Economies like animals…In a pit.

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Greenies want sustainable living, they say “don’t take more than the earth has to give” These days they don’t hang out in the back of VW’s instead they’re in parliaments back benches.

But why don’t we hear a chorus of main stream economists warning us “we can’t spend more than we earn, it’s not sustainable”

Maybe I’m too simplistic, after all, economies are complicated animals right? Unpredictable, with many moving parts and dependant operations who knows what they will do next?

However an animal in a pit might be unpredictable but it’s still in a pit, It may do all sorts of unpredictable crazy things while it starves to death, but it will still starve.

A states economy that is continuously in deficit is like an animal in a pit, the longer it is down there the weaker it becomes reducing chances of ever getting out.

Every year the balance of payments is negative, is another year in the hole, we don’t get to start afresh each season with a clean sheet, how many economists discuss the cumulative effect of 30 years digging our 160+ billion dollar pit:            (Click image to enlarge)             

                                
After 30+ years of digging ourselves into this hole, will we crawl out in just one or two years? (Yeah Right!) This graph was made by simply adding quarterly data that is publicly available, but I bet you have not seen it presented this way, click here to see how the Reserve Bank reports it in bar-graph format, like every year is a fresh start.

Some of you may ask, do deficits really add up like that, are your charts just manipulated data making things look bad, well as a sanity check the below statement is quoted from the December 09 press release from Statistics NZ:

“At 31 December 2009, New Zealand's net international debtor position was $167.5 billion (90.3 percent of GDP). A net international debtor position means that overseas investment in New Zealand is greater than New Zealand investment abroad.”

It’s real, it has not gone away, NZ has accumulated 167 Billion in debts with a population of 4 million people:

•    $42,000 for every man woman and child.
•    $128,000 for every full time employed person

Then if we were to consider only those who are not in Government jobs (i.e. not paid by tax from other working people) the debt per working person who can actually dig us out of this hole is overwhelming.

Truly without people taking this very seriously we will not get out of this pit, reality is it’s likely too late, it is so much work to get out from here, people welcome delusion, i.e. vote in politicians that say “everything will be OK just keep on digging, In fact since you consumers are now so weak we’ll do the digging for you”.

Maybe the main stream economists take comfort from all the company we have in the pit: The British lion, the American eagle, the PIIGS and host of others all looking at each other saying “it’s ok just keep on digging”, however that Icelandic clubbed seal is stinking up the place reminding us of our mortality.

8 comments (Click to make comments):

Anonymous said...

Holly Molly!!! and I thought Canada was bad!!!
"NZ has accumulated 167 Billion in debts with a population of 4 million people:"!!!
“everything will be OK just keep on digging,"

Keep up the good work Andy!
God Bless,

Rob Roy.

Anonymous said...

great work Andy great to see the facts makes holding AUD ASX etc or even better Silver Gold bullion a much needed safety net for NZer's as are dollar should well fall even further against better run economy's worldwide the next step of the credit debt bubble is only round the corner

JBmurc

NZ_Andy said...

Thanks Rob,
our debt looks bad alright but in terms of debt per sheep its only $4,500... we have expensive sheep here...

NZ_Andy said...

JBmurc,
Thanks for your comment, for what ever reason media economist focus on government debt and tend to forget the population thus missing the big picture that governments get their funds through taxis, so if the population is broke the government soon will be, and I believe that is what we did see as our government surplus vanished into thin air as the population stopped borrowing money into the country that was taxed.

I’m going to have a look at Australia in this regard also it will be an interesting comparison

Anonymous said...

If you think money will be a problem in the coming near future, read this:

"Of the scientists who fed the world in the past 40 years most have quit - in anger, sorrow, or disappointment – have been fired, or have retired."

"The dilapidation in the enterprise that feeds the Earth has disheartened a generation of young would-be agricultural scientists, especially in developed countries where many universities and colleges of agriculture cannot find enough students to fill the places they offer. Disciplines vital to reinventing agriculture, like soil science, are languishing."

"Global funding for agricultural research, public and private, is estimated to total around $40 billion...There is a stark contrast with the $1500 billion the world now spends on weapons."
http://www.sciencealert.com.au/features/20101804-20862.html

Got Silver?

RobRoy

NZ_Andy said...

100 years ago, four-fifth of the world populations lived outside towns and were in some way dependant on agriculture, I wonder if we have reached “peak farm un-employment”

Anonymous said...
This comment has been removed by a blog administrator.
NZ_Andy said...

Please note that I can't moderate parts of a comment, I can only leave it or delete it.... Thanks for the link.

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