The New Zealand election is over, we have got the desired result(for most of us anyway) so it is back to writing on my first love; money, business, finance and all that jazz.
Naturally my first piece back from writing at Political Animal is tinged with more than a little politics.
Sorry!
If you think New Zealand has seen the worst of its economic slowdown think again.
Currently New Zealand is suffering a recession brought on by profligate spending by our previous Finance Minister, Michael Cullen. Problems related to the credit squeeze have only just started to hit us and will reach their worst probably sometime mid 2009.
Some of the symptoms of the outgoing Labour Governments spending so far are; higher inflation, rising unemployment, a massive public deficit, lower spending on every level of consumer goods, high interest rates, low productivity, lower property prices, higher mortgage defaults and business failures, amongst other things.
These factors are set to get worse as we move into the New Year, save the higher interest rates, and clearly this is going to have a highly negative effect on the New Zealand stockmarket.
With the current NZX index at 2800, it is likely to go below 2000 points before it starts to get any better, probably towards the end of 2009 to early 2010.
Of course all the finer points of timing for recovery and or a worsening of the scenario outlined above hinge on what responses John Key's new Government makes to the current recession and whether it looms for longer or deeper.
The economic situation for our trading partners is also an important factor for any export led recovery and obviously the seriousness or otherwise of the global slowdown will have an impact and that impact we have largely yet to see.
Wasteful spending clearly needs cutting back in all areas of Government and the savings returned to taxpaying citizens via more tax cuts, this way the economy will be stimulated over and above any initiatives to speed the economy up via Government attached incentives or direct spending by them.
More of what we had from the Labour Party just isn't going to cut the mustard. Economies are best stimulated directly by citizens rather than by bureaucrats or politicians looking to spend taxpayer dosh on their favourite business charity.
Government spending on essential infrastructure is one notable exception.
New power stations, motorways in Auckland-another harbour crossing, a motorway through Mt Albert to finish the city's motorway system-and some decent school buildings would be a good start.
Any continuation of what got us in this mess in the first place will simply drag out out the recession for several years, rather than the likely 18 months or so.
Particular importance should placed on the speed and timing of the building blocks that must be put in place for us to start to grow the economy again.
A quick response is the best response and any impediment to economic development must be put aside so as to assist an economy that could get alot worse.
This means a fast tracking of a relaxing of the Resource Management Act and the immediate rescinding of the Emissions trading scheme, which will hamper economic growth by piling unnecessary cost into the economy when we least need it.
New Zealand finally has an administration that has the expertise to negotiate their way through financial management for the good and bad times.
New Zealand has made a choice by electing a new Government and our elected leaders must make the right economic choices, some of them difficult, in order for us to prosper again, sooner rather than latter.
The alternative is a continued slide down the economic ladder which will be extremely difficult to extricate ourselves from.
c Share Investor 2008
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