Tuesday, October 25, 2011

Better than 20% chance

we are caught in a downward spiral that ultimately results in the Government being so bust it can't pay its bills

In the absence of a marked improvement in the external position, New Zealand may be more likely to be singled out in the funding markets in the future. All things being equal, any further deterioration in the ratings outlook could serve to raise debt servicing costs for the Crown as well as borrowing rates for households and businesses

there is at least a one in five chance of an outcome worse than that captured in the downside scenario. Indeed there are a number of risks for the economy over and above those captured in the scenario

As suspected, the PREFU is not good reading. A better than 20% odds of the worst case and more scenario occurring as the EU continues it's slide into economic hell.

National, you've had three years to take action and squandered your chance. It does not matter one iota whether assets remain in NZ ownership or otherwise, all that is required is for the government to man up and take the necessary drastic action to the culture of entitlement.

Liarbour or the greenies and other lefties with their continued vote-for-me bribes are not options.


Mort said...

yep, the 1 in 5 chance is of a European meltdown... have the treasury not looked at the Greek predicament?
The Bond market has them at 95%+ chance of default. The Credit Default swaps (ie bond insurance) is only marginally better for Greece, but has ramped up markedly for Portugal, Spain, Italy and most recently France (the CDS for France jumped 75% this month).

Basically Europe has shitshow of pulling itself out of the crapper unless the start the printing presses, and that will cause a few ructions of its own. The Chinese won't be so happy their debt is getting undermined and may demand a bit of the 8 tonnes of gold in various Euro central banks as collateral.
thats the European factoring only for the PREFU: what if the housing and infrastructure boom caused by massive credit expansion boom in China suddenly bottoms out/ pops?
What if the US and the Europeans suddenly grow some fiscal brains and reduce their spending on crap, and actually repay some loans (as the private citizens in the US are doing)? Could China be in for a slowdown?
If so how much would this affect the world wide market, especially our big brother over the Tasman sea, and what about little ole NZ? Will the price of dairy products then fall through the floor?

Blenglish and the Keyster need to pull their heads out of their collective butts, and sort out the rampant waste that is govt expenditure

PM of NZ said...

Exactly Mort. Rolling the printing presses just hides the problem. China is already on a downward spiral, like you say the West has stopped buying - it can't afford it anymore. And their housing bubble awaits a big prick.

Europe at 95%? I would have thought 195% chance! I'd also bet Jap housewives too have stopped investing their hard earnt in the West.

As for saving NZ Inc, once the rest of the world ceases buying our exports when the globe comes apart at the seams, it's all over Rover NZ.

The more prudent of us await Armegeddon whilst actively reducing debt.