Who will win the 2011 election?

[shrub]

Wrong. It's a good example of how integrity can be twisted by others. Jeanette Fitzsimons believes in alternative energy technology. So she put a small amount of her money into a New Zealand company which was having a go. In other words she put her money where her mouth is.

So did a lot of other people who wanted to see a local company succeed. Hell - one of our problems is that Kiwis do not invest in our own businesses - then cry when overseas buyers step in.

Don't ya just feel all warm and fuzzy to see Greens and environmentalists, not to mention NZ employees, engineers, and scientists - all failing. Yeah must be karma man teach them hippies to try and save the planet.

That'll teach them. They should have bought residential rental property.

[shrub]

See .. some of us would argue that there has never been a truly communist country ... Cuba may come close, but not even close enough for Government work.

Despite that, you also seem to have a limited view of what Communism means - and it's only a stage on the pathway from capitalism, through Socialism, Communism to the goal of the dictatorship of the proletariat - (unfortunate choice of words from Mr Marx) which would be control by the people, of the people, for the people .. recognise that slogan from anywhere?

The reason many of us would argue that there has nwever been a communist state is that these states labeled as communist have seen their form of government as the end-point, not a stgae in the passage towards the end point .. and have been ruled by the bourgoisie and the intellegensia ... and created their own power structure ...


And capitalism would seem to be failing as well. The problem is not the system of the state, but the state itself ... all states are doomed to failure.

I would say he has no idea what communism means beyond what he has been told to believe and unfortunately you're right, capitalism is failing spectacularly because too many people have been driven by greed and short term thinking.

[Winston001]

...and unfortunately you're right, capitalism is failing spectacularly because too many people have been driven by greed and short term thinking.

Ya think? Is the current situation so very different to the Tulip Mania in the 17th century? The South Seas Bubble in the 18th century? The Panic of 1893? The Great Depression of 1929? The recession of 1987?

These events were examples of dynamic capitalism. They occurred during periods of exuberance when money flowed freely and became available to entrepreneurs. The seeds of commerce flourished and even after each collapse there were a core of newly wealthy people and new enterprises.

Recessions are a necessary part of the capitalist model because they provide repricing of assets - and just as importantly, redistribution of wealth to new people. Capitalism is brutal but efficent. It aint broke.

[Swoop]

Recessions are a necessary part of the capitalist model. Capitalism is brutal but efficent. It aint broke.

It also flushes out the cowboys, snake-oil salesmen and persons of dubious character from the economic arena. Those with a good track record and who stand behind their products/services tend to do OK through recessionary times.

[Banditbandit]

Ya think? Is the current situation so very different to the Tulip Mania in the 17th century? The South Seas Bubble in the 18th century? The Panic of 1893? The Great Depression of 1929? The recession of 1987?

These events were examples of dynamic capitalism. They occurred during periods of exuberance when money flowed freely and became available to entrepreneurs. The seeds of commerce flourished and even after each collapse there were a core of newly wealthy people and new enterprises.

Recessions are a necessary part of the capitalist model because they provide repricing of assets - and just as importantly, redistribution of wealth to new people. Capitalism is brutal but efficent. It aint broke.

And now .. New Zealand's rich list for 2011 has been released ...

http://www.3news.co.nz/NBR-Rich-List...6/Default.aspx

"the country's wealthiest 151 individuals and families now have a combined wealth of a whopping $45.2 billion, up $7 billion on last year. "

Fuck me ... that's where the money is (I'm not jealous .. I have what I need .. my bikes ... own my own home .. a boat .. car ... I pay my bills and eat well ... what else is there?) ..

I can't do the maths (figures make no sense to me) .. but that's a fuck of a lot of our resources and money in a very small group of people ..

Yes, some of their wealth is tied up in the productive sector ... but I'll bet it's not all there ... For those of you in Tamaki Makaurau (I'm pretty sure some of you will know where that is) .. go and stand on Ki te Moana Street and look across the valley at Paretai Drive ... How can we let poverty and gross wealth exist side by side in our country?

There are people living on the streets and children living in poverty while a small group of people cream off our wealth ... it's the ethics (or lack of) in NZ capitalism that lead to this sort of situation that those of us on the left object to ..

And yes .. there is an exuberance to Capitalism .. and also a massive cost .. do you think the children living in poverty are exuberant about the massive amounts of profit some people make?

[shrub]

Ya think? Is the current situation so very different to the Tulip Mania in the 17th century? The South Seas Bubble in the 18th century? The Panic of 1893? The Great Depression of 1929? The recession of 1987?

These events were examples of dynamic capitalism. They occurred during periods of exuberance when money flowed freely and became available to entrepreneurs. The seeds of commerce flourished and even after each collapse there were a core of newly wealthy people and new enterprises.

Recessions are a necessary part of the capitalist model because they provide repricing of assets - and just as importantly, redistribution of wealth to new people. Capitalism is brutal but efficent. It aint broke.

I agree, this latest collapse economic crisis is yet another in an ongoing series but this (and most previous) collapses have come about for one simple reason - huge amounts of money and vast wealth has been artificially created with no basis. In 87 I had a mate who was 26 and a millionaire. He owned a Porsche and a townhouse in Kohimarama and seemed to spend most of his time at restaurants and bars. In 88 he was working as a labourer, driving an ancient 120Y (that another mate lent him) and renting a room in a shithole in Papatoetoe. His money was based on nothing.

It was the same with the boom over the first decade of this century - I watched people who worked in ordinary jobs and owned nice houses worth a couple of hundred k in 2000 living in million dollar mansions, driving flash cars, going overseas etc. They had "capitalised" on the equity they had and bought more and more property and spent large chunks of their (tax free) equity. None of which actually existed anywhere outside of a piece of paper.

It is illogical that my house that was worth approx. $200k in 2000 is now worth $500k in 2011 when all that has been done to it is carpets, paint, a new kitchen and bathroom (max. $30k invested). Residential property has traditionally generated a real rate of return of around 2 -3%, therefore my house should be worth around $300k, so where has that extra $200k come from?

It's come from the greed and stupidity of people who are willing to pay $500k for a $300k house because they think they can sell it for $600k in a year or so, and they have borrowed money from (mostly) China to do that.

The west is the greediest and stupidest civilisation in history and our wealth and oppulent lifestyle is not actually based on anything, just like the equity I have in my house. We have basically made our money by moving money from one place to another and about the only thing NZ has actually produced and sold is milk powder and allowing foreigners to look at us.

Our beloved leaders have this strange idea that if we cut taxes and spend less running the country NZ will some how mystically come right, and that's the same idiotic idea that the yanks are operating on. They build a spreadsheet with projections and everyone nods and says it looks good, and so that's what we do. On a business analogy it is like a company increasing the staff wages while cutting holidays and spending less on marketing and on plant to pay for those pay rises. IDIOTIC.

If we want to get ourselves out of the crap we need to stop thinking we can get rich simply by owning money, and start making shit that people from other countries want to buy from us for more than it cost to make, or do stuff for people in other countries that makes more money than it costs for us to do that stuff. And dairy is not the answer. The true cost of dairying is a lot higher than we realise and we are almost certainly not making nearly as much as we think, especially when you consider the cost of the debt that most dairy farmer carry.

[Winston001]

I agree, this latest collapse economic crisis is yet another in an ongoing series...huge amounts of money and vast wealth has been artificially created with no basis. In 87 I had a mate who was 26 and a millionaire...

Residential property has traditionally generated a real rate of return of around 2 -3%

....the greed and stupidity of people who are willing to pay $500k for a $300k house because they think they can sell it for $600k in a year or so

The west is the greediest and stupidest civilisation in history...



If we want to get ourselves out of the crap we need to stop thinking we can get rich simply by owning money, and start making shit that people from other countries want to buy from us for more than it cost to make, or do stuff for people in other countries that makes more money than it costs for us to do that stuff. And dairy is not the answer.

Good post and too much to precisely respond to.

Land/houses - historically (over the last 200 years) the return has been about 10%pa. Shares returned about 12.5%pa for solid blue chip companies. Inflation needs to be deducted from these figures.

I agree with you totally that too much effort in expended in money/wealth management. As we know, whole careers can now be built in merchant banking, currency trading, and financial advising. Its been that way for most of my adult life despite my dear old dad insisting the only value in a piece of land or a company share was the income you could get from it.

He was right. Yet even now after the GFC has revealed the money markets to have feet of clay, the financial industry rolls on.

Will leave the rest for another post.

[Winston001]

Someone here - Shrub? linked to Werewolf a few days ago - very interesting.

http://werewolf.co.nz/2011/06/the-ca...porate-reform/

Its an interview with Rod Oram who, instead of simply criticising, has some ideas. For example:


"So what sort of things might we do? Christchurch is situated close to Lincoln, he says, which carries out good dairy farming research. [Christchurch] has got a medical school. “How about a lacto-pharmaceuticals institute in the centre of town, close to the hospital and medical school – and that would be working out what are the therapeutic values from milk, and taking that further into bio-actives and lacto-pharmaceuticals ? That’s very difficult science. We have very few people doing it. And its very expensive science. Nestle has been doing this for years. And last year – in what should be a very scary development for us – Nestle announced an incremental investment of $US500 million in that kind of science.”

Oram's central point is as a nation we still rely on our 19th century strengths viz. agriculture. We can expand that a bit more but not much. So smarter high-tech products derived from agricultural science is a no-brainer.

We are clever at this stuff. A mate of mine is a world-class expert on animal genetics and is invited to conferences monthly. And he is just one of our scientists, he doesn't work alone. The knowledge is there but poorly funded.

[shrub]

I agree with you totally that too much effort in expended in money/wealth management. As we know, whole careers can now be built in merchant banking, currency trading, and financial advising. Its been that way for most of my adult life despite my dear old dad insisting the only value in a piece of land or a company share was the income you could get from it.

He was right. Yet even now after the GFC has revealed the money markets to have feet of clay, the financial industry rolls on.

My dad was one one the smartest and wisest people I have ever met, and he once said the only real income is something you can attribute to having either made something, improved something or helped someone to get something they need and couldn't have got without your help, and that all other income is bludging.

Our Dear Leader made a shitload of money moving numbers around - he didn't actually DO anything, MAKE anything or give anyone anything they actually needed and its people like him who have been the problem, much more than bureaucrats or beneficiaries. Bob the Banker stitches up a few deals, moves money from one country to another, then back again and in the process gets a commission and bonus package of millions. How does that work? It wasn't his money, someone earning $50k could have done the paperwork just fine and he hasn't actually made anything or improved anything. The total amount of money, bricks, cheese or whisky on the planet and in the market didn't change, yet he plucked a huge chunk of cash out of the pot. Where did it come from?

And that's the problem. There are a million Bobs out there all chowing down at the trough, and so either everyone else gets less, more zeros are added to the bottom line, or a combination thereof. The people that can get given less without creating a problem are becoming poorer and poorer; and combined they have bugger all anyway, and while you and I in the middle are getting squeezed there is a limit to how much that can happen. So it all comes down to adding a couple more zeros, and lifting the debt ceiling which means we can borrow more from China so Bob (and John) can get their great wodges of cash.

[shrub]

Oram's central point is as a nation we still rely on our 19th century strengths viz. agriculture. We can expand that a bit more but not much. So smarter high-tech products derived from agricultural science is a no-brainer.

We are clever at this stuff. A mate of mine is a world-class expert on animal genetics and is invited to conferences monthly. And he is just one of our scientists, he doesn't work alone. The knowledge is there but poorly funded.

That's pretty much the answer mate. Or at least part of it. We are a nation of innovators and we have a (comparitively) well educated population. We have good universities and some of them lead the world in some areas, so we need to move on from being a big old farm and become a laboratory and precision engineering factory.

My area of research is in sustainable business practices and one of the things I have identified is that New Zealand is lagging most of the developed and developing world in this area which is hurting our competitiveness as much as our dollar and NZ exporters (the few that exist) are finding that the market is looking at how they operate and taking their business elsewhere. The halfwits that listen to Wayne down at the pub announcing that AGW doesn't exist don't realise that a company's carbon footprint is one of the factors that is starting to be assessed in a purchase decision and just because they don't believe the scientists doesn't mean the CEO of Megacorp Ltd doesn't.

[Winston001]

.. the only real income is something you can attribute to having either made something, improved something or helped someone to get something they need and couldn't have got without your help...

Our Dear Leader made a shitload of money moving numbers around - he didn't actually DO anything, MAKE anything or give anyone anything they actually needed...

Didn't realise Kim Jong-Ill was a currency trader?

The moderate view is that the world needs a certain number of people who are clever at understanding and managing money flows. Such experts make it possible for a Belgian dentist to invest in Ethiopian farming. Or a Chinese factory owner to invest in a NZ engineering company. Or for superannuation funds to buy bonds issued by foreign governments.

So using your dad's wise words, financial traders put together lenders and borrowers who would otherwise not have the opportunity.

Where it all goes wrong IMHO is that instead of say 100,000 people doing this globally, there are millions. As you say they produce nothing and in fact are a burden on money movements.

So many people are focused on money and wealth management that some become desperate to find new ways to attract funds. That is how the sub-prime mortgage CDOs were created to sell secure (HA!) investment packages.

This is the point where I depart from capitalism. It might be efficient but ordinary people get hurt which is simply wrong.

[shrub]

This is the point where I depart from capitalism. It might be efficient but ordinary people get hurt which is simply wrong.

I think the key thing to remember about capitalism is that it is an adaptation of the mosty primal of social differentiators. A hundred thousand years ago the cave man who was physically strongest and most able to hunt down a mastadon was the dominant one and the weakest in the tribe usually ended up missing out on food or a place by the fire and so died out - good old Darwinism in action. Today we don't hunt mastadons with clubs to decide who is the dominant member of the tribe, we use financial instruments and as is the way with Darwinism, the weakest (those with the smallest financial club) miss out on the good bits and a place by the fire. In the west they don't (generally) die, but we make sure we keep them down. Ever wondered why the rich get richer and the poor go to prison?

[SPman]

The moderate view is that the world needs a certain number of people who are clever at understanding and managing money flows

And fair enough - just keep them away from trying to run a country! Despite what people have been led to believe, running a country is totally different to running a business! Money people just see government as another way of lining their pockets and generally couldn't give a shit if they bleed the populace dry in the process. To them it's just a big bottomless money pit, and if they fuck over society in the process, well, it's their right, 'cause they're cleverer than everybody else and they and their apologists deserve it ..........

- I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs. - Thomas Jefferson, 1778!

[oldrider]

Ya think? Is the current situation so very different to the Tulip Mania in the 17th century? The South Seas Bubble in the 18th century? The Panic of 1893? The Great Depression of 1929? The recession of 1987?

These events were examples of dynamic capitalism. They occurred during periods of exuberance when money flowed freely and became available to entrepreneurs. The seeds of commerce flourished and even after each collapse there were a core of newly wealthy people and new enterprises.

Recessions are a necessary part of the capitalist model because they provide repricing of assets - and just as importantly, redistribution of wealth to new people. Capitalism is brutal but efficent. It aint broke.

Wars booms and busts, wars booms and busts, wars booms and busts -Capitalistic cycles! (much like the natural world)

Suppression, revolution, suppression, revolution, suppression, revolution - Socialistic cycles! ( walking backwards to Christm---err cancelled ... May Day)

Hobson's choice!

[Quasievil]

And fair enough - just keep them away from trying to run a country! Despite what people have been led to believe, running a country is totally different to running a business!

The Sky the Sky its falling !!!

we should really let people with no money skills run our country eh ?
even better would be tree hugging save the gay whale bludgers , that would be a winner.
Country is doing fine with a money man at the top thanks