Private Public Partnerships are back on the agenda as the New Zealand Election approaches once again. National is proposing them and Labour denouncing them. For once I actually agree with Michael Cullen though probably our reasons are somewhat different.

First of all I think infrastructure is incredibly important. Imagine if we had free broadband covering the whole of NZ. Imagine a computer in every household. Decent and reliable energy and school facilities our children require to get them on track to become productive adults.

Of course we need decent roads, hospitals and schools. I think National has a bit more vision in this area. It realises that we need to seriously invest and not in extra layers of bureacracy but in high impact areas like teachers, classrooms, sports and leisure facilities and technology.

It’s the PPP bit that I don’t like because what normally happens is that the Public bit gets loaded with debt and the overall cost of the project spirals out of control. Private investors want iron clad punts with very good paper returns. The Public wants quality common good assets for the public use. I think road tolls can be useful if a road supplies a benefit to a small group of users but in general we need to create long lasting infrastructure that ultimately benefit all.

It’s easy to split hairs over the financing and benefit aspects of building public assets but i’d bring the axe right down and say that we can fund these projects interest free.

Yes that’s right. Interest free. There’s a proviso, well maybe a couple:

One: The asset must be clearly adding the the public good. Broadband comes into this category as do schools and healthcare (though that is a greyish area).

Two: the money supply needs to be better managed.

The proposal is simply that government can create the money interest free, metaphorically speaking by printing it. The money comes into the system and is used to create the asset. The money can be paid back or not depending on the asset.

What? i hear you say. Isn’t that inflationary? Ceteris paribus yes but see proviso 2. The main issue is that interest will not be required so no new money needs to be created in order to pay back the interest. All you monetary scholars will alread know that interest is money that does not yet exist in the system and so has to be created via new money, normally in the form of debt.

The Forum for Stable Currencies in the UK has been advocating this policy for 6 years now through a string of Early Day Motions in Parliament. These have been kindly sponsored by Austin Mitchell, an MP well know to New Zealanders.

The point here is to dispell the myth that we are dependent on banks and overseas financiers to create our own public assets. That is a conversation I would love to see John Key and Michael Cullen have.

I caught up with an old friend in London recently and he mentioned Once Were Warriors, the New Zealand film, as still being seared in his consciousness. His comment has been reinforced since I got back to NZ with the revelations of Tony Veitch and his violent assault on his previous partner.

Violence never seems far from the front pages over here. Whether it’s child abuse, domestic assault, late night bashings or just some good old biffo on the sports pitch, the modus operandi is the same: fists. Is Jake the Muss the deeply ingrained dark side of the NZ male? That’s not to present the UK as a country that doesn’t experience violence on a regular basis. It’s hard to remember a month in recent years where a teenager hasn’t been knifed to death.

The rise in violent crime in London was certainly one reason to move to NZ.

But there are differences. The two Deborah’s raise the issues of violence and anti-intellectualism as being embedded in NZ society. Deborah Coddington laments the violent culture that pervades this “Godless country” noting the desire to hand out “loving smacks” as an inviolate right. If one casts back a year and remembers the furore at the introduction of an “anti smacking” law here. The energy going into a repeal of this law is quite impressive. Regardless of the merits of the new law it is the desire to be allowed to hit that, for me at least, reflects a desire to sort matters out with brawn rather than brains.

This follows neatly onto Deborah Hill Cone’s piece on Jim Bolger and his new appointment as the “Fat Controller” for Kiwirail (will all the trains be black?). As she notes

“The only conclusion to draw is New Zealand’s anti-intellectualism is so acute we really feel most comfortable being governed by thick people or bullies”.

This point was reinforced by Robert Winston on his recent trip to NZ where he noted that cleverness was not valued. He also noted we are exporting our talented people in droves and under investing in research and education.

New Zealand is in some ways still primitive. We rely on our primary industries for the bulk of our economic performance. Perhaps that is still reflected in our base culture. Perhaps that is why the Auckland rugby league team was named “The Warriors”. Talk about embedding the brand!

The way the news is presented on TV One sometimes seems an extension of that silly programme “A Game of Two Halves” which makes “A Question of Sport” look like “University Challenge”. That the man in question is involved in both probably reflects the current malaise. On top of that the jocularity of the presenters leaves one to wonder whether it is the news or some mates gathering.

This story wont go away. At some point the violence, and its seeming acceptance, has to be addressed at a wider level.

I had heard that some Euros were better than others and this story confirms the rumours.

Germans are refuisng to accept Euros which have originated from the Latin Bloc, especially Italy. They want “hard” Euros issued by the almighty Bundesbank, that inflation fighting automaton. You can hardly blame them given the fiscal history of Italy, never mind Greece, Spain or Portugal.

But what this shows is the lengths to which people will go to mitigate risk. It seems a waste of time really given that the Euro is universal in its value and acceptance. But its a bit like English and Scottish Pounds. No one ever wanted a Scottish one even though they were both accepted as legal tender by the Bank of England.

Perception is everything and the Germans have long memories of inflationary times.

The sad fact is that if the financial system falls apart nothing will save you. Having a nice pile of gold soveriegns might but the reality is that there wouldn’t be enough to create a reasonable market for exchange. Now a nice veggie garden is more of a goer in times of monetary distress. This is where NZ has a major comparative advantage. Nearly everyone has a patch of dirt in which to grow stuff.

Our central banks have a lot to answer for but promoting home grown veggies is one good thing to come out of this debacle.

After a 1200 pt rally in the Dow the market has come to its senses and started bailing again. It’s a year now since Bear Stearns stumped up $3bln plus to bail out one of its funds thereby signalling the start of the crisis.

The news is bad wherever you look but the focus now is on the banks and whether they will be able to shore up their balance sheets which have more holes than a block of Emmental.

The pressure of continued write downs will simply hasten the inevitable collapse of a major institution. The big question is how the banks will be re-capitalised.

The first wave of capital provided by overseas investors has resulted in major losses and burnt fingers. Sovereign funds may be a little more wary this time round even if the price is way cheaper.

The Naked Capitalist reports on discussions the Fed has been having with private equity companies to see if they might be interested in stumping up some cash. However, there are issues of bank ownership and the size of stake any non-bank organisation can take. The word is that the Fed could seek to relax these rules.

This does not fill one with confidence.

Closer to home NZ finance companies are collapsing like a house of cards. It’s hard to know if any will be left. Already prosecutions are underway against accountants who signed off on the books of failed companies. I wonder how bank auditors will be feeling when they come to sign off the books of the major banks and see a long list of assets “uanble to be valued” properly.

There should be caveats galore.

But the question remains as to whether the crisis will spread to the major banks. If it does we could see queues around the corner of all our financial institutions before too long. I’d certainly advise people to have a bit of cash set aside and money spread around various banks. Having said that NZ is one of the only countries in the OECD not have have deposit insurance for banks.

Given the central banks moves so far it’s safe to say the banking system is underwritten to some degree but if you own shares in a bank i would be very uncomfortbale about that.

I haven’t blogged for some time now. One reason is that I have been very busy and when you get busy sometimes the creative juices don’t run fast enough. Having said that what’s new to write about? It feels a little like groundhog day…….

I’m sitting comfortably at 39,000 ft on the new A380 heading for London. It’s a lovely machine. It’s amazing what we can build and the technology we can put together and yet………….

A dictator pounds along the well worn route to genocide, societal collapse and the ignominy of international tribunals and exile in some foreign land whilst the international community looks on in horror and wonders what to do.

The sad fact is that people like Mugabe will always appear. They are our shadow, our dark side. They come as saviours representing hope but become corrupted by power, insecurity and self loathing. Democracy is damned messy, it’s painful but one thing is for sure it gives space for us to address our shadow, to address our short comings, our weaknesses and our frailties. Nothing can be done for Zimbabwe now. The play has been written long ago and we are into the final act. Mugabe like Amin before him is unravelling in a paranoiac binge of violence. It’s painful to watch the people there suffer so much.

The Burmese catastrophe simply reinforces this never ending drama. It’s like Alice in Wonderland, curious and curiouser, as those generals walk around in their own fantasy creation. Is this really happening? Can you lock up the democratically elected leader forever? Are these generals real people or some kind of virtual reality?

I say carpet bomb the country with food parcels and emergency kit. Shower the place like a mid winter storm. Get Santa and his reindeers involved.

Invasion of national sovereignty they say wringing their hands with diplomatic concern.

Bollocks….we need an invasion of humanity. Now.

It’s tragic to see South Africa descend back into violence and disharmony. Necklacing, a one time favourite method of killing in the apartheid era, is back in vogue. As economic pressures mount in the townships rage has intensified towards the old maxim of “last in first to get it in the neck”.

The huge wage of immigration from other African states, such as Zimbabwe, has seen tensions rise at the same time that unemployment has risen to almost 4 million. Soldiers are out in the streets and even the prosperous Cape Town has been affected by unrest.

It’s poignant that Mbeki has been propping up Mugabe’s regime of fear which has accelerated the flow of Zimbabweans fleeing the violence and impoverishment in Zimbabwe.

It seems in their efforts to erase colonialism and restore their rightful sovereignty they have developed a high level of tolerance for violence and repression. This is the same story in Burma.

It’s a sad time for South Africa which has made such progress in recent years. One can only hope the Zimbabwe situation is resolved soon and the post-Mugabe rebuilding process can begin.

That should take the pressure off the situation is South Africa as the situation calms.