It feels like we are witnessing the end of Western Civilization. Along with Trump and Musk, Luxon and Willis are taking us nowhere. They seem to be so blinkered and with no original thought. The original thought is found with Bernard Hickey, Craig Renney, Bryan Bruce, Gordon Campbell, Rob Campbell, Melenie Nelson, Guy Standing, Catherine Knight, Katherine Trebeck, Ganesh Nana, but Luxon et al take no heed.
Chris Hedges certainly believes the American empire is coming to an end, though Trump seems set on setting up a super power era where international rules-based order is simply ignored. And Gary Stevenson (over on Gary's Economics, youtube) is quite convinced the middle class in England is being gutted (unless the very and uber-rich are very heavily taxed) and the sort of inequality last experienced in the feudal ages will return. And of course Yanis Varoufakis outlines in his book 'Technofeudalism' home capitalism (as we used to understand it) has already ended, and we now live in a 'technofeudal' era. Taken all together, it seems that trying to fiddle with interest rates and productivity no longer is the fix it may once have been?
Last thought: much beneficiary bashing by the coalition govt, but I thought unemployment was 'required' to increase to get inflation down, or did I get the wrong end of the stick?
It is difficult to pin inflation on unemployment in NZ when a large part of the inflation during covid was external or foreign inflation. The current drivers of inflation are rates insurance and other fees such as car registration etc that the government has driven. real motivation for benefit bashing must be to reduce benefit payments which will ease the provision of tax cuts and corporate tax reductions that the same government is also planning. Absolute oxymoron to argue the country is boke prior to and after the election and then provide public and corporate tax rebates funded by borrowing if necessary. Seems to me the COC are extremely financially challenged rather than the financial experts they were proclaiming to be.
The sub-corporate 'business community' holds a view of National as 'their' party that is mindless objectification. In reality the interests of workers and most business owners are the same- adequate discretionary spending money circulating in the economy (the non-discretionary spend such as fuel / food / mortgage repayment is entirely the domain of the corporate sector- hence 'sub corporate'). Starving the economy of circulating funds by austerity serves no-one. Even the banking sector which 'in theory' could fill the cash gap with loans is constrained by reluctance of households to borrow (in fact the political point of austerity is an attempt to force them to do so) while the economy is in dire straits with no light at the end of the tunnel.
Small businesses are also constrained by inability to borrow cheap money.
Local bank loans for equipment are at an eye watering interest rates whereas our Australian owned co-op gave us 5%, you can only get a loan to buy a business if you own a home with enough equity and anything secured against a business, even if there is proven track record of profits, is again at horrendous interest rates.
Everything in this country is incentives towards buying residential properties.
I guess the reason is because the equity in a business is in its activity whereas the equity in real estate is solid matter. Seems grotesque that high interest rates are still applied for established, profitable business though.
I think the thing about having equity in a home to get a loan to buy a business or a business asset has always been there though. My dad looked into it around 1980 to buy a coach to do vintage-railway themed coach-trips. My mum vetoed it because of the home equity risk (which was weird 'cos she was the one desperate to escape from the working class into the business class).
Using home equity to secure a business loan has always Bern there, but with house price skyrocketing and falling home ownership there are fewer and fewer people who are in a situation that is enabling taking such a loan. The outcome is more and more small businesses closing shop instead of selling because less and less people can afford to buy.
Wouldn't the drop in household discretionary spending power be at least as important a factor though? if a small business is a 'lame duck' on the balance-sheet it's not going to sell regardless of the capacity of potential buyers to raise the purchase price. There comes a point where it's more viable to close a business & sell off the individual assets than to attempt to sell as a going concern.
There are also other sources of funding (for some) that don't require going into debt. There's many an inheritance been lost in a business bought for sentimental reasons.
As an aside- when I came here 20 years ago there was a common scam in sales of businesses where the vendor would create a false set of final-year accounts- even to the point of paying tax on the non-existent profit- in order to inflate the sale price. One friend got burned for $50,000 this way. Another did the 'due diligence' and realised the Motel he was intending on buying was earning (on paper) more than if every room was rented out all the time! He made a reduced offer and bought it at a realistic price. This would be fraud in most jurisdictions- seems in NZ 'caveat emptor' is the rule when buying a business.
NZ is already one of the most deregulated countries for doing business in the OECD. Now these wolves want to eliminate any and all protections against corporate exploitation. Small business owners who vote for this shower thinking they stand for them are so misguided its laughable.
Great stuff Craig. The great irony is the foreign investors simply want to buy lots and lots of NZ Government bonds, and the Government is actually choosing to issue less of them, rather than use them to pay for desperately needed infrastructure, housing etc.
Excellent. Succint. As ever. Thank you. The plan of this govt is to defund and sell off to the highest bidder to line their own pockets. They are not even vaguely interested in 'the people'. Only themselves, their backers and corporate expansion globally. They are in fact not a government but a merger company masquerading as a govt. We do need a strong slogan from the left to make this clear for the next 18mths.
When I read that there were 17 workplace deaths per week, I thought that was a typo, maybe you meant per year? But then I looked at the Worksafe link - they're (quite rightly) including illness and long-term conditions. Not "just" the accidents that make the media.
Good point on tripartite agreements. Ireland's growth was also backed by 5 year agreements with business and unions but this almost never gets mentioned. Business loves stable predictable environments, well, the serious ones do.
Thanks Craig for the well written piece above. I have seen many a "plan" that does not meet that basic definition and it is a bit of a bug bear of mine. It seems rather than a mistaken omission, it's a shallowness of strategic thought and a tiny overton window that prevents real solution making.
Bang on Craig, productivity is not beetlejuice - it won’t just leap out like a bloody genie no matter how much govt hope and pray and repeatedly state they would like it. Someone has to MAKE it be so
It feels like we are witnessing the end of Western Civilization. Along with Trump and Musk, Luxon and Willis are taking us nowhere. They seem to be so blinkered and with no original thought. The original thought is found with Bernard Hickey, Craig Renney, Bryan Bruce, Gordon Campbell, Rob Campbell, Melenie Nelson, Guy Standing, Catherine Knight, Katherine Trebeck, Ganesh Nana, but Luxon et al take no heed.
I'm not sure western civilization is ending but when I look at its history maybe it's not such a bad thing.
Let us all embrace a bit more of indigenous culture into our lives.
Im all for that. The thing is though that if we allow these shysters to continue we will be locked into corporate control going forwards.
Chris Hedges certainly believes the American empire is coming to an end, though Trump seems set on setting up a super power era where international rules-based order is simply ignored. And Gary Stevenson (over on Gary's Economics, youtube) is quite convinced the middle class in England is being gutted (unless the very and uber-rich are very heavily taxed) and the sort of inequality last experienced in the feudal ages will return. And of course Yanis Varoufakis outlines in his book 'Technofeudalism' home capitalism (as we used to understand it) has already ended, and we now live in a 'technofeudal' era. Taken all together, it seems that trying to fiddle with interest rates and productivity no longer is the fix it may once have been?
Last thought: much beneficiary bashing by the coalition govt, but I thought unemployment was 'required' to increase to get inflation down, or did I get the wrong end of the stick?
Further to your last thought.
It is difficult to pin inflation on unemployment in NZ when a large part of the inflation during covid was external or foreign inflation. The current drivers of inflation are rates insurance and other fees such as car registration etc that the government has driven. real motivation for benefit bashing must be to reduce benefit payments which will ease the provision of tax cuts and corporate tax reductions that the same government is also planning. Absolute oxymoron to argue the country is boke prior to and after the election and then provide public and corporate tax rebates funded by borrowing if necessary. Seems to me the COC are extremely financially challenged rather than the financial experts they were proclaiming to be.
'that', not 'home'
They came into the election campaign saying they 'had a plan', 18 months later they still don't...
They do. They just dont want to tell us the actual plan.
I’m beginning to think you’re right… Atlas junktanks, Powell’s memo…
The sub-corporate 'business community' holds a view of National as 'their' party that is mindless objectification. In reality the interests of workers and most business owners are the same- adequate discretionary spending money circulating in the economy (the non-discretionary spend such as fuel / food / mortgage repayment is entirely the domain of the corporate sector- hence 'sub corporate'). Starving the economy of circulating funds by austerity serves no-one. Even the banking sector which 'in theory' could fill the cash gap with loans is constrained by reluctance of households to borrow (in fact the political point of austerity is an attempt to force them to do so) while the economy is in dire straits with no light at the end of the tunnel.
Small businesses are also constrained by inability to borrow cheap money.
Local bank loans for equipment are at an eye watering interest rates whereas our Australian owned co-op gave us 5%, you can only get a loan to buy a business if you own a home with enough equity and anything secured against a business, even if there is proven track record of profits, is again at horrendous interest rates.
Everything in this country is incentives towards buying residential properties.
I guess the reason is because the equity in a business is in its activity whereas the equity in real estate is solid matter. Seems grotesque that high interest rates are still applied for established, profitable business though.
I think the thing about having equity in a home to get a loan to buy a business or a business asset has always been there though. My dad looked into it around 1980 to buy a coach to do vintage-railway themed coach-trips. My mum vetoed it because of the home equity risk (which was weird 'cos she was the one desperate to escape from the working class into the business class).
Using home equity to secure a business loan has always Bern there, but with house price skyrocketing and falling home ownership there are fewer and fewer people who are in a situation that is enabling taking such a loan. The outcome is more and more small businesses closing shop instead of selling because less and less people can afford to buy.
Wouldn't the drop in household discretionary spending power be at least as important a factor though? if a small business is a 'lame duck' on the balance-sheet it's not going to sell regardless of the capacity of potential buyers to raise the purchase price. There comes a point where it's more viable to close a business & sell off the individual assets than to attempt to sell as a going concern.
There are also other sources of funding (for some) that don't require going into debt. There's many an inheritance been lost in a business bought for sentimental reasons.
As an aside- when I came here 20 years ago there was a common scam in sales of businesses where the vendor would create a false set of final-year accounts- even to the point of paying tax on the non-existent profit- in order to inflate the sale price. One friend got burned for $50,000 this way. Another did the 'due diligence' and realised the Motel he was intending on buying was earning (on paper) more than if every room was rented out all the time! He made a reduced offer and bought it at a realistic price. This would be fraud in most jurisdictions- seems in NZ 'caveat emptor' is the rule when buying a business.
NZ is already one of the most deregulated countries for doing business in the OECD. Now these wolves want to eliminate any and all protections against corporate exploitation. Small business owners who vote for this shower thinking they stand for them are so misguided its laughable.
I think that Clive Renney would be an excellent Minister of Finance. Maybe we should kidnap him!!!
Brilliant analysis as always, thank you
That bs line in the bar chart really cheeses me off
Great stuff Craig. The great irony is the foreign investors simply want to buy lots and lots of NZ Government bonds, and the Government is actually choosing to issue less of them, rather than use them to pay for desperately needed infrastructure, housing etc.
Excellent. Succint. As ever. Thank you. The plan of this govt is to defund and sell off to the highest bidder to line their own pockets. They are not even vaguely interested in 'the people'. Only themselves, their backers and corporate expansion globally. They are in fact not a government but a merger company masquerading as a govt. We do need a strong slogan from the left to make this clear for the next 18mths.
When I read that there were 17 workplace deaths per week, I thought that was a typo, maybe you meant per year? But then I looked at the Worksafe link - they're (quite rightly) including illness and long-term conditions. Not "just" the accidents that make the media.
Thanks for a great analysis. The graph is so telling. Thinking of borrowing it for Te Korimako.
https://teirimana.substack.com/p/te-ture-koura
Ka pai tō mahi! - please do.
https://teirimana.substack.com/p/he-kauwhata?r=125pvv
Good point on tripartite agreements. Ireland's growth was also backed by 5 year agreements with business and unions but this almost never gets mentioned. Business loves stable predictable environments, well, the serious ones do.
Thanks Craig for the well written piece above. I have seen many a "plan" that does not meet that basic definition and it is a bit of a bug bear of mine. It seems rather than a mistaken omission, it's a shallowness of strategic thought and a tiny overton window that prevents real solution making.
Two things:
Doesn't Denmark also have high taxation?
What are your thoughts about Inheritance Tax (say over $5m)?
We need the opposition parties to come out with a real plan.
Bang on Craig, productivity is not beetlejuice - it won’t just leap out like a bloody genie no matter how much govt hope and pray and repeatedly state they would like it. Someone has to MAKE it be so