Who will win the 2011 election?

[Clockwork]

NO. The reason to sell the rental bikes is that the money gained repays the $100k overdraft. No ongoing interest. Reduce debt = reduced commitment.

You can then concentrate on earning alternative income without the $100k debt pressure. People do this when up against a wall of debt.

By the same argument would you sell your house to clear the mortgage and then rent it back to live in; knowing full well you'll probably never be in a position to buy that house back again?

Energy assets do have the seductive attraction of "national interest" although the existence of Contact hasn't done any harm. Its not as though overseas shareholders can take the hydro dams away.

No, but they can and do take the profits away. How many litres of milk do you suppose Fonterra has to sell earn NZ enough to run a power station for a year?

[puddytat]

Russell Norman has a good idea that if we need to sell assets to pay the bills, then a better option would be to sell Govt. bonds in those assets, thereby keeping them in our hands, whilst encouraging overseas investment....

I also wonder if "the Global Debt Crisis" couldnt be simply solved by wiping all debt?
They considered it for the Third World there for a while.
So what if everything loses it supposed value, ....its happened before.
The major thing to do to stop folk going "yeehaa" on a spending spree would be to make it very difficuly to get finance in the future.The easiest way to get sustainable is to work within your means....like actually having earned the money you have to spend, rather on relying on money you hav'nt got & having to borrow it.
Simplistic I know, but life happens all around us anyway.

[SPman]

I also wonder if "the Global Debt Crisis" couldnt be simply solved by wiping all debt?
.

It worked for Argentina......

[Winston001]

Russell Norman has a good idea that if we need to sell assets to pay the bills, then a better option would be to sell Govt. bonds in those assets, thereby keeping them in our hands, whilst encouraging overseas investment....

Actually that's not a bad idea.

I also wonder if "the Global Debt Crisis" couldnt be simply solved by wiping all debt?

No. The money is real and is ultimately owed to real people. The loans are made up of millions of peoples savings in banks and pension schemes, which are then lent to governments and other banks. For example NZ house buyers were funded by local banks borrowing on the international money market.

The sources? Savings from Japan, China, Middle East, and granny next door.

The easiest way to get sustainable is to work within your means....like actually having earned the money you have to spend, rather on relying on money you hav'nt got & having to borrow it.
Simplistic I know, but life happens all around us anyway.

Agreed.

[Banditbandit]

Actually that's not a bad idea.



No. The money is real and is ultimately owed to real people. The loans are made up of millions of peoples savings in banks and pension schemes, which are then lent to governments and other banks. For example NZ house buyers were funded by local banks borrowing on the international money market.

The sources? Savings from Japan, China, Middle East, and granny next door.



Agreed.

Dumb investors - get caught all the time - that's why my money is in bikes and bikes

(oh, and some in land and bricks)

[Winston001]

In return you want to tell me about your Scots ancestry and values. Do you see why I have concerns about our ability to make intelligent decisions on November 26th?

Serves me right for breaking my own rule about being dispassionate.

Sigh...excuse the paranoia but you seem to have a sneering or disdainful tone for my little homily. Perhaps not. Nevertheless that was my first impression and in microcosm these KB discussions reflect how easily any of us can be affronted. Once emotions are engaged rational reasoning is gone.

[rainman]

Sigh...excuse the paranoia but you seem to have a sneering or disdainful tone for my little homily. Perhaps not. Nevertheless that was my first impression and in microcosm these KB discussions reflect how easily any of us can be affronted. Once emotions are engaged rational reasoning is gone.

I didn't mean to sneer, so I'll beg your pardon if it came across that way. I have a tendency to be a little acerbic when argumentatively frustrated and sleeping too little. Don't be affronted, for one thing it's a singular waste of time...

Disdainful? Perhaps, but not due to the homily. I think the sentiments you've advanced are fine indeed, it's just that they don't add to the debate at all. We're not talking about whether you waste money on frivolous holidaying or not, we're talking about whether we are going to let a political party screw the country over for no good reason.

I'm particularly interested in your detailed thinking about why Fortress NZ was a bad thing. Far more relevant than where you holiday.

And I disagree entirely about emotions. One does not need to be stoically unemotional and Spock-like to have a rational debate. All one needs is to maintain emotional control. Passion is a good thing.

[oldrider]

we're talking about whether we are going to let a political party screw the country over for no good reason.

What!

Political parties exist specifically for that reason, why would you expect anything else from them?

MMP reinforces their allegiance to each other, rather than to the electorate that allowed them to be there!

Once the electorate has given them "permission" the parties form a club or bonded group of parties loyal to "each other" and call themselves a government FFS!

Prior to the election nobody in the country has any idea of what form that government will be, so how can they claim to have voted for it?

I said "no" to FPP but I do not agree that MMP serves the interest of the electorate, regardless of a voters political persuasion!

There has to be a better way of expressing proportional representation than MMP!

Politicians must be required to serve the wishes of their electoral voters first, their parties second and their parties alliances last! IMHO.

IMO STV has more chance of achieving this providing the politicians are not allowed to meddle with it and make the system too complicated to their own advantage!

FPP or MMP? ....... there has to be a better way than these two, vote them out at this election!

[slowpoke]

Weeeeeeell, if this were an election Rainman would have my vote on the asset sales issue, although it's been interesting hearing Winston001's counter arguments.

I kinda get the selling the bikes to pay down the debt idea, but my problem is that once you've done that how do you then make any money? Unless you are prepared to go into debt again (in which case what was the point of selling the bikes?) you are reduced to being a permanent employee. It's not like you can instantly pull another business or skill out of thin air.

No, I far prefer the option of working away with the debt hanging over my head paying off the debt penny by penny and eventually owning the business. In the meantime the value of the business is increasing and the income stream is being spent in my local community, or to improve the business/infrastructure....not going out of town.

But lets get real: these assets are supplying vital services that people and businesses can't live without it. They're never going to go out of fashion, they're always going to go up in value and earning potential. And the infrastructure is never going to be cheaper to build. So no, it strikes me as very short sighted to sell such things for short term relief.

I also worry about the sale process, in that we would get the worst of any transaction. We'd have to price the assets in a depressed market to compete with an infinite number of other investments around the world, then even if we tried to buy them back the very next day we'd be screwed because we are in a lousy bargaining position: it's not like we can buy them from anywhere else. Supply and demand dictates we'd get forcibly DP'd big time.

Nup, tighten the purse strings, lose a few comforts, attack the issues that got us in the poo in the first place, don't sell the things that can help drag us out of it. That old saying about give a man a fish feed him for a day, teach a man to fish feed him for a lifetime? Well, after selling our fishing gear we'd eventually be reduced to buying our fish every day. It's just not smart long term.

[Banditbandit]

What!


Politicians must be required to serve the wishes of their electoral voters first, their parties second and their parties alliances last! IMHO.

Sorry - but we didn't get that under FPP either ... that's the Westminster system of Democracy for you ..

[oldrider]

Sorry - but we didn't get that under FPP either ... that's the Westminster system of Democracy for you ..

I wasn't advocating FPP, was I!

I said, FPP and MMP both fail in that respect!

[Cheshire Cat]

Yo mama!

[shrub]

Russell Norman has a good idea that if we need to sell assets to pay the bills, then a better option would be to sell Govt. bonds in those assets, thereby keeping them in our hands, whilst encouraging overseas investment...

Yeah, a surprisingly good idea and one that has worked very well in previous times of crisis, a good example was war bonds where WW2 was extensively funded by ordinary citizens. In essence the government are coming to us and asking us to contribute to the recovery by lending them money. It means we get to keep our assets and the interest payments stay in NZ. Bloody Greens, has nobody told them they're idiots?

[Winston001]

I kinda get the selling the bikes to pay down the debt idea, but my problem is that once you've done that how do you then make any money? Unless you are prepared to go into debt again (in which case what was the point of selling the bikes?) you are reduced to being a permanent employee. It's not like you can instantly pull another business or skill out of thin air.

Thanks for the nod -cheers.

Selling the rental bikes is a last resort when the debt becomes crippling. Eg the rental income only covers the interest.

Rainman's argument (which has validity) is that NZ is not yet in dire straits. Yet take a look at the world economy right now: share markets are crashing, money is fleeing to safety (ironically the $US) and it looks like the predicted second crisis will happen.

The reason this time? Not private debt but instead, government debt across the developed nations. Every dollar owed today is a burden for tomorrow and years to come, suffocating economies as governments cut spending and raise taxes.

Why would it be wise for NZ to join them?

But lets get real: these assets are supplying vital services that people and businesses can't live without it. They're never going to go out of fashion, they're always going to go up in value and earning potential. And the infrastructure is never going to be cheaper to build. So no, it strikes me as very short sighted to sell such things for short term relief.

I'd agree if the assets were being taken away but they aren't. The jobs etc will still be in NZ. And its a 49% sale so the govt retains control and 51% of profit.

I also worry about the sale process, in that we would get the worst of any transaction. We'd have to price the assets in a depressed market to compete with an infinite number of other investments around the world, then even if we tried to buy them back the very next day we'd be screwed because we are in a lousy bargaining position: it's not like we can buy them from anywhere else. Supply and demand dictates we'd get forcibly DP'd big time.

Good point. Well said. Especially if this turns out to be the second leg of the GFC.

The counterargument is that the money in the world does not disappear, and money which is available to invest will be looking for a safe haven. Hydro electricity companies are about as safe and boring as you could ever want. In that sense shares in the three power companies could command a premium.

Though I do like Russell Norman's suggestion of bonds as an alternative.

[shrub]

Rainman's argument (which has validity) is that NZ is not yet in dire straits. Yet take a look at the world economy right now: share markets are crashing, money is fleeing to safety (ironically the $US) and it looks like the predicted second crisis will happen.

The reason this time? Not private debt but instead, government debt across the developed nations. Every dollar owed today is a burden for tomorrow and years to come, suffocating economies as governments cut spending and raise taxes.

Why would it be wise for NZ to join them?

At the moment NZ still has relatively low levels of government debt - a legacy of the previous government but that is increasing steadily. As a businessman i know that when you're in the shit financially you have 3 options:
1. Increase your income
2. Cut expenditure
3. Sell assets and either lease them back or do without.

1. Increase income. Our income as a nation comes from exports, and I hate to keep on about it, but we have to increase our exports and find more productive exports than dairy. Our government's income comes from taxes and from money generated by SOEs, and at this point it's worth remembering that the government are not the enemy but are actually our representatives and taxes paid go back into running our country, not running Australia, China, Nike or Samsung. We need to increase our tax take, and while increasing the per capita GDP will have that effect, that won't happen unless we change what we're doing. We have all enjoyed lovely tax cuts, but maybe we couldn't actually afford them? We're like the boss who gives all his workers a 10% pay rise while his business is losing money. If we're serious about saving our economy then we ALL need to tighten our belts, not just civil servants and beneficiaries. Personally I wouldn't have a problem with a 10% increase in my tax if it meant NZ avoided a financial crisis. I'd budget around it and get on with my life. A CGT tax is not just a good idea, it's idiotic not to introduce it, and this year I am voting labour on that policy alone (my second time).

2. Cut expenditure. A vital strategy, and we need to find cheaper and more efficient ways to do things. On a personal level I have parked my car up, put the rego on hold and am now riding my bike because it is cheaper than my car (and more fun). Unfortunately the current crop of idiots in government think the only way to cut costs is to lay of government employees, and based on overseas experience that is an almost certain way to hinder growth. It means we have less effective civil infrastructure which means it's harder to do business and life gets unpleasant. And when staff get laid off generally the first to go are the best and brightest because they can get work anywhere so we're left with the dregs and the legacy bureaucrats.

3. Sell assets and lease them back. If an asset is not an income earner, is depreciating rapidly and/or is something without a lot of potential, that's a good idea. About 15 years ago I was a partner in a construction company and we sold our vehicles and leased new ones which injected around $75k into the company which meant we could take advantage of an opportunity ahead of us which was going to pay the lease costs and more. It didn't, but that's another story and it taught me not to put money into something I knew nothing about (construction). Our power companies are very profitable, are increasing in value and as energy demands rise and cheap oil runs out they will become a total gold mine. Selling them now would be like Apple selling the iPod patents just as MP3s took off - DUMB, DUMB, DUMB.


We need to increase our income by fostering and encouraging high tech exports and we need to realise that we couldn't actually afford our tax cuts and increase taxes. We also need to find more efficient ways to operate as a country and merely cutting the number of civil servants is like removing bits off a bike to make it lighter. To begin with you can lose weight and the bike still works fine, but there comes a point when you are down to removing disc rotors and drilling holes in the swingarm. As for selling assets, we really don't have a hell of a lot left to sell and probably don't have any we should sell.