Media suddenly wake up to an economic recession

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economist

I can’t watch TV3 because of the way their management killed off Campbell Live for political reasons,  but the twitter feed suggests that The Nation has only just realised that the so called ‘Rock Star’ economy is an illusion.

I love how the media have suddenly started asking questions about the ‘rock star’ economy as if it’s a new issue…

Top economist warns of NZ recession risk
So much for the rock star economy.

As dairy prices continue to slump and business confidence tapers off, a leading economist is warning that a “scenario where a recession becomes imminent” isn’t difficult to imagine.

BNZ head of research Stephen Toplis said the biggest shock to New Zealand’s economy had been the ongoing demise of the dairy sector.

As the Government begin to privatise mental health…

Mental Health provider and Australian bank first to negotiate health contract
A mental health service provider and an Australian-owned bank are the first private organisations to partner with the Government in its controversial social bonds pilot.

…pump vast sums in private education…

TDB Recommends NewzEngine.com

Charter school has budget surplus eight times the average state school
A Whangarei charter school under the spotlight for how it is using taxpayers’ money has a budget surplus eight times more than the average state school.

…and blame deaths of the poor in sub standard state housing on winter…

Nick Smith: Winter deaths ‘not new’
Housing Minister Nick Smith says the death of state house tenant Soesa Tovo can’t be blamed on the Government, despite an apology from Housing New Zealand’s (HNZ) chief executive.

…it seems the looming down turn based on rebuilding from natural disasters, milk powder & property speculation is only news to the NZ media.

The property bubble created by cheap immigration has masked how poorly National have managed the economy and the mainstream media are to blame for helping mask it.

Putting all our cows in 1 paddock & hoping house prices keep going up and balancing the books by privatising welfare isn’t much of an economic strategy –  but then again this isn’t much of a Government –  this is Key’s recession.

The sleepy hobbits of muddle Nu Zilind bewildering view National as the best managers of the economy because National speak the language of small business mortality.  Unfortunately their words hide their true loyalty to corporates.

Only when middle NZ stop earning more from their property values than their actual jobs will people turn on National and demand something must be done. We aren’t a small egalitarian nation of citizens any longer, we are a clique of desperate consumers looking for a quick fix product.

Nothing was solved from the GFC, the same neoliberal deregulated financialization that led to that weren’t fixed, it was merely powered on by cheap money. Like an addict on a bender, we face the come down.  China and Australia are our two largest export markets and any slow down from them will be far worse for NZ.

Paul Henry and Mike Hosking won’t be informing you of that this week.  Look over here, there’s a rugby match on.

 

 

40 COMMENTS

  1. “The sleepy hobbits of muddle Nu Zilind bewildering view National as the best managers of the economy because National speak the language of small business mortality.”

    I’m assuming you meant to say “morality”, but the mistake is surprisingly apt.

  2. This sad state of affairs is and was as predictable as night following day. But our moronic media are too stupid and too entwined with National to realise.

    Our economy had low government debt prior to John Key and his National government so we always had room to go on a binge with cheap cash, unlike Europe. That is the only reason we were a “Rockstar” and that term was coined by Paul Bloxham, economist of the questionable HSBC is because banks make a shit load out of dumb New Zealanders and their housing punts and that they love National for allowing it. Worse still these banks feel safe to do so because they are “too big to fail”.

    We shall see!

  3. No Martyn.

    A recession is what National inherited from Labour in 2008. A recession NZ was in before the full impact of the GFC. A recession caused by poor value Govt spending.

    A recession is not higher growth than any of the US, UK, Japan, or Ausralia (http://www.rbnz.govt.nz/statistics/key_graphs/real_gdp/).

    The dairy sector is less than 25% of the economy, milk exports single digit.

    You’re just making shit up.

    • I suppose you rely on the debt fueled “housing construction” and speculation sector to save us from recession.

      http://www.stuff.co.nz/business/money/67032939/Mortgage-debt-tops-200-billion

      And perhaps you suggest we can always resort to more of this kind of investment:
      http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11469949

      Exports to China are down by 40 percent, they reported on The Nation today, and while dairy is just part of exports and the economy, it is nevertheless a rather important, sizable share, New Zealand being the single largest exporter of dairy products on a global scale.

      As things are going, we will end up selling yet more of this country, in business shares, in residential real estate, in forests and farmland, to balance the books again.

      Great achievement by former Merchant Bankster Kim John Key.

    • Contravert you are in cloud cookoo land, Labour did not leave a recession . There was a world recession, but as usual Nats blame Labour, what reason is Key giving for this Rock Star recession ,chch earthquake, lower milk prices, etc etc,Key always thinks his excuse is valid but not Labours. you just parrot shit. Martyn is right in his article

      • [Contravert, you have email. Please deal with the issues I have raised. Until then, your posting privileges are suspended. – ScarletMod]

        • Uh oh

          A poster calls out the writer and provides factual evidence to show he is lying.

          Therefore this blog must eliminate him from posting.

          [No, Matthew, that is not the reason “Contravert” is suspended. I have reasonable grounds to believe that “Contravert” is the same person who has been previously banned.

          I do not appreciate you referring to another poster as “lying”. Enjoy a two week suspension. If you attempt to post again before the two weeks is up, it will be a permanent ban. – ScarletMod]

    • Making shit up??? Bit ironic.

      I’m guessing you weren’t in New Zealand and what preceded 2009 or you are just simply being as unreliable as National? But to help you out:

      2007 – Record low rainfall in many northern and eastern areas leads to a shortage of feed and lower than normal spring lambing and beef numbers.

      2008 – Waikato experiences driest January in a century. Severe moisture deficits continue in North Island until April/May, with the estimated cost to agriculture exceeding $1b, and an 11 per cent fall in sheep numbers.

      “Agriculture Minister David Carter” (National Party) “has revealed that the nationwide drought between spring 2007 and autumn 2008 cost the New Zealand economy $2.8 billion”. He goes on ““The sheer size of the economic impact of this drought reflects just how important the primary sector is to the New Zealand economy”, said Mr Carter.

      Recall National wanting tax cuts year on year leading up to that if you want to cite poor value?

      And as an example to the Dairy Industries overall contribution to economic growth Statistics NZ 2012 yearbook states:

      “The first half of 2012 brought favourable growing conditions for many dairy-producing regions of New Zealand. These conditions resulted in increased dairy production, which contributed greatly to agriculture industry growth in 2012 (up 16.8 percent). This means that of all industries, agriculture was the largest contributor to the overall growth in the economy.

      And to quote Reserve Bank Governor Graeme Wheeler:
      ” …dairy exports make up almost a third of New Zealand’s annual merchandise exports”

      So before you do a National Party spokesman job, check the facts out, they are easily available. The very lucrative Dairy Industry, milk, manufacturing, milk powder etc is a major factor to our economy and a major rural employer is not some corner op shop with a big “who cares” contribution to make.

    • The technical definition of recession is two quarters of negative economic growth as measured by GDP.

      NZ may have been in recession during the DotCom crash of 2000 to 2002, but NZ experienced growth in GDP during much of 2007. Just before the election.

      So no. NZ was NOT in recession at the time National took over from Labour. The definition was not met.

      And to state that a recession during Labour was due to “poor value Govt spending” is an assumption. One you have not supported by any actual facts.

      Recessions can be caused by many factors. In the case of the recession which followed the DotCom crash and the next one from 2004 – 2007 a more likely reason may be the global economy rather than anything Labour was or wasn’t doing at home. Why? Look at the USA’s GDP for those years. It too was in a recession since 2004 with no respite.

  4. Hah, you are right. I am not completely boycotting all of TV3, just most of the crap they broadcast, but I do that with many other programs on other stations and also with some print and online services, who cannot bother reporting what should be reported, that what is the TRUTH.

    So I watched ‘The Nation’, which was in my view another pathetic “effort” by Paddy Gower to again let the government off the hook, that is for the most of it. Lisa Owen was also taking a bit of a back-seat today, not conducting any interview.

    First there was a good report though, on how the bust in the dairy sector is hitting farmers, and how they are spending much less on machinery, on other essentials, where they have stopped doing much needed maintenance (which will probably include to not bother fencing off creeks and rivers, polluted by cow urine and dung). It showed a mental health expert, warning of the need for mental health care for farmers not coping, it presented a farmer who had been close to suicide, and economists stated the major “challenge” there is.

    It was at least admitted, that all this will have an effect on the rest of the economy.

    Then Paddy G. had Joyce, Mr Wonder and Glorious, Minister for Economic Development, interviewing him on the looming downturn. Some questions seemed targeted at getting an admission out of Joyce, that we may be heading into a recession. There were challenges re what Goldman Sachs predicted for a 5 year lull in dairy price growth, in comparison to a more “up-beat” PM John Key.

    Of course Joyce, the Master of Smoke and Mirrors, of endless “positivity”, even when the shit would hit the fan, and he did a good enough job, spinning it all to give the impression, the government is doing all it can, to avoid much harm, and to keep the course for a better economic future. Investment, more FTAs, more diversification, more openness, and more private initiative, that was the sum of answers. NO real discussion of the mad housing market in Auckland and over-leveraging there.

    So in the end it appeared, as if Paddy G. was sitting there like a school-boy, taking lessons from the “master”. There was NO opposition spokesperson, there was NO seriously dissenting economist, and Shamubeel Eaqub and Simon Wilson were as a “panel” rather soft on the government.

    In the end, almost in unison, they were all rather supportive of what this government is doing, or trying to do, mentioning nothing about alternative solutions or directions, as like the bulk of media, they are now almost ALL firmly into neoliberal mindset territory.

    NO dissent, NO alternative reporting, NO opposition politician speaking, NO truly independent expert advice, NO investigative journalism, just more of the same: Key and Joyce have not got it easy, there are international challenges, and there is only so much any government could do.

    Bla, bla, bla, the next election is again in danger of being another foregone conclusion.

    • Correction: Lisa Owen did conduct one interview, with Ron Marks, but that was rather about trying to “expose” a media created, alleged “split” in the NZ First caucus, hardly that great an interview, I felt.

      • And don’t forget the Ferengi’s sycophantic little blushing comment at the end of the interview:

        “A very good place to end…”

        Handkerchiefs available for wiping brown noses…

  5. “Putting all our cows in 1 paddock & hoping house prices keep going up and balancing the books by privatising welfare isn’t much of an economic strategy”

    Except they can’t even “balance” the books, they’re building up debt during one of the longest periods of potential economic recovery we’ve had in a long time.

    And somehow National supporters seem just fine with that.

    They still seem to think Labour was worse, even though Labour ran surpluses repeatedly and put some money aside (the Cullen Fund) for future pension costs.

    It makes no sense. It’s like they keep telling the rest of us the sky is not actually blue….

  6. No, Contravert, you’re the one making “shit” up. The graph you refer to shows the effects of the GFC impacting on the United State’s economy way before it slowed for us or Australia. Considering that the USA was our number one trading partner at the time, their economic decline inevitably impacted on us in 2008, if not earlier.

    A drought over the 2007/08 period also did not help, as Treasury referred here:

    “The New Zealand economy entered recession in early 2008, before the effects of the global financial crisis set in later in the year. A drought over the 2007/08 summer led to lower production of dairy products in the first half of 2008. …”http://www.treasury.govt.nz/economy/overview/2012/09.htm

    In fact, GDP growth declined in March 2008, as Statistics NZ outlined here:

    ” As figure 8 shows, GDP began to decline in the March 2008 quarter, and continued to do so for five consecutive quarters, before registering a very small increase in the June 2009 quarter.” – http://www.stats.govt.nz/browse_for_stats/income-and-work/employment_and_unemployment/wage-slow-down.aspx

    Trying to blame the GFC/Recession on Labour is pathetic. Then again, National/ACT sycophants have no choice but to fabricate all manner of “fiscal sins” against Labour. After all, the Clark/Cullen government recorded the lowest unemployment (3.4%); paid down sovereign debt; and delivered nine consecutive budget surpluses.

    Meanwhile, how many surpluses has English delivered?

    • Semantics – the financial impact of the GFC only materialised after the change of government. And I know It certainly only impacted on me after that time. Let’s also remember the financial implications of the Christchurch earthquakes which this government has had to deal with.

      I had respect for Michael Cullen but I must say I am glad Grant Robertson has not been the Finance Minister in the period 2008 to now. Bill English understands the economy better than most in the house certainly better than the other party finance spokesman but regrettably because of party politics and other vested interests we will not appreciate this until there is a change.

  7. And riding in on the white (red and blue) stallion, is the saviour Sir TPPA to the rescue.

    Even Stephen Joyce MOE admitted we can’t rely on China for trade deals and the economy. Next thing he’ll be saying we can’t rely on milk powder, or a housing boom, then the headline will be Clusterf#ck.

    BTW, will it be the TPPA itself, or Tim Grosser who will get the knighthood? Can inanimate things like trade deals get knighted even?

    • In the end we can conclude, that we cannot rely on Joyce, Grosser, Key, Blinglish and the rest of the lot, who have no more “tools” in their cheap (Chinese made) plastic “tool box” for dealing with economics and political challenges.

    • 1000% WINNIE,

      We need to become more self sufficient again!

      Instead of catching a cold every time the elitists play with the overleveraged global economy and catch a cold!

      So we do not need another foreign juganought like TPPA, but a more robust self generated economy like new used to have, and NZ First believes we need by generating again our manufacturing of export potential in the rich producing province’s near the producing areas, with added value exports instead of sending our raw products to other countries to generate jobs there.

  8. The beauty of this is they can’t blame it on Labour. And with the Greek revelation finally the myth that debt is good will be debunked. So it’s good news all round. Except of course when America smashes down later this year, can’t pay its debts either and Puerto Rico is failing, economy after economy. So finally neo liberalism has itself proven itself a failure. Can’t get any clearer than that. Go Tsipras. You see when everything relies on economists it fails. When an economist meets a mathematician he pretends he’s a philosopher. When he meets a philosopher he pretends he’s a mathematician. Simple really.

  9. I hate to spoil everyone’s fun, but Labour did stuff up the NZ economy in 2008 for the very same reason that National is now about to stuff up the economy some time soon:-Both governments allowed a housing bubble to grow and did nothing about it in the way of building houses when it had the chance.
    THe reason for all the ‘good’ statistics that are being quoted is that if the banks are flooding the economy with billions of $s of mortgages there will inevitably be a boost to the economy …….. until the bubble bursts, which resulted in 2008 in just about every financial institution (has every one forgotten South Canterbury Finace already?) going bust.
    THe Labour Government had it easy- their budget surplusses were obtained by all the taxes they got in from housing sales.
    As for National, they have produced the biggest shambles of a housing policy I have ever seen. They have sold assets, borrowed billions and enjoyed another housing bubble yet still cant balance the books. This is no surprise because they have voluntarily put NZ through the same wringer as Greece is suffering now and yet are expecting a different result.
    I dont support either Party but would like to see a bit of reality in the debate, please.

    • I doubt if low unemployment; a fall in income inequality; and other positive factors were a direct result of a “housing bubble”, Dennis.

      However, you’re correct in one thing that Labour should have brought in a comprehensive capital gains tax, including the “family home”, if sold within a period of time.

    • Hi Dennis. We are no longer in 2008 thank you.

      We are now in 2015.

      Good day.

      If we are still damaged from what you say is ‘labours stuff up from 2008’ then by all means vote it a new government!

      Oh wait, we did that already in 2009… Good Day

  10. When more countries start defaulting to try and ‘start over’. We will feel the financial hit as so many countries will. It is only a matter of time!

  11. I believe it is going to be a big case of ‘I told you so’ but sadly by then the New Zealand we once knew will be gone. Key played his part in the bankruptcy of Ireland and NZ is his next target. If the media were honest, and for the actual citizens of this country, they should tell everyone – we”re f***ked.

  12. Not saying NZ’s economy is, but an economy based on paper shuffling isn’t exactly a robust economy. Which is why I’m against the government using tax money to basically bet on the sharemarket, something both Labour and National have done. I’d rather our tax money be spent on things that make the economy more productive.

  13. No, no, no! You’ve got it all wrong! It isn’t a recession, it’s simply that we have gone into an economic downturn, you understand. Economies have natural peaks and troughs and we are just in a trough at the moment. Have faith, my little hobbits, soon we will be climbing out of it and moving up to the next peak. Go back to your burrows and your pipe weed and have faith in the great econowizard Bill and the great spinmeister John.

    • Great jest there laced with sarcasm MIKE the LEFTY, but true as you say.

      FJK is feeding us bullshit like as we are mushrooms!

      And is keeping us all in the dark, while he webs his evil web around the globe with dirty deals that will harm us all.

    • Excellent comment, and presenting a link to great and revealing info!!!

      Yes, I remember that report, it was swiftly passed over by our mainstream media, who are enchanted by the Glorious Master of the Universe, Kim John Key, and would not allow any clouding of their glossy view of things. They mostly dismissed it as undeservedly “gloomy” and irrelevant.

      Even yesterday, on Q+A, Bill English got away, with dismissing all concerns, and the journos and the panel asked few drilling questions.

      We have a crap, useless media, only ever reporting on a handful of vested interest heeding bank economists, and giving the government a free run all the time. And any critical research, analysis and reporting is a tapu area.

      That Forbes report is excellent, it is convincing, and the guy who wrote it actually knows a bit about what he presents there.

      We are in for a big shock, and the Chinese “investors” will be the only ones prepared to open the cheque book, and buy homes, farms and more cheaply, as Kiwis and their government will be like beggars without clothes, desperate to sell, no matter what at what price.

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