KEY POINTS:
Why can't Helen talk John into colluding on the deal that really counts: A bipartisan agreement on a package to ensure the New Zealand economy doesn't turn turtle as the credit crunch becomes a long-term nightmare?
Clark might feel the upcoming election is just too close now to
justify calling in the Treasury and Reserve Bank to urgently brief her Cabinet on the outlook. This is traditionally the time when top governmental bosses go into purdah and keep a distance from Cabinet ministers to ensure a clean electoral fight.
But if Clark extended a hand across the political divide and invited Key and his top spokespeople to join a confidential Cabinet briefing, any constitutional issues would be overcome.
This is important as it may be several weeks after the November 8 election before the shape of the next Government is confirmed and whoever is Prime Minister has to get to grips with the extremely volatile international financial situation.
New Zealanders would feel much more secure if they were assured that if there is to be a change of Government - which looks likely on current poll ratings - the incoming Prime Minister did not have to wait until possibly late November before being briefed on the extent of the financial difficulties facing New Zealand.
The least Clark could do is to emulate Australian Prime Minister Kevin Rudd and exert moral suasion on the United States Congress both publicly and via New Zealand's Washington representatives to urgently pass the bailout.
Again if Key's name was also attached to the push, a vital joint message would be sent that New Zealand expects the US to take a lead in digging global markets out of the hole their financiers have dug.
This might also give some ballast to the push by presidential candidates Barack Obama and John McCain to get some quick action before the cascade of failing US banks turns into an avalanche.
Right now Clark and Key are in Pollyannaish mode.
While the ructions on Wall St spilled over on to the New Zealand sharemarket yesterday, the two prospective prime ministers were continuing with their electioneering stances as if the New Zealand economy will weather the global credit crunch without any major impact.
Both National and Labour concede that if the failed US$700 billion ($1 trillion) bailout for its troubled financial sector cannot be resuscitated, New Zealand could face serious economic damage.
But the two leaders have not conceded they will need to reprioritise their existing plans irrespective of whether the bailout takes place.
Neither leader has any excuse for failing to inject a reality check at this juncture. Clark has had nearly a decade of golden economic weather under her belt during her prime ministership.
This may have lulled her into a sense of false security. But she was Deputy Prime Minister after the 1987 international sharemarket crash and should be well aware how long it took for the New Zealand economy to climb back as our companies found themselves well down the pecking order in the hunt for international equity.
Key - who also ought to know better given his financial trading background - still appears to be clinging to the notion that his party's "well-structured economic plan" will ensure the New Zealand economy is hermetically sealed from the global shocks.
But the upcoming hunt for international credit will impose constraints on New Zealand irrespective of the underlying health of our companies in much the same ways they were impacted in the late 1980s/early 1990s.
Neither prospective Prime Minister seems to have grasped the nettle - at least publicly - that their plans to buy our votes at this year's election also need to be urgently recast.
Continuing on their respective "default" modes (Clark promising more cash to Labour's people and Key promising another round of tax cuts without compensating expenditure cuts) is questionable as will be obvious on Monday.
On that day, the parlous state of the Crown's coffers will be confirmed as Treasury releases the pre-election economic and fiscal update.
This announcement will provide a suitable occasion for Clark and Key to take stock of the forecasts and recast their election offers to take account of the US contagion.
Former Reserve Bank Governor Don Brash - speaking from New York yesterday - was pessimistic that New Zealand would be insulated from the fallout even if Congress gets its act together.
Brash was in the chair when the East Asian financial crisis sent the region into a tailspin in 1997/98.
Both he and then Treasury secretary Alan Bollard prepared a package of measures for Cabinet to offset the effects on the economy.
Brash concedes that it would be constitutionally difficult for Clark to examine measures this close to the election unless Key is also invited to the discussions. ("You can promote that - I can't").
But he contends the extent of New Zealand's international liabilities should be giving pause for thought.
The problem with the US bailout plans as currently conceived is that they leave the American taxpayer "tailend Charlie" at a time when many feel justifiably angered at having to pay for wild irresponsibility by top finance firms.
The US bailout legislation was predicated on Treasury Secretary Henry Paulson's request for authority to buy toxic debt from financial institutions so that banks could resume lending.
Other avenues like forcing the banks to issue new shares to restore capital balances (in return for a bailout) might conceivably have posed less of a concern to US taxpayers. Particularly if the US Government had been positioned to get some cash back by flicking shares after the levels of toxic debt had been reduced. But logic is sometimes missing from the top table when panic sets in.
Finance Minister Michael Cullen is optimistic that Congress will ultimately approve a rescue plan. Cullen sees no need to urgently reorder Labour's spending plans to take account of the deteriorating conditions.
Neither does National's finance spokesperson Bill English feel it necessary to park his party's plan to increase tax cuts to give most people an extra $50 a week in their pay packets by April 1 next year when his party's first tranche of cuts will be added to Labour's existing cut that goes into effect today.
National doesn't have much room to move.
It has already sworn to keep all Labour's flagship spending policies in place, and given a cast-iron assurance it won't mount a major assault on public service numbers.
Yesterday Key was banging on about National's "carefully balanced economic package" that will get the country going again. Trouble is, few punters really know what the package entails.
Both leaders say this election is a "matter of trust". They could start by trusting each other and jointly asking for briefings not just from Treasury which outlines its forecasts on Monday, but also from the Reserve Bank.
That would be much more useful to overall confidence instead of waiting for the real extent of New Zealand's problems to be unveiled in the traditional post-election briefings.
