Government debt is blowing out and Finance Minister Michael Cullen admits being "beyond my comfort zone" as the economic contraction starts to bite.
Yip its easy to manage things when the books are good.
Statistics NZ confirmed yesterday a recession, with the economy shrinking 0.2 per cent in the June quarter, after a decline of 0.3 per cent in the three months to March.
We are only starting to feel the pinch here - retailers and restaurateurs are really starting to feel the downturn.
Dr Cullen said the forecast level of debt was "not a pretty picture" and would exceed his target of 20 per cent of gross domestic product when the Treasury opened the books on Monday week.
That's not rocket science Cullen.
He had said at the time of the May Budget, with a cash deficit of $3.5 billion a year for the next four years, that he was "at the edge of my comfort zone".
"Yes, I would say that I am beyond my comfort zone on Monday week so it is going to be important over the next three years for government to very carefully manage its accounts and not to add to those fiscal pressures." He expected a third consecutive quarter of contraction in September, but said growth was likely to resume in the last three months of 2008.
I cant see growth resuming for at least 6 months - we are in for a rough ride - batten down the hatches and hold on tight.
New Zealand's economic fortune largely depended on the United States sorting out its financial crisis and putting confidence back into markets. Without that there would be a severe international slowdown.
And they are all over the paddock - at a time of their greatest peacetime crisis US politicians wont play nicely - and we will feel the financial tsunami from here .
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