Oct 18, 2008

Everyone Must Read This

Why did it take the NZ Herald until almost midday to post the most sensational and important article written in New Zealand this year on its website and why is it still incredibly difficult to find?

Why is Fran O'Sullivan's article today so sensational? Because she has the guts to tell the truth.

What is the truth? That the banks are being forced by the Government's incompetence or scheming to ration funds and stall the economy.

Why would the Government want to do this?

The political calculation will be feral. At issue is whether Clark and Cullen _ two extremely skilful political strategists _ are manufacturing a mini-crisis which will cement them as leaders in the voters' eyes if they come to the party (again) before the election by issuing an inter-bank guarantee to keep "Kiwis in business".
Labour will have observed how British Prime Minister Gordon Brown came off his political deathbed to emerge as a hero in Churchillian mode by bailing out the British banks. Clark and Cullen know from experience how former Labour finance minister Sir Roger Douglas was able to set the agenda after the 1984 election when he had to act to stem a currency crisis.
Experienced politicians welcome crises for that reason.

Remember Fran is not writing in a blog, this was published this morning in New Zealand's leading newspaper.

Why are Key and English not taking the Government on over this?

National leader John Key and finance spokesman Bill English, who know the real story, are too spooked that Labour will attack them for fear-mongering to go public.

Why has Bollard not said something?

Reserve Bank Governor Alan Bollard must openly tell the Government to stop playing politics and guarantee the trading banks' foreign funding lines, before they ration lending and stall the New Zealand economy.
If Bollard can't summon the courage, he should resign. Because there is little more than a three-month window before trading banks put the clamps on new loans and tighten conditions to existing customers.

So far, this Government has reduced Bollard to a well-paid eunuch as it announces policies for political effect on the election campaign trail, instead of forming a statesmanlike response to the international crisis.
The central bank has let it be known, in elite circles, that it was not fully in the loop last weekend as senior Labour Cabinet ministers talked with their Australian counterparts over the guarantees they would offer to shore up their respective financial systems.

Bollard was told this by the bankers in a series of private tete-a- tetes about 10 days ago.
He is paid big bucks as the nation's top central banker. Time to tell the public the truth.

Are you really saying that the Herald has printed an article saying that the Government knows that the banks have only 3 months of funding left and that they are keeping this from the public so they can win the election by arranging a crisis just before polling day?

Neither Prime Minister Helen Clark nor Finance Minister Michael Cullen is telling the voting public this vital truth. Instead they are allowing voters to be lulled into a false sense of security through Clark's announcement that the Government has acted to keep depositors' savings safe and avert any panic withdrawals.

The full article is here...