The risk of debt

May 18th, 2010 at 7:00 am by David Farrar

The Herald reports:

The Government could face rising costs of borrowing and increased scrutiny of its debt as a result of the sovereign debt crisis in Europe, a global fund manager has warned.

Gerard Fitzpatrick, a bond portfolio manager for Russell Investments, said Europe’s €750 billion ($1.3 trillion) bailout had stopped the immediate liquidity crisis but there were still concerns about sovereign debt. …

However, he said there was a risk of debt being repriced which could make it more expensive for the Government here to borrow money internationally.

“That will put more pressure on the New Zealand budget.”

Maybe this may cause a bit of hesitation in the economic geniuses in who demand that the Government increase its level of borrowing, so it can put more money into the Cullen Fund.

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29 Responses to “The risk of debt”

  1. Danyl Mclauchlan (1,049 comments) says:

    But wait! Just last night I heard another totally random stranger on the bus say we SHOULD borrow money internationally. Now I don’t know who to believe!

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  2. Auberon (820 comments) says:

    Maybe, but unlikely. It’s all spend, spend, spend with ‘Whack it on the bill’ Phil and David ‘we left the economy in great shape’ Cunliffe.

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  3. redqueen (346 comments) says:

    Well, the problem is that Labour hasn’t been bright enough, as yet, to propose ‘quantitative easing’. Why just borrow when you can print the money and then borrow it?

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  4. nickb (3,629 comments) says:

    “Maybe this may cause a bit of hesitation in the economic geniuses in Labour who demand that the Government increase its level of borrowing, so it can put more money into the Cullen Fund.”

    And also the economic geniuses in National, who are currently borrowing $240,000,000.00 a week, and will be for the forseeable future

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  5. Chthoniid (1,967 comments) says:

    wait…Labour has some economic genuises hidden away somewhere in their party!? This is real news ;)

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  6. Pascal (2,015 comments) says:

    nickb: And also the economic geniuses in National, who are currently borrowing $240,000,000.00 a week, and will be for the forseeable future

    Yeah, it’s a bitter legacy the Labour / Green government left the country with. But National is now in the unenviable position of having to ensure the country’s economic future and ensuring that a Labour / Green government does not get in again in the forseeable future so National can put us back on the road to recovery.

    And radical cuts to Labour / Green policies will only ensure National’s political oblivion as well as putting us on a third world alert once Labour / Green can start enacting their tax and spend and borrow policies again.

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  7. Redbaiter (13,197 comments) says:

    Our first mistake was in allowing government to become such a big player in the economy.

    Our second mistake was electing politicians who have no ability to manage such a monolithic financial entity.

    It was always doomed to fail, and fail it will. Our elected representatives are powerless in the face of a financial tsunami of their own making.

    Now, the only course of action open to anyone with a brain is to prepare for the worst.

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  8. thedavincimode (6,131 comments) says:

    “The Government could face rising costs of borrowing and increased scrutiny of its debt as a result of the sovereign debt crisis in Europe, a global fund manager has warned.”

    Ooh … err. When did he realise that?

    Yaaawwwwwwwn.

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  9. Doug (405 comments) says:

    Dear Tories, sorry we spent all the money: Labour’s farewell letter as it’s revealed public debt could DOUBLE to £1,790bn.

    Labour’s gross mismanagement of the economy was laid bare today after it was revealed a former minister left his successor a note that said ‘there was no money left’.
    In a stark message left in a Treasury desk, outgoing chief secretary to the Treasury Liam Byrne wrote simply: ‘I’m afraid to tell you there’s no money left.’

    Sound familiar Labour Governments Worldwide can’t handle money just tax and spend.

    http://www.dailymail.co.uk/news/article-1279043/George-Osborne-deliver-emergency-Budget-June-22.html

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  10. Redbaiter (13,197 comments) says:

    “Ooh … err. When did he realise that?”

    Of course. This is just the outcome that Keynesian financial policies were always going to bring about. This result has always been just over the horizon, and our infatuated news media, in bed with the slovenly politicians who have unwaveringly subscribed to this idiotic fiction, have always done their best to draw attention away from the impending doom that was always going to arrive one day.

    When they should have been ringing the alarm bells, they were in bed with the political wreckers who have brought this destruction upon us.

    Its easy to blame the apathy of NZers for this event, but the real problem is a news media who merely acts as a megaphone for destructive government policies, and have never subjected these policies to the scrutiny they should have if they had been doing their jobs- being real journalists and not just propagandising for big government.

    Democracy only works if the populace is informed. Keynesian politicians have defrauded us all, and we have let these charlatans do it to us. The checks and balances we thought were in the media have all been destroyed because of that entity’s slavish devotion to the same destructive ideals as those politicians most responsible for the coming outrage.

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  11. YesWeDid (1,003 comments) says:

    I know how to sort out the government debt problem. Lets give big tax cuts to the rich!

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  12. nickb (3,629 comments) says:

    YesWeDid, by “rich” I assume you mean “the payers of the vast majority of tax”?

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  13. thedavincimode (6,131 comments) says:

    “The checks and balances we thought were in the media”

    Not so much of the “we” Kemo Sabe …

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  14. Redbaiter (13,197 comments) says:

    “Not so much of the “we” Kemo Sabe …”

    Yeah, fair enough Lone Ranger. I did reflect upon that as I wrote it.

    The other thing that I have to smile at is the idea that this is a partisan thing. That there is some critical difference between Labour and National , or (in the UK) the Conservatives and Labour, that would have produced a different outcome. Perhaps there are differences, but not to the degree that matters. They have all subscribed heartily and enthusiastically to Keynesian bullshit and they are all responsible.

    Now all will be punished. A curse on both their houses.

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  15. willtruth (245 comments) says:

    But are we really right to worry so much about our public debt? NZ public debt is very low by world standards. Isn’t our real problem a lack of GDP growth and productivity growth? And haven’t we choked off GDP growth in the past by focussing too much on debt?

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  16. thedavincimode (6,131 comments) says:

    Yes nickb – that would be the very group to which YWD refers – about 6% according to the stupid seagull.

    Its not clear though, whether the “rich” include single taxpayers, or those who have chosen not to have the cost of their breeding subsidised by others. Given that group pays tax when subsidised breeders on the same incomes don’t, perhaps they too are “rich” by definition.

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  17. mattyroo (885 comments) says:

    Redbaiter said:

    “…….but the real problem is a news media who merely acts as a megaphone for destructive government policies, and have never subjected these policies to the scrutiny they should have if they had been doing their jobs- being real journalists and not just propagandising for big government.”

    Spot on RB.

    Witness the walrus last night, and other associated media fuck knuckles, carrying on that the bail-out of leaky homeowners is not enough!!!! Where do these jerks get their fucking brains from? Cheering for the gummint to spend, spend spend, and the moment someone mentions cutting benefits, they scream blue murder.

    The lot of them should be lined up and shot, in the stomach, so they die slowly.

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  18. Redbaiter (13,197 comments) says:

    Here’s a politician telling it like it is. More such people here might have saved us-

    http://crusader-rabbit.blogspot.com/2010/05/now-this-is-campaign-ad.html

    Thanks to Crusader Rabbit. The best blog.

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  19. Redbaiter (13,197 comments) says:

    “The lot of them should be lined up and shot, in the stomach, so they die slowly.”

    Its our fault too in a way. We thought they were journalists, when they’re really just a collection of hicks, hillbillies, hookers, rent boys and other assorted low life political sycophants. Should have seen the truth years ago.

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  20. Redbaiter (13,197 comments) says:

    Damn-

    Fair enough Tonto… :)

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  21. mattyroo (885 comments) says:

    willtruth said:

    “But are we really right to worry so much about our public debt? NZ public debt is very low by world standards. Isn’t our real problem a lack of GDP growth and productivity growth? And haven’t we choked off GDP growth in the past by focussing too much on debt?”

    Yes, we are right to worry about our public debt will, but more importantly, we really need to worry about our private debt. As this is going to take years and years to pay off – as it is all caused by flogging houses to each other, using money borrowed from offshore.

    We now need to earn all of that money in foreign exchange, to repay that debt. This is the reason the gummint has to keep propping up the housing market, because, if they let values fall to where they belong, the private sector would have to have a massive en masse default, fucking the country. That is why housing has been so dangerous to our economy, and why, quite rightly, the gummint is trying to do something about it – although, not nearly enough in my opinion.

    Apologies for getting off topic, but it is all relevant.

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  22. Richard Hurst (714 comments) says:

    “…may cause a bit of hesitation in the economic geniuses in Labour..”

    No it won’t. Their in opposition and as everyone knows when your in opposition (and likely to be so for years) you can say any old thing becuase ya know your never going to be held to account for it.

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  23. jims_whare (389 comments) says:

    Yup big tax cuts to the rich so they can invest more in their businesses and not have to piss off to Oz so that wannabes like YesWeDid have the option of getting off their unemployed bums and go work for those rich. Or maybe NZ would be better off if all the rich pricks left everyone of them and everyone left were all on the dole and equal…………………………………….What a paradise………hold on where would the dole money come from??? Ummmmm I don’t care just give it anyway.

    Moron

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  24. Manolo (12,641 comments) says:

    “I know how to sort out the government debt problem. Lets give big tax cuts to the rich!”

    Yes, the same ruch that support bludgers and maintain the lifestyle of loafers, idle and lazy people. What you consider “rich” is what you will never be able to attain. In your world mediocrity rules.

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  25. YesWeDid (1,003 comments) says:

    jims_whare, as I’m in the upper tax bracket I think that makes me ‘rich’ in New Zealand.

    If DPF is concerned about New Zealand’s debt levels then why is not questioning why his beloved National government is cutting taxes at a time when we are running a reasonably large deficit?

    [DPF: They're not. This set of tax changes will be fiscally neutral]

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  26. thedavincimode (6,131 comments) says:

    willtruth

    You might well be right if Government was a profitable, innovative entrepeneurial and productive business returning dividends to its shareholder taxpayers so as to enble them to sit on their bottoms and do nothing all day like the stupid magpie. It is possible that we could one day have such a Government in NZ and if I have time later today, I’ll try to see if I can pull one out of my arse.

    To be fair, Herr Dokter sought to embark on this course with his inspired strategy of taxing the arse off medium and high income/wealth individuals and encouraging them to flee the country in droves. This had the dual benefits of clearing the landscape of commercial competition for NZ LabCorp, as well as making room for the next wave of migrant entrepeneurs who were in between skills … and money. His insightful local investment strategy, commencing with Kiwi Rail, came to an unfortunate and premature end in November 2008. Sadly and notwithstanding the 12 year promotion of his NZ LabCorp prospectus with regular billion dollar lolly scrambles, he failed to retain the support of his shareholders at the tri-annual shareholders meeting. But to be sure, the entrepeneurial die had been cast(e) … right down the shitter …

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  27. thedavincimode (6,131 comments) says:

    YWD

    If you think that makes you rich, then you won’t need future generations of taxpayers – as in taxpaying and non-breeding – to pay for your retirement directly or indirectly.

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  28. Repton (769 comments) says:

    Yeah, it’s a bitter legacy the Labour / Green government left the country with.

    The Green Party was in government? When was that?

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  29. RKBee (1,344 comments) says:

    …“That will put more pressure on the New Zealand budget.”…

    What budget we borrow the money.

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