Thursday, 26 February 2009

Gordon Campbell on "nice guy" Key and National's pitiful response to the global economic crisis

Political commentator Gordon Campbell has just posted an article on the National government's response to the global economic crisis. See Gordon Campbell on Friday’s job summit, and whether anyone has an end game for the recession Campbell has this to say of the global economic crisis and the National government’s response so far: How bad is it? Campbell: "…the latest economic news lends credibility to the feeling that the hole is getting deeper and darker than Treasury’s public estimates - too rosy, and hopelessly out of date – would indicate." "Could the meltdown and its effects really linger on for 18 months or more ? Unfortunately, yes." "As economist Paul Krugman pointed out last week, the US Federal Reserve has been talking lately to central bankers around the globe, and all of them have concluded that unemployment rates will stay at substantially high levels until 2011 at least. A few central bankers are picking it could take until 2015 before we see a recognizable recovery." "As Krugman says, it took an enormous world war to finally put an end to the Great Depression. Until then, the Depression had been resistant to desperate attempts to cut interest rates to near zero in order to stimulate growth - a tactic today’s central bankers are also finding just won’t re-start the engine." "The slump that followed Japan’s “bubble economy” also eventually ended, but only after a lost decade. And when Japan finally did start to experience some solid growth, it was thanks to an export boom, which was in turn made possible by vigorous growth in the rest of the world — not an experience anyone can repeat when the whole world is in a slump." Unemployment in NZ Campbell: "Will it be 7.5 % by 2011 as the briefing papers for the summit reportedly indicate, or 11.2 % as the horror estimate from the New Zealand Institute suggested on Sunday? Or somewhere in between, for quite a while ….maybe even for the next five or six years or so?" John Key and the National government Campbell: "Frankly, it is hard to see many links between the causes of the recession, and the actions taken so far by the Key government in response to it. In total, we have seen so far: a modest package to assist the cash flow problems of small to medium business. A construction package mainly made up of an old wishlist compiled by the Clark government. A programme of tax cuts already budgeted before the crisis began. This week, we have a talk shop convened by the government. Now, is a tax cut/construction programme a particularly good response – or even any response at all – to the economic problems at the heart of this crisis? Or merely a band-aid on its effects?" "You can bet that when and if our economy ‘recovers’ to anything like previous growth levels, nothing substantive will have been put in place to stop another housing bubble from surfacing." "Sadly, it seems that the Key government doesn’t have any co-ordinated plan to protect this country from the financial crisis. It has done the bare minimum required to look politically responsible, and is taking a huge punt that the colossal sums being spent by other countries will put our overseas markets back in working order again, in time to save us from the worst. If however, we are still in crisis mode 18 months from now – and that seems very likely – these enduring bad times are just as likely to curdle the current rosy perceptions of the new government. Nice guy, but out of his depth could easily become the public verdict on Key as this recession endures." Cutting the country’s “support net” Campbell: "Some state departments, such as the one managing welfare support, need to be bolstered, not cut. Yet as the Greens Sue Bradford pointed out last week, the government is planning to cut 500 jobs from the Ministry of Social Development. This seems incredibly stupid. Someone needs to tell Paula Bennett that with the long recession stretching before us, the safety net in society needs more strands, not fewer." Based on what Campbell is arguing the National governments "Job Summit" is likely to be a non-event for grassroots people fearful of the economic crisis and the impact on their jobs and welfare. The Labour party leadership – tied as it is to a similar mess of neo-liberal and newly popular neo-Keynesian ideas – is not offering anything significantly different to National. There's a political space opening up for the Left to put before worried New Zealanders a real plan for protecting them in this time of global economic turmoil. That's if we can build a credible broad left vehicle, which remains the crucial link in turning good ideas into a political force that can change society. See also:

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