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Friday, December 24, 2010

Ummm - did anyone notice the NZ economy just went backwards?

Ummmm - anyone notice that the economy is now going backwards?

Economy goes backwards
New Zealand's economy went into reverse in the September quarter, but hope remains for improvement in 2011.

Figures from Statistics New Zealand today show gross domestic product fell 0.2 percent in the September quarter.

Manufacturing fell 1.7 percent in the three months to September, construction was down 2.5 percent, and mining activity fell 6.9 percent.

For the year to September, GDP rose 1.4 percent compared with the year to September 2009, with primary industry activity up 1.1 percent including a 13.5 percent rise in forestry and logging activity.

ASB chief economist Nick Tuffley said much of the economic weakness was temporary, and he expected manufacturing and housing construction to recover over the next year.

Thank God the ASB Chief Economist expects things to get better, that will make the ratings agencies sleep easier at night. Could I venture that since this is a unique crises of capitalism in the exact same way the 1929 crash was a unique crises of capitalism that the old Free Market models that the ASB Chief Economist, the treasury, the Reserve Bank Governor, the National Party, ACT etc etc etc don't work? That the same old tired ideologically driven brain farts won't be enough to avoid the societal damage this recession will cause and that perhaps a reevaluation of the growth uber allas consumer culture may in fact be timely alongside a genuine look at welfare.

The faith that these oracles of money are putting into this supposed magical turn around in the second half of next year looks almost like a meth induced state of psychosis, pick anyone of the following global tumors that could turn to cancer in 2011; China property market bubble, sovereign debt collapse, banking crisis or Euro disintegration.

The first half of 2011 is predicted to be worse than what we are seeing now, and then magically rise like a phoenix, I however would suggest that anyone of those global threats would have a very low trigger value after such a prolonged recession and that anyone of those events would be enough to spiral the Global economy down worse than these optimistic domestic predictions making any recovery at the end of 2011 simply a falsehood.

We are directing the economy behind the blindfold of falsehoods.

If the economy continues to collapse, and we really are facing a unique economic 1929 crises, then the environment is set for a splintering of the political spectrum.

A new right party under Muriel Newman, John Banks and Don Brash could ignite out of sheer panic if a new left wing party made up of Hone, Sue and Matt were to launch with a direct focus on minimum wage and beneficiaries. There are 338 000 beneficiaries, there were 2 376 480 votes in 2008. That's 14%, 5% = representation, but the ace in the hole is Hone's electorate seat, so a sub 5% tail could get elected. Those crucial extra seats could be the difference between being the new Government and not being the new Government.

One thing is for certain, the 2011 election will be much, much closer than the right wing are currently pretending and the spite shown in the manufactured crises at The Hobbit tells us the next election will be a very bitter and divisive one.

Before the fight begins, let us all take a moment to celebrate the fact that no matter how nasty the election gets, we are one of the few lucky countries in the world where political power can be handed over or maintained by peaceful means in a country where the peoples will can be genuinely expressed. Beyond political allegiance, we can all count our blessings to live in such a strong democracy.


At 24/12/10 11:56 am, Blogger sdm said...

This is not 1929. This is no where near it. That would be like comparing a thunderstorm to Katrina.

1930 GDP -8.6%
1931 -6.4%
1932 -13%

US unemployment was 25% and wages dropped 42%.

Present time:

2007: 1.9%
2008: 0%
2009: -2.6%
2010: 3 quarters of low positive growth.

In the US the unemployment rate is 9.3%

To equate this recession with the great depression is statistically flawed.

The recovery may take some time. But it is not a crisis of capitalism. It is a recession.

We may not recover next year. But that doesnt make it 1929.

At 30/12/10 4:55 pm, Blogger Bomber said...

Scotty, Scotty, Scotty. I like the new angry Scotty, last month you were throwing a 'National's gonna win, Nah, nah, na nah na' tantrum and now it's being an apologist for the free market love you as a boss man seem addicted too, personally I think you should stick to being an apologist for Israeli aggression rather than failed free market dogma.

So according to Scotty, it is NOT a crises of Capitalism, all we are seeing is, what were your hilarious choice of words Scotty? it's just a 'recession' - really? Let's test this attempt by Scotty to mimize what happened in 2007-2008 and see if it's just wishful thinking on behalf of a bossman desperate to cling to his free market assumptions.

I'm going to enjoy this.

As I've posted previously, the great recession IS a crises of capitalism in the exact same way 1929 was, but according to Scotty, it's a mere recession uncomparable to 1929.


Sadly for Scotty, I just finished reading 'Crises' by Alan Bollard, and his thoughts on the currect recession, surprisingly the Central Bank Governor doesn't seem to share Scotty's optimism. But what would Alan know?

University of Chicago academic Raghuram Rajan author of "Has Financial Development Made the World Riskier" 2005 doesn't agree woth Scotty either and niether does Gillian Tett, author of " Fool's Gold: How the bold dream of a small tribe at JP Morgan was corrupted by Wall St and unleashed a catastrophe' 2009.

But fuck them, according to Scotty, we face a simple recession.

Forget that (as Alan points out) that these financial instruments were misused and ended up with derivatives that wrote up a quadrillion dollars - that's $1, 000, 000, 000, 000, 000. Fuck that right, cause Scotty says it's a mere fleshwound.

Alan recalls a late night phone call with the chairman and deputy chairman of a giant international bank who told him this is the worst crises of their careers. But screw that right scotty?

Alan of course himself described the crises as the largest financial shock since the Great Depression - WHAT DOES HE KNOW? Scotty says it's just a recession.

He says this by twisting GDP numbers - he points to the losses that occurred and then points to the current losses while ignoring that those current losses are so low is because the State took on all that private debt while borrowing for a massive stimulus, the impacts of which have now worn off. All Governments did was take on the debt of the greedy private sector, we've simply kicked the can of the correction down the road a couple of years, but screw that right Scotty? This is a mere bump in the road.

At 30/12/10 4:57 pm, Blogger Bomber said...

What we saw from this great recession was the US Fed, the European Central Bank, the Bank of China, the Bank of England, the Swiss and the Swedes all cut their rates by 50 points on Tuesday 7th October 2008 - an incredible response to a mere recession, why didn't they all listen to Scotty?

Scotty also twists the Unemployment figure, the 25% Scotty quotes occurred in 1935-36, 5 to 6 years after the collapse, our collapse this time around was in 2008, Scotty uses unemployment figures when the Great Depression had run its course (and was eventually solved by World War Two) yet our crises is only two year old.

Hilarious misrepresentation.

According to Scotty, this isn't a global reshaping of the hegemonic economic ssuper structure of the Washington Concensus, oh no, this is just a garden variety recession right Scotty?

I like Israeli central bank Governor Jacob Frenkel who said "We've spent the last ten years talking about imbalances building around the world. We all agreed those weren't sustainable. What did you expect"? But what does he know eh Scotty?

Ben Bernanke in a Time interview in 2009 said, "We came very, very close to a depression. The markets were in anaphylactic shock" - what does he know? It's just a boring old recession according to Scott.

In October 2008 we had a run on $100 notes - YAWN - it's a nothing recession, uncomparable to 1929. By the end of that month the equity markets around the world lost half their value, $30 Trillion US - as Alan points out (but what does he know?) stock prices had dropped deeper, over a longer period BUT publicly listed companies had been a much smaller part of the economy and did not figure in most people's savings, where as nowadays the impact is across society and damages many more.

The current recession is steeper and deeper than the 1973 oil crises, the 2000 tech crash, the recessions of 1980, 1990 and 1981 yet according to our boy Scotty, this is just a boring old recession.

Need I go on? I need. I need.

Scotty ignores the fact that the IOSCO, BCBS, IASB, G-20, FSF and IMF global economic systems all went into overdrive to prevent the depression, and their efforts have merely delayed the correction. To read the bare GDP figures and come to the conclusion you have borders on delusional.

Scotty you sound like that clown from Westpack who claimed NZ is on the cusp of a decade of prosperity, in fact if I just replace his name with yours, this would make a great post, screw it I will - I'd hate to waste this on just you


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