29 Sep 2014

Th Austerity Disaster and its impact - Lessons for New Zealand? (From Social Europe)

Europe’s Austerity Disaster

Joseph Stiglitz, Austerity Disaster
Joseph Stiglitz
“If the facts don’t fit the theory, change the theory,” goes the old adage. But too often it is easier to keep the theory and change the facts – or so German Chancellor Angela Merkel and other pro-austerity European leaders appear to believe. Though facts keep staring them in the face, they continue to deny reality.
Austerity has failed. But its defenders are willing to claim victory on the basis of the weakest possible evidence: the economy is no longer collapsing, so austerity must be working! But if that is the benchmark, we could say that jumping off a cliff is the best way to get down from a mountain; after all, the descent has been stopped.
But every downturn comes to an end. Success should not be measured by the fact that recovery eventually occurs, but by how quickly it takes hold and how extensive the damage caused by the slump.
Viewed in these terms, austerity has been an utter and unmitigated disaster, which has become increasingly apparent as European Union economies once again face stagnation, if not a triple-dip recession, with unemployment persisting at record highs and per capita real (inflation-adjusted) GDP in many countries remaining below pre-recession levels. In even the best-performing economies, such as Germany, growth since the 2008 crisis has been so slow that, in any other circumstance, it would be rated as dismal.
Austerity has been an utter and unmitigated disaster, which has become increasingly apparent as European Union economies once again face stagnation.
The most afflicted countries are in a depression. There is no other word to describe an economy like that of Spain or Greece, where nearly one in four people – and more than 50% of young people – cannot find work. To say that the medicine is working because the unemployment rate has decreased by a couple of percentage points, or because one can see a glimmer of meager growth, is akin to a medieval barber saying that a bloodletting is working, because the patient has not died yet.
Extrapolating Europe’s modest growth from 1980 onwards, my calculations show that output in the eurozone today is more than 15% below where it would have been had the 2008 financial crisis not occurred, implying a loss of some $1.6 trillion this year alone, and a cumulative loss of more than $6.5 trillion. Even more disturbing, the gap is widening, not closing (as one would expect following a downturn, when growth is typically faster than normal as the economy makes up lost ground).
Simply put, the long recession is lowering Europe’s potential growth. Young people who should be accumulating skills are not. There is overwhelming evidence that they face the prospect of significantly lower lifetime income than if they had come of age in a period of full employment.
The European economy is still in major trouble and the policy direction is making matters worse, according to Joseph Stiglitz.
Meanwhile, Germany is forcing other countries to follow policies that are weakening their economies – and their democracies. When citizens repeatedly vote for a change of policy – and few policies matter more to citizens than those that affect their standard of living – but are told that these matters are determined elsewhere or that they have no choice, both democracy and faith in the European project suffer.
France voted to change course three years ago. Instead, voters have been given another dose of pro-business austerity. One of the longest-standing propositions in economics is the balanced-budget multiplier – increasing taxes and expenditures in tandem stimulates the economy. And if taxes target the rich, and spending targets the poor, the multiplier can be especially high. But France’s so-called socialist government is lowering corporate taxes and cutting expenditures – a recipe almost guaranteed to weaken the economy, but one that wins accolades from Germany.
The hope is that lower corporate taxes will stimulate investment. This is sheer nonsense. What is holding back investment (both in the United States and Europe) is lack of demand, not high taxes. Indeed, given that most investment is financed by debt, and that interest payments are tax-deductible, the level of corporate taxation has little effect on investment.
The hope is that lower corporate taxes will stimulate investment. This is sheer nonsense. What is holding back investment (both in the United States and Europe) is lack of demand, not high taxes.
Likewise, Italy is being encouraged to accelerate privatization. But Prime Minister Matteo Renzi has the good sense to recognize that selling national assets at fire-sale prices makes little sense. Long-run considerations, not short-run financial exigencies, should determine which activities occur in the private sector. The decision should be based on where activities are carried out most efficiently, serving the interests of most citizens the best.
Privatization of pensions, for example, has proved costly in those countries that have tried the experiment. America’s mostly private health-care system is the least efficient in the world. These are hard questions, but it is easy to show that selling state-owned assets at low prices is not a good way to improve long-run financial strength.
All of the suffering in Europe – inflicted in the service of a man-made artifice, the euro – is even more tragic for being unnecessary. Though the evidence that austerity is not working continues to mount, Germany and the other hawks have doubled down on it, betting Europe’s future on a long-discredited theory. Why provide economists with more facts to prove the point?

The Damage Fallacies of Neo-Liberal economics cause

The on-going and recent scandals (Judith Collins & Oravida, Maurice Williamson & Donghua Lui, John Key & Dirty Politics....)  in New Zealand that have swirled around the neo-liberal National Party government of Key, supported by the discredited political parties of ACT and United Futures, with a combined total of 18000 nation wide, and the Maori Party did not prevent their re-election in the September election. The result is still being analysed and the fall-out worried over by those on the Left of the political spectrum. However, I think that this article in The Guardian best explains why, despite the National Party offering no visible policy direction for New Zealand except for a "steady as she goes...don't rock the boat" campaign which, late in the campaign, held out the possibility of tax cuts in 2017 the electorate cast their Party vote for National.

The description of the personality that dominates the Neo-Liberal society is an exact description of those, like Key, Joyce, Collins, and Bennett, who are now stitching up deals with the "support parties"  like ACT and United Futures to consolidate the striping of the State we have seen since 2008.

Neoliberalism has brought out the worst in us

An economic system that rewards psychopathic personality traits has changed our ethics and our personalities

City of London and Canary Wharf
'We are forever told that we are freer to choose the course of our lives than ever before, but the freedom to choose outside the success narrative is limited.' Photograph: Lefteris Pitarakis/AP
We tend to perceive our identities as stable and largely separate from outside forces. But over decades of research and therapeutic practice, I have become convinced that economic change is having a profound effect not only on our values but also on our personalities. Thirty years of neoliberalism, free-market forces and privatisation have taken their toll, as relentless pressure to achieve has become normative. If you’re reading this sceptically, I put this simple statement to you: meritocratic neoliberalism favours certain personality traits and penalises others.

There are certain ideal characteristics needed to make a career today. The first is articulateness, the aim being to win over as many people as possible. Contact can be superficial, but since this applies to most human interaction nowadays, this won’t really be noticed.

It’s important to be able to talk up your own capacities as much as you can – you know a lot of people, you’ve got plenty of experience under your belt and you recently completed a major project. Later, people will find out that this was mostly hot air, but the fact that they were initially fooled is down to another personality trait: you can lie convincingly and feel little guilt. That’s why you never take responsibility for your own behaviour.

On top of all this, you are flexible and impulsive, always on the lookout for new stimuli and challenges. In practice, this leads to risky behaviour, but never mind, it won’t be you who has to pick up the pieces. The source of inspiration for this list? The psychopathy checklist by Robert Hare, the best-known specialist on psychopathy today.

This description is, of course, a caricature taken to extremes. (Hardly, sounds exactly like those at the head of the NZ National Party.)  Nevertheless, the financial crisis illustrated at a macro-social level (for example, in the conflicts between eurozone countries) what a neoliberal meritocracy does to people. Solidarity becomes an expensive luxury and makes way for temporary alliances, the main preoccupation always being to extract more profit from the situation than your competition. Social ties with colleagues weaken, as does emotional commitment to the enterprise or organisation.

Bullying used to be confined to schools; now it is a common feature of the workplace. This is a typical symptom of the impotent venting their frustration on the weak – in psychology it’s known as displaced aggression. There is a buried sense of fear, ranging from performance anxiety to a broader social fear of the threatening other.

Constant evaluations at work cause a decline in autonomy and a growing dependence on external, often shifting, norms. This results in what the sociologist Richard Sennett has aptly described as the “infantilisation of the workers”. Adults display childish outbursts of temper and are jealous about trivialities (“She got a new office chair and I didn’t”), tell white lies, resort to deceit, delight in the downfall of others and cherish petty feelings of revenge. This is the consequence of a system that prevents people from thinking independently and that fails to treat employees as adults.

More important, though, is the serious damage to people’s self-respect. Self-respect largely depends on the recognition that we receive from the other, as thinkers from Hegel to Lacan have shown. Sennett comes to a similar conclusion when he sees the main question for employees these days as being “Who needs me?” For a growing group of people, the answer is: no one.

Our society constantly proclaims that anyone can make it if they just try hard enough, all the while reinforcing privilege and putting increasing pressure on its overstretched and exhausted citizens. An increasing number of people fail, feeling humiliated, guilty and ashamed. We are forever told that we are freer to choose the course of our lives than ever before, but the freedom to choose outside the success narrative is limited. Furthermore, those who fail are deemed to be losers or scroungers, taking advantage of our social security system.

A neoliberal meritocracy would have us believe that success depends on individual effort and talents, meaning responsibility lies entirely with the individual and authorities should give people as much freedom as possible to achieve this goal. For those who believe in the fairytale of unrestricted choice, self-government and self-management are the pre-eminent political messages, especially if they appear to promise freedom. Along with the idea of the perfectible individual, the freedom we perceive ourselves as having in the west is the greatest untruth of this day and age.

The sociologist Zygmunt Bauman neatly summarised the paradox of our era as: “Never have we been so free. Never have we felt so powerless.” We are indeed freer than before, in the sense that we can criticise religion, take advantage of the new laissez-faire attitude to sex and support any political movement we like. We can do all these things because they no longer have any significance – freedom of this kind is prompted by indifference. Yet, on the other hand, our daily lives have become a constant battle against a bureaucracy that would make Kafka weak at the knees. There are regulations about everything, from the salt content of bread to urban poultry-keeping.

Our presumed freedom is tied to one central condition: we must be successful – that is, “make” something of ourselves. You don’t need to look far for examples. A highly skilled individual who puts parenting before their career comes in for criticism. A person with a good job who turns down a promotion to invest more time in other things is seen as crazy – unless those other things ensure success. A young woman who wants to become a primary school teacher is told by her parents that she should start off by getting a master’s degree in economics – a primary school teacher, whatever can she be thinking of?

There are constant laments about the so-called loss of norms and values in our culture. Yet our norms and values make up an integral and essential part of our identity. So they cannot be lost, only changed. And that is precisely what has happened: a changed economy reflects changed ethics and brings about changed identity. The current economic system is bringing out the worst in us.

25 Jul 2014

Why the Super-Rich need Governments. (from Social Europe Journal)

Dani Rodrik

The very rich, F. Scott Fitzgerald famously wrote, “are different from you and me.” Their wealth makes them “cynical where we are trustful,” and makes them think “they are better than we are.” If these words ring true today, perhaps it is because when they were written, in 1926, inequality in the United States had reached heights comparable to today.
During much of the intervening period, between the end of World War II and the 1980s, inequality in the advanced countries was moderate. The gap between the super-rich and the rest of society seemed less colossal – not just in terms of income and wealth, but also in terms of attachments and social purpose. The rich had more money, of course, but they somehow still seemed part of the same society as the poor, recognizing that geography and citizenship made them share a common fate.
As the University of Michigan’s Mark Mizruchi points out in a recent book, the American corporate elite in the postwar era had “an ethic of civic responsibility and enlightened self-interest.” They cooperated with trade unions and favored a strong government role in regulating and stabilizing markets. They understood the need for taxes to pay for important public goods such as the interstate highway and safety nets for the poor and elderly.
Business elites were not any less politically powerful back then. But they used their influence to advance an agenda that was broadly in the national interest.
By contrast, today’s super-rich are “moaning moguls,” to use James Surowiecki’s evocative term. Exhibit A for Surowiecki is Stephen Schwarzman, the chairman and CEO of the private equity firm the Blackstone Group, whose wealth now exceeds $10 billion.
The venture capitalist Tom Perkins and Kenneth Langone, the co-founder of Home Depot, both compared populist attacks on the wealthy to the Nazis’ attacks on the Jews.
Schwarzman acts as if “he’s beset by a meddlesome, tax-happy government and a whiny, envious populace.” He has suggested that “it might be good to raise income taxes on the poor so they had ‘skin in the game,’ and that proposals to repeal the carried-interest tax loophole – from which he personally benefits – were akin to the German invasion of Poland.” Other examples from Surowiecki: “the venture capitalist Tom Perkins and Kenneth Langone, the co-founder of Home Depot, both compared populist attacks on the wealthy to the Nazis’ attacks on the Jews.”
Surowiecki thinks that the change in attitudes has much to do with globalization. Large American corporations and banks now roam the globe freely, and are no longer so dependent on the US consumer. The health of the American middle class is of little interest to them these days. Moreover, Surowiecki argues, socialism has gone by the wayside, and there is no need to coopt the working class anymore.
Yet if corporate moguls think that they no longer need to rely on their national governments, they are making a huge mistake. The reality is that the stability and openness of the markets that produce their wealth have never depended more on government action.
The super rich are now more separated from the rest of society than ever before (photo: CC 4WheelsofLux Photography on Flickr)
In periods of relative calm, governments’ role in writing and upholding the rules by which markets function can become obscured. It may seem as if markets are on autopilot, with governments an inconvenience that is best avoided.
As former Bank of England Governor Mervyn King aptly put it in the context of finance, “global banks are global in life, but national in death.”
But when economic storm clouds gather on the horizon, everyone seeks shelter under their home government’s cover. It is then that the ties that bind large corporations to their native soil are fully revealed. As former Bank of England Governor Mervyn King aptly put it in the context of finance, “global banks are global in life, but national in death.”
Consider how the US government stepped in to ensure financial and economic stability during the global financial crisis of 2008-2009. If the government had not bailed out large banks, the insurance giant AIG, and the auto industry, and if the Federal Reserve had not flooded the economy with liquidity, the wealth of the super-rich would have taken a severe blow. Many argued that the government should have focused on rescuing homeowners; instead, the government chose to support the banks – a policy from which the financial elite benefited the most.
Even in normal times, the super-rich depend on government support and action. It is largely the government that has financed the fundamental research that produced the information-technology revolution and the firms (such as Apple and Microsoft) that it has spawned.
It is the government that enacts and enforces the copyright, patent, and trademark laws that protect intellectual property rights, guaranteeing successful innovators a steady stream of monopoly profits. It is the government that subsidizes the higher-education institutions that train the skilled work force. It is the government that negotiates trade agreements with other countries to ensure that domestic firms gain access to foreign markets.
If the super-rich believe that they are no longer part of society and have little need of government, it is not because this belief corresponds to objective reality. It is because the prevailing story line of our time portrays markets as self-standing entities that run on their own fuel. This is a narrative that afflicts all segments of society, the middle class no less than the rich.
There is no reason to expect that the super-rich will act less selfishly than any other group. But it is not so much their self-interest that stands in the way of greater equality and social inclusion. The more significant roadblock is the missing recognition that markets cannot produce prosperity for long – for anyone – unless they are backed by healthy societies and good governance.

8 Jul 2014

YESTERDAY'S RUBBISH..why is a minimum wage different from Free Trade?

Andrew Watt
Andrew Watt
Germany’s first post-war Chancellor Konrad Adenauer is usually held to be the origin of an often-quoted phrase „Was kümmert mich mein Geschwätz von gestern?“. Roughly: why should I be concerned about the rubbish I talked yesterday? Whatever the rights and wrongs of this attribution, the phrase – used to draw attention to someone who places political flexibility over intellectual consistency – has occurred to me numerous times over recent months in the context of Germany’s debate over the introduction of a statutory minimum wage.

The statutory minimum wage in Germany

The decision was finally taken yesterday in the Bundestag. Germany will, for the first time in its history, apply a statutory minimum wage of EUR 8.50 to almost all workers from the start of 2015. It is estimated that up to 3.7 million workers will benefit, and given very pronounced wage inequality at the bottom of the German labour market, the wage rises for some workers will be substantial. There is a two-year transition phase for pre-existing sectoral collective agreements. A number of groups of workers have been excluded, some permanently the majority for a transition period, from the minimum wage requirement, which has given rise to an intense debate in the country.
This debate about exemptions, as with the battle over the minimum wage more generally, has centred, unsurprisingly, on possible negative employment effects. Once the minimum wage has been introduced it will be possible to analyse its employment effects, even if this will be difficult because its impact will not be easy to disentangle from that of other factors happening at the same time. For the moment, one has to rely on studies focusing on past minimum wage introductions and increases in other countries. The thrust of that literature is that, provided the minimum wage is at a “reasonable rate”, it is very hard to identify negative employment effects in the aggregate. (For a discussion of whether EUR 8.50 is “reasonable” in the German context see here.)
What we will see though is a lot of “argument by anecdote”. Firm A in region B has been forced into bankruptcy by wage increases necessitated by the minimum wage. Worker C in city D was happy about the minimum wage when it was being discussed, but now he is furious because instead of a job paying EUR 6.50 he is unemployed. Indeed, we are already seeing this argument being deployed in the form of threats and predictions. Handelsblatt, the German business daily, recently had a piece whose title asks whether the minimum wage will lead to bankruptcies (“Pleiten dank Mindestlohn?”, Handelsblatt, 15.05.14). The article answers the rhetorical question in the affirmative, based on the opinions of the director of the hotel and catering lobby organisation, the board chairman of a chain of hairdressers, and the president of the German employers association BDA. And this concern has been expressed by many liberal economists, by employer-linked think tanks such as the Initiative Neue Soziale Marktwirtschaft[1], and, not least, by the German Council of Economic Advisers.[2]

Political flexibility or intellectual consistency?

What I find interesting here is less the specific arguments put forward (which are rather weak) than the fact that the basis for the arguments is completely at odds with the way that employers’ representatives[3], and certainly liberal economists, normally position themselves. It is as if, on the issue of the minimum wage they are collectively saying: why should I be concerned about the rubbish I talked yesterday?
Consider the debate on free trade. A country has tariffs that protect a sector of its economy. They are removed, leading to job losses and bankruptcies in the least productive firms in that sector. Do employer representatives and liberal economists favour an anecdotal approach here and call for the reimposition of tariffs in order to protect jobs and companies? On the whole they take a very different line. The production and employment protected by the tariffs is “inefficient”. Free trade brings a welcome does of competition. It enables higher incomes and a shift of production to areas in which the country has a comparative advantage. Workers who lose their jobs move to more productive occupations or regions and everyone is better off. (At least, the more sophisticated would add, this is the case after an intervening adjustment period.) Focusing on protecting “old” jobs is a barrier to productivity and progress. One cannot judge from individual job losses that the overall employment level must fall.
A similar argument is put forward with respect to technological change. Yes, some workers are thrown out of work when new, more efficient machinery and production processes are introduced. Others have to adjust through training. But here, too, the overall impact is beneficial (after a lag), because lost employment can be recouped elsewhere in the economy, as higher-productivity jobs pay higher wages that in turn expand employment opportunities for workers in other parts of the economy. If you are against technological change you are a Luddite and economically illiterate.
This begs the question why different standards seemingly apply in the case of the minimum wage. Firms facing a rise in labour costs in the wake of its introduction have a number of ways to adjust. (These are not mutually exclusive in practice but can be separated for expositional purposes.) They can increase prices. Given that the minimum wage applies across the whole economy (i.e. will not just affect individual firms) this is likely to happen. Relative prices will adjust: the prices of goods and services produced with the use of large quantities of low-skilled labour will increase relative to those using more high-skill labour and capital. The economic (not technical) productivity of the low-wage workers will rise, thanks to higher product and service prices, to match the increase in their wages. Or firms can raise their productivity (in the technical sense), through innovation and reorganisation, just like a firm facing a dose of wholesome foreign competition because tariffs have been cut. Companies may also accept a lower profitability, and the wage share would rise somewhat. (If nothing else, this would make Thomas Picketty happy).
But, undoubtedly, in some firms these adjustment strategies may not be practicable or sufficient. Some may lay off workers and others be forced to close. This is the basis for the anecdotal argument. But surely, given their normal argumentative pattern, business representatives and liberal economists should be vociferously pointing out that this is actually not a problem, certainly not an inevitable one. For as we have seen a minimum wage has very similar effects to a bracing dose of foreign competition or the “creative destruction” associated with technology. Induced productivity gains and higher wages generate additional income that sustains employment in firms across the whole economy. Those employers that cannot keep up are forced out of business. And the labour that is displaced will, or at least should[4], be rapidly deployed to other regions or sectors where it can be put to more productive use.

Yesterday’s rubbish?

From the macroeconomic point of view it makes no sense at all to lock a large proportion of the workforce into low-paid, low-productivity jobs. If they were consistent, liberal economists and employers’ front organisations should be making that point. But they are not. It could be that they have suddenly abandoned liberal views as yesterday’s rubbish. This is implausible, however. The argument still applies in other areas; see for example the salutatory effects that such commentators ascribe to the TTIP (Transtlantic Trade and Investment Partnership).
Rather the discrepancy is presumably because the same effect is produced by two different causes: trade or technological change, on the one hand, which are seen as market outcomes, and the minimum wage, on the other, which is perceived as an market intervention. This dichotomy is wrong, or at least oversimplistic, of course. Trade and technology are also highly regulated, while many economists argue that the minimum wage (at a reasonable level) is correcting a market imperfection that gives undue power to employers. But even those who believe in it should be aware of the inconsistency of using anecdotal argument from individual companies as a stick with which to beat the minimum wage.
It will be quite some time before careful studies, with all the required controls, are made of the employment impacts of the introduction of the statutory minimum wage in Germany. Until they are done, expect a lot of heart-rending anecdotal argument about job losses and bankruptcies. And when you hear or read them, remember to confront those making such arguments with Konrad Adenauer, or whoever it was who said: Was kümmert mich mein Geschwätz von gestern?

[1] In its „eight facts about the minimum wage“ the INSM states baldly (translation mine) „ The introduction of a minimum wage, whatever ist level, destroys all those jobs that no longer pay. And a job no longer pays when the employer gets less from it than he pays the worker. And so it is clear: the higher the minimum wgae, the greater the job losses.“
[2] In their annual report 2013/2014. It is worth emphasising that one of the „Five wise persons“, Peter Bofinger, dissented from the majority view on the minimum wage issue.
[3] The following may not apply to heads of individual companies, who can be very protectionist, but it usually does to those representing employer interests at national level.
[4] The word “should” here can be understood in the sense that redeployment will happen if appropriate measures are in place to maintain aggregate demand and smooth the adjustment process through active labour market policies. And of course provided the increase in the minimum wage is “reasonable” so that the employment reallocation system is not completely overwhelmed.

7 Jul 2014

Robert Reich on the 7 big lies told by neo-liberal politicians.

This video is worth watching and listening to as Robert Reich exposes the fallacies that underpin the neo-liberal economics so beloved by John Key and his asset stripping cronies.


27 Jun 2014

The Herald and Key duck, scuttle and run as Donghua Liu story loses credibility

The anatomy of Dirty Tricks.

It looks like the powers that be on the Herald's editorial board are starting to realise that being a paid shill for the Key owned National Party is not as wise a move as they thought. Particularly as the realisation that the allegations fed from John Key and  those around Donghua Liu are proving to be a quicksand that is sucking the already doubtful credibility of the paper as a crusading, principled record of fact away from it.

The self parodying editorial (27.6.14) was the beginning of the duck strategy and, today, the normally rabid Key adoration puffer, Fran O'Sullivan, began to drop the blame for the fiasco on Key's desire to extract utu on Cunliffe for daring to reveal the extent to which National Party cabinet ministers have been prepared to go in the quest for largesse from foreign property speculators and "investor immigrants". Her comments that:

It was lack of discipline when he recently fuelled the journalistic flames on the so-called Donghua Liu donations scandal from the comfortable distance of the US.
He appeared to have forgotten a basic rule of politics — don't fan the flames of scandal unless you are sure where it will finish up. It's understandable that Key was tempted to indulge in some gotcha politics himself after a torrid month where he had to put Judith Collins on Cabinet leave after the Oravida affair and ask for Maurice Williamson's ministerial resignation after he intervened in a police matter involving the Chinese business investor.
It must have been pure utu to watch while the proverbial was thrown back all over Labour after Immigration Minister Michael Woodhouse informed Key there was an 11-year-old pro forma letter in the files that showed Cunliffe wrote to authorities on Liu's behalf over his residency application.
The Prime Minister wasn't the direct source of the Liu "revelations" (I use that word advisedly as many of the more hyperbolic Liu claims have since proved to be a mirage).
Herald investigative journalist Jared Savage, who broke the story which led to Williamson's resignation, had already sought Liu's immigration file under the Official Information Act. But it is instructive in that it was sources close to National who shopped the story of Liu's anonymous donations to Labour elsewhere after Woodhouse had accessed the file.
National has not played a straight bat on this story.
Woodhouse has yet to explain why he initially told porkies by denying he had informed Key about the Cunliffe letter — something that may have been literally true but skated over the fact he had told the prime minister's staff about the letter (and one from former Labour MP Chris Carter) and his office had provided both letters to Key's office.
While Cunliffe was obviously stitched up over the Liu letter, the political donor's subsequent "misstatements" have left thoughtful people wondering whether it was indeed Labour that had proven tricky — as National's meme invites us to believe — or the governing party.

reveal some deep disquiet emerging within the party political PR machine behind Key and the National Party.

"Smile, Wave, brain-fade, scuttle and run" The stategists in confrence?

The history of the Donghua Liu scandal is revealing, as commented on in earlier postings and by other commentators, because of its obvious links to the scandal spreading blog sites closely connected to the Ninth Floor of the Beehive and the readiness of The Herald to swallow without due diligence the statement given it by, to quote Fran O'Sullivan, those close to National ... after Woodhousehad accessed the file. 

And, now, as the allegations begin to unravel and there is colder, closer and more focused examination of the apparent deliberate anti-Labour campaign being waged by the opinionista in The Herald the classic Key strategy of "smile, wave, brain fade, scuttle and run" is being followed in an attempt to extricate the news-sheet from the  mess it helped create.

24 Jun 2014

The Ground gets boggier under Key's shifting feet

The Donghua Liu saga has just got even more dangerous for the  John "drop the insinuation then duck" Key as The Herald is forced to publish an altered statement from Mr Liu that changes much of his original statement.

It now appears that Mr Liu is claiming to have donated $2000.00 to the Hawkes Bay Rowing Club Branch of the NZ Labour Party and $60,000+ to The Yangzte Concrete Factory Branch of the NZ Labour Party to give the "honorable members a luxury cruise as a reward for their hard work making concrete for honorable building projects."

The claim that he purchased a bottle or bottles of wine  at a Labour Party Auction on June 3 2007 has also been shot down in flames as searchers have now identified the auction being one run by The Midland's Hawkes Bay Wine Charity at which no wine was sold at the inflated price Mr Liu claims to have bid. The Herald's new story now has Rick Barker receiving the bottle of wine from Mrs Liu rather than, as was originally alleged "giving it to her." The Herald is certainly back tracking all over the place on this story.
I look forward to the front Page apology to David Cunliffe, the NZ Labour Party and the long suffering NZ public who have had to put up with irresponsible reporting from the paper for far too long.

Left, Rick Barker receiving a bottle of wine from Donghua Liu's (top right) partner Juan Zhang. Photo / Supplied, NZ Herald

Left, Rick Barker receiving a bottle of wine from Donghua Liu's (top right) partner Juan Zhang. Photo / Supplied, NZ Herald

The questions need to be asked loudly, clearly and many, many times to John "Scuttle and Run" Key, Cameron Slater, Jami-Lee Ross and others close to Maurice Williamson and Donghua Liu "Who wrote the original statement for Mr Liu and who fed it to Key and Jared Savage?" and "Did Mr Liu really understand what he was signing  because, as Mr Williamson claims Mr Liu speaks and reads minimal English?"

POST SCRIPT: 1) The Fairfax stable is now asking questions about the Herald's reporting and the Key involvement in the Donghua Liu situation. About time the blow torch was applied to the links between The Herald and the Ninth Floor of the Beehive.
2) Radio New Zealand  Morning Report Political journalist declares that the Liu story doesn't stack up (27.6.14).
3) NZ Herald attempts to back off from its inept reporting by lampooning itself in an editorial claiming to be a crusading, reputable news-sheet and reducing the alleged "donations" from Liu to $38,000 in a series of anonymous donations over several years to different un-named MPs.