Posts by Matthew Poole
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OnPoint: Election 2011: GO!, in reply to BenWilson,
What I don’t get is why being “downgraded” is such a horrid outcome for NZ. Keith? Anyone? Surely it just tightens how much debt we can take, which is exactly what we’re trying to control in the first place.
Increases the cost of sovereign borrowing. Lower rating=higher risk=higher rate of interest to compensate for perceived increase in likelihood of defaulting. And that's not just on new debt, it'll flow on to the roll-over of bonds in future years which means that projects carried out now will end up having a higher lifetime cost because the debt will be more expensive.
A sovereign rating downgrade is definitely a bad thing for an economy that's being run on the back of poor productivity, low savings rates, and expectations of high levels of public services.
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OnPoint: Election 2011: GO!, in reply to Sacha,
If we’re going to sell shares in our state-owned businesses, it should be to people who will hold onto those shares for a long period of time.
Kind of like bonds, you mean?
The difference with bonds is that they impute no ownership interest. The financial return is a simple monetary transaction, payment for services, and the bond-holders get no say in the running of the company provided that the company keeps on making the correct payments at the correct times.
I wouldn't be thrilled about Aussie or Chinese investors hoovering up bonds in our SOEs, but at least they wouldn't be buying an ownership stake that gave them power to vote on the company's direction and directorship. -
OnPoint: Election 2011: GO!, in reply to Jim Cathcart,
Privatization of strategic public assets gives some of us who have forgone debt for saving an opportunity to invest in potentially valuable assets. Is that such a terrible thing?
If I thought that there might be a sufficiently-large pool of "mum and dad investors" out there with cash to spare and a long-term outlook on investing that history says is significantly absent from the NZ landscape, I might agree with you.
However, history gives me no faith in those investors looking for anything more than a quick (tax-free) capital gain. If we're going to sell shares in our state-owned businesses, it should be to people who will hold onto those shares for a long period of time. If not we may as well just list the companies on the ASX or the Shenzen Exchange and cut out the pathetic attempt to pretend that the final majority holders of the listed stocks will be kiwi.Sorry if that deprives you of an opportunity, but you are the few and the many have shown repeatedly that their length-of-view is limited only by the cents-per-share being offered by the long-termist buyers in Australia and China.
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OnPoint: Election 2011: GO!, in reply to Dismal Soyanz,
the revenue would allow for additional spending without adding to government debt.
Ignoring the loss of government revenue from dividends, of course. And at its worst the Smiling Assassin and his band of merry men are projecting that government debt will top out at about 30% of GDP. These asset sales, if they net the upper end of $8b, amount to about 5% of projected FY11 GDP. That’s not a big difference between borrowing with or without the sales, and comes at the cost of foregone dividend revenue.
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OnPoint: Election 2011: GO!, in reply to Jim Cathcart,
Jim, not a word that you have said explains how flogging off state assets to indebted "mum and dad investors" will do the slightest thing to improve the national debt situation.
Supposedly these assets will be sold back to the owners. But the owners are broke, and if they don't have the money to buy up then who does? Key's mates, and foreign pension and sovereign investment funds, that's who. Joe and Joanne Average-Kiwi don't have thousands of bucks sitting in the bank just begging to be invested in power companies. If they have thousands of bucks, it's probably their overdraft.
So J & J A-K have limited or no free cash, but they're meant to buy these shares. Right? With what money? Borrowed money? Borrowed from whom? Oh, that's right, those Aussie banks and the foreigners to whom we're already in hock to the tune of about 65% of GDP. And this does what, exactly, for our net foreign debt position?
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OnPoint: Election 2011: GO!, in reply to Sacha,
JOHN KEY: Well I wish it was spin doctoring. You’re right, New Zealand’s government debt as a percentage of GDP relative to the other countries is low, in other words we don’t owe very much. Vis a vis, say – and we’re about 20-odd per cent of GDP. If you go and look at Japan it’s 200 per cent of GDP. But the difference is New Zealand domestic consumers, mum and dad, they owe a lot of money. So on a combined basis we owe 85 per cent…
*head explodes*
He goes on to say that Japan just got downgraded by S&P - what a shock, with debt like that. And he compares our debt profile to Spain's, which is nonsense when Spain's level of private debt is double our combined public/private debt, at 178% of GDP!Spin, bullshit, lies, and more bullshit. This is not about our debt levels.
On a positive note, Dann is very definitely not the suck-up that PH was. Maybe it's a deliberate effort to differentiate from PH, or maybe he's actually just not living in awe of King Smiley. Hopefully it's the latter, because the former will doubtless run out of steam at some point.
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Hard News: Only what we would expect a…, in reply to Craig Ranapia,
it seems a wee bit graceless to piss your pants because Key’s actually going to do something he’s campaigning on
It's not that that gets me, it's the absolute, hide-bound insistence that the policy as it stands is right and that no amount of resistance from the public could have any possible relevance or importance in the development of that policy.
If he wins, he can implement any policy he can get the numbers for. However, given National's abuse of urgency to push through legislation without public consultation I have no faith that any legislation presented to the House will contain the slightest reflection of public interest or sentiment. This policy is absolutely about John Key, and nothing to do with what the public think is good for them.Key has as good as said that the only input to which he will pay the slightest heed is what he gets from Treasury. Given Treasury's well-known position on asset sales, it's a no-brainer that the sales will be recommended, and as quickly as possible. He's not going to get a contrarian syllable from that quarter, and he knows it.
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Hard News: Only what we would expect a…, in reply to Sacha,
Anyone exmained why not offer bonds rather than shares in these SOEs?
Maybe because there's no point? Key has as good as said that the plan will happen if he gets elected, no matter what the prolles may think of it, and without modification.
His language is very much "Don't like it? Don't vote for me, because I don't care what you think." -
OnPoint: Election 2011: GO!, in reply to Kumara Republic,
what chance of the Pike River Royal Commission doing a Justice Mahon, given the increasing disillusionment of the next of kin?
hmm? You mean accusing Pike River management of collusion and "an orchestrated litany of lies"?
The next-of-kin of the Pike River miners will not be satisfied with any ruling that doesn't hand them the head of someone living, on a plate. If the RC finds that all safety measures were adequate, and processes followed, and this was a nearly-unavoidable (I say nearly because there's always the "They should never have started mining there" argument) accident, that will be an unacceptable outcome. It may be the truth, but the families will not accept it.
There's evidence out there that it's possible for a methane fissure to be ruptured and for ambient gas levels to go from safe to explosive in seconds; faster than the ventilation systems or intrinsic safety cut-outs on machinery can function. Pike River could have been caused by just such an event, and the only way to avoid it is to have never started mining the seam.
It's also possible that there is, indeed, an orchestrated deception regarding the safety of operations at Pike River, and that the RC will uncover such. If that happens, the final act of the tragedy may be criminal trials. I get the impression that the next-of-kin want it to end that way, if only so that there's someone who the system has blamed.
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OnPoint: Election 2011: GO!, in reply to nzlemming,
But going by that book, Wilce should not have been cleared
Maybe, maybe not. The report into the affair was quite clear that nothing that came up in the review was so damning that Wilce absolutely wouldn't have been given clearance had it been discovered during his vetting. More than once the report said that the outcome of the vetting may not have been any different had the information come to light before clearance was granted, but that the failure to uncover it during vetting was a procedural lapse.
Remember, you don't get a clearance because you're a saint. You get a clearance because the vetting agency have judged that you are not likely to be coerced or blackmailed into releasing classified material unlawfully, and that you're not likely to shoot your mouth off. Whatever embellishments were made to his personal history, we've seen no evidence that Wilce had personal vulnerabilities that made him a security risk.
I just hope that Momentum has had all their government work reviewed. It's the recruiter's job to determine the candidate's suitability and verify their work history, not the job of the security services. NZSIS's role in all this was not to check that Wilce had, indeed, done the things he claimed, especially given how very historic many of them were; well outside the ordinary 10-year scope of security vetting.