Finance Minister Bill English must be getting good advice. Going against the wordlwide trend for such things, he has ruled out bailing out over-stretched dairy farmers.
English told TVNZ's Q+A yesterday that he doubted that would be a threat to the financial stability of the country, banks were stronger than at the time of the global financial crisis and the Government would not step in with any bailout for farmers.
"A few billion in losses is not a threat to financial stability. The regime that's in place now means the banks are stronger than they've ever been with a greater ability to withstand those losses than they've ever had."
He said there was a system for dealing with extreme hardship "because you are going to see, for a small number of dairy farming families, some real distress. But we're not going to be bailing them out."
Sadly, Labour leader Andrew Little can see only votes.
Little said some farmers were effectively now working for nothing and the Government could set up similar emergency provisions to those it uses in cases of drought or other 'adverse events.' …
Little has also called on the Government to "stiff arm" the banks to ensure farmers are not forced off their land because they cannot keep up mortgage payments after the latest slump in milk prices.
Nothing like making your coercion explicit to truly reveal your underlying politicapl philosophy, eh, Andrew.
[Hat tip Eric Crampton]
- “It was disappointing to see Labour leader Andrew Little calling for bail-outs though. It's this kind of pandering that could box them in when they next form government. It is harder to say no to demands to do silly things when you demanded those same things from Opposition. See also: Labour on Pharmac.”
No bailouts – Eric Crampton, OFFSETTING BEHAVIOUR
- “All that lending going into what Hayek explained as the “early stages” of production produced a short-term yet (this time) very flaccid boom. The bust is what happens when it is realised not all the world wants all that product, and at those prices as they are now few are in a position to stay afloat.
“That was the Fourth Act of this depressing story played out on Morning Report today with fourth-generation Northland farmer Ben Smith one of those taking the fall.”
Dairy, oil, iron, rubber, steel, malinvestment – NOT PC
- “From the debt problems of an underwater government --now over $100 billion in debt and counting -- to the debt problems of underwater dairy farmers who, like dairy farmers around the globe, had credit extended to bring new dairy into production, only to find that debt-driven overproduction has lowered dairy prices below what many need even just to repay their debt.
“Can anyone yet spell malinvestment?”
Dairy’s debt delusion – NOT PC, 2015
- “US$7.7 trillion! Just given away. Sort of puts the failed TARP programme into perspective, huh?”
Bankers’ secret bailout – NOT PC, 2011
- “When welfare beneficiaries cry that their benefits are too low, right wingers en masse tell them to suck it up. 'Taxpayers can't afford to foot your bills forever,' they say. 'Survival of the fittest,' they say. But when banks and finance houses start crying in pain, the shout goes out for a bail out, for a 'stimulus package' -- despite such bail outs and every stimulus package being ultimately more destructive in the long run to taxpayers and to the economy than any welfare explosion.”
"Government bailout crack" – NOT PC, 2008 .