Economy worse than expected
The economy that National has inherited is even worse than thought at the end of last year.
NZPA reports that Treasury has told the Government it now expects unemployment to hit 7.5%.
PM Key has said that a number of initiatives have been considered and will be announced on 4 February.
To get some idea of how bad it is, look at these trade figures from the US, a reader sent to me:
THE NUMBERS: American imports:
July 2008: $230 billion
October 2008: $208 billion
November 2008: $183 billion
This is the biggest drop in imports since 1942. And it is near impossible for us to maintain exports and economic growth with that sort of contraction in the US.
I’m not sure the recession may not turn into a depression.
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Tags: Credit Crisis, Economy
January 15th, 2009 at 5:01 pm
How do they calculate unemployment? if it is the same fuzzy numbers that they use for Inflation then i wouldn’t trust the 7.5% figure it would probably be much higher.
January 15th, 2009 at 5:09 pm
A depression is not determined by the depth of the recession. There would have to be something very large, like governmental interference, to pro-long a recession into a depression.
January 15th, 2009 at 5:17 pm
“..I’m not sure the recession may not turn into a depression..”
aahh..!..the ten-cent piece has finally dropped..!
now..from august 2006..to now…
..is about 2yrs and five months..
..any idea why..even tho you were presented with these facts then..and repeatedlt/ad nauseum since then..
..irt took so long for that ten-cent piece to finally descend..?
..this one really puzzles me..mr farrar…
..you are not lacking in perception/intelligence..
..yet on this..
..you are one of the last ‘arrivals’..
..the facts that i presented in 2006..are the ones that have brought us here..
..why did it take you so long to ‘see’..?
.phil(whoar.co.nz)..a.k.a..’the lone voiice at the back of the blogosphere’..
January 15th, 2009 at 5:19 pm
tho i see kimble is still maintaining his usual condition..of self-delusion/denial..
..top marks for consistancy there tho’..eh..?
phil(whoar.co.nz)..a.k.a..’the lone voice at the back of the blogosphere’..
January 15th, 2009 at 5:19 pm
Reduce the number of MPs by 7.5% in solidarity with the unemployed. Should be a permanent reminder.
January 15th, 2009 at 5:20 pm
Cullen you fool – the consequences of your stupid socialist policies has made matters a lot worse than they ever needed to be – Good to see Key / English at the helm – guys with a real understanding of the motivators of the economy and economic growth.
Cullen should retire to some miserable suburb like Flaxmare and live out his miserable retirement surrounded by lowers.
January 15th, 2009 at 5:26 pm
phule, dont even bother mentioning my name if you arent going to read and, more importantly, understand my post.
January 15th, 2009 at 5:27 pm
“A depression is not determined by the depth of the recession. There would have to be something very large, like governmental interference, to pro-long a recession into a depression.”
Yes. Government interference. That’s what lay behind the 1930s malaise. Bloody Roosevelt and his ilk. Wonderful how even the failures of the market are the fault of socialists … just like it’s always the devil’s fault when God’s great creation goes astray.
But someone had better warn Key/English before they go about trying to stimulate (ie interfere in) the economy. Oh, and Bush. And Brown. And the rest of the freaking world. Kimble, you’ve got a lot of letters to write!
January 15th, 2009 at 5:30 pm
gee monty..!
you still don’t realise that had cullen not reduced our o/s debt..
..that we would be in a far worse position now..
..crikey..!..we may have been as bad as (worst-case) iceland..
..instead of battling ireland for second-most-basketcase country..
..and how about that roy morgan poll yesterday..?
..showing ‘most of ius’ optimistic about the economic future..
..how seriously deluded/ill-informed/unaware are we..?..as a nation..?
hil(whoar.co.nz)..a.k.a….’the lone voice at the back of the blogosphere’..
January 15th, 2009 at 5:32 pm
# AG (238) Vote: Add rating 0 Subtract rating 0 Says:
January 15th, 2009 at 5:27 pm
“A depression is not determined by the depth of the recession. There would have to be something very large, like governmental interference, to pro-long a recession into a depression.”
Yes. Government interference. That’s what lay behind the 1930s malaise. Bloody Roosevelt and his ilk. Wonderful how even the failures of the market are the fault of socialists … just like it’s always the devil’s fault when God’s great creation goes astray.
Yeah I’m sure forced confiscation of the citizens private wealth had nothing to do with it.
January 15th, 2009 at 5:32 pm
“Yes. Government interference. That’s what lay behind the 1930s malaise. Bloody Roosevelt and his ilk.”
For once you have got it right. By accident you uninformed political troglodyte.
————————————————-
FDR’s policies prolonged Depression by 7 years, UCLA economists calculate
By Meg Sullivan| 8/10/2004 12:23:12 PM
Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.
After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.
“Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. “We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”
In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.
“President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services,” said Cole, also a UCLA professor of economics. “So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies.”
http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx?RelNum=5409
January 15th, 2009 at 5:33 pm
no kimble..you still don’t ‘get it’..eh..?
the whole monetary system is about to undergo a seachange..
and fings won’t be the same..again..
..eh..?
phil(whoar.co.nz..a.k.a..’tlvatbotb’
January 15th, 2009 at 5:35 pm
Poor old Phool, it seems he is still bitter about not getting a LPG government.
Tell me Phool, how would we have been saved from impending doom by a LPG govt?
January 15th, 2009 at 5:41 pm
Tell me Phil, how if Cullen was so masterful in lowering our overseas debt, why was Labour planning on raising debt levels to around 30% of GDP in the coming months had they won?
Being ‘the lone voice at the back of the blogosphere’ is easy when you’re so crazy that no one else wants to be associated with your idealogy.
January 15th, 2009 at 5:42 pm
Reddy,
Ah yes … the good old Cole and Ohanian paper. Described thus at http://www.huffingtonpost.com/hale-stewart/the-great-depression-pt-i_b_156161.html
“in more simple, layperson’s terms, the two bedrock assumptions of [Cole and Ohanian's] work are:
1. the New Deal is not compared with other historical panics and recoveries, such as those of 1837 and 1873, but rather with the Fairyland of Let’s-pretend-as-if Econ 101 perfect competition!
2. In their alternate “reality”, the Let’s-pretend-as-if Fairy magically sprinkled pixiedust on the economy and it spontaneously started to recover in Spring 1933 with no effort whatsoever. No need to worry about banking panics, debt deflation, starvation and privation, the Let’s-pretend-as-if-onomic Fairy gave everybody a clean slate on FDR’s first day in office!
It is only under these two explicit assumptions, which at no point in the paper are relaxed, that their results are valid. Nowhere in their paper is there an attempt to compare the actual reality of the 1930s with a comparable period that did not feature government intervention (such as the 19th Century great Panics). At best they make a theoretical comparison to a 1920s which featured some monopolies, and surprise, surprise, even under that limitation they concede that their results are considerably more tepid.
Despite the fact that their entire reasoning rests on economic fairydust, their conclusion pretends as if it is comparing two realities:
“Our results suggest that New Deal policies … reduced consumption and investment about 14 percent relative to their competitive balanced growth path levels. Thus, the model accounts for about half of the continuation of the Great Depression between 1934 and 1939.
New Deal labor and industrial policies did not lift the economy out of the Depression as President Roosevelt and his economic planeers had hoped. Instead, the joint policies of increasing labor’s bargaining power, and linking collusion with paying high wages, impeded the recovery by creating an ifefficient insider-outsider friction that raised wages significantly and restricted employment. The recovery would have been stronger if wages in key sectors had been lower.”
In fact, all they have proven — theoretically, not experimentally nor even by real historical comparisons — is that the New Deal slowed down recovery compared with an imaginary world where there was Econ 101 perfect competition and magical economic pixiedust ended the contraction in spring 1933. Take away the two preposterous assumptions, and Ohanian and Cole have proven nothing except the ability of neoclassical economists to indulge in thoeretical autoeroticism.
(hat tip to Mr. Francesco for the images of the fairygodfriedman)
In short, as Bruce Wilder has said, they “compare and contrast an entirely imaginary, right-wing fantasy economy with the actual economy, and then blame the actual economy for falling short of the imaginary economy,” without even bothering to “test the realism of their imaginary economy.” To which we can add, under the substantially “lower real wage” rate desired by Ohanian and Cole — a rate apparently close to 1932-33 wage rates — there would certainly have been a great deal more privation and death. But no concern to the economist authors. After all, it would have been much more efficient privation and death.”
January 15th, 2009 at 5:44 pm
Huffington Post?? Hahahahahahahah…. who the fuck reads that crap???
January 15th, 2009 at 5:46 pm
Now now, Reddy. Play the argument, not the source. After all, YOUR claim was from a pair of academics (aka socialist/commie/left-wingers out to subjugate the entire free world with their creeping marxist lies).
January 15th, 2009 at 5:47 pm
So what’s the sea change Philu? Please be very specific.
January 15th, 2009 at 5:48 pm
Baiter – you read your right-wing propaganda rags, we’ll read our leftie ones. Don’t kid yourself these right-wing, business-funded “independent think tanks” you are forever quoting are any different.
January 15th, 2009 at 5:50 pm
Ratbiter , think tanks will be blown from the battle field. Batten down the hatches as all hell is going down. Told you so months ago, you silly rodent.
January 15th, 2009 at 5:54 pm
the whole house of cards is falling down/over..reid..
..(how ‘specific’ do you want..?.
..and of course..going to whoar..and keying ‘meltdown’ into the search engine..
..should answer your desire for ‘specifics’..))
..and we aren’t even factoring in the environmental stuff..yet..
..whoar..!
phil(whoar.co.nz)..a.k.a..’tlvatbotb’..
January 15th, 2009 at 5:58 pm
“and of course..going to whoar..and keying ‘meltdown’ ”
Oh no, phools bong has another meltdown. What a git.
January 15th, 2009 at 6:01 pm
It would seem one news will be showing us the way out of a dying economy! they will be talking to government civil servants and think tanks! i wonder if the economic remedy will consist of printing more money and drinking more coke.
January 15th, 2009 at 6:12 pm
I have a 100% surefire way to reduce unemployment: remove the minimum wage.
I guarantee it will work. I double guarantee it. Supply and demand, people.
January 15th, 2009 at 6:17 pm
ah..!..christopher plans to execute the poor/unemployed..
it’s called the pol-pot-solution..
phil(whoar.co.nz)..a.k.a..’tlvatbotb’..
January 15th, 2009 at 6:20 pm
# Christopher (144) Vote: Add rating 0 Subtract rating 0 Says:
January 15th, 2009 at 6:12 pm
I have a 100% surefire way to reduce unemployment: remove the minimum wage.
I guarantee it will work. I double guarantee it. Supply and demand, people.
Yeahp, creating further insecurity in the labour force will really help things move along smoothly, i certainly hope they do this as we might see a paradigm shift sooner rather than later.
January 15th, 2009 at 6:20 pm
“pol-pot-solution..”
Are you on bad acid phool?
January 15th, 2009 at 6:20 pm
Sorry Phil, show me again where I said that?
January 15th, 2009 at 6:41 pm
Philip Ure said “it’s called the pol-pot-solution..”
Well, if anyone was an expert on POT …
January 15th, 2009 at 7:32 pm
LOl IV2
Phool, How could anyone take any advice from you on the economy, when your personal actions (inactions) do nothing to enhance ir, but everything to drag it down with your lazy dope smoking bent lifestyle of sucking off others?
January 15th, 2009 at 7:44 pm
Well the 4 major fuel companies have lifted prices again
yet we can never sting them for collusion.
who says support Gull
Just need more of them is all.
January 15th, 2009 at 7:45 pm
Why the hell is Phil so happy, does he not he realize that he will be one of the first to starve?. Or does he hope that the commie’s will be voted back into power by the starving masses and all the “rich pricks” will be put to the sword by aggrieved morons such as himself. In all honesty I feel very sorry for city dwellers as there is a lot of despondency in the rural sector at the moment and farmers are putting their cheque books back into the top draw. Like it or not NZ gets a very large percentage of it’s income from agriculture and those now engaged in agriculture have stopped spending, those in the cities will find this to be very true in the coming months.
January 15th, 2009 at 7:49 pm
It was so good without philu, wasn’t it?!? His multi-month election loss bender must have concluded and the haze cleared sufficiently for him to re-discover the keyboard. Bugger!
January 15th, 2009 at 7:50 pm
Aye, I fear you’re right. Of course, the less they spend, the more jobs we lose and the further into recession we slide. Our only way out if it is a total transformation to libertarian free market systems. No minimum wage, freedom of contract, drastically slashed welfare, dismantlement of non-essential government institutions, repeal and replacement of the RMA and zero tolerance for crime.
Any other course will lead inevitably to deeper recession and more hardship for the poorest in our society.
January 15th, 2009 at 8:00 pm
“So what’s the sea change Philu? Please be very specific.”
“the whole house of cards is falling down/over..reid..”
Why should anyone waste their time going to your site when you cant even give them the slightest indication of what they will find there?
For goodness sake, whet the appetite with a few specifics rather than force feed the audience banal generalities.
You may as well have written, “the vibe, reid, the vibe”.
January 15th, 2009 at 8:08 pm
Phool has a right to be smug in some ways, he knows that his lifestyle is safe for the time being, he also knows that this Labour lite government is never going to do what is really needed.
Sadly the people who are going to hurt the most are the same poor bastards who have seen their incomes taxed to hell by Klark and Kullen for the last nine years.
The so called middle classes are the ones who carry the burden, they are the poor bastards who will be laid off, these same people face losing all the equity they have in their property and possibly even losing their homes in mortgagee sales, meanwhile parasites like Phool and all the other dole and DPB bludgers will continue on as normal.
When this is over there is going to be a huge angry middle class, they will be angry that they missed out on the so called nine golden years, all they got from Kullen was higher taxes.
They sat and watched as their money was dished out to the dole bludgers, they sat and watched as Labour wasted billions upon billions of their hard earned cash on racist treaty settlements and ‘social spending” (engineering) sure the rich made plenty and the lower income all received a wage rise but the vast majority of the middle class received nothing.
Those middle class people who survive the crash (and those who do not) are going to be angry, bitter and rightfully resentful of those who were happy to sponge from them, they will be angry that they carried so much of the burden during the good times yet there was nothing left for them when things turned bad, they will emerge from this with a new mindset and it will be a mindset of….. “fuck everybody else, I will look after me and mine”
Low life scum like Phool will not be tolerated, handing out money for nothing to vermin like the Kahui’s and Kukas will not be acceptable, out of it all we will get a much harder, personally responsible New Zealand where the lazy will have to fend for themselves.
January 15th, 2009 at 8:30 pm
I just felt my dick move…
January 15th, 2009 at 8:32 pm
Philu I just want to know what you know. The ‘house of cards’ isn’t very specific.
January 15th, 2009 at 8:34 pm
Good move by Key anyway to appoint Weldon to chair the summit. Don’t know if you guys listen to Sunday Business on RadioLive at 12:00, but it’s one of the best business programs around – Weldon, Hickey are regulars.
January 15th, 2009 at 8:38 pm
# reid (1782) Vote: Add rating 0 Subtract rating 0 Says:
January 15th, 2009 at 8:32 pm
Philu I just want to know what you know. The ‘house of cards’ isn’t very specific.
The house of cards Dur, didn’t you know that the house of cards are nefarious agents of the N.C.O ( New card order ) who control the phoneless peasant population, i mean how more specific dose he have to get, Helen Clark was the 2 of clubs, John key is the ace of spades the ex president Bush is the Joker and Obama is the Queen of hearts.
January 15th, 2009 at 8:39 pm
Hey US purchasing power had plummeted. Maybe it is George Bush’s fault and not Labour’s …
Bring back Helen!!
January 15th, 2009 at 8:58 pm
It all the fault of Hussein Obama Micky.
January 15th, 2009 at 10:24 pm
No seriously, there are many many specific issues that Philu could identify, I just want to see if he does, or not. OTY Philu.
January 16th, 2009 at 8:15 am
How do they calculate unemployment? if it is the same fuzzy numbers that they use for Inflation then i wouldn’t trust the 7.5% figure it would probably be much higher.
There is a link on my blog to the US Bureau of Labor Statistics alternative measure of unemployment which includes much higher figures than 7.5%.
http://blog.thrashcardiom.com/2008/09/us-unemployment-rate.html
January 16th, 2009 at 8:57 am
Why is that gibbering bufoon phoolu commenting on clever his lords and masters were on so comprehensively screwing our country?
The word shame clearly has no meaning for some.
January 16th, 2009 at 9:09 am
Abolish the minimum wage? End welfare? At this time? Yeah….I assume anyone advocating that is heavily armed , lives in a concrete, steel reinforced bunker in an isolated area, has their own secure food and energy supply and will never need to step outside to use the roads and streets because starving, unhoused and desperate people have a tendency to get violent. I assume the libertarians still want to return to the gold standard as well? Great. We can just borrow some more billions and start buying the nice shiny yellow stuff.
Positive actions National might/could/should/ will do:
Not raise the minimum wage for the next 3 years as falling inflation/prices will eliminate this need.
Reduce the right of appeal in RMA decisions and introduce Rural Industrial Zoning to protect farmers and agricultural enterprises from absurd legal actions over ‘visual pollution’ and minor inconveniences like smells from pig farms and noise from machinery like tractors, trucks, harvesters etc.
Reduce or end unnecessary govt spending: CreativeNZ and other arts funding, borrowing for the Cullen fund contributions, the Women’s Affairs ministry, govt funded campaigns such as anti-smoking, push play etc. There will be much wailing by paper shufflers, consultants and academics employed by all this waste but they will just have to work in real productive jobs like the rest of us.
Freeze MP’s pay for the next 6 years. A small saving but an important gesture. Put it forward as legislation and dare Labour and the Greens to vote against it. They’ll be to frightened of the public backlash if they don’t.
Terminate Working For Families. This mad hangover from the Clark/Cullen days which discourages work and production and is unfair to productive singles or couples with no children must end. Return the savings as straight tax cuts with a board income catchment lowest to highest.
There’s so much more..but..oh what’s the point National will do some of it but I think they lack the will to do the big stuff.
January 16th, 2009 at 9:27 am
Philu reminds me of Gollum (sp) in Lord of the Rings. He’s been alone too long. This is the problem with the dole, it rewards people for doing nothing. People like Philu might even get a job with the government under Labour. Wonder how many kids he abuses each day.
January 16th, 2009 at 9:54 am
Richard Hurst, I agree with most of what you said. Income for Families is a tough one when I have talked to so many families that are dependent on it. Even us. To take the place of income for families, there needs to be a substantial tax break. The purpose of the “handout” was because Helen and Cullen wanted people dependent on the government. This gives them more control and control is the blood in their veins! Unfortunately it has worked and if Key had decided to dump it, he would have lost the election. I know Key had done extensive business in Ireland and hopefully he will use Ireland as a model for New Zealand because the populations are similar. They reduced Corp tax down to 13 percent. Flat rate for families 20 percent. They are experiencing a 2.5 percent growth rate even now. Like you said, the intellectuals sucking our money in bureaucratic waste will scream to the hilt because they have so much to loose. Ireland’s MPs even took a pay cut for the reasons you said. The low corporate tax would keep companies like Fisher and Pykle and those 500 jobs lost in Christchurch.
January 16th, 2009 at 10:36 am
# Thrash Cardiom (67) Vote: Add rating 0 Subtract rating 0 Says:
January 16th, 2009 at 8:15 am
Thanks mate! i was going to check out shadow stats but I’m not sure if they only do American figures.
January 16th, 2009 at 9:17 pm
philu, i see you are still annoying people…
you know, many folk other than you could see this coming so stop going on about it.
even tho you’re right. i have nought but terrible thoughts about the current fraughts.
it is a terrible situation as more and more people get hurt. It is easy to dismiss with vacuous comments on a regular basis but people’s lives change forever to the detriment at times like this. start having some compassion you (insert whatever feels right).
January 16th, 2009 at 10:44 pm
Two words explain the US data: oil prices.
June 30th, 2009 at 6:37 pm
Rather than a gold standard, how about an energy standard? It is tangible, it has value, in fact if you make it X KWH of work at a standard outlet established in any of the major centers you could easily enough CALL it work, and it never does less than a KWH of work because that is what it is worth.
Go ahead and do in the bankers with their attachment to Debt Based, Fractional Reserve FIAT currencies and follow a different path.
The bankers way leads inevitably to collapse of economies and ecologies both.
http://www.notjustnotes.ws/howbanksrobyou.htm
The Austrian school doesn’t have much truck with the Chicago school mobsters or Goldman Sachs the Planet.
If you want to be really disgusted about something pick up Tabibi’s article in Rolling Stone.
ciao
BJ
June 30th, 2009 at 6:39 pm
Wrong words Jarbury…. the words are “Goldman-Sachs”. Read the article and notice that oil prices are something special to them. – respectfully
BJ