Bruce Bisset: Sailing away on a sea of debt

Bruce Bisset.

Accountancy is not my thing - my eyes glaze and my brain realises its days are numbered at the end of a financial year - but ever since an ex-brother-in-law attempted to explain the intricacies of double-entry bookkeeping, I've understood that figures can be manipulated to show any result desired.

And the bigger the organisation, the more number-crunchers kept busy deriving whatever the owners wish the year's events to reflect in their bottom line. Profits can be turned to losses, losses to profits; revising a handsome bit of Ebitda into a liability with a few write-downs and contingencies and the like while the cash gets stuffed into handy tax havens is excused as "legitimate" business.

Which is, basically, how the multinationals and ultra-wealthy avoid paying more than a token in taxes to anyone; the merry-go-round of backdoor transfers of nominal profits leaves nothing for the taxman to collect on. Judging by the fact there's an estimated $30-50 trillion salted away by the mega-rich within a veritable global maze of false-front companies, accountants are pretty good at cooking books.

But when it comes down to it, this sleight-of-pen is nothing more than legalised or quasi-legalised theft. It reinforces what a complete fiction money is, and what a fantasy playground the wealthy make of it at everyone else's expense.

A country " even a small one like New Zealand " is one of the larger types of entity playing this game. Of course there are some peculiarities " a country can levy taxes or other charges on anyone living and working in it, and has "social costs" to pay " but its accountants are just as adept at proving up is down or down is sideways, depending, as those of the corporations.

As evidenced at Budget time, when the myth of the "balanced books" is trotted out and sold to a gullible public " even though the reality is that debt is galloping away "off the books" at headlong pace. See, call me simple or at best fiscally-challenged, but if at the end of a year you owe more than you did at the start, then you've made a loss, haven't you. Since National came to power, our annual losses add up to in excess of $110 billion " or around $14 billion per year. And it's accelerating.

That's just official Government debt. Add in private and business debt and as a nation we owe half a trillion dollars. Not to mention our "exposure" in financial betting-shops like the derivatives market, where potential debt is estimated at another $100 billion. Where's this money gone?

Seriously: show me the money. I don't see an extra twenty, let alone a hundred, billion dollars worth of basic infrastructure or jobs or housing or healthcare or education; in fact given the private sector seems to run half of everything these days, I don't see diddly squat.

Oh, that's far too simplistic, I hear all the bean-counters and apologists yelling. There's interest and service costs and all sorts of other trade-weighted "invisibles", plus we've had the GFC and the earthquakes yada yada yada. Sure. Fine. But a loss is a loss is a loss, isn't it. There's nothing "balanced" about it.

So stop lying, money men, and tell it as it is. We're diving into debt further and faster than ever before " with nothing obvious to show for it.

An increasing number of economists are pointing out that New Zealand is now in a "perfect storm" of conditions for a devastating financial crash. When that crash happens, who will profit? That's right: those who "own" the debt. Guess which party they represent.

- Bruce Bisset is a freelance writer and poet.