pre-Budget blog – Prioritising Public Debt?

16 Comments

1. Really? This post fails to mention private debt. Our gross debt/GDP ratio is around 100% of GDP. Or net debt/GDP ratio is about 55%. I can provide links if you wish but it is easy to look up.

   So at the risk of stating the obvious, all that high private debt means the Government needs to run low public debt, otherwise we would be in the shit. The fact that much of the private debt is for housing which generates no income makes the need for public savings even more compelling.

   I can’t believe you wrote this.

   1. I agree, its as if all that borrowed billions for speculating on property doesnt really matter.

      1. The chap from Business NZ was on RNZ this morning pointing out the massive private debt held by New Zealanders. He said when interest rates start to rise, there will be a day of reckoning for those owing $160 billion in mortgage debts.

         God help us then.

   2. Honestly. Who cares about stupid people who borrow more than there ability to repay. I believe the far right slogan is “choices.” We all have choices. Let feel the full power of a correction

2. Banks require nations, communities and individuals to get into debt and remain in debt.

   This planet is ruled by bankers.

   Everything else is a puppet show.

3. I suspect that we should pass legislation to provide for the compulsory purchase of untenanted properties. It seems to be generally accepted that compulsory purchase is justified where land is needed for public works. I feel sure that the purchase of properties and their replacement with higher density housing would be justice in the present circumstances.

4. I’m a fiscal conservative personally. You’re literally arguing that just because other countries have ridiculous amounts of debt we can (and should) add to ours? If so, you’re failing to recognise that EVERY dollar of debt issued into the economy is, by definition, IMMEDIATELY spent into said economy (obviously no one takes debt that isn’t used). This by necessity increases the total money supply by that amount and therefore must directly result in inflation (regardless of how it’s spent). For those that are most vulnerable in today’s NZ (e.g. beneficiaries), ANY inflationary pressures will be immediately felt and definitely not in a “good” way. If said new debt is used for infrastructure projects that would result in economic growth down the road I can kinda see your point, but otherwise you’re effectively just advocating effective monetary inflation (i.e. “money printing”, even if it is by stealth).

   1. Fiscal conservative can also mean jail bankers.

      So New Zealand can borrow about 600 billion if we wanted to. And people like Warren Buffet actually do borrow that much. So it is a ligitimate investment strategy. It’s just every one isn’t a Buffet with 80 years experience in investing billions.

      Borrowing that much dosnt scare me. How we spend it does scare me. Keith has good ideas about how to spend.

      1. The problem remains that borrowed money isn’t ever “free”, as much as we might want it to be. Look at Argentina. Look at Venezuela, a formerly rich country, where the poor are literally eating cats, dogs and pigeons.
         http://www.usatoday.com/story/news/world/2016/05/18/venezuela-food-shortages-cause-some-hunt-dogs-cats-pigeons/84547888/
         Once an economy starts to unravel (as NZ will when the Auckland housing bubble imo inevitably collapses), you want to be in a solid fiscal position so you son’t end up forcing abject poverty on your population. Being up to your eyeballs in public debt when the shit hits the fan surely isn’t a prudent strategy.

         1. Two things.

            1) As I have said many times before. If it can be proven that Argentinian or Venezuela government officials snort more Coke while running an economy than Wallstreet execs you may have a point.

            2) If and when a correction happens it will force people to engage with the political process. And depoliticise important issues. Aucklands unitary plan comes out in a couple of weeks. After that there will be no excuses. It will be act or get out of the way for some one more capable to lead this country.

5. Srylands; ” The fact that much of the private debt is for housing which generates no income makes the need for public savings even more compelling ”
   >>>the taxpayer is expected to bail out business people who don’t know how to save, how pathetic.
   Meanwhile Nitrium thinks we are in a world where inflation is a problem and that we’re going to end up like Argentina or Venezuela.
   Why don’t these people just stay at the Whaleoil site?

   1. No offence but with a name like farmer guy you should know that small business owners like farmers are pretty good at paying of there debts and knuckling down in crises.

      And when we talk about jailing bankers or the greedy ones that destroy capitalism. We are only talking about 200 New Zealanders that use different types of accounting. The Telly brothers use some shockingly old styles of capitalism that lowers there workers quality of life and manipulation of fishing quotas that destroy fish stocks and the environment.

      People who financialise there profits and work force and socialise there external liabilities like that company that skived off on paying the full amount for thier ship the Rena that missed up the east coast. People like that are few and far between. So jail a few really won’t harm the economy, it will better it.

6. “Hang em high”!

   Yes Country boy is right,

   This Benglish – bull is just robbing again from the poor to feed the 1% who own all our common wealth they have stolen from us!!!

   All under the administration of this criminal enterprise government!!!

   So we need to “hang em high” due to their treason against the people!!!!.

   1. So youve finally come around to my style of punishment.

      Some times you have to be ruthless in crushing corruption. Sends the bejezus up scheming little punks

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