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Posts Tagged ‘1984’

Trumpwatch: Trump escalates, Putin congratulates

31 December 2016 7 comments

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It started…

It started on 23 December, when President-Elect, Donald Trump made this unexpected, alarming  “tweet”;

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With 115 characters, Donald Trump declared a return to a global nuclear arms race.

It started on 9 November, when Trump – described by BBC journalist 

It started in 1949, when George Orwell’s Nineteen Eightyfour was published,   an  alternative reality of a world ruled by  three totalitarian superpowers, constantly at war with each other;

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It started in 1948, with the beginning of the “Cold War”…

The Scene is set…

Trump’s 23 December “tweet” that the US will resume a build-up of its atomic weapons arsenal should come as no surprise. On 8 September, on the campaign trail, he announced;

“History shows that when America is not prepared is when the danger is greatest. We want to deter, avoid and prevent conflict through our unquestioned military dominance.

I’m gonna build a military that’s gonna be much stronger than it is right now. It’s gonna be so strong, nobody’s gonna mess with us.”

The Military Times assessed Trump’s promised build-up of US forces;

Trump wants an active-duty Army with another 60,000 soldiers in the ranks, an unspecified number of additional sailors to man the 78 ships and submarines he intends to see built in coming years. He wants up to 12,000 more Marines to serve in infantry and tank battalions, and at least another 100 combat aircraft for the Air Force.

If Trump’s administration can accomplish even a portion of this, it could have sweeping effects on rank-and-file military personnel, touching everything from individual advancement opportunities to the number of U.S. troops stationed overseas and overall operational tempo. The scope of growth being suggested would require many more officers and noncommissioned officers, influencing, over the course of several years, how each service recruits, promotes and retains its workforce.

It could reshape how many American troops find themselves assigned to geopolitical hot spots, including the Middle East, Eastern Europe and Southeast Asia. And all of this, in theory, would ease the pace at which service members are deployed or actively preparing to go overseas, which amounts to time away from their homes and families.

Curiously, none of Trump’s hyper-jingoistic election rhetoric seemed to faze Russia’s president, Vladimir Putin. On the contrary, Putin remained zen-like  and complimentary  of the billionaire-turned-politician. In December 2015, Putin was reported in state media, Sputnik, as saying;

“He is a very bright person, talented without any doubt. It is not our business to assess his worthiness, but he is the absolute leader of the presidential race. He says he wants to move to a different level of relations — a fuller, deeper [level] — with Russia, how can we not welcome this? Of course we welcome this.”

Putin’s comments were also reported in Russian state-controlled media, RT News.

A veritable “love-fest” of compliments were exchanged between the two men. A “bro-mance” had obviously developed between the Oligarch and the Billionaire;

Trump: “It is always a great honor to be so nicely complimented by a man so highly respected within his own country and beyond.”

Trump: “He is really very much of a leader. The man has very strong control over his country. Now, it’s a very different system, and I don’t happen to like the system, but certainly in that system he’s been a leader, far more than our president has been a leader.”

Both Putin and leader of the far-right National Front, Marine Le Pen, congratulated Trump on his presidential success.

Their relationship continued, even as Trump ‘tweeted’ on 23 December that the “the United States must greatly strengthen and expand its nuclear capability“.

Putin seeming remained utterly unperturbed at Trump‘s sabre-rattling;

“I was a bit surprised by the statements from some representatives of the current U.S. administration who for some reason started to prove that the U.S. military was the most powerful in the world.

Nobody is arguing with that.

In the course of his election campaign he (Trump) spoke about the necessity of strengthening the U.S. nuclear arsenal, and strengthening the armed forces. There’s nothing unusual here.”

Perhaps because Russia is also considering a build-up of its atomic arsenal, as Putin himself stated on 22 December;

“We need to strengthen the military potential of strategic nuclear forces, especially with missile complexes that can reliably penetrate any existing and prospective missile defence systems.

We must carefully monitor any changes in the balance of power and in the political-military situation in the world, especially along Russian borders, and quickly adapt plans for neutralising threats to our country.”

So Who is the enemy?!

If, as Putin and Trump are at pains to assert, their relationship is on firm, cordial grounds – why the need for a massive modernisation and build-up of both superpower’s military force? A build-up that could cost both nations billions of dollars and rubles?

Who is the enemy?

Relations between Russia (formerly Soviet Union), China, and the US has always been a “balancing act”.  The three have constantly played each other off against each other.

In Nineteen Eightyfour, Orwell took the three-superpower rivalry to its ultimate, destructive, insane conclusion;

On the sixth day of Hate Week, after the processions, the speeches, the shouting, the singing, the banners, the posters, the films, the waxworks, the rolling of drums and squealing of trumpets, the tramp of marching feet, the grinding of the caterpillars of tanks, the roar of massed planes, the booming of guns — after six days of this, when the great orgasm was quivering to its climax and the general hatred of Eurasia had boiled up into such delirium that if the crowd could have got their hands on the 2,000 Eurasian war-criminals who were to be publicly hanged on the last day of the proceedings, they would unquestionably have torn them to pieces — at just this moment it had been announced that Oceania was not after all at war with Eurasia. Oceania was at war with Eastasia. Eurasia was an ally.

There was, of course, no admission that any change had taken place. Merely it became known, with extreme suddenness and everywhere at once, that Eastasia and not Eurasia was the enemy…

[…]

Oceania was at war with Eastasia: Oceania had always been at war with Eastasia.

Our own three super-powers

In 1972, then Republican-president, Richard Nixon made his historical trip to the People’s Republic of China. As History.com portrayed the momentous event;

The American fear of a monolithic communist bloc had been modified, as a war of words—and occasional border conflicts—erupted between the Soviet Union and the PRC in the 1960s. Nixon, and National Security Advisor Henry Kissinger saw a unique opportunity in these circumstances—diplomatic overtures to the PRC might make the Soviet Union more malleable to U.S. policy requests (such as pressuring the North Vietnamese to sign a peace treaty acceptable to the United States). In fact, Nixon was scheduled to travel to meet Soviet leader Leonid Brezhnev shortly after completing his visit to China.

Nixon’s trip to China, therefore, was a move calculated to drive an even deeper wedge between the two most significant communist powers. The United States could use closer diplomatic relations with China as leverage in dealing with the Soviets, particularly on the issue of Vietnam. In addition, the United States might be able to make use of the Chinese as a counterweight to North Vietnam. Despite their claims of socialist solidarity, the PRC and North Vietnam were, at best, strongly suspicious allies. As historian Walter LaFeber said, “Instead of using Vietnam to contain China, Nixon concluded that he had better use China to contain Vietnam.” For its part, the PRC was desirous of another ally in its increasingly tense relationship with the Soviet Union and certainly welcomed the possibility of increased U.S.-China trade.

That increased trade eventuated with then-President Jimmy Carter  consenting to  China gaining  a “Most Favoured Nation” in 1980; re-affirmed by Bill Clinton in 1994, and later by George W Bush in 2001.

However, in recent times, China has flexed its military muscle and increased its presence in the South China Sea. This has set it on a collision course with other regional neighbours, as well as the United States;

Chinese expansion in the South China Sea is bringing conflict between Beijing and its neighbours – Japan, South Korea, the Philippines and Vietnam – closer than it has been for decades. Vietnam has fortified several islands it controls, while Japan has been publicly rebuked by Beijing over its ‘interference’ in the sea – most of which China claims. The Philippines has called for “restraint and sobriety” as its own dispute with Beijing rumbles on.

But the South China Sea and a lesser-known spat with Japan over islands near Taiwan has not only brought talk of a regional war in the Pacific to the fore, but raised the prospect of the US being dragged into open warfare with China. Beijing’s expansionism threatens not only the interests of US allies in East Asia but also global trade, given that some 40% of all shipping passes through the disputed area of ocean.

“As horrific as a Sino-US war could be, it cannot be considered implausible,” warned the authors of the RAND Corporations August report, War with China: Thinking through the Unthinkable.

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But in reality US-China relations have been strained for some time, as demonstrated by the scrutiny of Barack Obama’s visit to Hangzhou, where American reporters scuffled with Chinese security staff and Beijing was widely accused of snubbing the US president on his final international visit. Chinese hacking of US companies has been widespread, leading to America’s indictment of five senior Chinese army officers in May 2014.

Meanwhile in the South China Sea and East China Sea, Chinese expansion has come at the expense of major US allies, including Japan. Japan’s ownership of the Senkaku Islands, north of Taiwan, is enshrined in the US-Japan Treaty that was signed after the end of the Second World War. China’s increasingly hostile stance towards its neighbour over the islands risks dragging the US into a conflict between Beijing and Tokyo.

This has already resulted in confrontations  between the two nuclear super-powers;

A U.S. navy destroyer sailed near islands claimed by China in the South China Sea on Friday, drawing a warning from Chinese warships to leave the area.

The U.S. action was the latest attempt to counter what Washington sees as Beijing’s efforts to limit freedom of navigation in the strategic waters, U.S. officials said.

The Chinese Defense Ministry called the move “illegal” and “provocative,” saying that two Chinese warships had warned the U.S. destroyer to leave.

The guided-missile destroyer USS Decatur challenged “excessive maritime claims” near the Paracel Islands, among a string of islets, reefs and shoals over which China has territorial disputes with its neighbors, the officials said, speaking on condition of anonymity.

The latest U.S. patrol, first reported by Reuters, is expected to anger Beijing and could further escalate tensions over the South China Sea. The destroyer sailed within waters claimed by China, close to but not within the 12-nautical-mile territorial limits of the islands, the officials said.

The U.S.  shows little sign in backing down, as Chief of U.S. Naval Operations Admiral, John Richardson, said during a trip to China in July this year;

“The U.S. Navy will continue to conduct routine and lawful operations around the world, including in the South China Sea, in order to protect the rights, freedoms and lawful uses of sea and airspace guaranteed to all. This will not change.”

A spokesperson for the incoming Trump Administration, Sean Spicer was equally belligerent (without specifically mentioning China);

“I think it’s putting every nation on notice that the United States is going to reassert its position in the globe.”

Trump himself has made antagonistic and disparaging remarks about China;

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The CNN report continued;

Trump has repeatedly accused China of manipulating its currency to make its exports more competitive on the global market and has claimed that China is “killing” the U.S. on trade.

Sunday marks the first time in this campaign that Trump has used the term “rape” to refer to what he views as China’s dominance in trade with the U.S.

“We’re going to turn it around. And we have the cards, don’t forget it. We’re like the piggy bank that’s being robbed. We have the cards. We have a lot of power with China,” Trump said Sunday before referring to China’s relationship with the U.S. as rape.

Trump added that he is not “angry at China,” but with U.S. leaders whom he accused of being “grossly incompetent.”

Trump previously claimed in 2011 that “China is raping this country” as he toured a defense manufacturer in New Hampshire.

Many considered the  doomed Trans Pacific Partnership Agreement to be designed to contain China;

From its inception, the TPP has been considered by many as a strategic instrument to isolate or contain China. Given the country’s ambitions, its leaders are understandably concerned about the concerted effort by the U.S. and other Asia-Pacific countries to curtail its economic growth and geopolitical influence.

China’s outsider status could also be seen as an indictment of its inadequacies, such as limited intellectual property protection and a lack of government procurement standards. The exclusion of China not only has caused the country to lose face, but has also provided a painful reminder of its continued struggle to gain an equal status in the international community. Finally, the lack of TPP membership will prevent China from enjoying new tariff reduction and preferential market access. If this regional pact is to operate according to design, it will divert trade and manufacturing from China to TPP members.

Our own expert and campaigner, Jane Kelsey, also remarked on the anti-China nature of the TPPA;

“In the past month both US presidential candidates have positioned the TPP at the centre of their strategy to neutralise China’s ascendancy in what they call the ‘Pacific’ region.

New Zealand already faces the prospect of being piggy in the middle, with potentially conflicting rules and foreign policy pressures from agreements with China and the USA.

Tim Groser is kidding himself if he thinks China will sit quietly by and allow us to play both sides. This is a high-risk game and we need to have an honest debate about its long-term implications for the country.”

Note President Obama’s statements over China’s increasing geo-political influence;

“And we believe China can be a partner, but we’re also sending a very clear signal that America is a Pacific power, that we are going to have a presence there.

We are working with countries in the region to make sure, for example, that ships can pass through, that commerce continues.

And we’re organizing trade relations with countries other than China so that China starts feeling more pressure about meeting basic international standards. That’s the kind of leadership we’ve shown in the region. That’s the kind of leadership that we’ll continue to show.

As part of his populist campaigning this year, Trump publicly rejected the TPPA. This left him to devise other options to “contain China”.

The Trump Deal between Russia and US

The new-found rapprochement between Russia and the US could be based on mutual interest. With Trump’s penchant for deal-making, the U.S. and Russia would have much to gain by stitching together a secret deal.

In return for the U.S. gaining Russian support against growing Chinese influence in the South China Sea, Trump would allow Russia a free hand in supporting its ally, Syria (where U.S.  interests are minimal anyway, unlike the Pacific).

This would explain why the U.S. and Russia have been ‘cosying’ up together.

More critically, it answers the perplexing question as to why Russia seems utterly unperturbed at American plans to build up its military. And why the U.S. seems to have stepped back from taking action over Syria.

Nixon went to China.

Trump may be going to Moscow.

Oceania has always been at war with Russia China.

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References

Twitter: Donald J Trump

BBC: US Election 2016 Results – Five reasons Donald Trump won

Wikipedia: Nineteen Eightyfour

CNN: Trump calls for military spending increase

Military Times: Trump’s military will have more troops and more firepower — if he can find more money

Sputnik: Putin Welcomes Trump’s Words of Readiness to Improve Russia-US Relations

RT News: Putin says ‘talented’ Trump is ‘absolute front-runner,’ welcomes pledge to work with Russia

Business Insider: Here’s a look at what Trump and Putin have said about each other

The Independent: Vladimir Putin congratulates US President Donald Trump as Russian leaders celebrate

RT News: ‘So correct’: Trump responds to Putin’s holiday letter

Reuters: Putin shrugs off Trump’s nuclear plans, says Democrats sore losers

ITV News: Trump and Putin both hint at expansion of nuclear arsenal

Ebook: Ninetween Eightyfour

History: 1972 – Nixon arrives in China for talks

CNN: Clinton Proposes Renewing China’s Most-Favored Trade Status

China.org.cn: Chronology of China-US Relations

The Tech: Clinton Grants China MFN, Reversing Campaign Pledge

International Business Times: Could the South China Sea dispute trigger a Sino-US war?

NY Times: Trump Says U.S. Would ‘Outmatch’ Rivals in a New Nuclear Arms Race

CNN: Trump – ‘We can’t continue to allow China to rape our country’

Fortune: How China’s exclusion from the TPP could hurt its economic growth

It’s Our Future: Obama casts TPP as Challenge to China

Washington Times: Inside the Ring – Obama, Romney on China

Previous related blogposts

Taiwan FTA – Confirmation by TVNZ of China pressuring the Beehive?

The Rise of Great Leader Trump

The Sweet’n’Sour Deliciousness of Irony: Russia accused of meddling in US Election

Protestors condemn Russian involvement in atrocities in Aleppo

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This blogpost was first published on The Daily Blog on 27 December 2016.

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Bricks, Bouquets, Bain, and Winston Peters

30 June 2013 1 comment

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There is an unpleasant tendency in our politics for parties to bash each other when they amend or dump a policy.

I’m not referring to breaking election pledges, such as National’s raising GST when Key promised that would not happen. That was clearly dishonest, and worthy of public condemnation.

I am referring to Parties putting forward a new policy outside of the Election period, and which the public has not had an opportunity to consider. These are policies that have not been tested, and are yet to be  subject to scrutiny, debate, and a verdict from the public.

Recent examples include Labour dropping their policy to remove GST from fresh food; National changing their policy on class-room sizes; and the Greens dumping their policy on Quantitative Easing.

National’s “u-turn”  on the Auckland rail-loop is another example. In this instance, the issue of the Rail Loop has been discussed and debated in the public arena. Eventually,  National Ministers realised that there was strong public support for this project and their own oppositional posture was no longer tenable. (No doubt this realisation was amply assisted by Focus Groups.)

So, yesterday, the Nats announced that they would be supporting the Rail Loop, with appropriate levels of funding,

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Govt to contribute to Auckland rail link

Acknowledgement: Radio NZ – Govt to contribute to Auckland rail link

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– and the response from Labour; other political opponents; and the media was to slam National for it’s “u turn”.

Now, I’ll emphasise the point here that I am no friend of right wing governments. That includes this National government.

But. When the Nats  change their policies to be more in line with New Zealanders’ expectations; and when they dump an unpopular policy which was based more on ideological clap-trap rather than common sense; and when they bow to public and political pressure to adopt more progressive policies – they should be encouraged and applauded.

Otherwise, if we’re not going to give  positive reinforcement to their policy changes, the Nats will simply refuse to countenance future backdowns when faced with public opposition.

After all,  where is the profit in listening to criticism and dropping a policy  if you’re going to be bollicked regardless?

In this respect, I think there is a fair degree of immaturity on this issue and it’s high time we did a bit of growing up. Schoolyard tit-for-tats is no way to do consenting adult politics.

Hat-tip: No Right Turn

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Big Ups to National for reversing it’s opposition to the Auckland Rail Loop.  This will be of major benefit to Auckland; improve public transport; take pressure of roads; reduce petrol consumption (and petroleum imports); create new jobs; and boost the economy. There is no downside to this major infra-structure project.

My only criticism is that National has delayed the project by three years; planning to start in 2020, rather than 2017. I see no practical reason for this delay and will only push up the cost of the project.

If it’s worthy of support by central government then it’s worthy of being initiated ASAP.

This blogger looks forward to more progressive changes to National’s policies.

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The Bain Mystery: case closed

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Bain case - Two dark lines on thumb point to father as killer

Acknowledgement: NZ Herald: Bain case: Two dark lines on thumb point to father as killer

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Last night’s (26 June) Third Degree on TV3 was as dramatic as the programme promos made out. New evidence indicates fairly conclusively that the muderer of the Bain family in 1994 was indeed – Robin Bain.

Twin carbon-streaks on his thumb are a match with the rifle’s ammo-clip.

Along with the bloodied foot-prints tracked through the Bain residence, which were closer to Robin Bain’s foot-size than David’s, this is the evidence which conclusively identifies the killer as Robin Bain.

In the US, this kind of homocide is known as the “family annihilator”, where the most common perpetrator is the father/step father/boyfriend. In a remarkably similar case  in New Zealand in 1992, a  family annihilation was committed in a  manner eerily resembling the Bain killings;

On May 20, 1992, Brian Schlaepfer, 64, shot or stabbed the family, killing his wife Jocelyn, 55, his three sons, Peter, 39, Karl, 33, and Darrell, 31. Also slain were Peter’s wife Hazel, 42, and their son Aaron, 11.

Acknowledgement: NZ Herald – Day of slaughter on family farm

It is time for Justice Minister Judith Collins to pull finger and  pay David Bain compensation. There is no logical reason to stall any longer.

Whoever is holding up this process in National’s caucus no longer has a rationale for their intransigence.

What’s it to be, Ms Collins – bouquets or brickbats?

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Winston Peters channels Orwell

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Peters blasts 'Orwellian' censorship over stand on migrants

Acknowledgement: NZ Herald – Peters blasts ‘Orwellian’ censorship over stand on migrants

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The irony of Winston Peters channelling George Orwell’s 1984 should not be lost on anyone.  Mr Peters points out that life under Orwell’s totalitarian regime of Big Brother involved absolute suppression of free speech.  The slightest murmur of dissent invited dreadful retaliation by The State.

But Mr Peters also forgot to mention that in 1984, Big Brother was able to maintain it’s iron grip over the people by means of total surveillance.

Quite simply,  in 1984 the State watched and listened to everything that people said. Everything. No one was exempt.

Which sounds remarkably like the Government Communications Security Bureau and Related Legislation Amendment Bill.

This Bill seeks to expand the powers of the GCSB to be allowed to spy on all New Zealanders.

Winston Peters is considering supporting this Bill (see:  Peters open to compromise over GCSB bill).

So, what was it you were saying about George Orwell’s 1984, Mr Peters?

Vote the Bill down, Mr Peters, vote it down. Do it for free speech; do it for privacy, and do it to keep Big Brother out of our lives.

Bouquets or brickbats?, Mr Peters?

This blogpost was first published on The Daily Blog on 28 June 2013.

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References

NZ Herald: Day of slaughter on family farm (19 May 2007)

TVNZ: Bain trial considers sockprint measurements (20 April 2009)

Fairfax media: Key ‘no GST rise’ video emerges (10 Feb 2010)

Fairfax media: Class-size backdown ‘to haunt National‘ (10 June 2012)

TV3:  Labour gone cold on GST-free food (25 March 2013)

NZ Herald: Greens ditch quantitative easing policy (19 June 2013

NZ Herald: Peters blasts ‘Orwellian’ censorship over stand on migrants (25 June 2013)

Radio NZ:  Govt to contribute to Auckland rail link (26 June 2013)

TVNZ:  Peters open to compromise over GCSB bill (26 June 2013)

NZ Herald: Bain case: Two dark lines on thumb point to father as killer (26 June 2013)

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It is 1984. It is ALWAYS 1984…

23 February 2013 6 comments

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First, the Labour government introduced the Terrorism Suppression Act 2002. This law could outlaw an organisation and declare them a “terrorist groups”.

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Facts about Terrorism Suppression Act

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Some see  Greenpeace as a terrorist organisation.

Ten years later, and National enacted the Search and Surveillance Act 2012. This law allowed the Police to search or keep citizens under surveillance, without a warrant. The Police simply had to show it was an “emergency”.

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More surveillance powers for Govt and police

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This law  allows  Police to keep someone under surveillance and search their home if they are a political dissident/protestor.

Or maybe I’m being overly dramatic?

After all, Police wouldn’t be interested in people exercising their democratic right to protest.

Right?

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Police software mines social media

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Eventually, though, the gradual demise of our privacy impacts on all of us. Even for those within the Establishment, who originally thought it was a good idea.

After all, if you’ve done nothing wrong, you have nothing to fear.

Right?

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National Party boss alleges covert filming

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As mainstream media focus and reports endless stories about crime and violence, society becomes more frightened of bogeymen just around the corner; or lurking behind bushes; or following us.

So we welcome any and all laws that successive governments give to the Police because, like children, we’re afraid of the bogeymen that the media tells us is waiting… just around the corner, or behind bushes.

Yes, crime does exist. Meteorites falling out of the sky also exist. Lotto winners exist.

So what are your chances of experiencing all three?

The way the media constantly fixates on crime – you’d think it could happen to you tomorrow.

The government could pass new laws every day of the week. Crime, however, will not go away. You probably will not be a victim tomorrow. Society will not be any more or less be any safer.

After all these laws – is it any more or less safer now?

Is the bogeyman real? Yes, he probably is.

But not today. And not tomorrow. Perhaps, for you, not ever.

But your loss of privacy is with you always.

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No more anarchy

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From Mini -True…

4 October 2012 2 comments

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… crime down – doubleplusgood!

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Full Mini-True Good News!

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Justice Minister Judith Collins said nationwide statistics showed the Government’s focus on crime was working. New Zealand’s crime rate was at its lowest since 1982 and, as a result, fewer criminal charges were laid against fewer people.

“I am particularly pleased to see fewer children and young people being charged with an offence and appearing in court – down by as much as 25% on the last year,” she said.

The rising conviction rate, up to 74% from 70% in 2008, showed good work was being done across the justice sector.

“These results are simply fantastic,” she said.

See: Prosecution numbers down

Dear Leader has achieved  his Party’s election promise,

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Memo to Mini-True scribes: delete previous inaccurate report,

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Full Mini-True Report for Deletion

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The past, he reflected, had not merely been altered, it had been actually destroyed. For how could you establish even the most obvious fact when there existed no record outside your own memory?” – “Nineteen Eighty Four”, George Orwell

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How Can A Minister of Finance Get It So Wrong???

28 February 2012 4 comments

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Five days ago, Finance Minister Bill English released a statement on the part-privatisation of several State Owned Enterprises. It is worthwhile re-printing his statement in full, and responding to it, point-by-point,

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Running up $5-$7b more debt not the answer

by Hon Bill English, Finance
23 February 2012

Opponents of the Government’s mixed ownership programme need to explain to New Zealanders why it would be better to borrow an extra $5 billion to $7 billion from overseas lenders, Finance Minister Bill English says.

Speaking to an Auckland Chamber of Commerce and Massey University business lunch today, he said the challenge was how the Government pays for forecast growth in taxpayers’ assets over the next few years.

“Taxpayers own $245 billion of assets, and this is forecast to grow to $267 billion over the next four years. So we are not reducing our assets. Our challenge is how we pay for their growth, while getting on top of our debt.”

The rationale for offering New Zealanders minority stakes in four energy companies and Air New Zealand is quite simple, Mr English says.

“First, the Government gets to free up $5 billion to $7 billion – less than 3 per cent of its total assets – to invest in other public assets like modern schools and hospitals, without having to borrow in volatile overseas markets.

“Our political opponents need to honestly explain to New Zealanders why it would be better to borrow this $5 billion to $7 billion from overseas lenders at a time when the world is awash with debt and consequent risks.

“We would rather pay dividends to New Zealanders on shares they own in the energy companies than pay interest to overseas lenders on more borrowing.

“The fact is, the Government is spending and borrowing more than it can afford into the future. So it makes sense to reorganise the Government’s assets and redeploy capital to priority areas without having to borrow more.

“Most nights on television, we see the consequences of countries in Europe and elsewhere borrowing too much. We don’t want that for New Zealand.”

Secondly, under the mixed ownership programme New Zealanders will get an opportunity to invest in big Kiwi companies so they can diversify their growing savings away from property and finance companies.

“Counting the Government’s controlling shareholding, we’re confident 85-90 per cent of these companies will be owned by New Zealanders, who will be at the front of the queue for shares.”

Thirdly, mixed ownership will be good for the companies themselves, Mr English says.

“Greater transparency and oversight from being listed on the stock exchange will improve their performance and the companies won’t have to depend entirely on a cash-strapped government for new capital to grow.

“We already have a living, breathing and successful example of mixed ownership in Air New Zealand, which is 75 per cent owned by the Government and 25 per cent by private shareholders.”

In his speech, Mr English reiterated the Government’s economic programme this term would focus on rebuilding and strengthening the economy.
It’s main priorities are:

  •     Responsibly managing the Government’s finances.
  •     Building a more productive and competitive economy.
  •     Delivering better public services within tight financial constraints.
  •     Rebuilding Christchurch.

“So there will be no big surprises from this Government,” Mr English says. “We have laid out our economic plan and Budget 2012 will focus on implementing that plan.”

Source

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Firstly, let’s call a spade, a spade here. Whilst National ministers use the euphemistic term, “mixed ownership model”, the issue here is partial-privatisation of state owned enterprises.  National’s spin-doctors may have advised all ministers and John Key to always use the phrase “mixed ownership model” – but the public are not fooled.

To begin, I take great exception to English’s opening statement,

Opponents of the Government’s mixed ownership programme need to explain to New Zealanders why it would be better to borrow an extra $5 billion to $7 billion from overseas lenders…”

Opponants of National’s part-privatisation do not “need to explain” anything. It is up to National to explain why it feels the need to part-privatise tax-payer owned corporations that are efficient and give a good return to the State.

Demanding that the  opponents of the Government’s mixed ownership programme need to explain” their opposition is the height of arrogance.  Governments in western-style democracies are accountable to the public – not the other way around.

English then goes on to say,

Taxpayers own $245 billion of assets, and this is forecast to grow to $267 billion over the next four years. So we are not reducing our assets. Our challenge is how we pay for their growth, while getting on top of our debt.”

Pardon?

“…we are not reducing our assets” ?!?!

Selling 49% of Genesis, Meridian, Solid Energy, Might River Power, Air New Zealand (from 75% to 51%) down to a 51% holding is “not reducing our assets” ?!?!

Bill English’s command of his namesake language is strange at best. I believe this is what George Orwell wrote about in his dystopian novel, “1984“, when he described “doublethink“,

To know and not to know, to be conscious of complete truthfulness while telling carefully constructed lies, to hold simultaneously two opinions which cancelled out, knowing them to be contradictory and believing in both of them…”

English laments that “our challenge is how we pay for their growth, while getting on top of our debt”.

This involves two distinct issues;

Paying for the growth of state assets.

Genesis, Meridian, Solid Energy, Might River Power,  and Air New Zealand are all profitable enterprises in their own right. In the 2010 financial year, these  assets made a combined profit of $581 million dollarsNone of these five SOEs are loss-makers.

They can each pay for whatever growth programme they require, using their profits.

Where National interfered in SOE operations, the results were highly distorted,

Genesis paid out no dividend and had a zero yield on its operating profit of $293 million.

It had a 30.5% shareholder return on total assets.

Meridian had a dividend yield of 10.4%, achieved by paying out 428.8% of its profit. The increase came from the $300 million special dividend it received during the sale of Tekapo A and Tekapo B stations to Genesis, which was forced by the Government to borrow to pay for the purchase.” – Source

The reason that there is a  “challenge [in] how we pay for their growth”  is simple: National demands high dividends from these  SOEs (often by forcing them to borrow) leaving little for the companies to reinvest in their own growth.

Under-funding is a problem only because National has created the problem.

Getting on top of debt.

Linking  New Zealand’s $18-plus billion dollar debt to funding the growth of SOEs is  deliberate sophistry (ie; a deliberate deception).

The reason we have out-of-control debt is because,

As a society and as an economy, we had no control over the first two crises to hit us.

But we sure had control over our taxation policy, and doling out generous tax cuts to millionaires and wealthy businesspeople was a luxury we could not afford. (Many maintain that National was “rewarding” certain affluent socio-economic groups for electoral support at the ballot box.)

Next. English states,

First, the Government gets to free up $5 billion to $7 billion – less than 3 per cent of its total assets – to invest in other public assets like modern schools and hospitals, without having to borrow in volatile overseas markets.

???

National appears confused (as with most of its ad hoc policies) as to the proceeds it may gain from the partial sales. Only a year ago, Key stated authoritatively,

“If we could do that with those five entities … if we can make some savings in terms of what were looking at in the budget and maybe a little on the upside you’re talking about somewhere in the order of $7 to $10 billion less borrowing that the Government could undertake.” – John Key, 26 January 2011

Then again, as recently as eleven days ago, English let slip that,

I just want to emphasise that it is not our best guess; it’s just a guess. It’s just to put some numbers in that look like they might be roughly right for forecasting purposes.  That’s an honest answer.” – Bill English, 17 February 2012

The best description of Key and English on asset part-sales: clueless.

It is also worrying that National is selling state assets to pay for  “other public assets like modern schools and hospitals, without having to borrow in volatile overseas markets“.

Every householder will tell you that if  you have to sell of your furniture; whiteware; tv, family car, to pay to maintain your home – then you are in deep financial trouble.

What National is doing is “selling the household furniture to pay for painting the house”.  Selling off assets to pay for maintenance is not sustainable – eventually you run out of stuff to sell. It is a really dumb idea.

But more than that, it indicates that National is not “earning” enough, by way of taxation revenue to pay for it’s house-keeping. If we have to borrow or sell assets to do simple things like paint schools or properly resource hospitals – then it is a fairly clear indication that taxation revenue is insufficient for day-to-day operations of public services.

It also indicates that we are paying for the 2009 and 2010 tax cuts by selling state assets.

This is not “fiscal prudence” – this is foolish profligacy.

Bill English again demands, in his speech,

Our political opponents need to honestly explain to New Zealanders why it would be better to borrow this $5 billion to $7 billion from overseas lenders at a time when the world is awash with debt and consequent risks.”

No,  Mr English. Perhaps you should “honestly explain to New Zealanders” why you believe it makes greater commerciall sense to part-sell  profitable assets that are returning a higher yield on investment, than what the government pays to borrow?


The Government is estimating a $6 billion reduction in net debt after the sale of the state-owned enterprises – but concedes the savings on finance costs will be less than what it would have booked from dividends and retained earnings if it kept them.

Treasury  forecasts released today in the Government’s budget policy statement outline the forecast fiscal impact of selling up to 49 per cent in each of the four State-owned power companies – Mighty River Power, Meridian, Genesis Energy and Solid Energy – and by reducing the Crown’s current shareholding in Air New Zealand.

They assume a price of $6 billion – the midpoint in previous estimates of a $5 billion to $7 billion sale price – and a corresponding drop in finance costs of about $266 million by 2016.

But the trade-off is the loss of an estimated $200 million in dividends by 2016 and the loss of  $360 million in forecast foregone profits in the same year.

Documents supplied today state that the overall fiscal impact of selling a partial stake in the SOEs is a reduction in net debt, but the Government’s operating balance will also be smaller, because foregone profits would reduce the surplus.” – Source


Yet, only a year ago, Bill English was forced to concede that state owned power companies were indeed, highly profitable. In fact, he was complaining bitterly about State-owned generators  “earning excessive returns”,

Generally the SOE model has been quite successful in that respect. But if you look at those returns being generated particularly out of the electricity market, the Government has taken the view that that market is not as competitive as it should be.” – Source

The State will be losing money on the deal; earning less dividends from the SOEs than the cost of borrowing. The sums simply don’t add up.

There also seems to be some confusion (no longer a surprise) as to what National intends to do with sale proceeds.

On the one hand Bill English sez he wants to reduce debt,

We are firmly focused on keeping the Government’s overall debt as low as possible and that is the most important consideration over the next few years.” – 16 February 2012

And a week later, English is spending it,

First, the Government gets to free up $5 billion to $7 billion…  to invest in other public assets like modern schools and hospitals…”  – 23 February 2012

I guess Mr English is hoping that no one is paying attention?

Further in his speech, English makes this rather candid admission,

The fact is, the Government is spending and borrowing more than it can afford into the future. So it makes sense to reorganise the Government’s assets and redeploy capital to priority areas without having to borrow more.”

And there we have it, folks: the clearest statement yet from our Minister of Finance that the partial-sale of our state assets has little to do with giving “mum and dad” investors a share in our power companies; or making them more efficient; or paying down any of our $18+ billion debt; or putting a new coat of paint on your local school – the government is desperate to raise cash because it  “is spending and borrowing more than it can afford “.

The tax cuts of 2009 and 2010 were never “fiscally neutral” as National kept insisting.

The “tax switch”  left a $1.4 billion “hole” in the government’s revenue and this is how they are attempting to “plug that hole”.

We have been conned.

The tax cuts will be funded by the sale of state assets that we, as citizens of this country, already own. And because the bulk of tax cuts benefitted the highest income earners/wealthy – who are also in a better position to acquire shares in Genesis, Meridian, Solid Energy, Might River Power,  and Air New Zealand – the transfer of wealth from low and middle income earners will be two-fold.

The legacy of John Key’s government will be to make the rich richer, and for the rest of us, we can look forward to,

  • more expensive power
  • losing half ownership of our taxpayer-created state assets
  • and the top 10% to increase their wealth even more

But, to be generous, I will leave the last word to the Hon. Bill English,

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"Would you be willing to increase the mortgage on your house to go and borrow the money to buy shares on mighty river power?" Bill English, 16 February 2012

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