Opinion: Now finance companies are a NZ$5.85 bln problem for the government

Posted in News August 14, 2009 - 10:50am, Bernard Hickey

By Bernard Hickey The announcements overnight that Standard and Poor's has downgraded Marac Finance and South Canterbury Finance from investment grade BBB- to BB+ 'junk' should concern their banks and the government. It is the strongest signal yet that the lead-up to the planned expiry of the retail deposit guarantee scheme on October 12 next year will be anything but smooth. There is now a significant risk that trustees will be tempted to pull the trigger on finance company receiverships in the lead-up to the scheme's expiry to ensure their depositers will get 100% of their money back by exercising the government guarantee. The finance company sector is increasingly desperate for either the government to outline its plans to replace the scheme with some form of deposit insurance or at the very least to simply extend the scheme to October 2011 to match the expiry of Australia's scheme and buy some time.

Without some announcement soon, finance companies will have to stop lending as depositors refuse to roll over their investments beyond the October 12 deadline. Given most of the remaining finance companies try to match their lending maturities with their funding maturities, this means they will have to stop making loans expiring beyond the October 12 deadline. A couple have alternative sources of funding, but most still rely on retail debenture investors. South Canterbury had NZ$1.48 billion of debentures outstanding as at December 31, while Marac has NZ$769 million of debentures oustanding. That is a NZ$2.25 billion problem right there. Overall, we at interest.co.nz estimate that finance companies covered by the guarantee owe retail depositors up to NZ$5.85 billion. If trustees were to force all of them into receivership on October 11 next year, that would be a major fiscal problem for the government. Let us not even think about the building societies and credit unions, who also lack investment grade credit ratings. This uncertainty creates the risk that all finance companies except UDC, which is backed by AA rated ANZ, will have to stop lending shortly unless the government clarifies what it plans to do. Many have already stopped lending. This could turn into another credit crunch, but in a much more crucial part of the economy. The property development finance company credit crunch of 2007 and 2008 saw the demise of Bridgecorp, Capital and Merchant and MFS, along with moratoria for Strategic Finance, St Laurence, Dorchester and North South. They have all stopped new lending, throwing the residential and resort development sectors into chaos. New small business credit crunch? The next phase of the credit crunch could see plant, equipment, car and small business lending from finance companies dry up. That would have a devastating effect on small to medium businesses who are heavy employers and are usually unable to find funding from banks. A chill is already settling over the sector given much plant and equipment lending is for maturities of 3-4 years. The next penny to drop will be consumer lending by finance companies, which tend to have shorter durations.

The problem for the government is that any decision to delay the expiry of the scheme would simply delay the inevitable. While these finance companies don't have investment grade ratings and are no longer guaranteed by the government they will struggle to raise money from the public or from banks.

Many had hoped that the ongoing move to Reserve Bank regulation of Non Bank Deposit Takers (NBDTs), which includes finance company, building societies and credit unions, would force a rationalisation of the sector. This is where healthy finance companies or banks would scoop up the weak to create something even stronger with an investment grade. That rationalisation never happened amid the carnage of failures and moratoria. It certainly won't happen now given the potential leaders of the rationalisation are themselves under clouds. Both Marac and South Canterbury will struggle to recover their investment grade credit ratings. Standard and Poor's made clear they could cut their ratings further unless they are successful in raising fresh capital and held out little hope of reversion to BBB-. South Canterbury's owner Allan Hubbard, 80, is scrambling to pump in extra cash and to find a new cornerstone shareholder to manage a succession from Hubbard to new shareholders. An IPO in this market and after last night's downgrade is unthinkable. A full takeover by a bank, possibly one owed substantial amounts by South Canterbury, is more likely. The same can be said for Marac Finance's shareholder, which is the NZX-listed Pyne Gould Corp. It is finalising a fresh capital raising and was looking at changing Marac's status to a bank, possibly with an IPO. That will now be very difficult. It is still mired in its shareholding with the flailing PGG Wrightson. Forced marriage ? At some point the Reserve Bank and the government may have to step in to force rationalisation. That could include a forced marriage or takeover of one or both of them by a bank. The alternative scenario is that somehow PGC and Hubbard are able to raise the fresh equity capital. Even then Standard and Poor's has said upgrades back to investment grade will be difficult in the current economic climate. Will retail debenture investors be confident enough to put their money in junk bonds at reasonable interest rates post the expiry of a guarantee? They may do it with some sort of insurance scheme, which is likely to be expensive for the finance company, or through much higher debenture interest rates, or a combination of both. Junk rated debt maturing after October 2010 should be offering much more than they are now. Our rates table for all institutions offering deposits of more than a year shows finance companies offering around 7-8% for 2 year debentures, which is just 3-4% above government bond rates. Junk bonds in the United States are currently trading around 9% above government bond yields, Bloomberg data shows. That means finance companies should be offering at least 13% or double what they are now to compensate the investors for the risk involved. I certainly wouldn't be telling my mother in law to invest in deposits or debentures in any non-investment grade rated banks, finance companies, building societies or credit unions that expire after October 11 next year. Meanwhile, Bill English and John Key may be spending more time on the plane to Timaru and other places over the next few months hammering out deals and cajoling finance companies to fix their balance sheets. A few Treasury officials will also have their work cut out for them.

Bernard If you had money

Bernard
If you had money in SFC would you leave it in even with the Govt guarantee? I would remove mine this morning, Trust politicians ,I dont think so. Trouble is going to happen sooner than you think.

AndrewJ. Many thanks. I've edited your comment. A gentle reminder to all not to use defamatory or abusive language

by garkenro | 14 Aug 09, 11:24am

A very eye opening (watering)

A very eye opening (watering) article BH. A wake up call if ever I saw one on where the economy could go in next few months and it ain't pretty.

by Wally | 14 Aug 09, 11:28am

Gosh I wonder if Cullen

Gosh I wonder if Cullen is learning anything from this?

by Andrewj | 14 Aug 09, 11:31am

Thanks Bernard,Ill be more careful

Thanks Bernard,Ill be more careful had no idea I was so close to the wind moderation is my aim for the future. My apologies.

by Paul Bettany | 14 Aug 09, 11:33am

BH I think it is

BH
I think it is an asset valuation problem as they are heavily dependent on valuations continung to rise.The realestate market has turned and the recession is over!There will not be a problem by October next year!You look at laggin indicators to much and overly pessimistic in your predictions.i.e. your projection of a Residential real estate collapse of 30%!More like 10% and will be back to 07 levels by next year!

by Andrewj | 14 Aug 09, 11:38am

SCF Bonds http://www.nzx.com/markets/nzdx/SCF010 http://www.nzx.

SCF Bonds

http://www.nzx.com/markets/nzdx/SCF010

http://www.nzx.com/markets/nzdx/SCF020

by Bernard Hickey | 14 Aug 09, 11:42am

AndrewJ No worries. We love

AndrewJ
No worries. We love your stuff and I share your thoughts, but some words get lawyers very excited. They start imagining the billable hours and then it's all over rover
cheers
Bernard

by Wally | 14 Aug 09, 11:58am

Paul, in you go mate.

Paul, in you go mate. Buy the long bonds and make a killing. No?

by welly | 14 Aug 09, 12:20pm

Given the cost of any

Given the cost of any deposit growth is payable the HM Treasury, at the rates below.
This downgrade has just killed off any the possibility of any growth in deposits,

# 50 basis points per annum to institutions rated BBB+, BBB and BBB minus
# 100 basis points per annum to institutions rated BB+ and BB
# 300 basis points per annum to institutions rated below BB or are unrated

by Kappa | 14 Aug 09, 12:52pm

Interesting article, however slightly misrepresented.

Interesting article, however slightly misrepresented. One could not see that the total market collaspes so we have say a 50% liability of the $$ mentioned. Furthermore, it would seem that all sectors which are seeing a rise at present are doing so on the back of a false market. It surprises me then that so many people are upbeat and only a few bloggers apparently have it right. I strongly believed that the market had it wrong, however aside from a high US/NZD the Asian market is very strong for exporters and should hold up a small economy like NZ. I want to buy a new house but cannot get anything to interest me and i'm above $2-3m. very little is available, which has been the case for well over a year. Prove to me why bloggers here are right and the majority of financial people are wrong??
Lastly, tell me what caused the great financial problems of 07/08 and how they were corrected so it will never occur again..??

by steven | 14 Aug 09, 12:56pm

my first commnet is oh....the

my first commnet is oh....the next is....OH.

One thing, what's the impact on the retail sector? by the this mean the big ticket items like TVs etc, at DSE, Noel Leemings etc that often do "Interest free" deals....I have one with DSE and surprise surprise it runs out next.....October.....I assume its financed via such lending? So as we run towards that magic October are we going to see shorter and shorter Interest free deals? what effects is that going to have on the retailers? Does it have any?

GE used to be the backend finance for Placemaker selling its Kitchen's no longer do I see any Interest free.....

regards

by William | 14 Aug 09, 1:01pm

Kappa, these 'financial people' need

Kappa, these 'financial people' need to keep us investing and trading and buying consumer goods. If we dont financial people go out of business.

by kin | 14 Aug 09, 1:09pm

That's what happens when Goverments

That's what happens when Goverments think they can control human destiny....other than sending people to jail, I think goverments can only make a muck of everything they do. The problem of goverment guarantees is always the problem of when do they expire? the answer is "Never" because the expectation created cannot be erased unless the goverment is willing to tolerate chaos and loss of power. The same applies everywhere especially in the US...."To big to fail" syndrome.

I am quite definite in my opinion that the goverment will extend the guarantee infinitum.
All the other discussion is just that : "discussions"

by Wally | 14 Aug 09, 1:22pm

Kin there is the option

Kin there is the option of providing a scaled guarantee post the extended date(100% likely English will match Rudd) by which the govt will extend cover over 90% of deposits in 2012, then 80% in 2013 etc down to a final rug pull at say 30% cover. This would slow any exodus of loot but I am sure it would come at the cost of govt controls over salaries etc in the finance companies. NO more perk loans.

by alex | 14 Aug 09, 1:29pm

so tell me again why

so tell me again why we should guarantee "risk Takers".My share prices aren`t guaranteed.My beef prices same.Lamb prices same.More market economy my backside.

by Steve K | 14 Aug 09, 2:00pm

The aussie banks might have

The aussie banks might have bigger problems than their exposure to SCF and Marac to worry about as well. Looks like the debt problems of private equity are finally starting to emerge into the public arena

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1059...

How about about an item on corporate CEO compensation and its relativity to company performance. We all know the bonus culture overseas got out of control but what about NZ?. eg would the payout to farmers from Fonterra or progress on added value products be any worse if the whole of head office was run by graduates on $30,000pa? Executive compensation it seems to me has exploded upwards with no corresponding increase in performance - indeed the evidence from the US is that is quite the opposite. The CEO's of these NZ finance companies are a case in point. There seems to be rationalisation by executives and directors that "we have to pay them that much otherwise someone else will". Here's an idea. Let someone else. Is the pool of management talent so small worldwide that companies have to pay any amount to get the "right person". I'm betting for every overpaid CEO there are 100 others who would do at least as good a job if not better (or in many cases they couldn't do any worse) at a fraction of the salary. Bruce Sheppard seems to be the only one holding them to account.

by Paul Bettany | 14 Aug 09, 2:15pm

wally Buy any asset as

wally
Buy any asset as inflation will drive asset classes higher.Inflation means hard assets not financials.Land,houses and commodites!

by Wally | 14 Aug 09, 3:05pm

I'll stick with copper and

I'll stick with copper and other such commodities Paul. The rest are dogs.

by Steven | 14 Aug 09, 3:29pm

Wally: "Gosh I wonder if

Wally: "Gosh I wonder if Cullen is learning anything from this?" Wally, I dont think he had much choice, if he hadnt done it when he did he would have had a melt down then and there, the world would have deserted NZ....lets face it its because the finance sector is an in-competent bunch of fraudsters and not becasue of Cullen.

regards

by Steven | 14 Aug 09, 4:20pm

Kapa: "Prove to me why

Kapa: "Prove to me why bloggers here are right and the majority of financial people are wrong?"

We cant prove anything....As always, make your own mind up it is your money, and as bloggers I think you will notice we dont actually all agree....

"Lastly, tell me what caused the great financial problems of 07/08"

What triggered it? or what made it this bad?

The trigger (IMHO ~ in my humble opinion) was the crude oil price, when the energy input costs to the US economy got to 6~7% of GDP it all collapsed....the high petrol/energy costs caused poor ppl etc to default in the sub-prime market...the mortgages of which were sliced and diced into so called grade AAA CDSs.....which instead of the expected 5% default rate were probably little more than junk....massive multipliers took over....the investment banks had huge worthless debt left on their hands....

What caused it was greed.....over 30 years....since the days of Reagan.

"and how they were corrected so it will never occur again..??"

The estimate was 12trillion has been lost out of the global financial system, the Fed etc has thrown 2trillion into the hole....its too big a hole.........and thats the first hole....next up is the Prime melt down and commercial meltdown....all the worthless trash owned by those same banks.....an even bigger hole....maybe as high as 50trillion worth the second round is too big to fill.....

It has not been corrected, the cracks have been papered over....it might hold or they might not....

Energy use is essentially pretty in-elastic (so supply and demand "curves" are all but vertical) hence its swings from $147 to $35 and back up to $70 in a year...throw in a load of speculators keen to make money no matter what the cost to anyone else....and you have huge and un-controlable volitility. But speculators dont make money unless there is a shortage (or they can corner the market and create one). In 2005 we reached peak oil output and the supply was essentially flat until July 2008. At which point oil demand collapsed as economies collapsed....so the price collapsed.....

So IMHO, this will occur again, oil will go up to 6~7% of GDP and we will see another collapse....and then another....As long as we rely on a declining energy resource our economies are going to decline....massive paper wealth is going to be eliminated, whats going to be left is the real economy.....it going to take 20~30 years and we are all going to be very poor....might be fit though as we walk and cycle every where....

So if you have money, I'd suggest taking steps to protect its real worth...

regards

by Steven | 14 Aug 09, 4:26pm

"Buy any asset as inflation

"Buy any asset as inflation will drive asset classes higher.Inflation means hard assets not financials.Land,houses and commodites!"

This assumes inflation...and not deflation....hard assests such as houses and land are only worth what ppl can and want(afford) to pay....if we really see deflation then these are all going to drop in value....I think ppl are being mad right now buying houses etc...if it was me I'd go Bonds and index linked ones....ride this out without losing real wealth......

regards

by Bernard Hickey | 14 Aug 09, 4:28pm

Steven GE Money is not

Steven
GE Money is not covered by the guarantee here so this is not a factor for them. They are one of the major funders of these ' 18 month interest free' (Insert Tui billboard here) deals at Noel Leeming etc.
Fisher and Paykel Finance, which is guaranteed and has the same issue, does lend into this type of consumer sector.
But I don't think it's as vulnerable as some of the other small business type lending.
cheers
Bernard

by jill | 14 Aug 09, 4:33pm

I did see an item

I did see an item on FOX NEWS asking the question was GE another ENRON??

by Bernard Hickey | 14 Aug 09, 5:39pm

Jill No worries. They're too

Jill

No worries. They're too big to fail, according to the US government. If they won't let Citigroup and Goldman Sachs die they won't let GE Money die (or GE for that matter).
Besides GE owns CBNC. Way too big to fail.
cheers
Bernard

by Steven | 14 Aug 09, 5:49pm

Bernard H: no I suspected

Bernard H: no I suspected GE was probably not covered....I was just trying to ask / gauge / comment that there could be an effect on retailers similar to small businesses not being able to get finance funding for plant past October.

Since GE withdrew from Placemakers Ive seen no other interest free deals from them....so that must have effected sales.....

regards

by Steven | 14 Aug 09, 5:53pm

Jill: Enron was corrupt...are GE

Jill: Enron was corrupt...are GE also? dont think so....

by Steven | 14 Aug 09, 5:57pm

Wally: It maybe Aliminium and

Wally: It maybe Aliminium and silver...are worth looking at.

regards

by Fairfax Orouke | 14 Aug 09, 6:15pm

Phosphorous. Watch that space

by Kappa | 14 Aug 09, 6:23pm

Thanks Steven. An intellegent reply,

Thanks Steven. An intellegent reply, which, right or wrong was worth reading.

by marky mark | 14 Aug 09, 6:26pm

Steven, I agree that execs

Steven,

I agree that execs are overpaid. The problems with reigning in executive comp are really a subset of the wider 'principal-agency' problem which has been laid bare over the last couple of years. Simply put it means that rather than acting in the long-term best interests of the principal (the company and shareholders) the agents (executives and employees) act in their own short term self interest.

In effect this means that most of the profits go to the employees and not to the owners who are too far removed. When things blow up - the employees don't give their salaries and bonuses back but the shareholders get wiped out.

Here's a short clip from John Bogle who complains about what he calls "managerial capitalism".
http://www.youtube.com/watch?v=za6inWhZcs8

by Ross | 14 Aug 09, 6:44pm

Marky Marky ---some other commentator

Marky Marky ---some other commentator put it another way recently. He said the problem was "weak owners". That is shareholders have stand up to these CEOs and call their bluff when they tell this BS that they have to pay so much to keep the talent.

by Bernard Hickey | 14 Aug 09, 7:04pm

Steven Very good point. Hadn't

Steven

Very good point. Hadn't thought of it like that. You're right some retailers will be affected. I would need to research which retailer uses which finance company. I know Farmers uses Fisher and Paykel Finance and some other dedicated Fisher and Paykel electrical goods stores do the same.
Your point on Placemakers is very interesting. Fletcher Building reported http://fletcherbuilding.co.nz/Corporate/downloads/Presentation%20Aug%202... (Page 16) that its distribution arm (Placemakers) saw sales fall 18% last year to NZ$883 million. I'm sure it was a factor.

cheers/made me think more which is a good thing
Bernard

by jill | 14 Aug 09, 7:54pm

Well GE money have just

Well GE money have just been fined Fifty Million dollars in USA maybe FOX NEWS are on the button,check it out Bernard ,the inference was like earlier reported ANOTHER ENRON?Bearing in mind they have been operating since 1985 as GE MONEY?not unsinkable.

by jill | 14 Aug 09, 8:22pm

Free Polls, Questions, and Answers,

Free Polls, Questions, and Answers, News Discussions - SodaHead
Ask a Question
Answer Questions
Discuss
Question :: Money : Investments & Real Estate
GENERAL ELECTRIC FINED 50 MILLION DOLLARS FOR FRAUD BUT YET THE ONES THEY DEFRAUDED ARE THE ONES THAT NOW GET HIT WITH THE FINES, IT IS FAIR?
GENERAL ELECTRIC FINED 50 MILLION DOLLARS FOR FRAUD BUT YET THE ONES THEY DEFRAUDED ARE THE ONES THAT NOW GET HIT WITH THE FINES, IT IS FAIR?
General Electric Co will pay a $50 million civil penalty to settle charges by the U.S. Securities and Exchange Commission that it misled investors with some fraudulent accounting in 2002 and 2003.... General Electric Co will pay a $50 million civil penalty to settle charges by the U.S. Securities and Exchange Commission that it misled investors with some fraudulent accounting in 2002 and 2003.

The SEC found that the largest U.S. conglomerate had intentionally wrongly accounted for some commercial paper hedging activity and the sales of railroad locomotives, in an effort to make its financial results look better.

The individuals that were the ones lying have not been charged but it's the company that will have to pay the fine which will effect the shareholders the very persons that the liars lied to.

How fare is that? Fat cats get fatter and not it's fact. Crime really does pay and the government backs them up. Well, G.E. is part of this administration so it makes perfect sense.

Oh, yea....it only cost the share holders another 200 Million that that the company paid to lawyers to fight against

Lets break this down for the simple minded:

Party A claims they are making lots of money so they attract investors to buy their shares of stocks they become party B.

Party A gets caught lying to party B that bought the shares and now has to defend themselves.

Party A then has to pay out to lawyers 200 Million to defend themselves from the SEC and now that costs Party B with less profits so their stocks are worth less.

Then Party A is found to have lied to party B and has to pay a 50 Million dollar fine to the SEC. That then costs Party B another 50 Million in Losses just because Party A lied in the first place.

Question: Shouldn't the liars have to pay the fines and legals fees not the company shareholders?

http://www.newsdaily.com/stories/tre5734g4-us-ge-sec/ (more)

* Answers
* Results

Read all 4 comments
Of course it's not fair and the persons that lied should go to jail and also pay the fines and legal costs. Of course it's not fair and the persons that lied should go to jail and also pay the fines and legal costs.
It's a way of doing business now that the ones that do the crime get others to pay the fine. It's a way of doing business now that the ones that do the crime get others to pay the fine.
Undecided (Please leave a comment)
Add Media
Join the discussion! Leave a comment.
Loading...

asked by
Hula girl
Question Stats

* Posted 08/06/09
* 4 answers
* 4 comments
* +2 raves

Top Comment

*
Pearlie
Reply
+3 raves by Pearlie posted Aug. 6

Answered It's a way of doing business now that the ones that do the crime get others to pay the fine.
I can't believe they don't have to pay or go to jail.
Funny how big rich companies, banks, etc..get away with so much.What happened to?? Do the Crime, Do the time?? That's the only fair thing.

View thread
text size
Sort By

* Most Raves
* Least Raves
* Oldest
* Newest

Comments

*
ArmyMason
Reply
+1 raves [-] by ArmyMason posted 6 days ago

Answered Of course it's not fair and the persons that lied should go to jail and also pay the fines and legal costs.
The share holders shouldn't sit back and accept this.
*
bacon bits
Reply
+1 raves [-] by bacon bits posted Aug. 6 (edited)

Answered Of course it's not fair and the persons that lied should go to jail and also pay the fines and legal costs.
Of course they're connected to the obama administration...is there anyone or anything not rotten about them?

They should have to pay and pay dearly! Fired and fined and should be made to give over their stocks!
*
Hitler was a community organizer
Reply
+1 raves [-] by Hitler was a community orga... posted Aug. 6

Answered Undecided
hey if you cant get money out of the criminals...get it from the victims
*
Pearlie
Reply
+3 raves [-] by Pearlie posted Aug. 6

jill : you lost me

jill : you lost me on that last bit, ......and the piece in the middle,......well, all of it really !

Hey guys, I've got some damn fool referendum thing to vote on ; anyone know someone in this country who still has a coin , so I can flip it ? Gotta get me $ 9 million worth outta this thing.

by expat | 15 Aug 09, 1:49am

Blimey, looks a bit messy.

Blimey, looks a bit messy. Spose the bank lending rates will go up now.

by Bryan Spondre | 15 Aug 09, 9:51am

@jillintawa - can you repost

@jillintawa - can you repost without all the additional info ?

by jill | 15 Aug 09, 11:09am

Sorry Bryan i stuffed up

Sorry Bryan i stuffed up can you delete message thanks.

by Wally | 15 Aug 09, 12:06pm

Steven, my point earlier was

Steven, my point earlier was that the Labour fools were blinded by the votes that came from the jobs that came from the bubble that they were happy to see grow to the size it did. If Cullen was able to shove his fat finger in the AIA deal, he was also able to throttle the flood of cheap loot coming in past the nose of the RBNZ. It would not have taken much of an effort. Trouble was the resulting fun and games made Labour look good and gave them the opportunity to splurge the revenue every which way but especially into stupid wasteful idiocy that remains with us today. Now we are stuck with that legacy of splurging and with the mountain of debt but guess what, the jobs are gone and they will not be coming back.

by steven | 15 Aug 09, 12:07pm

Kappa: 50% liability.....and indication of

Kappa: 50% liability.....and indication of the % might be who are lending pas October...from other coments that could be a lot higher.... also snowball effect....ppl have ben burnt, 50% might be low....its not un-reasonable to consider a far higher % IMHO

by steven | 15 Aug 09, 12:13pm

Wally: I wont agree with

Wally: I wont agree with "Labour" fools.....Pollie fools yes....it is un-questionably a case of lacking leadership....but the voter is very unkind....if you dont promise jam today, tomorrow and in the future and another pollie does, you are toast...so to me its a shallowness of the voter more than anything else....The fun and games would have seen a similar action from National, they may well have spent a bit less, but they would have tax cut'd and probably paid down debt slower...aka Bush.....I think (god help us) because Labour paid down debt, National now have options....on the flip side Labour near the end of their term did leave their successor some land mines to step on....plus of course a blindfold....

by Roger Thompson | 15 Aug 09, 12:26pm

Wally : The sad thing

Wally : The sad thing about AIA, was how the Gumnut airline (Air NZ) , and Auckland councillors, in a pique of xenophobia and self-interest, blocked the deal offered earlier by the Dubai consortium. They would have made Auckland the hub of their pacific connections , as Qantas blocked them so well in Australia. We stuffed up there , big time. A re-vamp of Auckland Airport to truely international standards , was on the cards . And Air NZ would have profited too, from the increased traffic flows. Sadly they were too stupid to see that........And that's why the Gumnut wound up owning 80 % of their stock, in the first instance. The directors of Air NZ were so dumb ! ( as for the later deal, the Canadians offered nothing to grow the airport, they just wanted a cash-cow to milk of dividends. Yet their's was the deal that got serious consideration ! Bizarre, truely bizarre. )

by Wally | 15 Aug 09, 12:45pm

Well Steven, I also tend

Well Steven, I also tend toward the opinion that it is gutless politicians who decide to slice the bacon every election and that our system is an ongoing sickness. It is now so deeply in debt, that there is no way out. So many families are now serfs to the money masters and these families will go on handing over most of their incomes for the rest of their lives. Labours legacy!

by steven | 16 Aug 09, 1:17pm

"Fletcher Building reported ---8><--- that

"Fletcher Building reported ---8><--- that its distribution arm (Placemakers) saw sales fall 18% last year to NZ$883 million.

and I wonder if they have killed the golden goose....

About 3years ago I finished a DIY $35k extension to my house....when I looked back at the bills the only thing that made it cost effective was my free Labour.

Prices since then have risen in PMakers indeed all of them to the point that I dont do DIY much now, its not giving me any return...Add in that the quality of the wood is quite frankly cr*p....there are times I go in looking for say 4x2 and walk out as what they have is rubbish...this might go on for 2 or 3 weekends....

Now I have contacts in the building industry, plumbers etc....I know full well that what I pay as "retail" (minus say 10% as I have an account) is nothing like the discounts tradesmen get, 30~50% seem typical....or if you want say a F&P part, F&P wont sell it to you, but only through agents, who charge $100+ an hour to fit it for you....

So sales dropping 18%? not surprised, ppl are not dumb....they can see themselves being ripped off.......

regards

Thing

by steven | 16 Aug 09, 1:20pm

Wally not Labour.....this is just

Wally not Labour.....this is just the same thing as National etc would want....a domesticated population "grateful" for what's given them......sometimes I think revolution would be a good plan....put the likes of Key and Clark up against the wall and shoot them......trouble is history shows what replaced them is far far worse......

regards

by steven | 16 Aug 09, 1:24pm

This is interesting.... http://www.nzherald.co.nz/business/news/

This is interesting....

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1059...

Got to wonder just where your money would be safe....

In this section

Offers for readers

The comment stream

Recent comments

Editors choice

Finance sector jobs

The news stream

Latest news

Most commented

Most viewed

Reader poll

Interest on Twitter

Opinion: Now finance companies are a NZ$5.85 bln problem for the government

Related Topics

interest.co.nz, Helping you make financial decisions

Text Size: