Why dont they just up their retail deposit rates to attract domestic funds?

Have you been to the High Court and tried to get one of these things ( or similar) enforced, POP? Good luck with getting your money back if there's a default.

It's economy of scale. Too bloody hard for the average person to orgainise that sort of thing.

That's right sam.p
We sold our business last year and even though we are only in our 40's we have retired and have started spending our savings. We don't care if we get to 70 and it runs out. If we keep saving the Govt will only devise more ways to take it.
The first $1 we earn from our physical efforts is taxed at 38% plus ACC as our investment income puts us into the top tax rate.
Spend your money now before it is taxed to death or inflation gobbles it up!
Don't let the Govt steal any more.

In the end we are stuffed!

POP
We have just over 3 mil in assets. 1/3 in our own house and toys. 2 mill mainly in term deposits bringing in 140k at the moment. We live on around 1/3 of the net income and reinvest the balance.

Who cares if it runs out? At this stage we are keeping up with inflation so the capital is actually increasing. Using various online calculators it looks like we will be ok.

Why see an accountant? What the F*&%%K do they know? We have done nicely without them and will continue to. We did see one accountant last year when we were concerned about "financial arrangements" IRD implications and he told us he wished he was us and good on us for what we were doing.

Life is good.

Well done, 'we are stuffed' .
Be kind to each other, though. I did the same as you at 39 in the late '80's and life teaches you that half of enough, isn't enough.

Thanks Janet,
yes, at any time anything can change and we could be back to the grind again. Good to make the most of it while it lasts though.
At the moment it is still early days and very fun. Who knows, we may get bored and start another business at some stage. It has only been 6months so far and we are looking forward to our 60 days overseas next month.

Have you seen the videos of the houses in California on youtube where mortgagees have trashed new houses before being evicted? Banks have been demolishing them with diggers also.

Mad world.

POP. What do you mean by "(we, 40's, we 70, = <60yrs)."?

Anyway, back to the real issue of the thread,
Wholesale Guarantee Funding explained by Bill English 11-DEC-08, remembering that we were first told, still are, that our banking system is fine and that the scheme would was only a confidence measure and would probably never be required to be used;

Firstly, Retail Deposit Guarantees: As the House had adjourned on 26 September and Parliament had been dissolved on 3 October for the election, it was necessary to use existing statutory powers to take timely action. Accordingly the power in the Public Finance Act 1989 for the Minister of Finance to give guarantees was invoked and was delegated to the Secretary to the Treasury. Under that delegation, the Secretary may issue Crown guarantees for the retail deposits in banks and other financial institutions that meet certain criteria and appear necessary or expedient in the public interest. I can inform the House that retail deposits in all the major banks and many other institutions are now covered by a Crown guarantee. Full details of the guarantee scheme, including the entities it covers, are on Treasury's website. To protect taxpayers the guarantees are limited in time and extent.

Secondly, Wholesale Funding Guarantees: New Zealand banks depend heavily on foreign funding, and the wholesale banking markets have been largely closed in recent months. Unless ready access to those markets can be re-established it is likely that pressures on the availability of credit in New Zealand, and on the exchange rate, could intensify next year. The Minister of Finance announced that the Crown will guarantee, using the same statutory power, specific wholesale financial instruments issued by major financial institutions if they meet the specified criteria. Acting under delegated authority, the Secretary to the Treasury must be satisfied that it appears necessary or expedient in the public interest to proceed with a wholesale funding guarantee. Officials are working actively with banks to facilitate use of the guarantee facility.
http://www.national.org.nz/Article.aspx?ArticleID=29038

And, this from Simon Johnson - Head Economist IMF 2007-8;
The Way Out

Looking just at the financial crisis (and leaving aside some problems of the larger economy), we face at least two major, interrelated problems. The first is a desperately ill banking sector that threatens to choke off any incipient recovery that the fiscal stimulus might generate. The second is a political balance of power that gives the financial sector a veto over public policy, even as that sector loses popular support.

Big banks, it seems, have only gained political strength since the crisis began. And this is not surprising. With the financial system so fragile, the damage that a major bank failure could cause"”Lehman was small relative to Citigroup or Bank of America"”is much greater than it would be during ordinary times. The banks have been exploiting this fear as they wring favorable deals out of Washington. Bank of America obtained its second bailout package (in January) after warning the government that it might not be able to go through with the acquisition of Merrill Lynch, a prospect that Treasury did not want to consider.

The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary.

In some ways, of course, the government has already taken control of the banking system. It has essentially guaranteed the liabilities of the biggest banks, and it is their only plausible source of capital today. Meanwhile, the Federal Reserve has taken on a major role in providing credit to the economy"”the function that the private banking sector is supposed to be performing, but isn't. Yet there are limits to what the Fed can do on its own; consumers and businesses are still dependent on banks that lack the balance sheets and the incentives to make the loans the economy needs, and the government has no real control over who runs the banks, or over what they do.

At the root of the banks' problems are the large losses they have undoubtedly taken on their securities and loan portfolios. But they don't want to recognize the full extent of their losses, because that would likely expose them as insolvent. So they talk down the problem, and ask for handouts that aren't enough to make them healthy (again, they can't reveal the size of the handouts that would be necessary for that), but are enough to keep them upright a little longer. This behavior is corrosive: unhealthy banks either don't lend (hoarding money to shore up reserves) or they make desperate gambles on high-risk loans and investments that could pay off big, but probably won't pay off at all. In either case, the economy suffers further, and as it does, bank assets themselves continue to deteriorate"”creating a highly destructive vicious cycle.

To break this cycle, the government must force the banks to acknowledge the scale of their problems. As the IMF understands (and as the U.S. government itself has insisted to multiple emerging-market countries in the past), the most direct way to do this is nationalization. Instead, Treasury is trying to negotiate bailouts bank by bank, and behaving as if the banks hold all the cards"”contorting the terms of each deal to minimize government ownership while forswearing government influence over bank strategy or operations. Under these conditions, cleaning up bank balance sheets is impossible.
http://www.theatlantic.com/doc/200905/imf-advice/4
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It has been the excess lending of created credit into circulation by non-productive means that caused the closed loop international banking system to no longer be able to move what little reserves they had around the world like chairs on the Titanic. Then it became clear they could not cover their imediate liabilities, they were insolvent.
But now they can continue on their imprudent lending way as their debt is now being guaranteed by tapping them into the Pay AS You Earn taxpayers vein.