America’s FIRE Economy: The secular decline in manufacturing and the rise of finance, insurance, and real estate (FIRE) is shown relative to U.S. GDP:
You can read more about it here
“The problem is that the existing RBNZ behaviour does not control inflation in the non-traded sector, it encourages debt expansion associated with asset inflation, and headline inflation remains within band only as a result of deflation in the tradeable sector. Our call for a “suite of changes” indicates that we think there is no one policy change that can cure this problem. A number of things need to be done.”
Read more over at John’s Blog
Labour’s spokesperson on Research, Science and Technology, David Shearer has branded National’s R&D voucher and grant scheme as “corporate welfare”.
Shearer says that: “Rather than the Government deciding who the winners and losers are under Dr Mapp’s new system, smart Kiwi companies – which represent New Zealand’s best chance of paying our way in the world – should be given access to the 15 per cent tax credit and allowed to get on with developing new ideas and business opportunities.
“They are the ones who know their business, who take the risks and work hard to succeed, creating jobs and investment, and ultimately economic growth. ”
“The Australian Government now has a 15 per cent tax credit almost identical to the one Labour developed, but since done away with by National. It is retrograde polices such as National’s R&D corporate welfare policy which risk seeing New Zealand fall further behind the Aussies.”
Check his full statements at Scoop
This month Bernard Hickey and Selwyn Pellett will lead free seminars in Wellington and Auckland on what is required to set the NZ economy on a path away from the precipice it faces. Find out more on the Fabian website here
Robert Scheer comments on how Paul Volcker, head of President Barack Obama’s Economic Recovery Advisory Board, summarises the root cause of the global financial crisis:
“As Volcker observed, the investment banks stopped investing in truly productive ventures and turned into “trading machines instead of investment banks,” resulting in “encroachment on the territory of commercial banks, and commercial banks encroached on the territory of others in a way that couldn’t easily be managed by the old supervisory system.”
More at www.huffingtonpost.com
The Basel III Agreement hammered out over recent months and announced a week ago is aimed at protecting economies from the sort of meltdown over 2007-2009 that brought the global financial system to the brink.
Read Gareth’s piece over at the NZ Herald
Bernard Hickey takes a look at currency, foreign ownership of assets and a general overhaul of our economic policy.
“I think we need to rethink the way we run monetary policy, the way we allow foreign ownership of assets, the way we encourage savings, the way our financial institutions are regulated and change the things we are aiming for.”
Read Bernard’s piece over at Interest.co.nz
Finally the mainstream media is waking up to the fact that you have to own your wealth generation to actually create wealth for New Zealand. It’s a simple concept but it’s amazing how long it has taken to get it into the public debate. Fran O’Sullivan correctly identifies the issues. For more on this subject watch the Beatson interview.
Gareth Morgan takes a look at how the Budget will effect the investment landscape and concludes that if the government was serious about ending our reliance on property investment then it must be given a fail mark on that score:
“And we are left more than ever with the tax regime and its application to investment, giving investors little choice but to either surrender sovereignty over their savings to some faceless institution, or to opt out of the wider investment market and just buy property.”
Read Gareth’s piece over at the NZ Herald
Gareth Morgan outlines just why residential property investment is costing us dollars in terms of tax and missed opportunities:
“So why, if residential property investment is taxed the same as shares or any other business, is it a tax rort? If you were to include capital gains in the profit measure you would instantly see that residential landlords aren’t running at a loss at all – their core business is capital growth.
And that of course isn’t taxed. So the root of the problem is that capital growth in property is by far the main component of the “profit” line of this business and it’s not taxed.”
Read the full article over at The NZ Herald