Hello and welcome…
It would be remiss of me not to do what everyone else in the world is doing over the course of this week so here goes…
A lot of people must be looking back at 2009 and thinking, like I am, where the hell did that go. This year seems to have flown by much quicker than usual. Or is it the fact that I’m getting old? Does time pass quicker the older you get? If I think back to my childhood the years seemed to go on forever, weeks and months melding into each other like one long hot summer. Anyway, that’s enough of the Stand by Me crap. On with what I was going to say.
It’s good to see that the capitalists of this world still think the sun shines out of their arses despite the complete and abject failure of their way of doing things.
Oooo, ooo, Mr. Obama… Mr. Obama… I’ve got a good idea!! Me, me! Look I know that in the last couple of years that things haven’t been going quite right. In fact, technically speaking, when you crunch the numbers, they’ve been going quite wrong by quite a lot – mainly because I’ve been trying to make ridiculous amounts of money by effectively gambling on things I didn’t really understand but pretended I did.. Anyway, what I’m trying to say is that if you give me MORE money, and when I say give I mean lend, if you lend me more money I can do some more guessing and gambling and I can make it all better. And once it’s all better, then I can pay you back. Good ay?
6 months later….
Oh, yeah, hi Mr. Obama… look I know that we made some number of billions profit this year despite having to ask you for some readies to tide us over but we really can’t afford to pay you back just yet. But I am good for it, I really am. It’s just that we need that money to do a bit more guessing and gambling. See, we’ve made $60 billion in the last six months, but if you let us keep going with the loan, if we can keep doing what we are doing – and remember we are the experts in the field, we know what we are doing – if we can keep going then that $60 billion could turn into $63 billion or maybe even $65 billion. That would be like an extra $5 billion that you didn’t have before man. Where did it come from? Well… um… I don’t really know. I just checked the balance at the end of the day and it had gone up a bit. No, it’s not like actual money you can hold in your hand, like a $2 note or anything. No no, this is an on-line bank balance. Well, yes, I suppose it could go back down just like it’s been going up, but I doubt that very much. After all, we play the markets like this all the time so we have experience and know how that allow us to be extremely confident in ourselves and what we are doing. No, I don’t have any qualifications other than a diploma I got from a technical college in Halifax. No, that diploma isn’t in finance – it’s in something called book labelling… it’s like book-keeping but instead of accounting for the ebb and flow of cash through the books, I’m am qualified for making sure all the books are correctly named. How did I get into the finance industry? I knew a guy in college who told me I was quite good on computers and adding up and he suggested I become a day trader. The rest is history.
Of course, that’s not to say that ALL of those people still involved in the financial institution that nearly bought the world to its knees (but thanks to some quick cash from those people who actually pay taxes, they can continue on their merry way) have no idea what they are doing. Indeed, I’m sure that most people who take huge daily risks with money that doesn’t belong to them in situations they can barely understand, know completely what they are doing.
I am being incredibly sarcastic here. I doubt whether anyone on Wall Street really fully understands anything about the institution they’ve created. All they really care about is making money – and lots of it. And before you go all funny and start suggesting I’m a communist, or, God forbid, ‘against us’, think of it this way… where does the money come from? If I’ve clicked my mouse to complete a trade, then later that day I sell making money, the only thing changing is a number on a computer screen. Where is the cold, hard cash – the tangible thing that I can hold in my hand that shows I’ve actually done something useful.
If I go out to a market and buy a carrot for 9 cents and later that day sell it for 10 cents, I’ve made a penny. I also have a 10 cent piece in my hand that I can show people and say – look at me, I’m worth 10 cents. Yesterday I was worth only 9.
The thing that really sticks in my mind from this year is the amount of profit these US companies made in the months following their bailout by Obama. For example, AIG made $1.82 billion in the second quarter of 09. This after getting nearly $200 billion in loans. I suppose, technically speaking, these loans have to be paid back by AIG, but all they’re doing is shuffling things around and selling them off to do this. They’re not really changing the root cause of all the financial market malarkey that has occurred in the last couple of years (oh, and in the late 90s, and in the late 80s, and in the 1970s, and so on and so on and so on).
People are driven by wanting to make as much money as they possibly can with little regard to whose money it is that’s actually helping them do this. When human nature is involved, you can’t have a totally unregulated situation in the marketplace, no matter how many times they tell you to let the market provide. Look what it provided last year (oh, and in the late 90s, and in the late 80s, and in the 1970s, and so on and so on and so on) – complete meltdown because those in charge of the money-go-round all got off at the same time. Dicks.
Oh well… I’m sure they’ll do better next time (I’m picking it to be around 2018).
Happy new year!!
This week the government – led by the benevolent National Party of New Zealand and their little shoulder parrot the ACT Party – sponsored the delivery of a report on how the country can bridge the ever-increasing wage/salary gap with Australia.
Having read the above you must be thinking, “How very benevolent indeed. Imagine thinking of the worker in this scenario.”
The point I have to make at this juncture is – Bollocks.
To understand by point let us why the report exists in the first place… About a year ago in little old New Zealand there was an election. This election was won by the National Party after they created coalition agreements with ACT and the Maori Party. Traditionally National are a right / centre right party – this means they are like the Republicans in the US – except for the extreme nonsensical gibberish about Money, Jesus and 9/11.
In terms of coalition partners, ACT are slightly more right of National and therefore obvious drinking partners. ACT stands for the Association of Consumers and Taxpayers. Ironically enough, the leaders of this party probably don’t pay any tax thanks to creative accounting. I’m not implying they are breaking the law, I’m implying that they are creative with their accounting. Things like trust funds for family homes, cars and putting things in the wife’s name. This creativity means a reduction in taxation imposed upon them by the Inland Revenue people. As part of their coalition deal with National, ACT demanded a review of things led by Dr. Don Brash, a former head of the National Party himself and a notable proponent of the low tax, low spend government that ACT so lovingly puts forward.
New Zealand has had a long history of low productivity compared to Australia. Over the years our wage gap has remained for years and this sees many New Zealanders eyeing up the sandy Ozzy shores to make a new live. And being just 3 hours away on the plane it’s very easy to return to see the family now and again. In recent years escaping the financial talons of a student loan has also been a great motivator.
Having done some backgrounding of the issue we can now move on to Dr. Brash’s report recommendations. If you can remember back to the 80s when hair was big and shoulder pads even bigger, many policies adopted by governments around the world were very much focused on cutting government spending in a variety of ways including rationalisation of health, education and welfare spending, selling off of state assets to the private sector and lowering personal income tax while lifting the level of consumption tax. Dr. Brash’s report brings us back to those heady days. He called for, among other things, cuts in government spending, cuts in income tax, lifting consumption tax, selling of assets, and cuts to the minimum wage – the argument being that the private sector is able to offer far more efficiencies to the taxpayer than the government-run organisations, and over time these changes will increase productivity and close the wage gap between New Zealand and Australia.
Again, I make my point – Bollocks.
I’m not an economist or a statistician. I don’t pretend to know everything there is to know about GDP or tax law. I am not a world leader in the sale of assets. I am, however, a wage/salary earner. If you want to increase my productivity, if you want to make me more efficient than I have ever been, then you reward me for my efforts. This seems, on the face of it, a very, very, extremely, very simple solution.
The minimum hourly wage in Australia is $A14.31 ($NZ18.32), whereas here in New Zealand it is a mere $12.50 – and Brash says this should be cut. I must be an idiot because I would have thought that if you cut the minimum wage and I can earn 50% more for doing the same job in Australia, then I’m going to move there… aren’t I???
Cutting health and education spending is not going to work either. Having a sicker, stupider workforce is unlikely to lift production or wages. I admit that this is flippancy at its extreme, but there is some foundation there. Brash and his report buddies are asking for more private sector involvement in the provisioning of health and education. The idea is that competition will cut government spending levels. This is good I suppose… but the private sector is not the great liberator of spending Brash thinks it is, and they don’t always run things better than the government. Just look at the state of ridiculousness at the end of last year where companies like AIG, Lehmann Bros and so on couldn’t do their jobs properly because they didn’t know how the system they operated in worked.
Who’s to say the same collapse wouldn’t happen if the education or health system were privatised? Once you get money involved in things then maximising profit and returning dividends to shareholders becomes the motivation, not delivering a public service and ultimately those services, and the consumers of those services, suffer.
Brash and his rich little cronies should get their wallets out of their arses and try and live on $12.5o an hour with 6 kids to feed. He never will though and therefore he will never really understand what it’s like in the real world. It’s all numbers to them. Numbers can be made smaller. Unfortunately, and this is the case for all economic arguments, people aren’t numbers.
So again I say: Bollocks. You can’t build a bridge between two things if you begin by cutting away at the coastline on one side.
Brash, you’re a dick, and you always will be (this is slightly inflammatory so I must qualify the word ‘dick’ by adding the word ‘alleged’ to it. So, Brash you are an alleged dick, you nerd).
Until next time. Word.
Hello and salutatious welcomings to you all…
Life is all a little bit too serious these days. It’s like someone has removed the funny bone from our society and replaced it with a jelly-like substance that smells of fear and stress. The fearstress jelly seems to run western life with the ruthless efficiency made famous by many a leiderhosen wearing Bavarian factory owner.
Starting off with a slight tickle of racism certainly wasn’t my intention. In fact, and I’m not sure if the boonparents still possess photos of me dressed as such, but there was a point in my life when I did own a pair of leather trousers that were handed down to me by a neighbour’s mother. I am uncertain if they were the fabled breeches of our Germanic cousins, but I can tell you this: they contained two adjacent zipper flies, when both were in the ‘descended’ position, opened a large flap in the front of the shorts. I can only assume this was to allow the wearer free range over any toilet encountered. Being only seven at the time of the trouser inheritance had me thinking that the previous owner might indeed be endowed with adjacent bi-genitalia – although age and common sense has since dented this belief slightly.
Back to my original point – life is too serious. Our culture (and by our I mean NZ, Australia, UK, USA and other such countries) is obsessed with ownership. It seems the model of our life is such: we go to school, we get a job, we go to work, we earn money to pay for things, and then we retire with little to show for it except some grey hairs, a kid or two, a late model car and maybe a house.
Our total focus on home ownership seems to have set us up incredibly well to deal with this current recession, hasn’t it?? What I’m trying to say, in a slightly sarcastic tone it must be admitted, is what I have said many times in this blog: you should never pay for something if you don’t have the money for it. People are going to say, “but I would never have the money for a home if the banks didn’t provide a mortgage facility.” Yeah, but that’s what the banks WANT you to think. You know you can save up for a house and buy it with cash – it will take years and years and years but it can be done. You can save up for a car and buy it for cash. And a stereo. An I-pod. A new pair of leiderhosen. You don’t have to get into huge amounts of debt because your parents did, or because society says it’s important to own a home. Sure you need somewhere to live, but I’ve seen people in housing provided by the taxpayer far happier than anyone else I know. Technically, I suppose Barack Obama and Queen Elizabeth fall into this category, but I now find myself ridiculously off point yet again and we must be brought back to my original point.
Life is all too serious.
Who says you have to buy stuff, own stuff, be something? Was it your mum? The government? If we weren’t so focused on this life model of capital purchasing or borrowing to fund our wants, then I doubt very much that the current recession would be happening. Banks would not have lent to people because there would have been no demand. Housing prices would be affordable – if people even wanted to own in the first place.
What would it be like if you didn’t want all the things you wanted? Admittedly some of those things, like quilted toilet tissue, make life a lot easier than in the days when we used bark and stones for the job, but really are you any happier?
How many people reading this have had to change jobs in the last year? How many have had to change down? That is, are you now a worker when you used to be a manager? You’ve had to take a pay cut because that was the only option. Has this affected your ability to service your liabilities? And has this, in turn, affected your brevity levels?
Of course, all this is immensely easy for me to say because I don’t have kids or a mortgage. If you have kids you do need that stability of home ownership a little more I suppose because if you were renting there’d always be the chance the landlord would ask you to move on.
The chances of my wife and I having this dream (home, kids, car etc.) are greatly reduced at the present moment and we are about to head into the world of IVF in order to attain at least part of it. This should have me tearing my hair out. Sometimes it does, but mostly it doesn’t. I am a happy and incredibly lucky person. I have a wonderful wife who I love and who loves me back. I have great friends and family who make me laugh. My wife and I get around in a 1991 Toyota Corolla with a bit of rust in the door and 200,000kms on the clock. I don’t feel the ‘need’ to own a house – I would quite like one sure – but I don’t need one. Even if we do get the chance to be parents I’m not sure if I want the stress of home ownership adding to the rest of it…
So, to conclude… go and buy yourself a pair of leiderhosen. Wear them proudly to work. Wear them to the bank when you’re breaking your fixed mortgage contract and being charged $16,000 for the privilege. I guarantee you the rub of leather against your moist skin will make that charge ever so slightly more bearable.
Until next time, auf wiedersehen.
I know a few weeks back I did say that I was going to blog more often. I just realised yesterday that I completed just three of these quick ones before my hugely busy life got the better of me once more. It’s been nearly two weeks since my last blog….
What can happen in a few weeks? Not much, as it happens.
GM are pinning all their hopes on a car called the “Volt” – it can run for up to 40 miles on battery power and plugs into the power sockets in your garage. Good for those of us who have garages, not so good if you have ‘off street parking’ – which in real estate advertising speak is a car port, or the lawn next to your veggie garden. Anyway, with the recession biting everyone in the arse oil prices have fallen to about a third of what they were this time last year. People can afford to drive those 40 miles using regular gasohol rather than some hippy brand of power derived by aiming things at the sun or wind.
GM are saying because of their forward thinking they should get a number of billions to stave off the total collapse of their firm. I mean this has worked very well for Goldman Sachs who this week posted a nearly $US2 billion profit just a few short months after receiving $US10 billion in free cash. Who’d’ve thought… I see no reason why this fiscal prudence shouldn’t work for the US motoring giant as well as it has for the aforementioned bank. While researching the above sentence I did find this article. It suggests that Old Goldy is planning to give back the payoff, I mean kickback, I mean bailout money shortly. It’s main reason: the conditions of openness, transparency and public scrutiny that come with the taxpayer money. Dirty money-grubbing arseholes can go to hell.
I am currently in love with the Daily Show. Yes, that’s right – we get it down here in New Zealand. And thankfully for everyone concerned, we aren’t 5 years behind as we were with some overseas programming during the 70s and 80s. No no, the Daily Show airs here just a few hours after playing in the US so it’s hot off the press. Last night the show featured Fox News’s fight against tax – the so-called teabag protests across America named, in part, after the 18th century protests in Massachusetts, among other places. Of course the show had many, many clips of the various US news organisations referring to the “tea-baggers” and their “tea-bagging“, much to the delight of everyone else in the world who actually know what those terms mean (click on the highlighted link and the gold old Urban Dictionary will tell you).
What I don’t understand about various citizenry around the world, and mostly they are from the so-called right wing and/or business sector, is how little they enjoy paying tax. According to usgovernmentspending.com, whose authority I have no reason to doubt because they were first on my Google search list and didn’t sound the least bit politicised, so therefore were the truest and most factual, thusly I didn’t have to cross-check their facts against any other websites, tell us a number of things…
- One fifth of the federal budget goes on defence.
- Health and pensions make up over a third of their spending.
- ‘other’ makes up a quarter.
Now I’m no economist, but people who read my mind wanderings from time to time will know that I am unafraid, like many modern day journalists, to make vast generalisations and leaps in logic with just the minutest trace of unsubstantiated rumour. I can see what the tea-baggers are so concerned about.
Old people – the over 65s make up just 13% of the population. That’s not even one seventh of the population! I mean it’s not like they’ve not saved all their lives is it. I know if my grandmother was alive and been born, lived, worked and retired in the United States, she would currently have hundreds of thousands, if not millions of dollars ferreted away in her retirement fund – a fund that had been growing thanks to the wise and risk-free investment strategies of those financial gurus mentioned previously.
The sick – nearly a fifth of US federal spending goes on this group of individuals who aren’t able to contribute their share to the federal budget by working at full productivity. This isn’t fair on all those healthy workers who have to carry the can for those too sick to ante up.
If you take pensions, health care and this group of spendings called ‘other’ out of the US federal budget, you’ll save nearly $US2.5 trillion and have a shitload more to spend on those wonderful federal inventions of recent times: Guantanamo Bay, pirate capture and Cheney’s various bypasses. What’s he doing now anyway since he stopped running the country? I hope he’s being looked after in his retirement…