefer people were unemployed and poor, just to increase the vote. Remarkable stuff. The other matters you have forgotten (conveniently, deliberately) are a rather large earthquake, and a WORLD WIDE financial collapse to deal with. We have yet to see what Labour would have done in this very situation (inevitably some sort of tax I would imagine), as the blandness and absence of policy is becoming the stuff of legend from the left.
Dave, again you focus on only one part of Sean’s post. By doing so you conveniently need make no comment about the contradiction of the PM cooing about S & P loving his budget and economic management earlier this year and now saying nothing about the downgrade, or that S & P’s downgrade doesn’t mean a criticism of our economic management, which is illogical at best.
” Labour has never said that a key performance measure for New Zealand’s economy is keeping ratings agencies happy. The only people who said that it was important were John Key and Bill English. The National/ACT government set their own performance measure, and have failed at it.
Much like the way National said that a key performance measure for a New Zealand government is low emigration figures of New Zealanders to Australia, and failed at that measure.”
“and a WORLD WIDE financial collapse” which began in 2007, and a recession which began in NZ in late 2007 and early 2008, well before the last election and allowing parties the opportunity to account for it in their pre election policies. Are you suggesting the man whose career was in future markets didn’t have his finger on the pulse at this time?
No doubt that the polls indicate a huge favour toward the government, however that doesn’t make the contradictions and flip flops untrue or unworthy of explanation.
Lots of people cared about this kind of stuff when the former PM was high in the polls. So much so ,t hat they investigated her husband, made disparaging comments, connected O Glenn and W Peters transgressions to her, a signature on a apinting (which I agree was wrong), a speeding car (again I agree was wrong), but the OUTCRYIES Dave, notwithstanding the polls,a nd rightly so, we must question questionable behaviour.
And when a party is elected on the back of high integrity and high behavioural standard promises, transparency and telling us the truth even if the question isn’t asked (as the PM said on TV1 to Paul Henry in 2008)…
So why did Worth resign, and why was he appointed junior minister with such a chequered past, why did Phil Heatley think that a bottle of wine and holiday in Nelson were business, why doesn’t Gerry Brownlee understand hwo credit card rules work, how does not tax increases relate to a GST increase, how does borrowing 130m each week for tax cuits equate to wont borrow for tax cuts, how does giving a tax cut tot he top earners stimulate an economy during a recession (it doesn’t), why not just say the SAS have a combat role, why not say they always intended to extend the 90 day trial to all businesses, … now Mr English says we need to pay down debt and save more. He’s right, of course, and his opinion was shared by the previous Labour Government. However he presided over a cutting of incentives to save through kiwisaver (and their 2008 policy clearly had already taken account of the GFC and recession, if you read their policy)
Great news today about the reductio nin murders. As this is due to govt policies (Minister of Police) then we can be sure of a plateauing or further fall from now on. Great stuff. Shame about the rise in sexual violence, hopefully the govt policies will work on this one quickly soon. Perhaps they would also now focus on reducing the annual workplace deaths, which are now three times as high as the murder rate.
From May 2011
“Bill English’s Budget has done enough to stave off a downgrade from Standard & Poor’s but not enough to reduce the risk of one.
S&P said the Government’s budget was “consistent with the assumptions that feed into our sovereign ratings on New Zealand”.
They currently stand at AA+ with a negative outlook for government debt denominated in foreign currencies and AAA with a stable outlook for debt in local currency.
S&P analyst Kyran Curry said the negative outlook on the New Zealand foreign currency rating reflected the possibility of a downgrade if New Zealand’s external debt did not improve.
Achieving the savings outlined in today’s Budget “will be an important component of such an improvement”.
Mr Curry said the Government’s finances may need to be adjusted faster if the cost of money borrowed from overseas by our banks rose.
“On the other hand, the ratings could stabilise at the current levels upon a sharper-than-expected improvement in the external accounts, led by stronger export performance and higher public savings.”
Funny how they warned about the need for higher public savings, yet cut incentives to kiwisaver the Government did.
Dave: you clearly have not followed Labour’s economic policy announcements. True the MSM have not given these much attention but Red Alert has. The structural problems of the NZ economy were not caused by the earthquake or the world crisis but were sharply revealed by these external events. Labour has produced policies to respond to these. So the faux naif “but what would Labour do” is wearing very thin.
Thanks Dorothy – so I can conclude, in short, that you don’t know either. As far as “structural” problems, there are none. One has to be a deluded ideological moron to believe that the natural disasters and our exposure to world financial problems are mutually exclusive to economic performance. “What would Labour do” might be wearing thin with you, the committed Labour voter, but try to walk in others shoes when they have no idea “what Labour would do” because either Labour still doesn’t know what they would have done, or they would have done the same, or we are still waiting for a”Panel of experts’ to decide what Labour would do. After all Labour doesn’t need to preach to the converted, its the lack of traction from the very people they abandoned that matters more. Middle New Zealand has stopped listening to Labour because Labour stopped listening to middle New Zealand some time ago. Their preference seems to be to pander to whatever pressure group or union du jour which demands their attention. The final straw for me was being described as a ‘rich prick’ when in fact I’m a teacher, so if I were a Labour voter that would worry me far more than getting irritated at criticisms. So again “what would Labour do” ?
No they didn’t. They said the government is doing nothing to address the imbalance.
No, it says that the MSM aren’t reporting the news.
The financial collapse brought about by the policies that National and Act are following.
The absence of policy is all on the right. Their only idea is to leave it to the market which, as the GFC confirms, doesn’t work.
“One has to be a deluded ideological moron to believe that the natural disasters and our exposure to world financial problems are mutually exclusive to economic performance”
Thanks for leading the way on grown up behaviour Dave. As long as you will be consistent and accredit any economic growth from the money going into the rebuild of Canterbury to natural disaster and not the current PM and MOF Dave.
Well done to have amassed $50m as a teacher Dave, that is pretty astute, kudos to you man.
Dave, again you focus on only one part of Sean’s post. By doing so you conveniently make no comment about the contradiction of the PM cooing about S & P loving his budget and economic management earlier this year and now saying nothing about the downgrade, or that S & P’s downgrade doesn’t mean a criticism of our economic management, which is illogical at best.
” Labour has never said that a key performance measure for New Zealand’s economy is keeping ratings agencies happy. The only people who said that it was important were John Key and Bill English. The National/ACT government set their own performance measure, and have failed at it.
Much like the way National said that a key performance measure for a New Zealand government is low emigration figures of New Zealanders to Australia, and failed at that measure.”
“and a WORLD WIDE financial collapse” which began in 2007, and a recession which began in NZ in late 2007 and early 2008, well before the last election and allowing parties the opportunity to account for it in their pre election policies. Are you suggesting the man whose career was in future markets didn’t have his finger on the pulse at this time?
No doubt that the polls indicate a huge favour toward the government, however that doesn’t make the contradictions and flip flops untrue or unworthy of explanation.
@Tracey – contradictions everywhere isn’t there? Like “Labour has never said that a key performance measure for New Zealand’s economy is keeping ratings agencies happy.”
If that’s so then why the (excuse the word) hysteria about the downgrade, if it isn’t a “key performance measure”. It either is or isn’t. Which one is it? No I don’t have $50M, most don’t, but to call someone a rich prick without justification is appalling, and I’m surprised you don’t defend teachers and Police from this scurrilous kind of attack. Perhaps you believe we are ‘rich’?
I would “accredit any economic growth from the money going into the rebuild of Canterbury to natural disaster and not the current PM and MOF” if I could, but, stay with me here, Earthquakes aren’t people and in my experience they rarely create wealth.
Lastly as far as ‘low emigration figures’ try this one for some perspective. It seems the Government is comparatively pretty well: http://www.statschat.org.nz/2011/10/03/emigration-graphics/. Any more spin ?
Dave: you say there are no structural problems; Bernard Hickey says there are (and he’s not alone among economic commentators). Who do we believe? Hmmm….
Their only idea is to leave it to the market which, as the GFC confirms, doesn’t work.
@ Draco
Though I agree with all else you’ve said in this post (and numerous others) this is wrong.
The ‘market’ didn’t fail. The ‘market’ (trade of goods and/or services between buyer and seller under contract to mutual benefit) has been working fairly well for thousands of years.
What failed was regulation of this particular market, most obviously its transparency. The market operates on trust and openness between transactors.
You can’t make an honest deal between traders when one party has all the knowledge and is playing an inside game.
That’s fraud; something which is anathema to a functioning market and should be punished to the full extent of the law without any recourse to legal chicanery.
No it hasn’t. Every time we’ve had a market economy it’s collapsed. Then we’ve gone back to a bit more government control, things go well, the market gets another look in and then things collapse again.
In fact, the biggest problem with a profit driven market is that it’s incentivised to use up all available resources as fast as possible. Main reason for the collapse of all civilisations so far? They’ve run out of resources. We’re next on the list and the collapse will be this century but we’re going to have a bit more fun than usual because of the massive overpopulation that the market has encouraged and climate change. This century will, quite simply, be hell on Earth due to the market system.
No you can’t but that’s the normal state of the market. In fact, if it wasn’t nobody would ever be able to make a profit as everyone would actually know what the product/service was worth.
Let’s look at some of the policies which lead to the financial crisis.
- The change to the Community Reinvestment Act (CRA) (the first private securitization of loans were of CRA loans), to make banks prove they were making efforts at lending to the ‘underprivileged”, which led to the creation of the subprime mortgage market in the US.
- Government sponsored enterprises Fannie Mae and Freddie Mac (the federal guarantee of which gave risky securtizations of their mortgages an implied triple A rating) or the role of the Federal housing Authority in directing mortgage lending to low income borrowers.
-HUD directives to Fannie and Freddie, beginning in 1994, which produced a gigantic spate of government-insured subprime and nonprime lending and securitization.
- The labyrinthine mess of regulations that conferred upon the rating agencies government protection and privilege and effectively barred anyone from competing with them.
- The Federal Reserve keeping interest rates low for five years after the dot com crash and the credit expansion it fostered.
- The role of the capital requirements under the Basel accords.
Which of those policies are “leaving it to the market” and in what way are National and Act pursuing similar policies?
I would recommend you read this paper in the critical review
The simple fact is that the market wasn’t left alone and we can’t know what the financial and banking sectors would have done without those regulations nor do we know how the recovery from the financial crisis would have proceeded in the absence of state intervention. However, to quote the above paper;
drawing convenient conclusions again raven? so, in order to “prove” they were lending to “underprivileged” borrowers the banks managed to lose trillions of dollars? what a load of poppycock!
being blinded by party politics isn’t a good start to any kind of realistic dissertation…
unless, of course you are averring that the sub prime crisis was created by a morally and intellectually bankrupt republican administration giving the green light to profligate greed by the banks… which led to criminally negligent lending practices…
unless you are averring that the same inept administration was more concerned with attempting to cover its lack of coherent economic strategy with politically motivated largesse, through their banking sector support network, to try to convince voters that the american economy was so strong that anyone could buy a house, because jobs were so secure that the huge debt these people were being saddled with was not the risk it turned out to be…
if that’s what you are trying to say, then i agree…
The problem of the financial crisis is not a simple matter of why bankers err, why they are overconfident or imprudent, but why did so many banks engage in the same behaviour at the same time. There is no systematic risk if only a few players engage in such behaviour they will fail or change and it won’t pose a threat to the whole system. That is if there is sufficient heterogeneity in it. However, what regulations do is push the system toward greater homogeneity and hence put it at greater systematic risk.
In the case of the recent crisis the thick web of regulations built up and up interacted in ways that regulators were ignorant of to create the systematic risk that lead to systematic failure. The Community Reinvestment Act, Government sponsored enterprises such as Fannie Mae and Freddie Mac, and the department of housing and urban development all worked to create a spate of government insured subprime lending and securitisation, the capital requirements in Basel I and II, tied to the judgements of the ratings agencies which were canonized in regulations, encouraged banks to hold double and triple A rated asset backed securities, and the SEC regulations which protected the three major ratings agencies from competition, essentially giving them state privileged status, all interacted to move banks and investors in the same direction and make them ignorant of the risks and lead to the crisis.
It was not the result of the actions any one administration, but happened over many years. The SEC regulations around the ratings agencies data back to the seventies. There was no grand conspiracy to fool the American public as you allude to. In fact many of the policies were pursued with the best of intentions like trying to get more low income people to own their own homes.
All you provide is a tired narrative about greedy bankers and evul republicans. You mention no specific policies and say nothing that would tell me you know what you’re talking about.
I don’t support any political party whatsoever.
As long as we’re clear Dave, you don’t mind it if National does it but do if Labour does it. For my part the speaking with forked tongues outrages me whoever does it. You didnt tell me what core values drew you to Labour and which, when no longer exhibited by them saw you move to National.
I DO defend teachers. I didn’t take Mr Cullen to be referring to teachers but to wrongly deriding those who made the kind of money Mr Key did. Note I said wrongly deriding.
I believe in holding those in power to account whether I like their ideology or not. You are the one who answered the query about National’s contradiction by bringing up Labour’s. Do you teach that two wrongs make a right? And if a student likes a particular viewpoint, no matter how hypocritical or contradictory they should just accept it?
“I would “accredit any economic growth from the money going into the rebuild of Canterbury to natural disaster and not the current PM and MOF” if I could, but, stay with me here, Earthquakes aren’t people and in my experience they rarely create wealth.”
I dunno Dave the earthquake will be one of our biggest foreign revenue earners (through reinsurance money flowing into NZ).
@Tracey – “if a student likes a particular viewpoint, no matter how hypocritical or contradictory they should just accept it?” I’m not sure i follow this, are you suggesting they shouldn’t accept something they agree with? If so , I would say they can accept it, because it is a viewpoint, it is an opinion, their opinion. If they’re asked to justify something, then how they do that, rather than what I believe, is what a (good) teacher looks for. Opinions aren’t facts and can be justified or unjustified. If left or right had to justify their values and opinions, then we would get absolutely nothing done. Again, I don’t have to justify my values, they are mine. As far as bringing my students into this, why? Their values are theirs, and as I teach papers that are mathematics, physics and technical and will lead to an actual job, we rarely get into the philosophical. If I did ask them to justify their findings on something, it will ALWAYS be backed by technical data.
When a party is elected to govern, that is their mandate to do so. The opposition will inevitably scream about a ‘lack of democracy’ on most decisions but as they are the opposition, and democracy has just handed them their a**se, I’m not surprised this happens. Democracy, by its very nature won’t please everyone. But of course, choice is a wonderful thing.
@ Draco
Hadn’t had time to reply earlier but here goes.
GW:The ‘market’ (trade of goods and/or services between buyer and seller under contract to mutual benefit) has been working fairly well for thousands of years.
DTB:No it hasn’t. Every time we’ve had a market economy it’s collapsed. Then we’ve gone back to a bit more government control, things go well, the market gets another look in and then things collapse again.
Counterposition: Evert time we’ve had a controlled market they have collapsed. That doesn’t prove the point.
I am suggesting that markets have worked ‘fairly well’ over time given that (presumably) you have food on your table, a roof over your head and access to the internet all without having to farm, build your own house from timber grown in your own forsest, or develop the personal computer that you access the internet via.
DTB: Main reason for the collapse of all civilisations so far? They’ve run out of resources.
Generally true I guess though resources would have to take a pretty broad definition.
GW:You can’t make an honest deal between traders when one party has all the knowledge and is playing an inside game.
DTB:No you can’t but that’s the normal state of the market. In fact, if it wasn’t nobody would ever be able to make a profit as everyone would actually know what the product/service was worth.
You have taken an extreme and inaccurate view of ‘market knowledge’ here. It’s very rare that one party has all the knowledge, not the norm. It may be heavily weighted to one of the transactors but again, there is plenty of legislation to restrict this imbalance (Securities Act, Fair Trading Act etc.) in an open market.
Oddly enough it’s ocasionally when the State gets involved that we get the worst of both outcomes: effective monopoly of supply, ownership of networks and other barriers to entry, coupled with an unhealthy distain for the taxpayer (i.e the energy industry in NZ).
Note – Not to suggest that SOEs are bad for primary infrastruture, but they need to be regulated/mandated as a public good, rather than milked as a cash-cow by the govt. of the day.