Take a moment to consider that the NZ Labour Party are trying to implement trickle down economics to appreciate how lost we are

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Trickle down is the failed neoliberal mythology that if the rich have more money, they will spend it and the little people feed from the crumbs.

It has been debunked a billion times with the truth being that a lift in welfare and the minimum wage actually generates more real world economic activity, so no politician ever attempts to use Trickle Down the way con artists never want to say ‘Pyramid Scheme’.

Until now.

The shocking explosion in house prices is thanks to property speculators leveraging their existing debt to borrow more at cheaper rates.

What is most horrific is that it’s a Left wing Labour Government who have done this.

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The play is very obvious. If property owners feel wealthier from inflated house prices, they will spend more. It was National’s economic plan for 9 years and Adrian Orr alongside this Government have embarked upon it again to ‘stabilise’ the economy.

What it has in fact done is given the property speculators a meth hard on for borrowing cheaply to buy everything that isn’t nailed down.

Labour have once again used a free market solution for a market warped and damaged from being so ‘free’.

None of this will hurt Labour’s new National voters with property, but Labour’s actual support base will be shocked at how quickly their aspirations have been utterly forgotten.

Labour really need to take the Summer to catch their breath and move beyond simply keeping us safe from Covid.

 

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36 COMMENTS

  1. So, the government has ‘no control’ over the RBNZ, and the RBNZ decides to pour gasoline on the raging fire.

    ‘Jenée Tibshraeny looks at why it’s time for the Government to get its head out of the sand and address the distributional impacts of printing up to $128 billion.

    Skyrocketing house prices are turning the Reserve Bank (RBNZ) into a political football.

    In the past few weeks, we’ve had Finance Minister Grant Robertson signal he put pressure on the RBNZ to reimpose loan-to-value ratio (LVR) restrictions on bank lending against housing.

    Thereafter, the RBNZ announced it would consult on reinstating the rules in March – two months before it previously said it would look at the matter.

    On the same day the RBNZ indirectly committed to sprinkling water on the raging housing market, it added fuel to the fire by confirming it would launch its $28 billion Funding for Lending Programme (aimed at lowering interest rates) in December. …..’

    https://www.interest.co.nz/opinion/108050/why-its-time-government-get-its-head-out-sand-and-address-distributional-impacts

  2. For Labour, what they gain from the right, they will lose from the left.
    National stay entrenched in denial, and is now being told by it’s former sell-out leader to keep mum about the sordid goings-on within the party (https://www.stuff.co.nz/national/politics/opinion/300164537/sir-john-keys-speech-a-chilling-glimpse-into-the-future-for-national#comments).
    National’s continuing death spiral into irrelevancy guarantees that Labour will be the new Bankers party for the foreseeable future.
    The Greens remain distracted by identitarian factions, and ACT consists of nutters pushing failed Rogernomics and climate denial.
    Reclaiming our right to exercise our monetary sovereignty (https://www.socialcredit.nz/toolkit-for-a-new-economy) will make possible the necessary and urgent infrastructural and societal investments needed to confront our grim future. If Labour won’t do it, we must elect those who will.

    • Yes we need a REAL labour party, like the workers party started in the UK. Or Bombers idea of a “Pa Aotearoa’ party. Until then left winger have no where else to go with their vote, to punish ‘Labour’.

  3. I am utterly pissed with Labour and there are a number of new MP’s who should be very concerned and probably should start polishing their CV’s for 2023 if their PM and senior Ministers do not break out of their collective torpor.

    Jacinda demonstrated that Labour has not turned its mind to housing. Her comments were jaw-dropping and gave away how they think since the failure of Kiwibuild. Better to do absolutely nothing and promise nothing is what she beamed out. Or worse, tinker.

    Jacinda, you are on the verge of being nicknamed “Tinkerbell”!

    Why the fuck do you want to be in government if you do not want to address the issues of the day that are so fully within your control, Labour? You know the ones that go to the core of the PM’s very famous visions of 2017, transformative, poverty reduction etc. etc. Power for power sake is very unappealing to this voter!

    • It appears to me, and has done for a few years now, that NZ politicians of ALL parties, DON’T want to fix the problems, they just want to be seen to be trying to fix them.
      As if they can’t admit to the fact that the problem can not be resolved for reasons ‘we’ can’t be told about.

      • ‘Why the fuck do you want to be in government if you do not want to address the issues of the day that are so fully within your control, Labour?’

        The salaries are better than in the advertising sector and the perks are far better.

        Politics is primarily about NOT addressing the issues of the day and keeping the proles distracted and uninformed.

    • Most of the policies the Coalition Government put through 2017-2020 were NZF Policies however the NZ Public gave Winston and NZF the Dump ???

    • Why the fuck do you want to be in government if you do not want to address the issues of the day that are so fully within your control, Labour?

      Is it possible for ANY govt to address the issues of the day? It all seems simple enough: JUST DO IT. After all, the issues are not hard to see. Are they? But solutions? Well … ideas, tools, levers and actions that at best tinker around the edges and at worst make things worse. I don’t really buy the idea that it’s all a cunning plan by those ‘in power’ to further line the pockets of their own kind – although voter capture and retention IS a long-standing political reality, often short lived. Or that its an even bigger ‘plan’ to transfer capital to the financial elite. I may well be wrong. And in the case of the current housing market, that it’s all a ‘plan’ that effectively offers a windfall for cashed up mum and dad opportunists as well as professional investors. But I do concede that greed and opportunism are as old as time, and are made easier by neoliberal ideology. In this sense Martyn is correct to say: “Trickle down is the failed neoliberal mythology that if the rich have more money, they will spend it and the little people feed from the crumbs”. Neoliberalism is replete with such myths.

      But it all goes a lot deeper. Our decision-makers know not what they do. None of them I suspect. That are just pretending. Gooid intentions for many but just pretense. It’s not really their fault. They have all been seduced by Voltaire’s bastards and all our woes are the unintended consequences of pure reason. Is it possible for ANY govt to address the issues of the day? Yes it is. But it’s a tough ask. Complicated by the political process at play as much as blind reliance on the illusions of pure reason. What is needed is new ways of thinking, underpinned by alternative metaphors. Only this will lead to new ways of doing.

  4. “Trickle down is the failed neoliberal mythology that if the rich have more money, they will spend it and the little people feed from the crumbs.”
    Coreect Matryn.
    The Labour Party is totally infected and tainted with ‘trickle down’ political poison; – and needs to finally rip themselves from the ctutches of the global cabal that is killing NZ slowly as we speak.

    Just look at Labour’s record of not restoring our own rail system around all our provinces the whole rail system is being run down to a shoddow of activity now as they seem to support trucks trucks and more trucks just the same as national did so no change has occurred since the last four years of labour and perhaps nothing will change again as this new government has no rail restoration plans at all. There now has to be big changes if the Labour Party is to survive in future.

  5. Our economic system is doing exactly what it’s designed to.

    Have you not seen the many property cheerleaders?

    You continue to think these properties prices are an out-of-control accident, rather than a celebrated plan.

  6. Kath on Nine to Noon claimed the same thing last week, that owners of a 100 square meters of dirt are more likely to spend domestically. I can’t see it, those who have bought in this hysterically bloated market, first home buyers especially in the past ten years, would be so leveraged to the hilt that they are one personal disaster away from financial ruin. They are on baked beans for the next twenty years. And this is the market they have to buy back into when they sell their precious commodity. A Ponzi scheme for sure, and an especially dangerous one for those who are forced to rent.

    • Ummmm, the plan is to have workers give all their money to landlords. Obviously this means works have no purchasing power .. leaving only the rentier class (landlords) able to drive the economy forward.

      That is the STATED plan. Usually renters would have a wee bit left over, but the plan has worked so well .. renters now borrow to furnish banks and landlords with income.

      Jacinda is one of the worst. Obviously she doesn’t want her Auckland properties’ ‘value’ to decrease. How many houses/buildings does U-Turn Ardern have an interest in these days?

  7. I don’t believe any Government with a collective brain bigger than a sultana would still think the trickle-down theory has merit. Except for National of course who thought their farcical promised tax cuts that the wealthy would bank could somehow magically trickle down to the peasants.

    If Ardern adopted this conclusively proven fail, my support for this Government and Ardern would end immediately. I don’t accept for a moment it’s a realistic possibility.

    My take is that Ardern is walking a tightrope. She wants to get as many first home buyers into their own homes as possible but she doesn’t want to create a situation where the value of so many Kiwi’s biggest asset and future security is slashed. My conclusion is derived from Ardern’s dithering on the topic and farting about with talk of an insignificant increase of the deposit if you meet certain criteria. That amounts to a tiny splash in a huge ocean that will make virtually no difference. It’s the epitome of too little too late.

    It’s my contention that the Government should pressure the reserve bank to reinstate LVR immediately, not in March after investors have raped our housing market even more relentlessly and have dozens more properties on their investment portfolio at the expense of so many Kiwi families desperate for their first home.

    The RMA also needs to be repealed without further delay. There is an appetite for this from both major parties so there wouldn’t be any meaningful opposition to doing so immediately. Both of these actions would bring about immediate positive change which is desperately needed.

    What we have at present with our broken housing market is displacement. The wealthy and or cashed-up buyers knock other contenders from their previous price range properties. Those displaced buyers then knock down the next level down and so on. Greedy investors with all the tax breaks on the planet hover over from top to bottom until those displaced at the bottom end have to move into a subdivision in nowheresville because investors would need rocks in their head to consider those properties.

    • A disease and Labour’s handling of it what got them reelected in 2020. That is a one off.

      But just prior to that their lack of progress on many issues including housing was what was going to cost them government. They were consistently trailing National and the Nats, under an unpopular leader like Bridges were promising nothing

      If the brains trust in Labour think dining out on Covid AND doing nothing about something as important as housing is going to see them reelected they are delusional. They have been given a once in a lifetime second chance to sort their act out. It looks like the do nothing option will waste it!

      • XRAY,

        You keep thinking the pandemic handling is the only thing that got Labour elected in 2020 and you will keep missing the boat.

        They handled multiple diabolical situations in a manner that reflected superbly on a Government and a leader people gravitated toward. If you can’t see that you haven’t been paying attention.

        Their policies are inclusive and after 9 long years of arrogant and divisive National Party policies, NZ is ready to evolve and move forward. Young people embrace Labour. Those same people recoil at National who are sour milk well past it’s use-by date.

        I said in 2017 that Labour would be Government for four consecutive terms. I’m very rarely wrong. My prediction is Ardern will step down as PM halfway through the 2026-2029 term.

  8. I never thought I would say this but there needs to be some form of tax on the wealth created by property increasing so much so quickly . It has distorted the investment market and many who would have invested in a business with the flow on effect of increase employment now cannot go past the easy money made through property . The low interest rate has also effected the low rate for those needing a secure investment by having money in the bank. The last time this happened we had people losing millions through investment companies that fell like a deck of cards when times got a little tougher.
    The only way to stop this rise in the cost of housing is to build more houses but as soon as this idea is floated there are protests from self interested groups that hold plans up and increases the cost to the developer .

    • the only way?
      don’t think so.
      Could repeal the reserve bank act, institute other forms of lending (State Advances anyone), reduce demand (capital gains, brightline tests, citizen ownership requirements, rent controls).
      Heck, I even remember price controls.
      There are a s**t-ton of other options, but we get told time and gain TINA, TINA, TINA. Supply, supply, supply.

  9. Don’t know why any one is surprised by how useless Labour are.
    No policies. No brains. No ideas . No vision. No idea.
    Bunch of muppets by and large and a mirror of who we are as a nation.
    No one is angrier or sadder than I am.
    We have been stuck ever since 1984. The Alliance made some headway Kiwibank, Kiwisaver, paid parental leave. All Alliance policies.
    Ardern will do NOTHING.
    There is no one to pull her and Robertson into line. No one to pressure her .
    She is a gutless Blairite Toadie. All baubles and smiling communiques .
    No one to shame Labour but the Public.
    Get used to it and ORGANISE.

  10. This is awesome…
    Russian Martian cyber-punk farming.
    https://boingboing.net/2020/11/21/russian-cyberpunk-farm.html
    And this seems relevant at this point.
    Rutger Bergman.
    “Poverty isn’t a lack of character; it’s a lack of cash”
    “Ideas can and do change the world,” says historian Rutger Bregman, sharing his case for a provocative one: guaranteed basic income. Learn more about the idea’s 500-year history and a forgotten modern experiment where it actually worked — and imagine how much energy and talent we would unleash if we got rid of poverty once and for all.”
    https://youtu.be/ydKcaIE6O1k
    Ok. I’m no politician, accountant or crook and yet even I can see the merit in Rutger Bergman’s opinions.
    It’s clear to me that labour, just like our previous scurrilous natzo lot, are DELIBERATELY ignoring sound advice and wisdom from well intentioned intellectuals.
    Why is that?
    Is it because when all’s said and done there’s fuck all we can do about it and our politicians are simply capitalising on that?
    If that’s so, and it certainly looks that way then should that not deeply worry us all?
    When growers take their produce to the supermarkets they must take what the supermarkets offer them.
    When we go to our politicians we must take what they give us.
    I say FUCK THAT ! And so should you and you and you.
    Poverty in a broad and general sense in AO/NZ is inexcusable and so is our lack of spine to do something, anything, about that.
    This shit? This political chicanery? It has to be stomped on.

    • Agree and I have been shouting it loud on Facebook that labour is going to be the PARTY OF NO.
      It is not going down well at all.
      Being called a National Party troll by those blinded by Jacinda’s NEO-KINDNESS just makes me laugh.
      Pressure now before the speech from the throne is the only power we have .

      The medicines petition re Pharmac has at least 90,000 signers at the present time and growing and will be presented after it closes on 31st March 2021. Expect those numbers to go up by at least another 50 plus thousand as more and more people get fed up waiting for their latest generation meds ( some over 15 years old and still not funded) remain unfunded due to the trickle feed philosophy which only allows the list to grow.
      So Plenty of reason there along for then middle class to rise up as insurance companies add $100,000 unfunded meds extensions to health policies that are already over the top pricewise by the time you reach 65.
      Plus with the end of the wage subsidy a few weeks back a few middle class folks will already be meeting their winz case managers and finding out life dealing with winz is not a bed of roses anymore .

  11. Think of the economy on a 3-day cocaine-induced rush. At some stage all its structural issues (i.e underfunded infrastructure; poor productivity & wage growth; large scale cost of living and increases; a large underclass of working poor) will have to be addresses. Normally this happens in a recession. What beetroot and grunter have done is kick this can further down the road.

  12. Be interesting to see the MP Property Register and declarations for 2021, how many MPs do not own one or more rentals, and one or more houses and farms is the question to ask. Can people who by their admitted personal circumstances can be determined are members of the ruling class, or petit bourgeoisie, adequately represent working class and underclass people?

    My enquiry is not a personalised niggle at MPs, who are as likely as anyone else of their class and income level to own property. And it is totally reasonable to own at least a family home–reasonable, but not necessarily fair though–when in 2019 the bottom 50% of New Zealanders had only 6% of the wealth!

    It is the psychology involved that interests me. If your next meal, or getting your kids warm dry accomodation, depended on sucking up to a hostile, information withholding, MSD/WINZ case manager would you be as tolerant of the right wing, neolib MSD CEOs and arsehole WINZ case managers as Minister Sepuloni seems to be?

    Sure, many people are capable of empathy–putting themselves in others situations–but the Labour MPs have not demonstrated that post election so far. With such an unencumbered majority they need to raise benefits and or make a substantial special payment before xmas to establish some good faith with the people.

  13. Labour need to pull finger on housing, I thought Twyford had it sorted, obviously not.

    Hopefully something will happen to sort this ridiculous situation out during the next 3 years.

    Jacinda and Robbie need to pull their fingers out ???

    • Kia Ora Hongi,

      Twyford is no longer involved with housing. He was replaced by Megan Woods who “seems” capable.

      The next three years will see huge changes in our housing market but that change can’t come fast enough.

      Reinstating the LVR loan to value ratio restrictions will make a huge change. They were removed earlier in the year after almost every NZ economist adamantly claimed house prices would drop by 15% or more. The reserve bank got seriously spooked by that prospect and removed the LVR. All this did was create an open season for investors to walk all over first home buyers wanting to own their own home. Very low-interest rates coupled with huge numbers of cashed-up “Kiwis” returning from overseas saw the perfect storm for big increases in house prices. Those increases are around 15% so virtually the complete opposite to what the alleged experts adamantly predicted.

      If you look around Auckland house listings at present you will see “price by negotiation”. That’s an invite from sellers to buyers to push everyone else out of the way and pay more than others can. Investors are buyers in the best position to accept that invitation. Great for sellers. Great for investors. A nightmare for first home buyers and or those that don’t already own property.

      Repealing the RMA resource management act will also free up considerable land for house building so the stock of houses will quickly increase. This will not cause prices to necessarily drop, but it will redress the balance and stabilize the market. Both the major parties are keen to see this occur asap so it’s a given that will soon be gone.

      A Covid vaccine will also be very helpful for our housing market. The number of cashed-up ex-pats returning will drop off considerably with many likely to return to their previous country of choice.

      All of the above can’t happen fast enough for our diabolical housing market but come 2023, housing will not be the issue it is now. My very confident prediction is it will be yet another success story for Labour that will see another one-sided election victory. The scaremongers will tell you the opposite but they desperately need some hope for 2023 as they have nil at present and they view Ardern like most view warts on their nose.

      Chur bro.

  14. NZ high globalism solutions has many casualties.

    “The number of teenagers leaving school with no qualification rose for the second consecutive year in 2019 with boys and Māori worst affected, Education Ministry figures show.”
    “The figures showed nearly half, 3689, were Pākehā, and 3285 were Māori.”
    https://www.rnz.co.nz/news/national/431226/the-trend-is-of-concern-school-leavers-with-no-qualifications-rises

    Government knew 20% of students were failing in 2017 and our results were getting worse.
    https://www.rnz.co.nz/news/national/431226/the-trend-is-of-concern-school-leavers-with-no-qualifications-rises

    The reasons for this alarming statistic is varied, historical and made up of many parts. Legacy of Rogernomics paid for tertiary education and the rise of International students studying in NZ taking priority for governments and schools. In particular government budgets for education is all about increasing the amount of construction of schools for more students from new residents numbers, rather than actually on educating the actual students themselves. Education as an export in NZ, has somehow become more important that the actual role of educating.

    Another issue, is the woke/right wingers are making teachers/principals/schools personally responsible for students safety and woke safety concerns becoming all consuming in schools and budgets, rather than educating students. Sadly kids have accidents at school, unless there is gross negligence on behalf of an individual, that should be the end of the matter, not decades of paperwork.

    Meanwhile business can do no wrong. Truancy/Absence (very convenient to blame the kids/families rather than government policies) is being sited as a reason for lower performance (but why are kids more absent in the past decade?) , apparently now it’s the parents fault when a child is killed on their own driveway coming back from school and Worksafe fails to interview the truck driver!

    https://www.stuff.co.nz/national/112696703/inquest-hears-that-sensor-may-have-saved-girl-killed-by-rubbish-truck

    Government having advertising campaigns laughing about 30 yo’s living at home with a degree, and our anti intellectualism is part of NZ’s big problem as well!
    https://www.youtube.com/watch?v=dHjQAf9QUfY

    Calling NZ youth lazy, unreliable and drugged out is a NZ politicians/industry national sport. Why bother to work, local workers are not required in NZ according to most of the industry, government and media.

    Apparently picking corgettes is so difficult it requires specific Thai workers for example. Why bother trying to get higher education, bother going to primary/secondary school, or take a manual job as a school leaver or part time student job. That has been the big message for modern Gen Z.

  15. I hold Jacinta to a large degree personally responsible for the current state of the housing market. Remember, she made a “captain’s call” to rule out implementing a CGT as long as she was PM. Straight from the John Key playbook, this totally unnecessary step was designed to placate the boomers and stay in power. Depressingly, it would appear that all the aspirational visionary talk about tackling poverty and inequality is just so much hot air and empty rhetoric. Jacinda prefers power for its own sake. Why be transformative and risk pissing off the all-powerful boomers? How ironic that these beneficiaries of the era of cradle-to-grave state welfare don’t want to have to share any of their massive property windfall with the younger generations and the less fortunate. Yes folks, Labour no longer represents the labouring class

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