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Political Friday: a tumblin down

We have a "rock star" economy.

Or so the government has been keen to tell us.

A high Kiwi dollar has meant that imports have been cheap so Kiwis have stocked up on new cars, flat-screen TVs, smartphones, tablets and enjoyed affordable overseas holidays.

The same high dollar has meant that although oil prices remain high, we've been insulated from such things and this has kept input costs low for local industries.

The cost of servicing overseas debt has been trivial, thanks to low interest rates and the stunningly high Kiwi dollar.

All of this was however, a case of riding on the cow's back at a time when dairy prices were at record highs.

Now savvy management would have realised that such things are cyclic and sooner or later, dairy prices would fall, perhaps significantly. That same management would, in anticipation of such an event, not simply sat on its fat arse and acted hedonistic ally. It would instead have taken advantage of "the good times" to invest heavily in diversification within the NZ export sector -- ramping up other types of industries that could pick up the slack when the milk price fell.

Events of the past few weeks and months clearly indicate that we don't have savvy management at the helm of the good ship the SS GodZone.

Dairy prices have fallen -- and not just a little but -- they're in steep decline with no hint of recovery.

This has meant that the NZ dollar is also in steep decline, having fallen from US$0.88 to US$0.78 in a surprisingly short space of time.

Watch now as fuel prices start to soar -- a cost that will be passed on to consumers on just about every product or service traded in this country.

Watch as the price of other imports also starts to head skywards, putting strain on the average Kiwi's household budget and squeezing business profit margins.

So where are the new industries waiting in the wings to take up the slack and keep NZ's rock-star economy humming?

Missing in action -- that's where.

While the decision-makers have been standing around patting each other on the back and congratulating themselves on what a stunningly good job they've done of economic management -- the rug is being pulled out from under their feet.

Of course the sudden decline in our rock-star economy will be attributed to factors beyond their control, as it always is.

I love the way that politicians are quick to claim the bouquets when international market forces make us look good but are even quicker to deny any responsibility and blame those same market forces when things go bad.

The reality is that our economy is not so much "managed" as patted-at by our political masters.

Perhaps it's the very short (3 year) political term that sees very little in the way of long-term strategic planning on the part of our governments. It seems they can look no further ahead than the next election -- and that costs this nation very dearly. A succession of short-term strategies is no match for a well developed longer-term strategy which is why NZ seems to be unable to weather the storms created by fluctuations in the global economy.

Many economists are now predicting a far less rosy outlook for NZ's economy over the next few years and it's hard to disagree with them.

An economy in decline is a very bad thing for more reasons than immediately spring to mind.

Seasoned politicians know full well that the best thing to take voters minds off the fiasco that is a poorly run economy is a well-conceived "crisis". Hey, I know... let's pretend that the nation is under threat from terrorists!

The government can play up the threat to the point where people are more worried about their safety than buying a new car or flat-screen TV. Such a crisis also allows the passage of draconian new laws that can also be used to suppress dissent within the ranks (such as the ones just passed in Australia)

But am I worried?

Hell no! Thanks to prudent government investment of taxpayers' dollars, we have the Martin Jet Pack to save us ;-)

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