Another stock market crash coming?

One day in October 1929 the stock market suddenly went into a catastrophic
plunge. The resulting economic depression saw millions of people across the west struggling to feed and clothe themselves and their children. Farmers walked off farms in places like Oklahoma, that then proceeded to be ravaged by dust storms of particular ferocity. It also enabled the rise of dictators like Adolf Hitler who seized on Germany’s ill fortune to push extremist agenda’s that would ultimately prove horrendous.

89 years after the 1929 crash, with notable crises or severe corrections in 1987 and 2008 is it possible that another is looming?

Possibly. When the 2007-09 crisis ended, legislation.was being pushed through Parliaments and national Houses of Representatives world wide. It was an attempt to ensure that the appropriate legislation would have time to be passed by Parliament seeking to address those concerns knowing a contentious debate about anything that may entail restrictions or negative attitudes is likely to follow.

New Zealand should not fool itself. A large scale collapse would affect all economic sectors. Tens of thousands of jobs in New Zealand could be potentially wiped out by the collapse.

As was the case in the 1930’s a new collapse with prolonged depression could give rise to a new generation of hardline politicians and/or dictators. The key players however are already firmly entrenched.

The conditions are favourable. The key conditions in the United States that contributed to the Global Financial Crisis of 2007-09 include:

  • Reserve Bank failing to check toxic mortgages
  • Massive corporate governance breakdown
  • Powerful mix of debt and risk by a large number of households and Wall Street
  • Policy makers inability to.understand what was happening and how to fix it
  • Massive failure of public and private accountability

Attempts to rein in the banks were introduced under President Barak Obama. The reforms that were enacted by Chris Dodd and Barney Frank were meant to check the conditions that led to the 2007-09 Global Financial Crisis. They have been systematically under cut by President Donald Trump. On 24 March 2018 much of the gains that were made by the passage of the legislation that Mr Dodd and Mr Frank put their name to were undone by the Financial CHOICE Act.

New Zealanders need to spread their savings across multiple sources, so that their exposure to undue risk is mitigated. Although New Zealand banks are more transparent than American banks, they are lacking in corporate oversight. Between 01 January 2006 and 01 January 2013, 67 financial institutions failed in New Zealand between 2006-2010 costing New Zealanders more than N.Z.$9 billion in savings that they thought were secure.

What have New Zealand institutions done to reduce the likelihood of further collapses in the future and improve the chances of recovering the losses? Not very much. I cannot recall any regulatory checks and balances being put in place that ensure savings are not being squirreled away.

What new tools and ideas does the Reserve Bank have for dealing with the challenges a stock market crash, post Global Financial Crisis? Shamubeel Eaqub, an economist, painted a grim picture in 2017 of how well prepared New Zealand banks are.

It honestly seems like a really radical idea, and possibly one that would not work in New Zealand. When Iceland suffered the Great Financial Crisis like other western countries it decided that enough was enough, and that the banking sector was going to get a lesson. The bad players were arrested, tried and jailed. Whilst the rest of Europe wallowed in recession or very little growth, Iceland began to recover in a way that surprised many.

How could New Zealand learn from these experiences?

Technology regulation in New Zealand needs overhaul

Many of you might have watched Terminator movies when you were kid. For those deprived of what was essential viewing for my generation, they were about the remnants of humanity versus intelligent machines created by Skynet which posed a threat to the human race. These movies were science-fiction at its finest. But 30 years after the first one, killer robots are not so far fetched now as we thought.

It is not just killer robots – more on that later – but also the misuse of drones, which have many practical military and civilian uses, around airports and the rise of the sexual robot that have raised concerns. A mixture of security, ethical and safety issues have arisen at a speed that New Zealand politicians seem to have been caught flat footed.

New Zealand politicians have been slow to catch on to the growing threat for example posed by the use of drones and lasers around airports. Not a month goes by without drones and/or lasers being implicated in a potentially dangerous act that could have brought down an aircraft. A few weeks ago drones held up or forced the diversion of aircraft at Auckland Airport for over an hour. Other instances have included interference around Christchurch Airport by people with lasers.

Whilst progress is being made in tackling the interference of aircraft by people wielding lasers, this is not the case with drones. In the case of lasers, criminal prosecutions have been brought against several people, which has sent a message that this is criminal activity that can be traced.

Drones pose a bigger risk. They can be made to hover for long periods of time, move randomly with the pilot having no chance to react in time and their physical mass is large enough that it would cause substantial damage to a plane. Coupled with the restrictions placed on aircraft flight paths around airports, the potential to cause a major civil aviation incident is very real.

It is time to ask questions of how appropriate sexual robots are. These are predominantly female gendered robots that imitate sexual favours being performed. As robots have no concept of ethics, given the just alarm over sexual violence, how appropriate is it for a person to act out their fantasies on a robotic being that cannot say no or physically reject inappropriate conduct. Without appropriate checks on what sort of functions a robot can and cannot perform, is technology lending itself inadvertently to some of the darkest and most dangerous of control over a human being?

But the most dangerous robotic menace are potential murder drones or killer robots that might open fire or otherwise use lethal force against a human being. The artificial intelligence race means that robots with a degree of humanoid intelligence already exist. This is not just a concern of mine, but a concern of human rights organizations such as Amnesty International and Human Rights Watch. Numerous countries are already calling for a ban of such technology and point to the certainty that rogue states such as – but not limited to – North Korea might get hold of it and would be most certain to use it against rivals.

Overhauling regulation does not necessarily mean bringing in a raft of new laws, although that will definitely be necessary in dealing with some types of technology. It might well be that existing laws are fine, but just need updating. In the case of drones for example new regulations will be necessary, including licensing, fines and operating compliance with the Civil Aviation Authority rules.

Lest we forget

Over the last four years a project nationwide has been underway to graphically illustrate the cost of World War 1 to New Zealanders. For each year the war raged the same number of crosses as New Zealanders who died in the war in that year is represented. Each year they added that years to the previous year. When the total is added up in Auckland in November for Armistice Day there will be 17,000 crosses including 4,000 from Canterbury.

Some of the 4,000 crosses in Cranmer Square. PHOTO: R. GLENNIE


Of gays and Freedom of Speech

Over the last week a raging storm has been in progress in rugby. No, it wasn’t the one that pounded the Canterbury Crusaders with heavy, rain and hail on Saturday night – audibly and visually spectacular as it was – so much as one kicked off by the comments of Australian rugby player Israel Folau about gays and hell.

But just as an atmospheric storm does, this has sucked in unstable air from across the board – politicians, Pastors, rugby bosses, fellow players and former All Black Sir Michael Jones have all jumped into the debate. Some of them have sought to fuel the storm. Some have attempted to calm the storm

Mr Folau, a Christian by faith, stated that Gods plan required people to repent their sins or be prepared to suffer for eternity. His statement went onto say that he thought gays would go to hell unless they repent of their sin and turn to God.

Mr Jones, a devout Christian himself perhaps spoke the wisest words of anyone so far. He acknowledged Mr Folau’s right to his opinion with grace, but then pointed out that with an opinion that might be divisive such as this, one must temper it with love and respect for the other person. As a newly elected Board member of New Zealand Rugby, a place that has had some rather unfortunate brushes with issues of sexism and sexuality, Mr Jones would have been seeking to look after N.Z.R.’s best interests when seeking to moderate the tone.

Wise words. Much more intelligent and gracious than those that were uttered by Pastor Brian Tamaki. Mr Tamaki, whose anti-LGBTQ views are widely seen as divisive, inflammatory, and in some quarters, degrading made use of the hash tag #CryBabyGays highlight on social media his problem with the LGBTQ community.

But there are also very credible reasons for showing concern about the impact this debate and Mr Folau’s words has on people of poor mental state, especially those who might have harboured suicidal thoughts or showing symptoms of depression. Nigel Owens, a widely respected international rugby referee, who is openly gay told media that he had fought his own demons in the 1990’s when realizing what his sexual orientation was. It came a head with him considering suicide in 1996.

Labour Member of Parliament for Manurewa and former Black Fern Louisa Wall spoke out against Mr Folau’s commentary. As the author of the Same Sex (Definition of Marriage)Amendment Act, 2013, Ms Wall believes they are dangerous and send the wrong messages to people struggling with sexual identity issues. Ms Wall goes on to say that rugby contracts between player and club should have a clause in them forbidding bringing the game into disrepute.

I personally have no problems with Mr Folau having an opinion. Anyone is entitled to one. But with an opinion as Mr Jones noted, one needs to be aware of its potential for negative impact and a willingness to make utterances with respect and grace.

This particular thunderstorm is going to rumble on for a while longer yet. More politicians and other identities on the social landscape of New Zealand and Australia might yet jump in with their own views of what is going on.

Across the Tasman Sea, Australian rugby might be sharpening the knives, but who are they sharpening them for? They should not be sharpening for Rugby Australia Chief Executive Raelene Castle who through no fault of her own finds her tenure plunging headlong into a socially and professionally explosive issue. If they are sharpening for the scalp of Mr Folau, it might be remembered that to his considerable credit he did offer to quit the sport that he no doubt loves and has until now represented Australia with great skill in.


Contrary to National’s belief fossil fuels are not dead – YET

Contrary to the belief of the National Party, the Government has no plans for a ban on coal. Part of this is pure necessity, ensuring that during dry seasons in the hydro-electric catchments where rains have failed to keep the hydroelectric storage lakes of the lower South Island and the Waikato power scheme topped up, the Huntly power station can still be started. It runs on coal and gas.

Part of the absence of a ban also rests on an acknowledgement that there is still a demand for New Zealand coal overseas, especially in China and Japan, with coal mining making up a significant part of the West Coast economy. The railway line from Ngakawau, north of Westport down to where it meets the Trans Alpine line is largely paid for by coal coming out of mines in this area.

There are other things that can be done first before any ban include:

  • No longer mining lignite or sub-bituminous coal which has a higher sulphur conent and releases
  • Focus on bituminous and anthracite coal which burn better

Power stations at Whiranaki in Hawkes Bay and Stratford in Taranaki are diesel fuel and natural gas based operations, respectively, that have installed capacity of 360 megawatts. Like Huntly, these are normally held in reserve unless there is a dearth of hydroelectric power available.

Contrary further to the National Party’s claims of fossil fuels being banned in the near future, Minister of Energy Megan Woods has stated that she can see oil and gas still being used in 50 years time. The reason for this is simple. National has ignored the finer print of the message and claimed that oil and gas will stop quickly, whereas the ban only exists on new exploration.

The claims made by New Zealand Gas have been completely dismantled by economic commentator Rod Oram. Among some of the rebuttals were:

  • Having the right geology – whilst true of Taranaki, it cannot be so easily said for the Canterbury Bight
  • The economics would suit New Zealand – actually the U.S. is becoming a major exporter, and the cost of selling N.Z. product at a price beneficial to both customers and shareholders alike is not likely to suitable
  • The fisheries will be okay – New Zealand has superb fisheries that are the envy of many nations, which is one of our biggest comparative advantages
  • The environment can survive an oil spill – The moves to protect the Southern Ocean fisheries aside, National slacked off in a big way on affording our marine environment the protection it badly needs and did not seem to think our capacity for dealing with an oil spill needed overhauling
  • No need for alternative sources – biomass is slowly becoming more popular; substantial research is going into other alternative energy sources, meaning the decline of gas is in some respects natural

Whilst it is true there is still an immediate future for fossil fuels, the long term outlook strongly suggests something approaching a gradual yet nearing terminal decline. New Zealand and the world are moving on, and at some point, N.Z. Gas will have to accept this.