The Reserve Bank’s Manufactured Recession: Political Winners, Losers and Predictions
Wow, the ‘I-told-you-so-express’ is on time again here at The Daily Blog when the recession we’ve argued is coming was finally acknowledged and announced yesterday as the Reserve Bank Governor became the Grinch who stole Christmas.
You know shit just got bad when the Reserve Bank Governor ends his economic briefing begging people not to spend money at Christmas.
When instilling confidence in ones economic fortunes, the Reserve Bank Governor calling on the country not to spend at Christmas is a bit like hearing the Pilot blaming the passengers for not believing enough in the plane staying in the air.
It does not install confidence.
“I have to burn the economy to save the economy”, isn’t really a vote winner.
There are predictably political winners and losers of this manufactured recession.
WINNERS:
Violent Crime – If you thought post-covid social damage generating the Ram Raids were bad, you ain’t seen nuttin yet! Buckle up, the stresses and strains going on everyone with a mortgage and pushing prices beyond peoples ability to pay will cascade down causing an explosion in desperation and need mixed with misplaced algorithmic bravado and social media notoriety mixed with depression and full blown alcoholism to create an explosion of violent crime. You thought shit was bad now? Imagine 150 000 job losses and 10% food inflation with a 30% jump in rents! Things are about to break and that is going to frighten people into demanding a response from the State that is disproportionate.
News media covering crime – The ratings bonanza for crime porn news coverage has just saved every news producers job in NZ’s desperately underfunded newsrooms. If it bleeds it leads will become the mantra and the nation will howl in fear and anger and resentment screaming ‘something must be done” while driving ratings through the roof. The 2023 crime spree will be brought to you by ‘KiwiBank – banking made safe’.
Get tough on crime cheerleaders – Here they come, the Something-must-be-done-Get- Tough-On-Crime cheerleaders, all promoting terrible things to be done to the worst people. Some Politician, either Luxon, Winston or Seymour will finally break the political consensus and demand NZ Police be armed at all times and the frightened News viewers will scream “Yes already”. One of the weird sub 5% religious Qanon Anti-vax Parties will call for the Death Penalty to be restored and will get an alarming amount of support.
The Daily Blog – Again, just pointing out TDB was arguing there would be a recession. So, technically that makes us a winner. Not much of a silver lining we admit, but shit could get really bad right now and you gotta take those wins where you find them.
The SIS – The recession will cause desperation which is the fastest path towards extremism meaning the people the SIS can now claim are legitimate targets to spy on has dramatically jumped. Expect a demand for more money to spy on the lumpenproletariat in the budget no matter who the Government is. When you are destroying over 100 000 jobs as the price to tame inflation, expect some extremism as part of that price, and that price will be about $100million more into the SIS.
Medicinal Cannabis – All those middle class property owners are going to need some chill the fuck out time as those Tesla car owning fantasies evaporate. Medicinal Cannabis is about to become the new monthly Netflix subscription.
Liquidators and Debt Management – The fat vultures of Capitalism are about to feast.
ACT – Suddenly ACTs crazy slash and burn solutions sound agreeable to the small business owner who has never felt this insecure before and is resentful that solo mothers get money while they do not. Never before will Small Business Owners resent mothers on welfare as much as they are about to and no where will that voice be heard loudest than with ACTs insane small Government economic self mutilation.
LOSERS:
Food Banks – The 100 000 food parcels a month will explode to over quarter of a million as entire communities and suburbs are plunged into poverty by relentless price increases as the base line products from Russia and Ukraine drive up all costs and China’s zero Covid policy continues to disrupt global supply chains. This global blowback of inflation makes no sense to the person having to seek food parcels, all they will feel is desperate and resentful.
Domestic Violence support networks – Losing over 100 000 jobs so that inflation can be tamed will cause a cascade of domestic violence that will overwhelm support networks. Money stress is bad at the best of times, during a recession it is torturous and these tensions will rupture throughout hundreds of thousands of homes. This when our domestic violence rates are already obscenely high.
Mental Health – Economic recession and job loss is going to cause an enormous demand upon a mental health system that is already failing.
Grant Robertson – His incredible courage during Covid to underwrite the economy during a once in a century pandemic has come back to bite him in the arse. Pumping $51billion into Banks inadvertently resulted in the largest transfer of wealth to the richest in NZs history. It was right for Grant to do that, but the economic ramifications and the property bubble it generated have a political price. His caution to date has served NZ well, but right now he needs big ideas to appease the electorate and protect NZs Economy. His problem is that we face a unique crisis of Capitalism that is going to require a far more engaged State at a time when people don’t believe his engaged State can do anything.
The NZ Political Left – Middle Class Identity Politics Activists have taken over the Left and because they benefit from rigged capitalism, they don’t really ever challenge the neoliberal economic hegemony because that would challenge their own privilege. What they are good at however is cancelling people for crimes against woke dogma, unfortunately cancelling people for woke dogma doesn’t put bread and butter on the table. Poor people won’t be in the kitchen arguing over pronouns during the recession. Because the Left no longer have the intellectual capacity to challenge free market capitalism, it has no solutions other than compulsory Te Reo, mandatory cycling and personal choice self identification. ‘Free land for Gay Whales’ is our intellectual contribution to the economic debate.
Crime debate – The anxiety a recession creates cancels out compassion, empathy and rational debate. As the desperation drives violent crime via a Crime Porn News filter to insecure viewers, watch how the crime debate disintegrates into lynch mob level slogans.
National – Have finally dumped their stupid top tax rate cut and will have to stop bleating about spending they know is essential (and won’t really change under them). Despite the recession and Labour’s woeful delivery, National still can’t capture any real support for their own totally rudderless economic vision. It’s like a game of rugby where the National Party are on foot and the entire Labour Party are on crutches and National is still only ahead by 2 points.
NZ Democracy – An unelected technocrat has promised to crash the economy and burn over 100 000 jobs and no one can stop him. Not a great day for NZ Democracy.
PEDICTIONS:
Look.
To stave off an economic implosion cause by obscenely greedy banks in 2008, Central Banks pumped $25Trillion into the global economy and artificially created the lowest interest rates in 5000 years!
No one could work out where the hell all the inflation went, we saw massive bubbles in stock-markets and property, but no wide spread inflation.
Turns out that inflation was suppressed by global supply chains stretching into the deepest, darkest, most deunionised parts of China. With their zero covid stance, those supply chains have turned from ‘just-in-time’ supply chains to ‘just-in-case’ supply chains as the West effectively imports inflation back into western base line production.
This is a tectonic shift in free market globalisation and suggests inflation hasn’t peaked and has a long way to go yet.
Here is a photo of Chinese workers rioting at iPhone labour camps…
…Capitalism’s reliance on super cheap, highly skilled workforces run by an authoritarian Communist regime always seemed like a gamble, turns out that gamble isn’t just unworkable, it’s also broken.
Adrian Orr has no choice but to ramp up interest rates, the problem is the Market believes interest has to be in double digits to truly impact inflation and they don’t believe Orr has the political capital to do that.
He’s trying to show them he does and will be forced next year to seriously consider a full 100points if inflation doesn’t stall and drop by February.
This will quickly feel like a crisis and the political question then becomes what do you as a voter feel.
If you feel scared, you will look to Jacinda and Grant who have protected you previously through Covid, but if you feel angry you will look to David and Chris to punish those who have angered you.
2023 will be an election of two feelings, fear and fury.
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Very blunt and to the point.
It was bound to happen sooner or later. It just goes to show how fragile western economies are. Their currency may be relatively stable, with the exception of the UK, but housing and jobs aren’t. Not really.
Going forward, we really do need to elect the party that will create the most jobs. Looking back, John Key’s government slashed public sector jobs to shore up their account books. This sort of theology won’t do anyone any good going forward. This is the same with boot camps. This is the same with not really supporting small business and innovation.
Both of our major political parties need a major political rethink before next year’s general election.
Agreed Martyn. ‘People that lose everything, have nothing left to lose’ I heard one American commentator say. I guess get the pop corn out it’s going to be interesting times ahead.
Politically this is tricky. RB Governor says we need higher unemployment, employers across the land say we desperately need workers!–of course they mean low wage migrant workers. Fuller employment has led to people being able to move from crap jobs to something better, maybe even with proper training & professional development, or living wage.
Workers are rediscovering their collective power and getting some reasonable results–but enforced unemployment will soon fix that, unless Unions hold the line on this and the next Govt.
Also some practical points of unity have to found among middle class, working class, beneficiaries/pensioners and alienated people. Why? to do practical stuff in our communities as this shit storm really hits. Doesn’t matter if it is gardens, installing rain water collection, shared childcare, house maintenance, elder care, car pooling, everyone can do something–because MSD and other agencies sure are not going to. So form neighbourhood groups, a collective feeling always helps in my experience in tough situations.
I look forward to Baldrick supporters telling us what the Natzos great ideas are…
@TM Bingo
Whatever solutions are offered we can be assured they are targeted for the benefit of the financial tier of the economy and the financialized economy. Any benefit to the real economy and who the economy should (in theory) serve, the people, will be incidental.
Baldrick? Must be Luxon. I haven’t heard that one yet. My favourite for him is Fester, but Baldrick works too. Yip good advice I reckon – do whatever we can in and around our local communities, neighbour’s, work mates, wherever we go about our days in the coming months that are upon us. Lend a hand, an empathic ear, share a meal or veges from your garden. Every little bit helps, no gesture too small. Even a friendly smile as you walk past a stranger on the street – it all helps. We never really know what stresses individual people are experiencing at any time, but helping out wherever you can is a good vibe and we all need more good vibes at times 🙂
In spite of the 1 in a hundred year pandemic and the war in Europe, Aotearoa now has the lowest inflation rate in the world (less than OZ), record low unemployment, low debt levels, rising wages, record export receipts – leading to the best economy in the world. This translates to Orr and Robertson as the best Governor and finance minister in NZ history. Now the right winger tory supporters have become loser economists and matakites hoping that things go arse up to help the hopeless Luxon and willis gain the treasury benches.
Correct Nikorima, watch Bob the first from Dulwich pedophile school have a meltdown over this comment!
Hmm…”Aotearoa now has the lowest inflation rate in the world (less than OZ)” sorry but Oz is not rest the world. Japan and china are way less than us.
Low unemployment _ possibly but difficult to know as the calculation had changed,
Low debt_ thanks to Bill English
Rising wages_ definately, but not enough to cover inflation or cost of living increases.
Record export_ the current account deficit has been increasing faster.
Low debt was not from English, he inherited it from Sir Michael Cullen, at least get your facts right.
Immediately after the 6:00 news on RNZ this morning the word ‘carnage’ was used to describe the Reserve Bank announcement yesterday.
Martyn uses the words “Instilling confidence in ones economic fortunes.” The mission of the Chris Bishops, Mark Mitchells and Nicola Willis is to destroy confidence and every utterance and action is about that. The more despondency and lack of hope and positivity the better.
That is the well they plumb. Martyn says, “National still can’t capture any real support for their own totally rudderless economic vision.” They don’t need some profound realistic economic vision they need disaffected, freaked out voters.
Yes its Medicinal Cannabis for the wealthy and screw the rest. We could have had a thriving industry by now, with jobs galore for those that would rather work outside in nature instead of in a dull office. And who knows, maybe some of those would also rather work outside instead of ram-raiding.
How about Love and Light instead of fear and fury? How about make sensible choices this Christmas and turn our attention to our friends, families, neighbour’s, relationships instead? How about we all spend some time “going inward” and contemplating what is really important in our lives and make plans for 2023 to take action and accomplish our plans? We can’t control others any more than they can us, but we can make sensible choices that are right for us and the people we care about. Have no fear or fury as it serves no one. In fact it is detrimental to our individual and collective health (covid fear and fury taught us that). We don’t need saving. We just need to get real and get on with it. JMO
Back in the day the term sociological imagination was bandied about. Much of what happens simply appears beyond the control of individuals. Yet on a personal level – perhaps even a collective level – yes, human agency exists.
Cant wait to see what the get tough on crime politicians have cooked up for breeching our individual rights.
Martyn, you forgot me in the ‘winners’ category!
One of my term deposits rolled over today and I reinvested at 4.5% – about double what it was before, and I calculate it’s worth an extra 6K in my pocket this time next year.
Thanks Adrian!