The Wall Street financial crisis is another indicator of a very good reason we should not let Mr Key and Mr English near the nation's purse strings and especially why we should not let them touch ACC. They want to throw ACC open to competition effectively letting the insurance industry in to give cover to our workers. But what happens when the insurance company goes belly-up? Recent history has shown that insurance comapnies are not fail-proof. The biggest insurance company in the world is in serious trouble. If a significant section of our workforce were covered by a private insurance company that was not able to meet its obligations who would care for our injured workers and their families. Would a Key lead government bail out the insurance company (corporate welfare) would it reinstate ACC (yeah right!) The tax payer would be left with the bill and following the next election a Labour-led government would left to clean up the mess. let's short cut that possibility by keeping the labour government in.
The Council of Trade Unions is challenging National leader John Key to state whether he is still in favour of privatising accident compensation, following the US government bailout of insurance giant AIG.
National leader John Key said all of ACC could eventually be opened to competition
Mr Key said National would "investigate" whether to let private providers compete in ACC's workplace and self-employed accounts, and other areas, such as cover for motorists, could also be opened up. (Dom Post, 17 Jul 2008)
Helen Kelly (CTU president): "The last time National let the private insurance industry loose on our accident compensation one of the providers, a subsidiary of HIH Insurance which had up to 40 percent of workplace cover, went bust with losses of around $1 billion. Fortunately by the time of their collapse the government had renationalised the scheme."
"The bailout of AIG sends a strong warning to voters - National wants our accident compensation and rehabilitation managed by firms just like these ones."
"No one wants this ACC privatisation policy - health professionals, workers and the business community have said there is no appetite for change."
"National has ignored the evidence from PricewaterhouseCoopers which noted ACC was a world leader, and they are continuing with their plans to privatise it. We don't think workers' health and safety is worth the risk," (CTU, 18 Sep 2008)
Mr Key and Mr English are demonstrating that they are not capable of leading the country. They are idealogues trapped in the 1990's user pays, and 19th century free market philosophy. They put workers rights at risk, they put the best ACC scheme in the world at risk. They intend to raise our vulnerability to the international market by increasing our government foreign debt to pay for tax cuts - hey but they sounds like the topic for another post....
Thursday, September 25, 2008
Merrill Lynch Credentials
National leader John Key recently cited his work experience at investment bank Merrill Lynch as a the kind of experience that suited him to be PM.
Key was a top money trader at the bank before he entered politics. While to some extent that is history and he can't be blamed for that company's difficulties neither should we accept that this experience is good for the country. It is the high risk, short term, make-money-at-whatever-cost mentality of such banks that got them into trouble and will get NZ in trouble if we follow the same strategy. The only credentials that Merrill Lynch offers John Key is the fact that he has the same DNA as investment bankers, he is wired in the same way, he has the same primary motivation and if allowed to lead the country will head us on the same precarious path. And if i may add another metaphor to my colourful mix "a leopard can't change its spots".
As Micheal Cullen said just last week
"He [Key] has got a short-term profit-maximising mentality, and that is what has brought Merrill Lynch and Lehman Brothers . . . to their knees. Do you want someone like that running the New Zealand economy when we are going to be going through a difficult period?" (Press, 17 Sep 2008)
Key was a top money trader at the bank before he entered politics. While to some extent that is history and he can't be blamed for that company's difficulties neither should we accept that this experience is good for the country. It is the high risk, short term, make-money-at-whatever-cost mentality of such banks that got them into trouble and will get NZ in trouble if we follow the same strategy. The only credentials that Merrill Lynch offers John Key is the fact that he has the same DNA as investment bankers, he is wired in the same way, he has the same primary motivation and if allowed to lead the country will head us on the same precarious path. And if i may add another metaphor to my colourful mix "a leopard can't change its spots".
As Micheal Cullen said just last week
"He [Key] has got a short-term profit-maximising mentality, and that is what has brought Merrill Lynch and Lehman Brothers . . . to their knees. Do you want someone like that running the New Zealand economy when we are going to be going through a difficult period?" (Press, 17 Sep 2008)
Wednesday, September 17, 2008
Tuesday, September 16, 2008
Another bank bites the dust!
Another American bank falls over and Alan Greenspan of the Federal reserve says it is a 'correction in the market' the like of which happens about every 50 or 100 years. It is the worst correction since the 1929 stock market crash which lead to the Great Depression. In NZ finance companies are toppling over at record rates. Investors have lost millions and house prices have slumped. Is this just what you have to put up with in a free market economy or is it a sign that the free market actually needs some regulation and intervention?
There is a common factor in all of this and its the old deadly sin of greed. It is greed that causes banks to make ridiculous loans to people who can not afford them. Its greed that drives consumer demand for high interest rate returns and high risk investments. Its greed that causes people to speculate on the property market pushing house prices to extraordinary levels. No doubt greed will be a factor as people now seek to take advantage of other peoples misfortunes, in lawyers fees for extended legal battles, mortgagee sales, and further speculation in the property market. Its a high risk game with few winners and lots of losers. Free market capitalism is a natural ally of human greed and for this reason alone we need a third way in the economy that allows for enterpise and industry to be rewarded but greed to be kept in check.
There is a common factor in all of this and its the old deadly sin of greed. It is greed that causes banks to make ridiculous loans to people who can not afford them. Its greed that drives consumer demand for high interest rate returns and high risk investments. Its greed that causes people to speculate on the property market pushing house prices to extraordinary levels. No doubt greed will be a factor as people now seek to take advantage of other peoples misfortunes, in lawyers fees for extended legal battles, mortgagee sales, and further speculation in the property market. Its a high risk game with few winners and lots of losers. Free market capitalism is a natural ally of human greed and for this reason alone we need a third way in the economy that allows for enterpise and industry to be rewarded but greed to be kept in check.
Wednesday, September 10, 2008
ACC the Tail
I submitted the following to the ODT on 7/9 in reply to a letter in which VE Lamb welcomed the move to privatise ACC, supposing that it would benefit small business who were currently paying for the tail.
Your correspondent V E Lamb (5/9) raises the issue of what is commonly called 'the tail' in the ACC scheme. During the nineties levies were set too low and the scheme ran at a loss. Now this deficit is being made up in part by employer contributions. The tail is one of the ways that we are still paying for the follies of the last National government when they privatised ACC. The tail has to be paid for one way or another. V E Lamb seems to think that privatisation under National is the way ahead. All that will do is shift the cost of the tail to the tax payer (say good bye to your tax cuts) and shift $200 million dollars off shore to benefit Australian insurance companies. Under the current system employers pay their share. Workplace accident insurance is a reasonable cost that is passed on to the consumer anyway. A temporary reduction in ACC fees is possible under a National scheme but at the cost of reduced worker entitlements, more time off work to recover from accidents and less safe work places.
Your correspondent V E Lamb (5/9) raises the issue of what is commonly called 'the tail' in the ACC scheme. During the nineties levies were set too low and the scheme ran at a loss. Now this deficit is being made up in part by employer contributions. The tail is one of the ways that we are still paying for the follies of the last National government when they privatised ACC. The tail has to be paid for one way or another. V E Lamb seems to think that privatisation under National is the way ahead. All that will do is shift the cost of the tail to the tax payer (say good bye to your tax cuts) and shift $200 million dollars off shore to benefit Australian insurance companies. Under the current system employers pay their share. Workplace accident insurance is a reasonable cost that is passed on to the consumer anyway. A temporary reduction in ACC fees is possible under a National scheme but at the cost of reduced worker entitlements, more time off work to recover from accidents and less safe work places.
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