While the new Zealand mainstream news holds the mirage of economic recovery dangling in front of our faces perhaps it pays to read this analysis from former assistant treasurer under Reagan and former Wall street editor Paul Craig Roberts.
It is important to remember that New Zealand like the US is a service and consumer driven economy and other that dairy, Beef and wood does not produce a lot more to sell.
Tourism is only as good as the global economy and will dry up when America and Europe collapse. China will spend it’s money at home and also go down because they are completely dependent on the consumerism of the US population. Their own population will impoverish to the point of almost medieval proportions and even if they recover it will be at least ten years for that to happen.
Americans cannot get any truth out of their government about anything, the economy included. Americans are being driven into the ground economically, with one million school children now homeless, while Federal Reserve chairman Ben Bernanke announces that the recession is over.
The spin that masquerades as news is becoming more delusional. Consumer spending is 70% of the US economy. It is the driving force, and it has been shut down. Except for the super rich, there has been no growth in consumer incomes in the 21st century. Statistician John Williams of shadowstats.com reports that real household income has never recovered its pre-2001 peak.
The US economy has been kept going by substituting growth in consumer debt for growth in consumer income. Federal Reserve chairman Alan Greenspan encouraged consumer debt with low interest rates. The low interest rates pushed up home prices, enabling Americans to refinance their homes and spend the equity. Credit cards were maxed out in expectations of rising real estate and equity values to pay the accumulated debt. The binge was halted when the real estate and equity bubbles burst.