OK Guyon, John, Vernon and Tracy might not understand it, but how about a Professor of Finance and Economics at Victoria University? This came through from Professor Roger Bowden yesterday, but we missed it (possible because it arrived at 11:29 pm :
But as to all of this, I do not think that the government, of whatever ilk, should lose their nerve. If there is to be a slow down, then we need countercyclical action, not to make things worse by cutting back willy nilly. I think the Nats are on the right track with infrastructure spending, which primes the short term pump and helps with long term productivity. Moreover, it’s perfectly justifiable to finance it by issuing long term debt. Even if the Prefu was right and we end up with 26% against GDP, the comparable prudential figure for the EU is actually 60% or for the Poms 40%. But there we are: after the Muldoon years, public debt is a dirty word here in NZ, and such fears die hard.
