Time to do some crystal ball gazing to look at what 2014 will have in store politically for NZ.
Most important person politically in 2014:
Without a question, this will be Kim Dotcom. His legal case against Key in March stands to be the most important political event of the year that will overshadow everything else. Snowden hasn’t released more than 5% of what he has, and purposely the NZ section hasn’t been made public yet, if Dotcom proves that John Key has lied to NZ as to when he was informed of Kim’s existence, Key will have his credibility mortally wounded. Expect this to have more impact on the election date than anything else.
Economy – China is the risk:
National’s reliance on selling milk powder to China and mining and drilling everything that moves while racking up obscene levels of debt increasingly being spent on corporate welfare while tens of thousands of beneficiaries are forced off benefits to become invisible statistics makes NZ appear far stronger economically than it really is. The real threats to NZs economy next year will come from China’s financial bubble and the growing global financial bubble which is now back to pre-bust levels.
China’s financial security could have large repercussions to our economy. This from Forbes…
Even without adding in shadow banking exposure, China’s banks are undoubtedly balance-sheet insolvent if their assets were classified according to international standards. Yet these institutions have always remained liquid. Now, as we have seen at the end of this quarter and the second one, they are beginning to run out of cash.
Most analysts don’t worry. By and large, they believe the recent shortages of liquidity are the result of central bank efforts to tighten, so in their view the problems are short-term and “manufactured.” Take the Financial Times for instance. “Looking at interbank borrowing rates, while durations of one month and less have shot up, those from three months to one year have remained much flatter,” writes Simon Rabinovitch today. “This is an indication that the cash crunch is more an end-of-year scramble for money than a fundamental breakdown of the Chinese financial system.”
There are two main problems with optimistic views. First, the argument—it’s really no more than that—ignores why the central bank needs to rein in the money supply in the first place. Chinese technocrats need to tighten because of systemic flaws, especially runaway debt creation. Last year, China’s risk-laden shadow banking sector grew 42% according to one estimate, and credit overall may have soared by almost a third. If credit grew by only 20%—a conservative estimate one hears—then debt is increasing more than twice as fast as officially stated gross domestic product. My sense, based on guesses as to the extent of back-channel lending and more realistic GDP figures, is that credit is growing about seven times faster than the economy. In any event, Beijing has no choice but to rein in credit.
And reining in credit will inevitably create more Lianshengs. Once they can no longer borrow, broken businesses will default across the country. “If China is insolvent, why haven’t there been any big defaults yet?” asks Quartz’s Guilford. “Here’s why: China’s shadow lending system keeps credit pumping to insolvent companies, so no one can tell that they’re bankrupt.”
Second, given a runaway situation, the central bank is eventually bound to cause a disaster with its remedial measures. Not only pessimists think this. “We believe the PBOC is faced with some serious challenges with rapid unfolding of bottom-up interest rate liberalization and is confused on whether to target volume or rates of liquidity,” writes the normally optimistic Lu Ting from Bank of America Merrill Lynch. “With its limited predictability of flows and its insensitivity to market reactions, the PBOC finds it much more likely than before to make operation mistakes.”
The problem is even worse than the oft-quoted analyst thinks. Lu assumes that the central bank has a way forward. Yet it is much more likely that there is none. Chinese technocrats continually talk about “reform” and the need to accept lower growth rates, but they always flinch, falling back on state stimulus and rampant credit creation when growth rates falter. They do that, I suspect, because they know restructuring would cause the economy to fail.
With interest rates set to jump, many home owners currently struggling to make ends meet will find themselves in trouble as Auckland’s property bubble swallows up any silver lining generated by the Dairy industry, but if China fails on top of those interest rate increases, the white gold won’t be enough to insulate us from that economic fallout.
For those with, the economy will continue to pay dividends, for those without, the economy will continue to provide cold hopelessness, but if China has a financial meltdown, even those living in leafy Epsom will feel the impact.
National – no mates:
National will be the largest Party after the 2014 election but not gain an outright majority and they will still need coalition partners, unfortunately for National those limited options will make for an election that is razor close. The real problem for National will be in avoiding sickening their own soft blue support from being so alienated by the hard lurch to the right a Conservative Party/National Government would represent that they simply stay at home and don’t bother voting. National will have little option other than scare tactics, so expect a dirty, dirty fight.
NZ First – writing Winston off:
Has Winston got one more left in the tank? The conventional wisdom in NZ punditry is never to write Winston Peters off, well, I am. NZ First made it across 5% last time because of 2 things – the first was the utter failure of Phil Goff to perform as an opposition leader and the second was the ridiculous Epsom Tea Pot fiasco. This time around Cunliffe will be a star performer during the election and there won’t be any repeat of the Tea Pot nonsense, with Winston positioning to be a coalition option for National, the electoral seduction of voting for him to throw the Government out will not be enough and National Party voters would prefer to vote United Future or ACT than Winston. For the sake of the progressive left, NZ First better come under the 5% threshold because if it doesn’t, they will give National the numbers to be the Government or they will spend 3 years frustrating every single Green Party political aspiration.
Greens – their own worst enemy:
The Greens have done a terrible job of reorganizing their strategy since Cunliffe’s win. Next to Shearer, the Greens looked like a credible 15%, but much of the Greens win last election was again due to a weak Labour Party and much of their sky high polling since 2011 has again been due to Labour’s total lack of a convincing direction under Shearer. That has changed dramatically with Cunliffe’s ascension to leader and as each poll passes, the Greens are the ones losing soft vote to Labour.
The Greens need to start looking like Labour-Plus rather than National-Plus to keep the vote they obtained at the last election and this can only be achieved by appearing like a Government in waiting alongside Labour. This would require symbolic gestures aimed at looking like they can work with Labour rather than against them. Such gestures would be not standing candidates in certain electorates where the combined Labour-Green vote trumps the National candidate.
If Cunliffe can convince the Green leadership to attend the last Labour Party conference before the election with a handful of targeted electorates as symbolic gestures alongside a couple of core policies, the Greens can succeed in getting real policy advances and have a real argument for genuine Cabinet representation.
Maori Party – no point being at the table when John Key has sold the table:
The Maori Party are a finished force if Labour and MANA cut a deal in the Maori electorates. The reality is that if all National require to become the Government is one vote from the Maori Party, then the Maori Party will sell out again and give Key his majority. The simple truth is that the Maori Party can’t be trusted to do the right thing by anyone but themselves.
United Future – no political middle ground:
With soaring inequality, there is no more political middle ground, the next election will be decided by either end of the political spectrum, it will be decided by either MANA or the Conservative Party. The end equation will decide if modern NZ is egalitarianly socialist or socially conservative at heart. If the Greens can put their ego’s in check, a deal should be reached in Ohariu with Labour to deal to Dunne once and for all. Cunliffe should be paying for a one way ticket for Charles Chavuel to return from the UN.
ACT – dead political corpse walking:
At this stage in ACT’s demise, they could put Jesus Christ, Frank Sinatra or Elvis up as a leader and it wouldn’t make a jot of difference. The stinking hypocrisy and rot caused over a decade is beyond saving. Matthew Hooton may have harbored a pretense to become the leader, but ACT are dead and the vast amount of skeletons in Hooton’s closet meant mutually assured destruction if he had made the attempt. Banks’ trial next year, even now he is stepping down will be automatically associated with ACT whether they like it or not. Even if they win Epsom, they will bring no one else in with them.
Conservative Party – lunacy in full moon bloom:
Colin Craig’s path to Parliament looked set until he started talking about moon landing conspiracy’s, chemtrail conspiracy’s and climate denial. While there is a flat earth audience for such musings, it ain’t enough to get over 5% and the weirdness of it all destroys National’s main strategy plan for next year to paint the Green Party out as fundamentalists. National are only going to cut a deal for an electorate with Colin if they are desperate. Expect the decision to have a lukewarm milo with Colin in East Coast Bays to be decided VERY late in the 6 week election campaign.
MANA – 3 MPs:
Under the mainstream media radar, MANA have been making huge efforts in each Maori electorate to build Party infrastructure, their surprise second place win in Ikaroa-Rawhiti was proof of that. Te Ururoa Flavell will be rolled by Annette Sykes who has been tireless in Waiariki, within a few months of campaigning in the last election, she had cut Flavell’s majority from 7000 to 1700, with 3 years worth of ground work, she will take him out next year. While the media attack Hone for not being in Parliament, he spends all his time on the road in those electorates meeting Maori communities large and small. MANA will pick up 2 electorate seats and another MP off the Party list. If they cut a deal with Labour to end the Maori Party, they will also hand an election win to the left.
The ABC’s within Labour are still dragging their feet and praying Cunliffe fails meaning the need to trim the dead wood within Labour is now a fire hazard. Expect Trevor Mallard to fight some ridiculous socially conservative issue in the hope of hanging on (bets are on for it to be some over the top response to legal highs). The incredible win in Christchurch East was important but what really sealed the deal was Cunliffe’s speech at conference, which was one of the most sophisticated performances in modern political history. The problem essentially is that Cunliffe can communicate, the Labour Party can’t, and the more conservative hands steering the Labour ship will do all they can to suffocate Cunliffe’s ability to communicate for fear he over promises. Cunliffe has only one shot at leadership, if he loses next year the ABCs will turn on him and he becomes a political footnote and not a political legacy. Cunliffe needs to be allowed to be Cunliffe and the only one who can ensure that is David himself.
Oil leak or another shipping accident:
Two things that could really damage the Government is another ship crash or a major oil leak from the current oil drilling. With the full text of Anadarko’s oil drilling now revealed, the Government will not be able to pretend to not have been warned.
Whaleoil – how low can he go?
The new sewer levels of gutter trawling Slater has descended to this year hints at dark tactics that will be used next year. The clear connection between the Prime Minister’s Office and Whaleoil are now publicly noted and to pretend that there isn’t high level communication to seed sleaze and smears between the PMs Department and the Whaleoil blog seems naive in the extreme. The problem for Slater is his current court case where he is demanding legal protection of his sources. While Russell Brown’s rush to defend Slater looks more like self interest for Brown as a blogger, the issue is whether or not Slater’s bizarre attack on Matthew Blomfield amounts in any way shape or form to public interest. If the Court rules that Slater’s attack on Blomfield isn’t in the public interest, Slater will face serious ramifications. I’d love to hear Russell Brown explain exactly how the attacks on Blomfield were in the public interest and why Slater should be given legal protections to attack private citizens, because Journalists are given these protections to speak truth to power. How on earth Slater’s weird out of the blue attack on Blomfield manages to fit into the ‘speaking truth to power’ category is an utter mystery to me.
With Dotcom’s case against Key in March and a Royal visit in April, could the Government go to the polls early? Only if National can generate an excuse to do so.
Despite the howling of deniers, the planet continues to warm due to human made pollution and that continues to impact on the climate. We can expect more weather extremes and more denial of the science in 2014.
Rising inequality & poverty denial:
It is exceptionally important for the right to deny poverty in NZ and its structural implications. If they ignore child poverty and refuse to measure it, they aren’t responsible for it. Expect a lot of disinformation on inequality in 2014 in the lead up to the election.
The good news is that the Wellington Press Gallery are increasingly irrelevant, the bad news is that the finance companies who bought up leveraged media companies will continue to cut back on quality journalism. With Mike Hosking and Paul Henry returning to TV, the hard right bias inherent in corporate media is going to become unmistakable. The blogs and social media will increasingly become important places for voters to gain information for the election. Hopefully the first thing a new Government invests in is public broadcasting.