neo-liberal

Has NZ been left with a financial T-Rex?

New Zealand’s Prime Minister John Key has resigned.  I’m surprised at the timing – just after the Kaikoura earthquakes, and on the same day that Italy’s prime minister resigned.

It reminds me of that scene in Jurassic Park where the kids got left with T-Rex.  But let’s hold that uneasy thought for the time being.

he-left-us

Key should have resigned like he promised when it was proven that the GCSB is carrying out mass surveillance of us New Zealanders.  But when the Snowden revelations did indeed show that in 2015, nothing happened.  At least he would have had some credibility if he’d kept his word.

But he hasn’t kept his word.

For instance, he wasn’t going to raise the GST tax.   John Key’s changing opinion on GST rise.

On gay marriage – before his government passed it into law in 2013, he previously said “he did not believe there was a big demand for gay marriage in NZ and that civil unions were enough.”

Has John Key left big shoes to fill?  No, those big shoes look more like flip flops.

John Key flip flops like a girl changes clothes

His comments were flip and his neo-liberal financial leadership was a flop.

flip-flops2

So what has John Key done in the three terms he’s been in?

He raised GST to 15%, turned NZ into a tax haven for the one percent, sold NZ land to overseas investors thereby pricing our children out of the domestic housing market, signed NZ up to the TPP, sold state houses – which forced vulnerable NZ families into living in cars, and under his watch New Zealand’s gross debt has soared to a whopping half trillion dollars.

That’s what we know he’s done.  So what’s happening behind the scenes that we don’t know about?

How about New Zealand’s exposure to derivatives? 

Former Canterbury University accountancy lecturer Dr Susan Newberry, now professor of accounting at Sydney University’s business school, still keeps a fascinated eye on the “New Zealand experiment”. And some of what she sees she finds a little alarming.

Does the average Kiwi know the country’s balance sheet now has a derivatives exposure of $180b, she asks? That is rather a lot of those “financial weapons of mass destruction”.

It means the NZ tax-payer is on the hook if it all goes wrong and there is the international equivalent of a bank-imposed mortgagee sale. (Think Greece, Iceland and Ireland.)

But hey, what could go wrong?  It’s like 2008 never happened!

John Key was directly involved in the development of derivatives – the financial contracts and credit default swaps that no-one understands, which led to the toxic sub-prime housing loans, which led to the Global Financial Crisis. The likes of Merrill Lynch and the Bankers Trust profited from foreign exchange trades and derivatives speculation at the expense of national economies.

In transforming NZ into a tax haven and creating the speculative housing bubble, he’s done the same thing to NZ that he did to Ireland, when as head of global foreign exchange for investment giant Merrill Lynch he shifted a considerable amount of his business to Ireland in the mid-1990s to take advantage of a 10% tax rate for foreign investors.

Fran O’Sullivan: Key chases luck o’ the Irish

That’s what you get when you elect a banker for Prime Minister.  He’s done really well for the one percent.

Meanwhile, have we in NZ been left with a financial T-Rex?

derivatives

Other links:
The great big list of John Key’s big fat lies

Another Very Short Collection of John Key’s Lies

Trading Places: Running NZ like an investment fund

Don’t let the door hit your arse on your way out Johnny

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Why our state housing stock is being sold off while thousands of Kiwis are homeless

Rangitikei Environmental Health Watch

The Prime Minister John Key announced earlier this year that he intended to sell off  1000 to 2000 of NZ’s state houses. Large numbers of these homes were built by the first Labour government in 1935 and as of 2013 the stock numbered 69,000. That era had marked the birth of our welfare state and the tenants of the first house that was finished and let in 1937, paid just one third of their income in rent. Fifty years later we had the Labour government promising to remain involved in NZ’s housing market, then with the event of  Rogernomics and Roger Douglas’s neo liberal economic policies (the new economic ‘experiment’ that benefited those at the top of the capitalist pyramid and launched the ever increasing gap between rich and poor) rents were raised to market rates. Tenants could then apply for a government subsidy called an accommodation benefit,  effectively subsidizing…

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The sellout of NZ

Thanks to greed, poor planning and economic mis-management, we can kiss goodbye to dreams of home ownership and a quarter acre section for the kids to run around on.  We now have people living in cars – unheard of before the economic reforms of the 1990’s.

New Zealand now has the highest housing prices in the world, next to Qatar!

How did we get here? These are a number of causes; (1) Supply and demand, (2) Land restrictions under UN inspired initiatives like Agenda 21 and now C40, (3) Foreign banks creating NZ’s money, and (4) Economic mismanagement.

(1 and 2) The demand for land out-stripping supply. The Auckland City Council has been restricting the amount of land that can be built on. Our media haven’t reported on this – but in December the Auckland City Council signed up to the C40 Low Carbon City Group, a group of councils across the world that regard carbon as a pollutant.  Carbon is not a pollutant – but we won’t go into that here.  I’ve already addressed that in Carbon Con, another blog post.

The C40 dream is for “compact cities” where car use is restricted. Our councils were already restricting land for building on under Agenda21, but it will really ramp up now Auckland is one of the C40 cities. The plan is for high density housing where people walk, bike, or use public transport. How can that be good for families? Gone will be our own private backyards where children and pets can play in the summer, and log fires in the winter. Gone will be our cars and garages. Gone will be land ownership and privacy. Surveillance will be increased and energy use will be monitored by things like “smart meters”, another thing that has been imposed on us.

big_4_money(3) Foreign Bank lending causing housing inflation.  The other reason for inflated housing prices is bank lending. NZ’s banking sector is dominated by big Australian Banks – called “the big four.” New Zealand banks were sold to them in the 1990’s.  The big four are the ANZ, NAB, Westpac and Commonwealth Bank. These foreign-owned banks hold 90% of New Zealand’s mortgages.

They make money electronically out of thin air and then loan it to New Zealanders at interest. Our money system is still based on the printing of bank notes, and nothing has been done to stop them from creating electronic money in this fashion. The overseas banks do have to have reserves, but its not covered by depositors funds – it’s covered by the inflated price of the land from the bubble they’ve created.

The big banks make huge profits which are taken out of NZ. They win, property owners and speculators win, and our children and people on the lowest rung of the economic ladder lose.

I’ve just heard on the news that half of the house buyers in Auckland are speculators. There are no laws to stop speculation in the NZ property market. The speculators don’t even have to be NZ citizens. It’s morally wrong.

(4) Economic mis-management.  Finally, we don’t have enough builders. The National Party decided that ‘the free market’ would deliver all the industry training New Zealand needed,” effectively wiping out the old apprenticeship system in the 1990s. Wage subsidies for apprentices on block courses were abolished in 1991, leading to the huge trades skills-crisis facing New Zealand today.  Source: http://www.scoop.co.nz/stories/PO0507/S00250.htm

What can we do? Here are my ideas.  Stop unelected overseas entities from stealing our wealth.

Put pressure on our local and national government to demand the councils get out of the C40 “low carbon cities” initiative. Our rate payers are not being looked after in this group, and rates have gone up and will continue to go up. Technocrats in the UN, carbon exchanges and overseas investors are the only winners here.

Ask for a change to the money system. Ask why we aren’t creating the money electronically and giving it to Housing NZ?

Join Positive Money NZ – they’re part of an international movement for money reform.  http://www.positivemoney.org.nz/

Demand that we reinstate building apprenticeships.

Stop speculators buying our homes. Make it so they can invest in forestry or commercial property – but make it illegal to speculate on our homes.

Demand our local and national governments use some common sense – something that has flown out the window with the neo-liberal reforms of our economy in the early 1990’s. Blind fools in our government have let “the market’ dictate business and economic activity here, without any rules around the banks or the investors – resulting in this mess. They’ve enriched themselves at the expense of our country and our children.

Don’t borrow from the big four Australian Banks.  Go to the Cooperative Bank, Kiwibank or the Taranaki Savings Bank – they are all NZ owned.

There’s also Liberty Trust, who provide Interest Free Lending from pooled money.

I’d love to hear what you think.


Further links: Bernard Hickey: Power of printing money