Foundation for Economic Growth - Newsletter

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Last Updated: Aug 15th, 2008 - 11:26:43

Newsletters : 2007 Newsletters : 29 June 2007
Thought for the Day

In 1999 Helen Clark told us she was going to raise our standard of living and take us up into the top half of the OECD. In 2003 a few of us felt that the Labour government economic settings were a disaster and would make us all poorer - especially those persons on a lower wage.

Since that time the average GDP growth rate of 52 countries comprising 90% of the world economy has been 5%. Unfortunately for us we are well below average with a growth rate now of around 1% and the lowest productivity growth rate in our history.

Helen wanted to take us from 20th out of 30 countries up to number 15. Instead she has taken us backwards to number 22. Dr. Cullen, who has presided over this debacle is frantic to redress the situation. However the more he interferes with the economy the worse it becomes.

We need leaders who understand what it takes to grow an economy otherwise we are doomed to mediocrity - or worse.


Jun 23, 2007, 15:18

 Newsletters : 2007 Newsletters : 29 June 2007
Massive Loan Revocations Expected from U.S. Banks

In our search for an economic theory that made sense and could be used to predict the REAL world satisfactorily we stumbled upon the theories espoused by the Austrian School of Economics. We have read Mises and Rothbard, and we think, "How can this help us to explain the real world, and more importantly, how can it help us to predict the future"?

Very clearly we see that the western world is awash with fiat currencies. Our politicians are pumping their economies at 10% to 15% or more in their bid to buy voter favour and to stay in power. All this extra money produced at the touch of a computer button or over-night on the printing press has to go somewhere. All around the world it has gone into housing as people attempt to save their wealth with a real asset or attempt to become property millionaires.

Banks have excess money to lend out and they lend it to less and less likely investors. We see in New Zealand that they will now lend 100% on a house.

Meanwhile the Americans are ahead of the game and, just as the Austrian theory predicts, they are caught with the downside. Have a read of this article which explains how it is starting to be played out in the USA.

Will it happen here? - you bet. When will it happen? - who knows!


Jun 27, 2007, 12:52

 Newsletters : 2007 Newsletters : 29 June 2007
The Solitary Bear

In the investing world some people are starting to realise that 10% inflation is a way of life in our modern society. Having the Central Bank steadily decrease the value of your savings sure concentrates the mind. Remember, in 1998, when Don Brash advised us to rent rather than buy a house. I wonder how many people followed that advice.

We started out in 2003 trying to work out how to get our governments to make sensible economic decisions so that we could enjoy the benefits of strong economic growth. Unfortunately with a rapidly increasing money supply it becomes difficult to say just what is real growth and what is inflation.

Certainly, if our GDP growth is a mere 1% and the money supply is increasing by 16% tnen we don't have growth - we have shrinkage.

This article gives an indication of what some investors are thinking.


Jun 24, 2007, 14:34

 Newsletters : 2007 Newsletters : 29 June 2007
Tax Havens: Myth Versus Reality

So-called tax havens are routinely vilified, largely because they are perceived as a threat by politicians, leftist organizations, and other advocates of bigger government and high tax rates. In almost all cases, however, attacks on these low-tax jurisdictions are either baseless or distorted.

Surprisingly, anti-tax haven demagogues generally are unable to even correctly identify the characteristics that make a jurisdiction a "haven." Is it low taxes? Zero taxes? Financial privacy laws? Incorporation laws that do not require ownership information? The existence of bearer shares? And even the critics that use a more carefully tailored definition – i.e., a jurisdiction that exercises its sovereign right to not enforce the tax laws of another nation – often engage in discrimination when listing the world's tax havens.

The United States, for instance, is a tax haven. Foreigners can – and do – put money in the U.S. and earn interest and capital gains without any obligation to pay tax to the IRS and without being reported to their governments. Many states allow foreigners to set up corporations without disclosing ownership information. Some even allow bearer shares. These policies have helped attract trillions of dollars to the U.S. economy, yet critics of tax havens fail – perhaps deliberately – to note how any campaign against tax havens unambiguously can boomerang against America's self interest.

Critics also ignore how tax havens provide confidentiality to ethnic, religious, racial, sexual, and political minorities, a critical role since the majority of the world's population lives in nations have less-than-stellar attitudes toward human rights. Likewise, tax havens also are a refuge for people in nations suffering from crime, extortion, and corruption.

Tax haven opponents routinely rely on shoddy numbers, ignore academic evidence, and engage in smear campaigns. Public policy, however, should not be based in mistruths and stereotypes fostered in novels and movies. And public policy certainly should not be based on politicians in high-tax nations persecuting nations trying to prop up their inefficient welfare states by engaging in anti-globalization policies.

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Jun 7, 2007, 12:57

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