The crash must only be a matter of time, on the other hand the optimists will tell you that since a boom, bang, bust economic model guarantees an eventual crash you won’t be wrong predicting one; but you won’t make money unless your timing is immaculate.
I shouldn’t try and draw parallels much less equate the complex and competing currents propelling the US economy will the simplistic and small NZ economy, notably the heavily constrained old NZ economy; but hell I do it all the time so why stop now.
(plus I’m over here avoiding the englishman I took some fairly solid swings at in the whale thread. must learn to let that first cup of coffee take effect before I hit enter)
After lefty prime minister Norman Kirk mysteriously died around the same time as Gough Whitlam copped the big flick in Australia and Salvador Allende ‘committed suicide’ in Chile, the most appalling fat middle aged, middle class white man to have ever held elective office in NZ was installed as prime minister.
This thanks to a heavily overseas funded election campaign, complete with images of reds under the bed and blackfellas raping and pillaging.
Anyway this low life spent the next couple of terms giving money to his mates by awarding them huge contracts for white elephants,or, direct gifts by way of subsidy to his landowner supporters, or tax cuts for the rich whilst screwing the poor by slashing their services.
This was financed by running a huge deficit which was in turn funded from borrowing.
Is this starting to sound a little bit familiar?
Everyone could see the crash coming except, apparently, prime minister muldoon who retreated into his den to drink large amounts of whiskey and blame everyone else for their communism and/or treachery.
Anyway the thing is he actually managed to keep the ship afloat far longer than anyone predicted. This was because the markets (such as they were) made the mistake of imagining they were dealing with a reasonable, sane, and rational person that would throw in his hand when it became apparent that absolute ruin was inevitable if the charade continued any longer.
Of course they were in fact dealing with a deluded alcoholic meglamaniac.
The currency was kept at an artificial level by really strict regulations on currency exchange. When Soros and co decided that the game was over and wanted to take their cash off the table, Muldoon just closed down the money exchange. He had said he wasn’t going to devalue and by god he wasn’t. Since the treasury cupboards were long since bare from previous bailouts, he convinced hisself closing down the game was his only option.
Of course that just delayed and exacerbated the problem. There was no hope of trading out, but once NZers couldn’t buy any foreign currency and foreigners couldn’t buy any NZ currency there was no chance of any trade whatsoever unless it was by bartering which is a lot of hassle. Especially ‘not worth the candle’ in a market where you are trading in resources and those resources are in abundance.
So it took a lot longer to ‘hit the wall’ than anyone expected.
When the crash did come it took nearly a generation to recover from it.
‘Recovery’ was only effected by surrendering sovereignty on most of NZ’s assets. The bits that are left are purely thanks to the Maori people who decided not to allow their assets which had been wrested from them in spite of the treaty, to be sold overseas.
Any reasonable person would be excused for imagining that the wall must come soon for the US dollar, but I suspect that BushCo aren’t rational, sane or reasonable and they won’t allow the forces of gravity to come into play before every skerrick of goodwill has been used up.
Every asset will have been hocked for twice it’s value.
Not sold, hocked. A hocked asset can be a much more difficult asset to regain control over.
Then when Dubya has finally stopped flinging his arms up in down in lame imitation of a bird making it’s way from point to point, the shit will hit the fan.

Posted by: Debs is dead | Jan 22 2006 22:17 utc | 3

Ford to cut up to 30,000 jobs
When these big companies throw out so many people you need to double the number of jobs lost because all business depending on those closed factories will go down too.

Posted by: b | Jan 23 2006 16:17 utc | 5

The rich are not in debt. This is more “blame the poor and working class for their own misery” crap as any support systems are pulled out from under them. All the growth came under Clinton anyway, before the ballyhooed tax cuts. The market as a whole has gone nowhere since. The housing market is also bouyed by unpecedented population increases. A major part of the growth is the result of a one-time technology advance–the commercialisation of computers–similar to the adoption of electricity–which, it should be noted, was largely developed by public funds and then privatized. The collectivization of risk and the privatisation of profit.
Additionally, currently adopted economic indices are rotten to the core, so using them only perpetuates their fallacious assumptions: namely, that growth is unlimited, that resources are unlimited, that control over resources is not effected by state violence; that consumption is preferrable to conservation; that the climate of the earth, or the health of her species, is not a valid “economic indicator”, since it is from the field of biology and not economics (box thinking); that there is no difference, economically speaking, between the production of Nuclear armaments and renewable energy, that the radiating of Mesopotamia and Serbia with DU represents valid economic activity and growth, since items were manufactured and consumed, also medical treatment will now be consumed; that the monetization of earth’s foodstocks through GMO-enabled ownership of all food seeds represents valid economic growth; and that corporate profits represent economic wellbeing, rather than worker’s conditions.

Posted by: Malooga | Jan 23 2006 21:03 utc | 7

I too have been surprised by its staying power, no matter how much finagling is involved in its stability
There was a Bush tax cut law that allowed U.S. companies to repatriate the profits made by their foreign entities for a reduced tax rate. That chance ended last year.
I don´t have a source right now. But from (uncertified) memory:
Ford and others who had profits in Britain and reinvested their profits over the last decades back into the factories there could in 2005 bring those profits back to U.S. for a mere 15% tax.
The original law had the selling point of saying that these profits had to be reinvested in new factories in the U.S.
In the end “reinvestment” was just formulated as just to be “spend” so the marketing budget of Ford in 2005 was reinvested “old” profits repatriated for a small profit tax.
The chance to do so ended Dec 31, 2005. I have not seen or found a statistic how much money this was, but it was a significant chunk that proped up the dollar and the balance sheeds of many major companies.
That party is over.

Posted by: b | Jan 23 2006 21:39 utc | 9