Wednesday, 1 June 2011

This is tomorrow calling

There’s a little graph that started doing the rounds yesterday that someone’s tricked up to show that government debt here in NZ is just ten percent of GDP and falling.

It’s not.

The person who tricked it up is bullshitting you.

Government debt in New Zealand is over thirty percent of GDP and increasing—as we can see just by checking Dominique Strauss-Kahn’s website here:

26.164% of GDP in 2009, to
31.024 of GDP in 2010, to
32.653 of GDP in 2011, to
something even bigger in 2012 and beyond.

The simple fact is that this Government is borrowing over $300 million every week to cover the shortfall between its big taxes and its even bigger spending.  That's a new $300 debt added to the account of every New Zealand family, every week—and that figure is not falling, it’s growing.

We are in a crisis, and “politics as usual” is not going to get us out of it.

So why would the faker who tricked up the graph want to bullshit you?


PIGSBecause, like Bill English, and like John Key, they too want the government to keep faking reality and keep right on spending as if there were no tomorrow. Just as they did in Portugal, in Ireland, in Italy, in Greece, in Spain, in the UK, in the US … in pretty much every jurisdiction where the virus of welfarism has taken hold and convinced nearly everyone in them that the world owes them a living—and that they can vote themselves riches to make it happen.

But tomorrow is calling—and really very loudly. There is a worldwide sovereign debt crash coming, and when it does it won’t be pretty.

And just because the ratings agencies aren’t worried about it now, that doesn’t mean a thing. Those blind imbeciles were busy just a few short years ago giving A++ ratings to debt based on mortages given to unemployed homeless Americans—just before that particular world came crashing down.

Here’s Bryan Ferry & Chris Spedding.


  1. genuine question - does the oft-touted $300million a week take into account that much of that is refinancing rather than new borrowing per se - and if it doesn't, should it...?

  2. Empirical studies on public debt. Here is a freely downloadable PDF pre-print.

    Scale-invariant properties of public-debt growth (Appeared in Journal of Euro-physics Letters, Volume 90 Number 3 : May, 2010)

    Since government bureaucrats have no clue about debt safety level, they (English & Key - including their advisors) must read the paper above, because the paper gives a rough estimation (empirically based on the data they used) of the safety level. See page 6, where the authors have produced the PDF (probability distribution function) of debt-to-GDP level.

  3. Sam - that old chestnut is more rubbish. The $300m per week is all new debt. Shamelessly copied from No Minister comments thread at

    May 5, 2011 2:31 PM
    Anonymous said...
    ... Refer the Treasury document you yourself linked to, page 28 Statement of Borrowings, Total Borrowings (Actuals):
    Feb 2010 = 67,570 million.
    June 2010 = 69,733 million.
    Feb 2011 = 81,128 million.

    So what the hell are you going on about? The debt NEVER ever decreased, it increased massively on top of rolling over the existing. For Feb 2010 to June 2010 the debt INCREASED 2,163 million (over 2 billion).

    For the full year Feb 2010 to Feb 2011 the debt increased 13,558 million dollars (13.6 billion) - an average of 261 million new extra borrowing per week. The latest Treasury forecast for the June 2010 to June 2011 government budget year is for total new borrowing to exceed 15.2 billion = average of 293 million new borrowing per week (and I bet the actual will be even higher).

    You have used the Feb 2010 figure and called it the Feb 2011 figure. Now either you are very confused and or illiterate/innumerate and got it totally wrong TWICE or deliberately lied. I'll let the readers judge for themselves.


  4. no Sam that is the over spend every single week. Some weeks the double dipper of dipton manages to out do himself and encumber the rest of us with upto $1000B in a week. Ain't he just the bestest finance minister EVER!

  5. over thirty percent of GDP and increasing

    No. Core government debit is over sixty percent of GDP and rapidly increasing.

    Why: because we're pricing the debt at the highest-ever levels of the NZ dollar - and that debt is mostly denominated in US dollars. Price it at the long-term average and the debt is 60%. Price it at a likely medium-term low and the debt is 90%

    Oh fuck.

    Then even if 60% is low - which it's not - the biggest problem is the Nett debt - where bludgers & civil servants borrowed for houses in the bubble: all that was borrowed at overseas.

    Current nett debt at highest-ever exchange rate is about 120% of GDP. At a realistic long run rate, getting on for 300% - and a low rate: 500%.

    Ok fuckity fuck fuck fuck.

    300 million every week

    naa, more like 380-400. And more next week. and the week after.

    How bad is this? Here's a thought experiment: if we stopped every form of welfare -- dole, dbp, WFF, sickness, invalids; AND super and govt super funds etc; AND stopped paying for education from childcare to kindy to primary, secondary, tertiary, stopped the minimal subsidies to private and integrated schools, stopped the job training schemes for bludgers etc; AND stopped paying for health, from GPs to Plunket to hospitals to ACC

    if we stopped the lot we would just about be able to stop borrowing.

    we wouldn't be able to make appreciable loan repayments

    and there certainly wouldn't be even one cent left for tax cuts.

    that's how bad it is

    A realistic policy must to be maintain current tax rates - or a responsibily policy, increase them, say GST to 20% - while terminating all those welfare and transfer services.

    Then by 2025 we won't have caught Australia - nowhere near - but we might be out of the hole we're in.

  6. Anonymous, the real reason the NZ dollar is increasing is our borrowing. We can't pay it back, so we'll have to print the money (which we're doing already actually) and devalue. That's priced in the NZ dollar, so that's why we have to borrow at high rates.

  7. The numbers are difficult to comprehend, the UK debt is a stack of 50 pound 5600 miles high, give or take a few miles of fifty pound notes. Not edge to edge or anything tricky like that just one piece of paper on top of the other.


  8. and devalue. That's priced in the NZ dollars...

    sure that's why the dollar is high.

    and that's also when the NZ bubble bursts, the currency will be done to 0.40 or 0.35 - potentially even lower - with the result that our debt and interest payments required more than double in NZ dollar terms.

    pushing the currency down.
    pushing the interest up.
    pushing the currency down.
    pushing the interest up.

    And which point we really will have wave a big "hello" to the IMF and sell of everything at pennies on the dollar. Better to get top dollar for 'em now - and ideally keep the price in USD until the NZD is down to a sensible level.

    We can't pay it back,

    We can pay it back. We just need to stop spending on welfare, benefits, health, education, and start selling whatever we can for hard currency.

    That's the only good thing: USD 1 Trillion isn't really that much. Hell, the Chinese investment fund could basically buy the country many times over.

    Hmm - that's not really such a bad idea...

  9. I see why the govt. are giving a whole lot of shit to Iwi now. It's a cunning plan to default on the debt without losing the whole country.
    See, govt. goes broke but don't actually have anything, Iwi take over and we are in the clear.

  10. there are trillions of dollars in resources still waiting for someone to come along and dig them up. But the govt can't fathom the negative sentiment to issue the permits. Look at the debacle of the Greywolf affair, why did the govt need to dismiss all of their applications? Why not let them blow a few million in our economy on at least 1 site, instead of turfing them out totally? They might have found a resource which allowed them to do what all miners do, go back to the market with a proposal to raise funds to further the mines' progress into production. Heaven forbid, there might even be a microcap company that grows on the NZ share market. Alas the local bourse loses another opportunity to grow, as do local investors, not to mention all the potential employees, and their taxes that the govt so readily finds ways to waste, before they are even earned.


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