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.

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.

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.

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’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.

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.

I’ve talked about Burma but for China this is becoming a very difficult year. It was supposed to be a huge celebration, the coming out party for the slightly post-communist leviathan and a party to show the world what an amazing country it was. Alas the Tibet demonstrations rained on that parade and now the earthquake has really taken away the focus. Indeed many Chinese were unhappy that the Olympic torch procession was carrying on as normal and this saw an immediate response by the authorities who scaled back the daily relay.

This shows that the Chinese government is very senstive to public feeling within China and is keen to always be on the right side of its citizens if not those who live outisde its borders. This sensitivity has been increasing over the last 10 years and with the Olympics putting China centre stage, the rallying call for a strong sense of nationhood has been blasted out from all points. From all accounts it seems to be working.

It’s nearly 20 years since the Tiananmen Square massacre. It holds memories for me because I was in Northern Pakistan at the time, coming to the end of nearly 2 years away backpacking and working during my OE from London, and getting ready to cross the Khunjerab Pass into Western China. The idea was to head across China and catch the Trans Siberian home. It didn’t happen. I was with my Kiwi girlfriend (now my wife!) and we met an English guy who had just crossed over from China and told us the news. We were completely cut off and had no idea what ws going on. This was from the days of getting your post from the GPO Poste Restante service. Oh for an internet cafe. It was clear then that it wasn’t a good idea to cross over so we abandoned that idea and headed back down.

China has come a long way in 20 years. Sure it still is pretty ruthless when it comes to repressing dissent or “dangerous groups” like Falun Gong. And yes it still executes a lot of criminals though they say that rate is falling. It has built an enormous economy with a massive trade surplus which has enabled it to move overseas to secure resources and assets. It is however still unsure of its rightful place in the world. It’s military continues to expand posing a threat to Taiwan as well as giving itself plenty of muscle in the worlds’ oceans historically the preserve of the US Navy and before that the Royal Navy.

2008 is a big year for China. How it handles it should give us some idea of how it will turn out in the years ahead. Can it open itself up and with that accept the good and the bad, the praise and the criticism or will it revert to control and repression. Let’s hope its the former.

In his new book, “Superclass: The Global Power Elite and the World They are Making“, David Rothkopf explores the globalisation of the new elites, naming some 6000 players who basically run the whole show. From media to banking he lays out how close these people are and how they are shaping and making the world in their own images. The link between politicians and business is crystal clear. In some countries its hard to tell the difference with the US a great example of this.

If anyone felt the US financial authorities were in collusion with the banking system look no further. The current US Treasury Secretary, Henry Paulson, is a former Goldman Sachs Chairman and Chief Executive. Rothkopf reveals the shennanigans that took place over the bail out of Bear Stearns. He tells how bank heads met over the weekend to hammer out a deal for Bear Stearns. Clearly the deal had to be done that weekend lest the market really fall apart on the Monday. This type of round table pow wow is becoming more and more common as the fragility of financial markets continues to be revealed.

On one hand this sounds good: we have capable people in government and business to take charge of managing a crisis. They all know each other and have worked with each other. They know the score.

But: are they not the same people who caused and are part of the crisis? Is there any chance we get to hear the truth of the matter? Do ordinary shareholders and citizens matter anymore?

Well there have always been plenty of stories about how the Fed operates and the murky manner in which its was founded.

But one thing is clear from this article and the activities of those in power. They run the show in a “we know best” style. The question all concerned people should have is whether power should be so concentrated and in the hands of so few.

I wonder what Lincoln would have made of it.

Numbers of this magnitude tend to overhwhelm causing a certain numbness to appear. 90,000 or 120,000, it’s a big number. But I don’t want to dwell on that aspect of the disaster but more on what this means for Burma.

A period of searching and mourning followed by rebuilding will take place, following a similar pattern to these events, but in what framework? The miltary junta, bunch of decrepid bovver boys, has no choice but to allow the world in as it has no hope of handling this on its own. Repression yes! reconstruction nah.

If ever a message was to be heeded this is it. The Saffron Revolution was just the beginning, creating a force of energy which some might say has manifested in this terrible way. It is surely no coincidence that just 2 days away is the proposed referendum on a new constitution. A referendum where you can vote but not against it.

It’s been interesting watching the warlord generals and how they look shellshocked and dazed as the cameras focus in on them. But more than anything they look very human. Sure they have plenty of vicious thugs to carry out their torture and murder but now they look weak as they are exposed to the world.

It’s time for the world to really put the hammer down on these dictators and try and bring about some kind of change. Just being able to live without fear of being carted off to prison or a labour camp would be a good start but this may be the point at which birth, although painful, can be given to a new Burma.

Regardless of the credit crunch, employment really is the key to how the economy will fare. As long as people are employed then somehow they can get by and service their debts. Well mostly. But now this will see a deeper problem emerge and that is one where people simply cannot service mortgages or debt in any way.

This will reverberate throughout the whole economy. Added to this is a report out today showing house sales down 40% in the last quarter and 53% lower last month from the previous year.

Ouch.