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Posts Tagged ‘New Zealand Sovereign Credit Ratings’

“Less Debt and Lower Interest Rates” – Really?

2 November 2011 2 comments

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National’s “statement of intent” for “less debt and lower interest rates”  on one of their billboards,

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It would be a laudable goal, if National’s track record was not somewhat different,

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Our recent double down-grade by Standard & Poors and Fitch will eventually flow into our mortgage rates. Bill English guesses that the amount could be “as little” as “about one-tenth of a per dent” – but of course, he’s guessing.

Whilst National is alleging that Labour will be borrowing to fund it’s policies, the fact is that National has already borrowed $18.4 billion,

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This is borrowings made up, in part, because we could ill afford two tax cuts cuts which gave up to $1,000 a week for someone on a salary similar to John Key’s.

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In fact, National has cut taxes to such a level that they are now having to part-sell State assets to pay for day-to-day maintenance of schools, hospitals, etc. This is not good fiscal  “housekeeping”.

Put another way, it would be like a Courier selling his/her van, to buy groceries and pay other bills. The courier will have enough money – for a while. After that, the money runs out and the Courier is left with no money and no means to earn an income.

This is not sustainable lontg-term. It is a desperate attempt for National to find money it does not have. Otherwise it will have to simply borrow more… or undo it’s 2009 and 2010 tax cuts.

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John Key’s foot-in-mouth syndrome

16 October 2011 3 comments

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In Parliament last week (4 October), John Key quoted a mysterious, anonymous, “email” which he daid  “inferred”  that, “when Standard and Poor’s was giving a meeting in New Zealand about a month ago, what it did say was that there was about a 30 percent chance that we would be downgraded. That is what happens when one is on a negative outlook. It did go on to say, though, that if there was a change of Government, that downgrade would be much more likely.”

However, a quick glance at the official government website, the NZ Debt Management Office not only doesn’t support that claim – but actually shows the reverse: Labour  actually RATES BETTER than National/Rogernomics governments.

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[Click on image for full size version]

Source

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Note that three credit downgrades happened duting three National governments; 1991, 1998, and this year. And if you include the Rogernomics period – that makes FOUR neo-liberal governments that were downgraded.

Do credit ratings agencies  seem “risk averse” to new right governments? Do they prefer centre-left governments?

First, look at 10 September 1998 (National government) – AA+ (negative outlook)

But when Labour came to power – 7 March 2001 – AA+ (stable outlook)

Stable outlook?!

Nah, must be a mistake. Let’s have another look at a following period…

6 August 2008  (Labour Government) – AA+ (stable outlook) re-affirmed

“Reaffirmed”?!

Well, bugger me! It  rather does seem that credit agencies look favourably upon  centre-left government policies rather than centre-right administrations.

Whoda thunk?!

John Key – wrong again. It’s rather getting to be a habit with the ‘infallible’ Dear Leader.

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Reference Sources

Hansards – 1. Credit Rating Downgrade—Effect on New Zealand Economy

NZDMO – New Zealand Sovereign Credit Ratings

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