Cullen talks depression not recession
October 15th, 2008 at 11:00 am by David FarrarDoes Dr Cullen know something we don’t?
The Dom Post reports:
Finance spokesman Michael Cullen said: “The Government is not going to allow the economy to slip into a depression because it has some fear of lifting its short-term borrowing position. That is not sensible fiscal economic management.”
The Government is already facing a debt blowout after the Treasury forecast a decade of deficits.
So Dr Cullen is worried about a full scale depression, yet he is handing out free cash to students.
But Dr Cullen said he would borrow more if necessary to fund road, infrastructure, forestry, housing and rail projects, including expanding the electrified network to Auckland’s North Shore and a rail tunnel under Waitemata Harbour.
His plan marks a U-turn from Labour’s scathing attacks on National’s plan to borrow more to spend on infrastructure.
In August, Prime Minister Helen Clark said: “I just think it’s mind-bogglingly stupid. You go out and borrow at a time when the international markets are in crisis.”
National pleding to borrow more when debt was at 20% of GDP was called reckless and stupid, and now Labour says that increased borrowing is the answer with debt projected to hit 30% of GDP.
Which Dr Cullen should we listen to?
Is this the biggest economic flip-flop ever?
Related posts:
- Clark and Cullen on Debt
- The risk of debt
- Will Cullen cancel the tax cuts?
- Cullen breaks his own debt target
October 15th, 2008 at 11:06 am
“Spend more!” Cullens answer for everything?
Splish splash.
Vote:October 15th, 2008 at 11:06 am
Yes, yes, yes. But what exactly was John Key’s view on the Springbok tour?
Please focus on the issues confronting New Zealand.
Vote:October 15th, 2008 at 11:27 am
The biggest flip-flop ever was in 1984 when Labour realised that New Zealand’s “pink paradigm” just wouldn’t work, and opened up the economy. The second biggest was in 1999 when Labour realised that they didn’t have any policies other than to tax and spend, and so reverted to their old policies. This is but a continuation of their old policies, so no, it isn’t the biggest economic flip-flop ever.
Vote:October 15th, 2008 at 11:29 am
In August, Prime Minister Helen Clark said: “I just think it’s mind-bogglingly stupid. You go out and borrow at a time when the international markets are in crisis.”
I trust Clarks latest dose of foot-in-mouth disease will be suitably treated.
I am sure that there are journo’s, right now as I write this, just lining up to ask her why she has flip flopped so horrendously.
They will ask her to confirm that she now believes that Nationals ideas were correct and the best way forward. She will deny it of course and say that she has been mis quoted.
But the intrepid journos’, smelling blood, will not let go and will rip into Clark until she is a quivering wreck.
No they won’t. I lie.
Vote:October 15th, 2008 at 11:32 am
Ever since Labour buggered around with the Fiscal Responsibility Act, I’ve been suspicious. Last election, there was the interest-free student loan rabbit. It was only by the MSM placing an OIA on Treasury that got got the true costings out before the last election. There’s also Helen Clark’s experience in burying the BNZ blow out back in the 1990 election, so there’s a history of silence on public finances.
Like Mr Bean hiding Steak Tartare, undisclosed debts could be hidden under the cushion, in the sugar bowl or buried in the shrubbery. More likely though, there’s a write-off hidden in a definition in a footnote in an appendix of some official document or other.
Vote:October 15th, 2008 at 11:35 am
Bold eh?
If you are going to breach a trust then do it in such a humungeous manner that no-one can get their collective heads around the monumental nature of the breach and as a consequence the population (led by a willing and compliant MSM) wander round in a state of denial with their eyes wide shut saying “bloody lying Nats they’ve got it wrong again, trust Helen she is a wise and self confessed competent and internationally capable leader who knows what she is doing”
Vote:October 15th, 2008 at 11:39 am
All true DPF, but the election will not be decided by people who follow these issues and/or have any knowledge of what’s at stake. It will be decided on whether someone walks the plank (Dr Don) or smiles the right way, or says it’s really just “common sense” (remember that that gave Dunne 6 seats overnight). In other words, the election will be decided on emotional issues, not policy wonk issues.
John Key did well on telly last night, connecting well emotionally. “Nanny state” needs to be pushed harder as it goes to the heart of how people FEEL about the government. ACT and National need to focus on emotional hot buttons. If policy mattered then ACT would have been the government long ago!
Vote:October 15th, 2008 at 11:43 am
True to type. “Tax and Spend” / “Tax and Bribe”, is the only tool that socialists have in their economic tool kit. The only direction an economy under their control ever takes, is down. And the only interpretation of events they have, is, that if times are good, it is thanks to us, but if times are bad, it is the fault of previous governments, or capitalism, or Wall Street, or other events “outside our control”. And sadly, the MSM endlessly regurgitates this, and even more sadly, we need to hit economic bottom before the socialist suckers of the teat might actually change their voting patterns, if they do even then, if they will even when the State has run out of revenue and sources of loan money with which to pay them and keep the power on. This is the democratic era’s eventual whimpering end. As Hume or some other conservative Scottish philosopher said about democracy, it will only last until a majority entrenches themselves as the recipients of largesse from a minority, and then it is just a matter of time before the money tree dies.
Vote:October 15th, 2008 at 11:55 am
Sorry Mex I just don’t know where my heads at these days.
Vote:October 15th, 2008 at 11:56 am
Cullen is showing himself to be a fair weather economist. He has no idea what to do now that the economy is in a bit of a tailspin.
Vote:October 15th, 2008 at 12:10 pm
Slightlyrighty – you are right I think. While the sun was shining there was plenty of hay. Now things are going south, he is lost and seems to be floundering.
Vote:October 15th, 2008 at 12:20 pm
“and now Labour says that increased borrowing is the answer with debt projected to hit 30% of GDP.
Which Dr Cullen should we listen to?”
Yes Labour’s policy must not change even in response to dramatic global events. (We demand a stationary target?)
Kiwiblog is looking more and more like any other far-out political hate site the closer we get to the election. Pity…
Vote:October 15th, 2008 at 12:28 pm
You’re right, it should change. Just not like THIS – you think it’s a good (though vague and non-specific) move?
Vote:October 15th, 2008 at 12:32 pm
RRM: sorry, I don’t see kiwiblog as a far out political hate site. Although some of the people on here are definitely way out there. The point is that Labour deliberately painted Key’s plan to invest in infrastructure, and incur some debt in doing so, as being always and completely a bad thing, rather than the minor tweaking of policy settings that it really was. They deliberately painted it as an absolute, so it cannot be surprising to now have those words thrown back at them.
I realise that as a lefty you also feel obliged to defend this, and you are correct in saying that their response is a reasonable one. It does, however, involve more debt, and to my mind some of the policies they are borrowing for don’t make sense – borrowing so middle class kids can get supported at university doesn’t make sense to me.
In other words, we’re just playing our assigned roles. The right point out the hypocrisy, the left justify it. As we would do were the situation reversed. Maybe I can write a computer program that could do that automatically (for both sides) and we could all go to the pub instead?
Vote:October 15th, 2008 at 12:36 pm
As a non-economist, to me what John Key said sounded very reasonable when he said it is safest to allow debt to grow a bit now, within reason, and service that debt through the lean times.
It’s the *explaining* that’s the thing I’m getting at – any fool (and especially a political nutter) can put out insightful opinions like “Clark good, Key bad!”
Vote:Farrar is normally pretty good at taking that next step and explaining these stances.
October 15th, 2008 at 12:37 pm
RRM, stephen. If this was National changing their minds and becoming this irresponsible you two would be howling with outrage. You cannot say that National changing their minds on policy is a flip-flop but the same from Labour is an intelligent change in policy thanks to dramatic global events. There’s a word for that type of thinking …
But Remember what you just said whenever somebody makes a comment about a change in National’s policy – like the war in Iraq and others that you have been fond of harping on.
(Like what National did twenty years ago, etc.)
Vote:October 15th, 2008 at 12:43 pm
Pascal – hmm, I can’t ever recall criticising Nats for a flip-flop. I take issue with plenty of their ideas that they (and their fans here) put forward, and I see their past policies as not irelevant to any analysis of their current ideology, if that’s the same thing?
Vote:October 15th, 2008 at 12:58 pm
Pretty soon Labour will have enough flip-flops to open a shoe store.
Vote:October 15th, 2008 at 1:03 pm
right next to the national mega mart selling flip flops.
Actually that’s a little unfair, all the decent policies they now have in place are labours
Vote:October 15th, 2008 at 1:08 pm
Paul – National didn’t flip-flop in the middle of an election campaign. They made clear, well-signalled decisions in a measured fashion. They didn’t panic and rush off to the Hannah’s flip-flop sale like Labour.
Vote:October 15th, 2008 at 1:19 pm
A decade of deficits is not a consequence of the financial crisis, it is a consequence of irresponsible overspending over a long period of time. Cullen and Clark have squandered billions on their pet idealogical projects and now we get to face the bill. Cullen is an incompetent liar who has abused his office (and probably himself) in the pursuit of political power – in short he is a cunt who has absolutely no credibility in any sphere aside of the dark art of dirty politics. Fuck off !!
Vote:October 15th, 2008 at 1:33 pm
True casual watcher. The PREFU doesn’t include projections from the current financial crisis. We had the deficits before the crisis, it will be worse with it. It is purely and simply a Labour party policy issue.
Vote:October 15th, 2008 at 1:48 pm
Pascal, I think you misread my comment – it was disapproving. I think it’s irresponsible.
Vote:October 15th, 2008 at 3:29 pm
You Labour flunkies really need to remove your blinkers once in a while.
Vote:October 15th, 2008 at 3:50 pm
*Which* Labour flunkies?
Vote:October 15th, 2008 at 4:07 pm
No one seems to realise that we cannot build our way out of this depression/recession while local government is so determined to stop anyone from doing anything on their turf and actually fines entrepreneurs for setting up a new business.
People just don’t seem to make the connections. I was having an enjoyable meeting with a young divorcee celebrating the fact that after two years she had been able to subdivide her 4ha lot into two and could now pay her ex hubbie and stay in the neighbourhood with her children. She works in a small business as a house painter and was concerned that they only had one new house to paint in the pipeline. I pointed that that just about all projects were on hold or abandoned because they could not afford to see them through when the chances of sale were so low. For example I complained about the two thousand people who had objected to the New Town proposed at Te Arai which would have provided about 600 houses but was now on hold. She said “Oh but I objected to that” and then the penny dropped. If you want to keep working don ‘t object to everyone who wants to provide jobs. The Carter Hold Closure is because there is no demand for timber because the building industry is stalled. And each week I read of another project being declined or someone being fined for spilling some cow manure.
Vote:October 15th, 2008 at 5:53 pm
A Government bereft of any new ideas, stripped of top team talent, reliant on the old workhorses of Klark and Kullen donkeying them through to the election they wll inevitably lose. The rest of the Labour team are trying to avoid the stain of defeat so they can jostle for position in the shadow cabinet and cosy up to Goff. An international recession.
Kullens answer – Think Big. Rob Muldoon would approve, look where that got us.
Vote:October 15th, 2008 at 5:58 pm
New Zealand is among 13 nations named by BusinessWeek as most at risk from the global financial crisis.
http://www.stuff.co.nz/4728238a13.html
Vote:October 15th, 2008 at 7:21 pm
Sullen is right when he says we are in a depression, I know, he fucking depresses me.
Vote:October 15th, 2008 at 8:20 pm
“Kiwiblog is looking more and more like any other far-out political hate site the closer we get to the election. Pity…”
Vote:I’ll have two of whatever he’s on…
October 15th, 2008 at 11:14 pm
expat says at 5:58 pm:
Wouldn’t it be interest to observe what happened to New Zealand if it did become an economic basket case and collapsed in upon itself? It would be like 1984 if New Zealand had taken another path. Instead of Roger Douglas saving the country Rob Muldoon would have demonstrated the real meaning of “failed policies of the past”.
Vote:October 16th, 2008 at 10:26 am
The provisional tax issue is trivial compared to the impact of Development Contributions.
A Maori couple here bought a motel in good faith and then found it had not been permitted under the RMA.
It probably has exisisting use rights but it would take an Environment Court case to prove it so they decided
to upgrade it to get a permit.
Then when they got their resource consent for the four rooms (which had been operating as a motel for about ten years)
they also got a bill for $64,000 for roading contriibutions to pay for the “extra load” generated by the extra four units.
They had no idea they would be hit with this. They applied for the consent before the Council adopted its roading
contribution policy and it never occured to anyone that getting a consent would add to the load on the roads.
They cannot pay it and may well just walk away from the whole thing.
So if we want to build our way out of depression we had better scrub development contributions – everywhere unless there
Vote:is the common law nexus.
October 16th, 2008 at 11:32 am
Owen McShane, keep those stories up. There is hardly anything more important to get across to people, that their OWN greedy attitudes to the inflation of their own property value, and their anti-development attitudes, don’t spoil my view, don’t spoil the greenfields buffer around my area, don’t cut down trees, beggar thy neighbour, especially young people wanting to buy their first home; this ultimately HURTS EVERYBODY BIG TIME, including themself…….can you get this little point into an op-ed in the MSM……? Fat chance, I suppose.
Vote:October 16th, 2008 at 6:46 pm
The bailout didn’t work and Cullen thinks Borrowing will
The whole world is sliding into oblivion and he thinks borrowing will help
We simply have to ride out the storm.
All I know is the Repubs have no show what so ever of winning in November
And how has America benefitted from them in eight years??? Not one financial year was positive.
That ‘s is a horribly inept indictment of an administration. Even the speaker of the house commented and that is rare.
Does anyone know of an administration that has under performed so woefully in history?
Vote:October 17th, 2008 at 5:06 am
An Obama administration would be a disaster for America. Talk about end of empire.
How would President Biden explain his failing to the American public in 2012?
Vote:October 17th, 2008 at 5:45 am
OECD rank 22 kiwi – drop me an email on kiwiexpat007@gmail.com
I’d give you my real one but I know stalkers from the standard would bomb me with .jar trojans.
Vote: