Economic meltdown denial over now is it and where the hell is National (they do know they are the government right?)
IMF warning: It's going to get a lot worse
How much more the Reserve Bank cuts interest rates will depend on how much worse the world economy gets, Governor Alan Bollard says - and the International Monetary Fund is warning that it is set to get a whole lot worse. The IMF yesterday slashed its forecast for global growth this year to the weakest rate seen since World War II. It expects the advanced economies, which include most of New Zealand's major trading partners, to shrink by 2 per cent, and to claw back only half of that next year. And with growth in China and other developing countries expected to fall sharply, overall world growth is forecast to be a scant 0.5 per cent this year, rather than the 2.2 per cent the IMF expected just two months ago. The International Labour Organisation said that global unemployment and poverty are set for a dramatic increase in the coming year. The UN agency added that in a worst-case scenario, recorded unemployment could rise by more than 50 million from 2007 levels to 230 million, or 7.1 per cent of the world's labour force, by the end of this year. The IMF's downbeat view found agreement among the elite financiers and economic thinkers gathered at the World Economic Forum in Davos, Switzerland. Nouriel Roubini, professor of economics at New York University, said: "There is nowhere to hide. We have for the first time in decades a global synchronised recession. This is not your traditional minor recession."
“This is not your traditional minor recession” – okay so can we dump the denial that there is no economic meltdown now can we folks? Apparently not on Close Up, I just watched tonights promo and it’s about a cat that traveled a long distance to get home to its owners – incredible isn’t it, we face an economic catastrophe that has been growing for some time partly because of our total denial about a consumer culture of SUVs, plasma TVs and cosmetic surgery all paid for on credit cards from money borrowed from the developing world and partly because the entire banking industry in America formed Enron-esq financial structures in an unregulated greed cluster fuck that has collapsed, yet Close Up have as their main story tonight a cat who traveled a long distance. Add a property speculation bubble where middle class NZers pretended they weren’t and politicians too frightened to step in between the trough and the greedy little piggies with a capital gains tax and we get an equation that promises a ‘correction’, but you wouldn’t know that from the bullshit we are fed from the mainstream news media.
I remember debating with some of my right wing friends that a global economy focused myopically on growth was simply unsustainable, and that at some point we will run out of credit to keep buying stuff that we are consuming faster than can be replaced, their response was that I was a tree hugger who needs to accept that capitalism is never wrong and stop spoiling the gang bang, followed by a rousing USA! USA! USA! Well those right wingers are a wee bit quieter now, but I still see Governments focused only on trying to reboot the entire consumer credit cluster fuck by trying to goad NZers into spending more with credit cards already maxed out. How is this a strategy, well none of us are sure because National have been AWOL while the economy sinks. They assure us they haven’t been on holiday and Paula Bennett broke up a fight and John Key broke his arm and…………….and fucking nothing else. Look I know it’s terrifying National, but you’re kinda the Government now and promising big speeches and a conference NEXT MONTH doesn’t really telegraph the deep, deep, deep urgency required to tackle this. We are looking to double our unemployment rates within 18months, the social cost of that alone is going to be immense and I argue that the unemployment rate will be much higher as Australia goes through its own environmental and economic crises which will drive many NZers to flee back home, bloating our unemployment rates even higher.
Does slashing the interest rates help? We were one of the few Governments who had such high interest rates, won’t this move aimed at helping homeowners simply start a run on our currency as investors leave us, won’t that put pressure on our credit rating leading to a downgrade meaning that mountain of debt NZ has acquired will explode uncontrollably putting us on the slippery slope of Iceland? Bernard Hickey has little time for the move, he clearly points out 5 reasons why the cut was a bad idea and it seems National are simply trying to look after their electorate of well to do NZers who are now facing poverty for the first time in their lives with an interest rates cut will lower Mortgage repayments as those previously well to do NZers have to gear shift down in living standards. That’s neat for National to look after their lot, but there are a lot of other NZers hurting and that hurt is going to be reflected in a crime rate that will start to soar.
Bottom line is that we are fucked, fucked so bad we are still in denial how badly fucked we are, the entire game plan has to be reviewed, sustainability has to be the touchword in every industry and those skills will become more valued than any good we export, those skills will be the future and there has to be a paradigm shift in what we expect as standards of living and there has to be change in how we pursue those standards of living.