As with anything which is state-controlled, we have entered a twilight world of arbitrary diktats. We are told by Big Sister that those of us still having jobs may return to work. We must stay two metres away from strangers, but a metre away from those we know. It is rather telling of the Prime Minister’s frame of mind and general disposition that we have been permitted to visit brothels, but not churches – some of which are only just beginning to open.
Up to 15 people may travel on a bus. I was hugely heartened the other day when a bus with 15 people on it stopped to pick up more passengers. “Shall I let them on?” shouted the driver. “Let them on,” cheered the crowd. What possible difference could an additional two people make?
Economically we are entering the abyss, with jobs losses of around a thousand a day – and 37,500 in the last month. At its recent budget the government took on $50 billion in additional debt. Borrowing exceeds 50 percent of GDP, and the cabinet has assumed what is effectively a second mortgage of more than $80,000 on every New Zealand family. Now watch the debt mountain grow. We will be saddled with it for decades, and even if we seek relief by growing inflation – something which is sure to happen anyway – the ensuing problems will compound.
UK debt, incidentally, is now over 100% of GDP, which will give Miss Ardern something to aim for. Having only recently been told what GDP is, she will be able to pick up a crayon and put her new-found knowledge to the test.
Against this backdrop, Oliver Hartwich of the New Zealand Initiative has written of our country’s Net International Investment Position (NIIP), which is one of the weakest in the world. Put simply, we owe to others a great deal more than they owe us: $171 billion, in fact. This is more than half our annual economic output. Mexico, Nigeria and Venezuela are currently in a stronger position than we are.
At the end of last year, New Zealand’s NIIP stood at a negative $171 billion, more than half our annual economic output. Even Mexico, Nigeria and Venezuela are not as indebted to the rest of the world as New Zealand.
nzinitiative.outreach.co.nz/?Ns=&Na=view-msg-public&SMESG-oid=24022&Scontact
A weak Reserve Bank governor is effectively printing money at the government’s behest, with quantitative easing set to reach $90 billion, or a third of GDP. This, Hartwich predicts, will destabilise the dollar and ‘conflate’ both monetary and fiscal policy.
Charles Dickens included Mr Micawber’s famous, and oft-quoted, recipe for happiness in his book David Copperfield:
“Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
Debt, as he correctly noted, results in misery.
If you enjoyed this BFD article please consider sharing it with your friends.
