A few days ago I went with some mates to Dannevirke and spent the morning and afternoon door knocking as part of our campaign for Labour in the Wairarapa. We listened to local people telling us how they were coping under a National Government. It became clear; Dannevirke and its people like most communities in the Wairarapa have been poorly served under National as a result of Key's policies.
The National/ACT agenda of borrowing to fund tax cuts to the rich while cutting back on social spending and benefits is devastating middle and lower income New Zealand. Rural towns like Dannevirke relied in the past on a few large employers like the carpet mills and freezing works. One by one these have been closed or outsourced. No one has come to fill the void. The result is that generations who grew up in this beautiful rural town are now unemployed. Their parents are elderly and there is no economic future for the people in that community. Many don't even have the money to relocate for work. But if they do, they leave elderly parents behind and the place slowly becomes a ghost town.
Things that you and I would regard as staples such as cheese and lamb are regarded as luxuries by a lot of people in Dannevirke. One mum told me that she "has enough to buy her bread, meat and some milk, but cheese is a rarity”. It is sad that in an area surrounded by dairy farms - mums use milk sparingly and cheese is regarded as a rarity. As I knocked on door after door I heard the same thing - the rising cost of living was not only using up what little money people had each week, it was now eating into what little savings people had and was driving them into debt.
The Government’s cutback policy has at one of its stated aims to reduce debt. In reality it is driving more and more people deeper and deeper into debt.
I walked past the local National MP's office. It is only open 6 hours a week. Most people have never seen him. No one I spoke to could ever recall him coming to talk to him or her to ask how he or she was doing? These people are hurting and desperately need a hand. All they get is the Prime Minister crowing about how great the Government is doing and an absentee MP. It is as if National lives in a bubble divorced from the realities of what life is really like for people in rural New Zealand towns.
Up one street I spoke to a young single mum. She had applied for 100 jobs and had been knocked back every time. Cheese was something her kids hadn't tasted since last year. The temperature had dropped to 9 degrees, but there was no fire in the hearth. Wood was not an essential.
One woman who had three kids was in despair. Her face showed the strain as she calmly recounted her story. She lives on potatoes and bread she bakes herself. She can't afford to run a car, so carries all her groceries home by hand. Some Monday's her kids’ stay home from school as she is ashamed to send them to school without lunches.
Across the road there was a block of flats. At the first door I met Victoria. She was a small woman who was middle aged. She was married to Troy. They have no kids. She told me that Troy used to have a job as a handyman at a police station. They both had been looking for work for three years but had found nothing. She is one of life battlers. She told me of the despair and hopelessness they feel with life under National. What little they had saved has now long gone. Some nights she said she just sits and cries.
National has done nothing to help everyday New Zealanders. It is common when I am out door knocking to hear similar stories. People are being let down by this Government which is arrogant and out of touch. It appears that despite the smiles and waves this Government has only one aim - to make those at the top richer while ignoring how life is for everybody else.
All of the people I spoke to had had enough. They only heard of Labour's policies because people like myself and my team went to speak to them. They won't hear this hope from the media, which is pro-National and is just as out of touch as Government.
As Labour's policies around food and taxation were explained to them they experienced something they hadn't felt in a long time - hope, and the fact that someone in politics actually cares about them. We need to get up and start telling our communities this simple truth - that only Labour really cares and will stand up for a fair deal for everyone.
Wednesday, 1 June 2011
Sunday, 29 May 2011
Labour & the Minimum Wage
The most striking aspect of the Budget was not what it contained, but what it ignored. Government debt is not our most pressing problem (when overseas, Key boasts about our relatively low level of government debt). The low level of Government debt when Labour left office was largely due to Michael Cullen's paying down of government debt during the 2000’s. Our financial problem is based on the mountain of debt being accumulated by households and the private sector. The latest Budget obsessively focused on keeping government debt well below 30%, while the portion of debt that really puts our credit rating at risk (and within the same basket case status as Greece) is left to sail on regardless. There was nothing in the budget to promote growth, there was no vision for the future.
I will be discussing over the next few weeks the steps that Labour will put in place to assist with growing our economy and providing people with a better future. Today I will focus on Labour’s policy to increase the minimum wage.
Under a Labour government the minimum wage will go up to $15 an hour. That’s $600 a week – a real improvement on the current $520, and might just be enough to pay for the 20% increase in food costs since September. Its not huge, but then we all know we are in difficult times. Even that small increase has infuriated the National government and Business NZ. Their predictions of doom suggest that the increase will bring business to its knees.
Sorry – business is on its knees, and in a region like the Wairarapa, where there are an alarming number of people on the minimum wage, the increased dollars will provide a much needed boost to the local economy. In the end the beneficiaries of this increase will be businesses, particularly in those local retail and service areas where low paid people spend their money. The increase will not be spent on luxury goods or investments or imports or foreign travel, but in the supermarket, the chemists, the doctor, school trips; all on the basic necessities. Every dollar of that minimum wage increase will be fed back into the local economy.
Businesses are the wealth generator of any community, but many of them are dependent upon a customer base that has the dollars to spend. An increase in those dollars makes the world go round. It’s a modest increase, but when added to Labour’s promise of $100 a week tax free and a 15% reduction in the cost of fresh fruit and vegetables, this is a policy that will provide a vital stimulus to the Wairarapa.
I intend to represent the Wairarapa in parliament, and I have to recognise that according to the Dept of Statistics, the Wairarapa electorate is the lowest paid electorate in the country. On that basis alone, a $15 an hour minimum wage is vital for the wellbeing of our communities. It is a tragedy that Bill English’s budget, concentrated almost entirely upon cost cutting and missed the opportunity to set policies to stimulate economic growth. The English plan is to push us further away from recovery. The big problem is that the government is borrowing $2.5 billion a year to give tax cuts to just the top ten percent of earners.
Back in 2007 the Department of Labour funded a study on the effect of two increases in the youth minimum wage. The increases then were extreme, raising the youth wage by 41% and 69%. That study showed that there was no reduction in the number of young people employed, even though Business NZ had warned (as they do today) that every 10% increase in the minimum wage would mean a 4% drop in employment. That prediction was shown to be completely wrong.
So it is worth looking at what actually happens in the workplace when there is a pay increase, and I know this from my years in small business in the region. First of all there is a recognition that the worker is actually valued. That recognition is usually responded to by increased commitment to the job. That is the nature of pay rates. Pay is actually about recognition. Being paid at $13 an hour is statement about your worth. Not a good basis for a productive workforce.
Secondly, the increase is a universal one – so an employer who pays the minimum wage will know that competitors who also pay the minimum wage will not gain an advantage. The increase is not disadvantaging either in terms of competition. Increasing the minimum wage should not just be seen as a cost increase but within the context of the boost it will give to the broader economy. Even Don Braid, managing director of Mainfreight and hardly what one would regard as core Labour support agrees, when he said, “New Zealand’s lower wages compared with Australia are not an advantage and the minimum wage should be increased, not reduced.” (TVNZ News 29 April 2011)
So what better way to boost a local economy than to ensure a nationwide increase in pay for the lowest paid layer of our community. It will have a significant impact on the local economy and a huge impact on low paid families.
I will be discussing over the next few weeks the steps that Labour will put in place to assist with growing our economy and providing people with a better future. Today I will focus on Labour’s policy to increase the minimum wage.
Under a Labour government the minimum wage will go up to $15 an hour. That’s $600 a week – a real improvement on the current $520, and might just be enough to pay for the 20% increase in food costs since September. Its not huge, but then we all know we are in difficult times. Even that small increase has infuriated the National government and Business NZ. Their predictions of doom suggest that the increase will bring business to its knees.
Sorry – business is on its knees, and in a region like the Wairarapa, where there are an alarming number of people on the minimum wage, the increased dollars will provide a much needed boost to the local economy. In the end the beneficiaries of this increase will be businesses, particularly in those local retail and service areas where low paid people spend their money. The increase will not be spent on luxury goods or investments or imports or foreign travel, but in the supermarket, the chemists, the doctor, school trips; all on the basic necessities. Every dollar of that minimum wage increase will be fed back into the local economy.
Businesses are the wealth generator of any community, but many of them are dependent upon a customer base that has the dollars to spend. An increase in those dollars makes the world go round. It’s a modest increase, but when added to Labour’s promise of $100 a week tax free and a 15% reduction in the cost of fresh fruit and vegetables, this is a policy that will provide a vital stimulus to the Wairarapa.
I intend to represent the Wairarapa in parliament, and I have to recognise that according to the Dept of Statistics, the Wairarapa electorate is the lowest paid electorate in the country. On that basis alone, a $15 an hour minimum wage is vital for the wellbeing of our communities. It is a tragedy that Bill English’s budget, concentrated almost entirely upon cost cutting and missed the opportunity to set policies to stimulate economic growth. The English plan is to push us further away from recovery. The big problem is that the government is borrowing $2.5 billion a year to give tax cuts to just the top ten percent of earners.
Back in 2007 the Department of Labour funded a study on the effect of two increases in the youth minimum wage. The increases then were extreme, raising the youth wage by 41% and 69%. That study showed that there was no reduction in the number of young people employed, even though Business NZ had warned (as they do today) that every 10% increase in the minimum wage would mean a 4% drop in employment. That prediction was shown to be completely wrong.
So it is worth looking at what actually happens in the workplace when there is a pay increase, and I know this from my years in small business in the region. First of all there is a recognition that the worker is actually valued. That recognition is usually responded to by increased commitment to the job. That is the nature of pay rates. Pay is actually about recognition. Being paid at $13 an hour is statement about your worth. Not a good basis for a productive workforce.
Secondly, the increase is a universal one – so an employer who pays the minimum wage will know that competitors who also pay the minimum wage will not gain an advantage. The increase is not disadvantaging either in terms of competition. Increasing the minimum wage should not just be seen as a cost increase but within the context of the boost it will give to the broader economy. Even Don Braid, managing director of Mainfreight and hardly what one would regard as core Labour support agrees, when he said, “New Zealand’s lower wages compared with Australia are not an advantage and the minimum wage should be increased, not reduced.” (TVNZ News 29 April 2011)
So what better way to boost a local economy than to ensure a nationwide increase in pay for the lowest paid layer of our community. It will have a significant impact on the local economy and a huge impact on low paid families.
Sunday, 22 May 2011
KEY - NO LONG TERM VISION FOR NEW ZEALAND
I was talking with an Auckland based broker last week: word is that John Key if re-elected would like to quit New Zealand in the second year of his second term and go on to the board of a multi national like BP in London and wash his hands of New Zealand. Has anyone heard anything similar (it gives him enough time to flog off our assets off to his rich mates)? Key has said he would bugger off if he doesn't win anyway, so he has no deep seated loyalty to New Zealand.
This starts to make sense when you see the lack of long terms vision for economic growth under the Key administration. It really is just spin and a desperate attempt to keep New Zealand in a delayed nose dive holding pattern. I am advised that when he was asked a couple of weeks ago (at a breakfast function) as to what he was going to do regarding the long term unaffordability of national superannuation - he said he was going to do nothing as it would not be a problem for ten years. This is both irresponsible but also revealing as it shows a man who only has a short term horizon as to his leadership.
This starts to make sense when you see the lack of long terms vision for economic growth under the Key administration. It really is just spin and a desperate attempt to keep New Zealand in a delayed nose dive holding pattern. I am advised that when he was asked a couple of weeks ago (at a breakfast function) as to what he was going to do regarding the long term unaffordability of national superannuation - he said he was going to do nothing as it would not be a problem for ten years. This is both irresponsible but also revealing as it shows a man who only has a short term horizon as to his leadership.
Wednesday, 18 May 2011
Rating Agencies Opinions For Hire
"Inside Job" explains how unreliable the rating agencies are, especially Standard & Poor's & Moody's. They, among others, gave Triple A ratings to companies that were unworthy - while being paid by those companies. They not only made millions through scribbling suspect ratings, but helped cripple the global economy & fuel the recession.
Moody's confirmed the Irish State's AAA rating shortly before the cover came off and it was revealed to be a basket case. Why Was Lehman Brothers Rated 'A'? In 2008 though, Standard & Poor's justified its own financial crash blindness in its paper Why Was Lehman Brothers Rated A? Their answer was to blame the market and the public. Their ratings, claims Standard & Poor's, are far too sophisticated to merely reflect the whims of prevailing market sentiment.
An insightful editorial from Ponte Al Dia concisely expresses the problem: "In 1974 the impartial judge and ‘fundamental credit analysis’ guru, began “charging issuers for corporate ratings”, albeit a common and legal practice, but the boundaries between the objective evaluator and its clients began to blur, as attested by the case of the Enron debacle and its complicit auditor Arthur Andersen."
Now, they are warning our Government about our debt yet the US Government enjoys a AAA rating and increasingly the US dollar is no longer the currency of choice. The US dollar is a default currency – there are no other options. The US debt's 'AAA' rating is the highest issued by Standard & Poor's. However, that the US debt rating has been put on negative watch is no surprise. Statistically, the US economy is almost at par with basket case Third World economies of yesteryear, except that the US can issue debt which investors must buy by default. (No other debt market is as deep as the US bond market.) To my knowledge governments don't pay to be rated, it may be useful to find out who is paying - in which case we'll then be able to see the organ grinder and not the monkey!
"http://www.pontealdia.com/editorial/unusually-rich-standard-poors.html"
Moody's confirmed the Irish State's AAA rating shortly before the cover came off and it was revealed to be a basket case. Why Was Lehman Brothers Rated 'A'? In 2008 though, Standard & Poor's justified its own financial crash blindness in its paper Why Was Lehman Brothers Rated A? Their answer was to blame the market and the public. Their ratings, claims Standard & Poor's, are far too sophisticated to merely reflect the whims of prevailing market sentiment.
An insightful editorial from Ponte Al Dia concisely expresses the problem: "In 1974 the impartial judge and ‘fundamental credit analysis’ guru, began “charging issuers for corporate ratings”, albeit a common and legal practice, but the boundaries between the objective evaluator and its clients began to blur, as attested by the case of the Enron debacle and its complicit auditor Arthur Andersen."
Now, they are warning our Government about our debt yet the US Government enjoys a AAA rating and increasingly the US dollar is no longer the currency of choice. The US dollar is a default currency – there are no other options. The US debt's 'AAA' rating is the highest issued by Standard & Poor's. However, that the US debt rating has been put on negative watch is no surprise. Statistically, the US economy is almost at par with basket case Third World economies of yesteryear, except that the US can issue debt which investors must buy by default. (No other debt market is as deep as the US bond market.) To my knowledge governments don't pay to be rated, it may be useful to find out who is paying - in which case we'll then be able to see the organ grinder and not the monkey!
"http://www.pontealdia.com/editorial/unusually-rich-standard-poors.html"
Sunday, 15 May 2011
THE FREEDOM TO ROAM NOW TO BE A CRIMINAL OFFENCE
PROPOSED fines of up to $10,000 for freedom campers have been welcomed by motor-camping advocates.
Environment Minister Nick Smith unveiled the new freedom camping legislation yesterday and said a bill would be introduced into Parliament this month.
Under the proposed new law, councils will be able to designate areas as camping areas, prohibited places, and sites where camping is restricted to self-contained motorhomes. The Conservation Department will be able to make similar rulings.
Automatic fines of $200 will be given to people camping illegally and court-imposed fines of up to $10,000 will punish those caught dumping sewage. Dominion Post, 16 May 2011
AH Reed a member of a once famous New Zealand Publishing family once wrote a book when he was 98 entitled "The Happy Wanderer" about his journeys on foot across NZ. This was a celebration of what we would now call "freedom camping" and of seeing our country while on foot and interacting with the people he met. This freedom to roam is something we should think about before we rush to criminalise it.
This walking about and camping in the open air is something our forebears took for granted and we now wish to make it a criminal offence. If the concern is about human waste etc then the answer is to supply proper toilet facilities. Roaming and camping in public spaces is one of the best ways to experience nature and see and encounter people. It causes me dismay to see us legislating our freedoms away slice by slice or precedent by precedent.
GK Chesterton's final verse from The Horrible History of Jones seems apt:
An author in the Isle of Wight
Observed with unconcealed delight
A land of just and old renown
Where Freedom slowly broadened down
From Precedent to Precedent.
And this, I think, was what he meant.
Environment Minister Nick Smith unveiled the new freedom camping legislation yesterday and said a bill would be introduced into Parliament this month.
Under the proposed new law, councils will be able to designate areas as camping areas, prohibited places, and sites where camping is restricted to self-contained motorhomes. The Conservation Department will be able to make similar rulings.
Automatic fines of $200 will be given to people camping illegally and court-imposed fines of up to $10,000 will punish those caught dumping sewage. Dominion Post, 16 May 2011
AH Reed a member of a once famous New Zealand Publishing family once wrote a book when he was 98 entitled "The Happy Wanderer" about his journeys on foot across NZ. This was a celebration of what we would now call "freedom camping" and of seeing our country while on foot and interacting with the people he met. This freedom to roam is something we should think about before we rush to criminalise it.
This walking about and camping in the open air is something our forebears took for granted and we now wish to make it a criminal offence. If the concern is about human waste etc then the answer is to supply proper toilet facilities. Roaming and camping in public spaces is one of the best ways to experience nature and see and encounter people. It causes me dismay to see us legislating our freedoms away slice by slice or precedent by precedent.
GK Chesterton's final verse from The Horrible History of Jones seems apt:
An author in the Isle of Wight
Observed with unconcealed delight
A land of just and old renown
Where Freedom slowly broadened down
From Precedent to Precedent.
And this, I think, was what he meant.
Friday, 13 May 2011
Community Is Where An MP Belongs
Now that Rodney Hide has released the Cabinet Paper “Smarter Government - Stronger Communities” it’s time for the consultation to begin. That means real consultation in a way that stimulates public debate – not just calling for submissions from powerful interests. My fear is that like the Auckland “Super-City” and so many other changes currently forced on New Zealand , “consultation” means telling people what you are going to do and then doing it.
I’m pleased to see that the paper is about both stronger communities and smarter government (although I would obviously disagree with Rodney’s view of smarter government). Also “stronger communities” can also mean a lot of things.
I’ve found over the years, and particularly through walking the streets of the Wairarapa towns, that where you belong becomes part of your identity. I am intending to represent the Wairarapa electorate in parliament, but a massive chunk of this electorate declares (sometimes in quite strong language) that it does not belong in the Wairarapa. The further north I go, the stronger the opinion, so that Waipukurau and Waipawa people declare that they belong to Central Hawkes Bay, sometimes to the extent that they feel disenfranchised by being drawn into the Wairarapa electorate. That attitude could soften if there was greater contact with the MP for the electorate, whoever it is.
Identifying with a district isn’t just habit, it’s not even a matter of the name of the district. People have a real sense of community and belonging and to tamper with that can lead to unstable communities – communities without a focus and without a centre. People define their community in terms of its centre, the local sports teams, the high school their kids go to, the community centre, clubs like Rotary and Lions and the local police presence. We know who is “us” and who is “them” and that’s not unhealthy .
I strongly support the construction of the new community facility in Carterton. Last Tuesday I had the privilege of being shown around the Events Centre and was impressed with its design and multitude of uses. It will strengthen the heart of the Carterton community. It will be a truly intergenerational facility containing the restored library, which will be the oldest functioning library in the country, married successfully into rooms for Plunket, Scouts, meeting facilities and a concert venue.
It is regrettable the current MP signed a petition against its construction, which did not stop him from turning up to have his photograph taken when the first sod was turned. Pity when he was offered the opportunity to say a few words he declared, ‘‘It was wonderful to be back in ‘‘Greytown’’. I love Greytown but it is a few miles down the road.
“Stronger communities” may well mean supporting what is there, rather than setting up the divisive and expensive government structure that Aucklanders are now stuck with.
It is inevitable that there should be ways for local bodies within the electorate to make savings through economies of scale, as they are doing, and that might mean further developing the approach to sharing facilities. Further it could mean mergers once ratepayers see the benefits that may result. The overriding standard, however, must be the survival of the distinctive character, cohesion, and spirit of each community.
The fear most strongly expressed by people in our electorate is being consumed by Wellington. In this case size does matter and there is already a growing concern that a merger with Hutt and Wellington is part of Rodney’s “Smarter Government” proposal. After all he was, until recent interesting events, the head of a party which has as its primary standard “Less Government”. Ratepayers beware.
My main concern, however, is that it must be the people of the Wairarapa who decide the outcome not some political appointees in Wellington. More important still, it must be the people who shape any proposal. I will fight hard to ensure that the Wairarapa retains its independence. The last thing we need is to be swallowed up in some Wellington “super-city”. Let the discussion begin.
I’m pleased to see that the paper is about both stronger communities and smarter government (although I would obviously disagree with Rodney’s view of smarter government). Also “stronger communities” can also mean a lot of things.
I’ve found over the years, and particularly through walking the streets of the Wairarapa towns, that where you belong becomes part of your identity. I am intending to represent the Wairarapa electorate in parliament, but a massive chunk of this electorate declares (sometimes in quite strong language) that it does not belong in the Wairarapa. The further north I go, the stronger the opinion, so that Waipukurau and Waipawa people declare that they belong to Central Hawkes Bay, sometimes to the extent that they feel disenfranchised by being drawn into the Wairarapa electorate. That attitude could soften if there was greater contact with the MP for the electorate, whoever it is.
Identifying with a district isn’t just habit, it’s not even a matter of the name of the district. People have a real sense of community and belonging and to tamper with that can lead to unstable communities – communities without a focus and without a centre. People define their community in terms of its centre, the local sports teams, the high school their kids go to, the community centre, clubs like Rotary and Lions and the local police presence. We know who is “us” and who is “them” and that’s not unhealthy .
I strongly support the construction of the new community facility in Carterton. Last Tuesday I had the privilege of being shown around the Events Centre and was impressed with its design and multitude of uses. It will strengthen the heart of the Carterton community. It will be a truly intergenerational facility containing the restored library, which will be the oldest functioning library in the country, married successfully into rooms for Plunket, Scouts, meeting facilities and a concert venue.
It is regrettable the current MP signed a petition against its construction, which did not stop him from turning up to have his photograph taken when the first sod was turned. Pity when he was offered the opportunity to say a few words he declared, ‘‘It was wonderful to be back in ‘‘Greytown’’. I love Greytown but it is a few miles down the road.
“Stronger communities” may well mean supporting what is there, rather than setting up the divisive and expensive government structure that Aucklanders are now stuck with.
It is inevitable that there should be ways for local bodies within the electorate to make savings through economies of scale, as they are doing, and that might mean further developing the approach to sharing facilities. Further it could mean mergers once ratepayers see the benefits that may result. The overriding standard, however, must be the survival of the distinctive character, cohesion, and spirit of each community.
The fear most strongly expressed by people in our electorate is being consumed by Wellington. In this case size does matter and there is already a growing concern that a merger with Hutt and Wellington is part of Rodney’s “Smarter Government” proposal. After all he was, until recent interesting events, the head of a party which has as its primary standard “Less Government”. Ratepayers beware.
My main concern, however, is that it must be the people of the Wairarapa who decide the outcome not some political appointees in Wellington. More important still, it must be the people who shape any proposal. I will fight hard to ensure that the Wairarapa retains its independence. The last thing we need is to be swallowed up in some Wellington “super-city”. Let the discussion begin.
Wednesday, 4 May 2011
INSIDE JOB AND WHERE WE FIT IN
What does it take to drive people to label someone as dishonest, prosecute him or her, sack them and put in someone new?
In the case of a cleaner at a school a few years ago it was a couple of ballpoint pens and the fact he nicked some stationary – that was enough.
What if you brought down the entire global economy, turned a large number of homeowners into paupers, wiped out pension savings, threw millions of people out of work — and as an afterthought, destabilized a number of the world's most developed countries? And then what if you ended up even richer than you started out? Well, so far, it seems that isn't enough.
The film Inside Job, is about these people. Inside Job is a documentary that quizzes some major perpetrators of the global financial crisis. It doesn’t pull punches it says that these individuals were crooks who got away with their crime. Worse than that not only are the people who caused the economic crisis not being prosecuted. They are still getting rich, and richer and a lot of them actually remain running the businesses that still influence the global economy.
From around 1950 until the early 1970s there was a period of unprecedented egalitarian economic growth. It was also a period of some limited but real form of benefits for the population. As growth went up social indicators went up, as you'd expect. Many economists called it the golden age of modern capitalism — they should call it state capitalism because government spending was a major engine of growth and development (dams, roads and government buildings).
In the mid 1970s that changed - restrictions on finance were dismantled, finance was freed, speculation boomed, huge amounts of capital started going into speculation against currencies and other paper manipulations. The power of the economy shifted to the financial institutions, away from manufacturing.
So what went wrong? In a nutshell that cause of the global financial crisis was a bit like the boy in the old story “The Emperor’s New Clothes”. One shout of disbelief and the illusion began to crumble. In this case it was the beginning of doubt in the never-ending increase in the value of property.
The cause of the financial system's meltdown is not hard to grasp. The decades-long supremacy of "free trade" resulted in capital being unmoored from national economies and freed to move around the world with few limitations (under the imperative of government not "intervening" in markets). Unconstrained by borders and investment rules, those dollars, yen, euros and what have you roamed the planet seeking a better rate of return.
From the 1980s real estate was the can't-miss investment, and as enormously overvalued housing bubbles sprang up, notably in the United States, Wall Street's financial whizzes started offering newer and more "creative" investment vehicles, bundling mortgages and selling them off to investors from around the globe. That was driven by an era of relentless deregulation, both at home and abroad.
Meanwhile, international bodies like the WTO and the IMF were pressuring the governments of all countries to drop their controls on the flow of cash and goods. Government after government capitulated to the free market orthodoxy.
Without fear of a regulatory backlash, the banks pushed their new investments hard, and investors gobbled them up with glee. You had sleazy brokers pushing bad investments on gullible retirees. One executive at Morgan Stanley's mortgage unit as saying, "It was unbelievable. We almost couldn't produce enough to keep the appetite of the investors happy. More people wanted bonds than we could actually produce."
In the end, investors were basically buying up paper that had only a distant relationship with anything concrete. The link that had long existed between homeowners and lenders was broken, and debt -- in this case debt tied to housing, but also commercial and consumer debt -- became a hot investment vehicle.
Convinced that the market would continue to grow indefinitely -- or maybe that they'd get bailed out if things headed south -- investors leveraged their assets further and further, in effect buying on the margin – in the hope that it wouldn’t crash – not yet.
Yet these loans -- many of which were taken on investment properties by people expecting a nice, quick turnover -- started to go belly-up, a panic ensued. As the rot spread, banks started going down and investors essentially began a stampede on an already weakened financial sector. It was the modern-day equivalent of a bank run, but on a global scale.
That posed a risk to the mammoth and wholly unregulated market in insurance on bad loans that had grown up around these new kinds of investments. The market in what are known as "credit default swaps" is of unknown size, but it's estimated to be worth as much as $60 trillion, most of it essentially paper backed by too little in the way of hard assets.
Here in New Zealand we have been comparatively sheltered from the financial storm, but its waves have hit our shores. The bailout of South Canterbury Finance, tax cuts for the rich paid for by borrowing, the rise in GST, employment law reforms, the insidious chipping away at welfare, talk of raising the age of super, and cuts in public sector services and jobs are all signs that in fact our Government is acting out a shadow play paralleling the international chaos.
Our own Prime Minister made his fortune while working at Merrill Lynch. He knows how to make money out of moving money. He has seen and worked for the shiny suits who do the corporate raids – but he does not know how to create jobs. Don Brash is the same. They are both disciples of the free market and want to privatize everything. The theory behind this is that the State is inefficient and chokes innovation. Whereas the invisible hand of the market brings discipline and controls unattainable by the State. I have a friend who heard the Prime Minister at a breakfast meeting in Auckland in early April. He said that he knows most Kiwis are opposed
I want you to look at the film and focus on these issues – the values that motivated the main players in this documentary are you could argue the same ones that motivate those that want to privatize New Zealand. I hope this film will help you realize the dangers of what the National/ACT Government is inflicting on our people and hopefully you’ll want to be part of a strong, organised resistance to the whole ‘privatise the profits, socialize the losses’ agenda.
In the case of a cleaner at a school a few years ago it was a couple of ballpoint pens and the fact he nicked some stationary – that was enough.
What if you brought down the entire global economy, turned a large number of homeowners into paupers, wiped out pension savings, threw millions of people out of work — and as an afterthought, destabilized a number of the world's most developed countries? And then what if you ended up even richer than you started out? Well, so far, it seems that isn't enough.
The film Inside Job, is about these people. Inside Job is a documentary that quizzes some major perpetrators of the global financial crisis. It doesn’t pull punches it says that these individuals were crooks who got away with their crime. Worse than that not only are the people who caused the economic crisis not being prosecuted. They are still getting rich, and richer and a lot of them actually remain running the businesses that still influence the global economy.
From around 1950 until the early 1970s there was a period of unprecedented egalitarian economic growth. It was also a period of some limited but real form of benefits for the population. As growth went up social indicators went up, as you'd expect. Many economists called it the golden age of modern capitalism — they should call it state capitalism because government spending was a major engine of growth and development (dams, roads and government buildings).
In the mid 1970s that changed - restrictions on finance were dismantled, finance was freed, speculation boomed, huge amounts of capital started going into speculation against currencies and other paper manipulations. The power of the economy shifted to the financial institutions, away from manufacturing.
So what went wrong? In a nutshell that cause of the global financial crisis was a bit like the boy in the old story “The Emperor’s New Clothes”. One shout of disbelief and the illusion began to crumble. In this case it was the beginning of doubt in the never-ending increase in the value of property.
The cause of the financial system's meltdown is not hard to grasp. The decades-long supremacy of "free trade" resulted in capital being unmoored from national economies and freed to move around the world with few limitations (under the imperative of government not "intervening" in markets). Unconstrained by borders and investment rules, those dollars, yen, euros and what have you roamed the planet seeking a better rate of return.
From the 1980s real estate was the can't-miss investment, and as enormously overvalued housing bubbles sprang up, notably in the United States, Wall Street's financial whizzes started offering newer and more "creative" investment vehicles, bundling mortgages and selling them off to investors from around the globe. That was driven by an era of relentless deregulation, both at home and abroad.
Meanwhile, international bodies like the WTO and the IMF were pressuring the governments of all countries to drop their controls on the flow of cash and goods. Government after government capitulated to the free market orthodoxy.
Without fear of a regulatory backlash, the banks pushed their new investments hard, and investors gobbled them up with glee. You had sleazy brokers pushing bad investments on gullible retirees. One executive at Morgan Stanley's mortgage unit as saying, "It was unbelievable. We almost couldn't produce enough to keep the appetite of the investors happy. More people wanted bonds than we could actually produce."
In the end, investors were basically buying up paper that had only a distant relationship with anything concrete. The link that had long existed between homeowners and lenders was broken, and debt -- in this case debt tied to housing, but also commercial and consumer debt -- became a hot investment vehicle.
Convinced that the market would continue to grow indefinitely -- or maybe that they'd get bailed out if things headed south -- investors leveraged their assets further and further, in effect buying on the margin – in the hope that it wouldn’t crash – not yet.
Yet these loans -- many of which were taken on investment properties by people expecting a nice, quick turnover -- started to go belly-up, a panic ensued. As the rot spread, banks started going down and investors essentially began a stampede on an already weakened financial sector. It was the modern-day equivalent of a bank run, but on a global scale.
That posed a risk to the mammoth and wholly unregulated market in insurance on bad loans that had grown up around these new kinds of investments. The market in what are known as "credit default swaps" is of unknown size, but it's estimated to be worth as much as $60 trillion, most of it essentially paper backed by too little in the way of hard assets.
Here in New Zealand we have been comparatively sheltered from the financial storm, but its waves have hit our shores. The bailout of South Canterbury Finance, tax cuts for the rich paid for by borrowing, the rise in GST, employment law reforms, the insidious chipping away at welfare, talk of raising the age of super, and cuts in public sector services and jobs are all signs that in fact our Government is acting out a shadow play paralleling the international chaos.
Our own Prime Minister made his fortune while working at Merrill Lynch. He knows how to make money out of moving money. He has seen and worked for the shiny suits who do the corporate raids – but he does not know how to create jobs. Don Brash is the same. They are both disciples of the free market and want to privatize everything. The theory behind this is that the State is inefficient and chokes innovation. Whereas the invisible hand of the market brings discipline and controls unattainable by the State. I have a friend who heard the Prime Minister at a breakfast meeting in Auckland in early April. He said that he knows most Kiwis are opposed
I want you to look at the film and focus on these issues – the values that motivated the main players in this documentary are you could argue the same ones that motivate those that want to privatize New Zealand. I hope this film will help you realize the dangers of what the National/ACT Government is inflicting on our people and hopefully you’ll want to be part of a strong, organised resistance to the whole ‘privatise the profits, socialize the losses’ agenda.
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