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Top 10 at 10: US bank fears grow; Obama a plonker; Citi cancels cards; Doug's 'gratuities'; Dilberts
Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments in the comments below or please email your suggestions for Wednesday's Top 10 at 10 to bernard.hickey@interest.co.nz . We don't have paper to crumple up at interest.co.nz... 
1. Nationwide problems - Rob Stock at the Sunday Star Times reports that Treasury has raised concern about the liquidity, capitalisation and provisioning for bad debts of New Zealand's Allied Nationwide Finance. This is concerning and the last paragraph quoted below is stunning. It turns out finance companies were regularly covering up impaired loans by shareholders 'making good' the losses on the loans. Oh that's fine then...
The report was prepared by a "third party" for Treasury, which Allied Nationwide Finance's chief executive John Mallon said had commissioned reports on the state of several finance companies covered by its deposit guarantee scheme. It was delivered to Allied Nationwide Finance on October 1 and Mallon said the board was considering its contents. A carefully worded statement in the prospectus, which says the board is "satisfied the financial statements continue to be appropriate", suggests differences of opinion on the state of the firm between its board and the report's author. Mallon conceded the liquidity and capital position of the company has been eroded but the firm been making use of a securitisation programme to raise funds to pay out debenture holders who want their money back, a facility it inherited when it bought troubled Speirs Finance in September last year. It has taken some clever footwork for the finance company to remain within its trust deed pledge to "maintain a capital ratio such that total liabilities of the Charging Group do not exceed 90% of total tangible assets". It just squeaked in on June 30 with 89.9%, a number that would have blown out had it not been for a capital injection of $3.9m from its parent and a deal whereby Allied Farmers said it would make good losses on some loans, allowing them to be treated as unimpaired "“ an arrangement Mallon said was similar to schemes employed by Marac and South Canterbury Finance.
2. Doug's 'gratuities' - The debacle around Money Managers' frozen First Step funds just gets deeper. Money Managers' supremo Doug Somers-Edgar is donkey deep in it, reports Tim Hunter at the Sunday Star Times in an article titled "Millions in gratuities for First Step trio". It's painful to read. A morass of related parties and trusts all over the place. Needless to say, poor Mums and Dads are the losers and Doug and his mates seem to have been the winners.
Investors in the defunct First Step Trusts promoted by advisory firm Money Managers, now known as MMG Advisory Partners, have learned three wealthy individuals received $1.25 million from the funds in the last months of their operation. The three "“ Doug Somers-Edgar, Gerald Siddall and Russell Tills "“ were involved in marketing and managing the funds but also gained from an unusual feature of the investment structure that made them personal beneficiaries of four intermediate trusts. First Step investors, many of them elderly, are out of pocket by about $236m since the freeze in 2006. Among them is retired Wellington investor Peter Fletcher, who gathered the information about the trust payments in a meeting last month with MMG chief executive Derek Young and First Step trustee Edward Russell of sister company Calibre Asset Services. He was told the beneficiary payments were $1.25m in the 2006/07 financial year "“ the period in which the funds were frozen "“ following payments in previous years of $5.5m, $8.9m and $9.5m. The money was on top of management and brokerage fees earned by companies owned by the three of typically $6m-$7m a year. "It seems excessive under any circumstances really," said Fletcher. "They are entitled to a profit I'm sure, but considering [First Step fund manager] Matrix was apparently doing the work, it's more or less a gratuity to them. They didn't invest or risk any of their own money."
3. Opportunity or threat? - Allied Farmers Finance, owned by NZX listed Allied Farmers, is looking at buying loans from a large finance company in moratorium, reports Rob Stock at the Sunday Star Times. Potential candidates include Hanover Finance and Strategic Finance. Apparently Allied wants to turn around poor performance. Can I suggest that buying loans from Hanover and Strategic might be a risky strategy to achieve that turnaround....
Allied's managing director, Rob Alloway, a substantial shareholder in the company, would not confirm whether Allied Farmers was close to striking a deal but admitted the firm had been in discussions with firms in the sector. "I believe there are opportunities," he said, but added a word of caution. "There is also a mixture of asset qualities out there. There's some pretty bad stuff on people's books. These companies are in moratoriums for a reason." He admitted the firm had looked at debt for share swaps, but said such deals were not simple. Alloway said his brief was to make things happen at Allied Farmers. "I bought into Allied Finance earlier in the year and joined the board in July. I wasn't particularly impressed with the annual result." He said a firm the size of Allied Farmers should be looking at 10 to 20 deals a year, of which only some would proceed, and he added: "Allied Farmers will be making a number of announcements in the next four to six weeks around its current business and future opportunities."
4. Nervousness aplenty - I've been banging on for weeks about the problems in the US commercial real estate market that threaten to blow up in the face of America's banking system. Here's the first big piece of fallout to hit the US market. One of America's biggest commercial lenders, Capmark Financial Group, has filed for bankruptcy, MSNBC reported. It had US$21 billion of debt and US$20.1 billion of assets. Guess who was behind it?
Capmark was created in 2006 after a private equity group led by KKR & Co., Goldman Sachs Capital Partners and Five Mile Capital Partners bought the commercial real estate business of lender GMAC LLC.
5. Not so commercial - The commercial property debt news in the UK is bad too. Investors in the first British commercial mortgage bonds to be liquidated since the crisis have lost US$1.6 billion, Bloomberg reported. HT Gertraud.
Epic (Industrious) Plc issued bonds on 1,500 warehouses, which fetched 44 percent of their peak value in sales that completed this month. White Tower 2006-3 Plc packaged bonds against nine London office buildings owned by Simon Halabi, six of which went into administration this week.
Banks, insurers and pension funds that hold the bonds face losses from the 35 billion euros ($52 billion) in European commercial mortgage-backed securities that are set to expire over the next three years. Bank lenders have been willing to extend loans to help borrowers avoid default, while commercial mortgage bond issuers must repay investors by a set deadline.
"If they're not nervous now, then they've been hiding under a rock," said Hans Vrensen, interviewed in his role as head of European securitization research at Barclays Capital Inc, which he left last week.
Loans against hundreds of buildings were securitized throughout Europe, with more than 60 percent packaged near the market's peak. They include Paris's Coeur Defense, the largest office complex in Europe; London's city hall; German apartment blocks; and British hospitals and care homes.
"There's very little appetite among banks to recognize losses on their property loans, but CMBS doesn't have that luxury," said Jeffrey Rubinoff, a London-based real estate finance lawyer at Freshfields Bruckhaus Deringer LLP. "If maturity is looming, you're up against a hard date."
6. Motown mayhem - Read this story from MSNBC to get a sense of what's happening in the worst affected areas in America. The town council in Detroit has just tried to auction off 9,000 homes that it has seized because of unpaid rates. The minimum bid was US$500 but only a fifth of the 9,000 were sold after 4 days of non-stop auctions.
In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded. After five hours of calling out a drumbeat of "no bid" for properties listed in an auction book as thick as a city phone directory, the energy of the county auctioneer began to flag. "OK," he said. "We only have 300 more pages to go."
7. Mark to imagination - It's hard to believe this story has actually happened in recent months, but it has. A 20 year old woman called Denise Tejada who earns US$2,470 a month has borrowed US$183,000 from the US government to buy and renovate a house, Business Insider reports. The repayments cost 54% of her income. HT Gertraud.
Tejada appears to be using imaginary numbers about the value of her house. She says that when she bought it, the house was just a "box" with no kitchen or bathroom. Now it is "gorgeous". She claims the renovation has increased the value of her home from $155,000 to $255,000.
"I bought my house for $155,000. And now, after all the fixing, after all the remodeling, my house is worth $255,000. So just within a month period, I made a $100,000," she tells Market Place's Scott Jagow.
As far as we can tell, this is just mark-to-imagination valuation. She doesn't give any indication about how she arrived at the conclusion that she has made a $100,000 gain in just a month. Even if her improvements had dramatically increased the value of the house beyond the cost of the improvements themselves, she would have to contend a declining housing market. From last year to this year, the median price of homes sale in Oakland, California has declined 28%.
8. Drums beating - China is beavering away to reduce the reliance of the region on the US dollar as the reserve currency. It planned to use this weekend's ASEAN meeting to sell the idea of making the Yuan an international currency, The Times of India reported.
It is using the sense of uncertainty over the US dollar to sell a new dream of enlarged regional trade, financial support from Beijing and reduced dependence on the volatile dollar. China has also offered to contribute nearly one-third of the $120 billion economic stimulus package being worked out by ASEAN with the stated purpose of helping member-nations reduce their dependence on the International Monetary Fund. Japan offered to cough up a similar amount so that its influence in the region is not diminished. A senior Chinese official has said that the China-ASEAN Free Trade Area agreement, which will come into being on January 1 of 2010, will result in wide scale use of the renminbi or Yuan as the regional currency. "The upcoming CAFTA, which boasts the largest population among all the world's FTAs and allows zero-tariff on 90% of products traded between China and ASEAN, will quicken the process of RMB rationalization, " the official Xinhua news agency quoted Xu Ningning, executive secretary general of China-ASEAN Business Council, as saying.
9. 'Break them up' - The last US Federal Reserve Governor to retain any credibility, Paul Volcker, is now a lonely figure on the fringes of Barack Obama's White House. He endorsed Obama very early and was appointed as an advisor. But since then he has been shuffled aside by Treasury Secretary Tim Geithner and National Economic Council Chief Larry Summers. Sometimes though he does speak out. He has given an unusual interview to the New York Times and called for the too big to fail investment bank/commercial bank monsters to be broken up. But will Obama listen to him? No. Because the President of the United States is a plonker.
Mr. Volcker's proposal would roll back the nation's commercial banks to an earlier era, when they were restricted to commercial banking and prohibited from engaging in risky Wall Street activities. The Obama team, in contrast, would let the giants survive, but would regulate them extensively, so they could not get themselves and the nation into trouble again. While the administration's proposal languishes, giants like Goldman Sachs have re-engaged in old trading practices, once again earning big profits and planning big bonuses. Mr. Volcker argues that regulation by itself will not work. Sooner or later, the giants, in pursuit of profits, will get into trouble. The administration should accept this and shield commercial banking from Wall Street's wild ways. "The banks are there to serve the public," Mr. Volcker said, "and that is what they should concentrate on. These other activities create conflicts of interest. They create risks, and if you try to control the risks with supervision, that just creates friction and difficulties" and ultimately fails. The only viable solution, in the Volcker view, is to break up the giants. JPMorgan Chase would have to give up the trading operations acquired from Bear Stearns. Bank of America and Merrill Lynch would go back to being separate companies. Goldman Sachs could no longer be a bank holding company. It's a tall order, and to achieve it Congress would have to enact a modern-day version of the 1933 Glass-Steagall Act, which mandated separation. "People say I'm old-fashioned and banks can no longer be separated from nonbank activity," Mr. Volcker said, acknowledging criticism that he is nostalgic for an earlier era. "That argument," he added ruefully, "brought us to where we are today."
10. Shitigroup - How much trouble is Citigroup in? Mish at Global Economic Analysis points to a couple of ominous signs coming out of Citigroup. It has just cancelled credit cards linked to gas station partners and has hiked interest rates for many credit card customers to 29% from 19%. This is at a time when America's Official Cash Rate is 0.25%. Mish cites Karl Denninger's report on why Citigroup has taken such drastic action.
Citibank's average yield year-to-date (consumer and plastic) was about 12%. But they're suffering 10% defaults, making their true margin about 2%. That's still a positive number.... if it's accurate. This spread, of course, has a lot to do with previously-issued fixed-rate 12.99% cards (they and everyone else had a lot) that were handed out like candy to everyone and their brother, frequently with $10,000, $20,000 or even $50,000 credit lines. Huge numbers of small business owners - especially sole proprietors - use these cards as a means of financing operations. They relied on that 10 or 12% interest rate, and most of them have huge balances outstanding. I have since confirmed that this letter is not just going to people who have had credit "challenges". Indeed, this appears to be a blanket change on the part of Citibank. I now have multiple copies from people who assert that they have 750+ FICOs and have never missed a payment on this or any other obligation - the "paragon" of so-called "responsible" credit use. All of the letters are identical. The problem should be obvious - for someone with one of the 12.99% cards that is now 30%, this is a radical change that more than doubles monthly interest expense. Of those who have sent me copies of this letter and disclosed their previous rate, none were over 20%, meaning that these changes represent 50% or greater interest rate increases. If you're anywhere near the edge of being unable to pay, this will shove you off the bridge and into the deep, shark-infested water of bankruptcy.
80 Comments
@10: The "frightening" thing is
@10: The "frightening" thing is it could happen here....what's stopping 30~40% CC rates here? $25K seems excessive on a CC to say the least, but if they have been that silly....
regards
Two thoughts: 1 - as
Two thoughts:
1 - as we seem to be dealing with an epidemic of financial zombies (they shamble around, eating the brains of any healthy institution they come across, and are prone to sudden lurches of decomposition), perhaps this article and its comments thread may prove useful.
2 - Let's recall who relies on Shiti for all business and offshore banking facilities....our very own, made entirely in NZ - <a href="http://www.kiwibank.co.nz/about-us/press-releases/show-news.asp?story=81"Kiwibank. The money quote:
"During the year Kiwibank formed a partnership with Citibank to provide a full range of International accounts and services for Kiwibank customers. The accounts and services have been designed, in particular, to support small to medium businesses as they trade offshore, with cross border funds transfers, foreign exchange, foreign currency accounts, and trade services all available."
@waymad: and so? Kiwibank has
@waymad: and so? Kiwibank has to link with someone...
regards
#10 is a big deal
#10 is a big deal in the USA and world economy, credit cards are used as working capital for many smaller businesses, 25-75k balances are common for small business owners in the States. Here 20-30k is not unheard for owners with slow debtors ledgers in smaller companies/partnerships.
Bernard , you called President
Bernard , you called President Barack Obama , " leader of the free world " , a plonker ............. Gosh , you're beginning to warm up to the guy , he's no longer " a liar and a fool " ?
It's no secret that folk
It's no secret that folk have 'maxed out' on debt, and that it's run away ahead of actual. The problem here and now is that that hasn't been sorted, and it looks like we're right back on the negative-gravy train.
Energy analysis will tell you there ain't the 'fuelled' time window left for any of it to be repaid - be it credit-card, mortgage or national debt.
Leaves two options: a total implosion, or a global debt-forgiveness.
Place you bets....
Roger, He's a liar, a
Roger,
He's a liar, a fool and a plonker.
Waymad is right about Kiwibank. They shouldn't be anywhere near Citigroup. That connection will not be worth the reputational pain in years to come.
cheers
Bernard
Whew ! That's better .
Whew ! That's better . ........ . For a moment , thought you were going all soft and squidgy . Stay lean & mean ....... That's what we respect !
Bernard, You forgot puppet &
Bernard,
You forgot puppet & muppet, though kermit he ain't, not that green like Swarzenagar.
Silver lining to every cloud?
Silver lining to every cloud?
http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=10605592
My what challenging times these
My what challenging times these are. How to get past the mountains of debt without having to climb over the top. How to make the mountains shrink down until they are mole hills. Will the QE money destroying inflation creationism win the day or bring on the economic apocolapse....my money is on the big A. Maybe the Mayans sussed it eons ago when they picked 2012 as the end of time.
Gosh Alex : That makes
Gosh Alex : That makes destroying the economy seem to be a worthwhile objective . A shame that we turfed Cullen out ........... Nyuk nyuk haaaaaaaaa !
Wally "My what challenging times
Wally "My what challenging times these are"
Good call wally. The thing I find so disturbing is the lack of moral principles. Nothing is honest; hiding bad assets, inter-party deals, printing money, bailing out gamblers, fraud and deception as far as the eye can see.
Call it karma, whatever, but I am sure that no good can come of this, is this the road to hell.?
From Volker, "“The banks are
From Volker,
""The banks are there to serve the public," Mr. Volcker said, "and that is what they should concentrate on. These other activities create conflicts of interest. They create risks, and if you try to control the risks with supervision, that just creates friction and difficulties" and ultimately fails."
WOW - wouldnt it not be nice to return to the days where banking serves the economy, not itself.
Re (5) & (7) <i>There
Re (5) & (7)
There is mounting evidence that bubbles are forming again everywhere across the globe as easy money makes itself felt in asset prices. The latest evidence comes from Sweden where Europe's lowest home loan rates have pushed up the price of residential property.
Read more: http://www.creditwritedowns.com/2009/10/the-latest-bubble-warning-sweden...
#10: Jeez. You mean we
#10: Jeez. You mean we have to start PAYING for stuff when we want to buy it.
#9 Obama is not a plonker! Any US president is so beholden to their campaign funders that there is no room to do anything except on soft (ie unimportant) issues. Obama can't change the world but he can bugger it up less than the likes of the Bushes.
@Mark H: Is it [just]
@Mark H: Is it [just] "easy money" or is some/most money that has moved from say the hedge funds into "real" assets....The reason why I speculate is reading that ppl are withdrawing from hedge funds as hedge funds have lost a lot of $....so that money has to go somewhere...
Wally and others, Did you
Wally and others, Did you know that date is 21 December 2012 AD (13.0.0.0.0 in the old count) This represents an extremely close conjunction of the winter solstice sun with the crossing of the the Galactic Equator (Equator of the Milky Way) and the Ecliptic (path of the sun) This is an event that has been coming to resonance very slowly over thousands and thousands of years. It will come to resolution at exactly 11.11am GMT........just thought you might want to know (excuse the tangent) Did you know that a lot of crop circles designs are of Mayan decent. I'll go back to work now.
I'm a firm believer that
I'm a firm believer that the US market is now living on both barrowed money and time. The US is overdue, by about a month, for a second major crisis. Tomorrow should be rather interesting to see what dominoes start tumbling.
I'm still wondering why Obama doesn't sell Michigan to the Chinese for a handful of beads and debt forgiveness. It would be a Win-Win.
Hot off the PEC press..
Hot off the PEC press..
'W-shaped recession on the way says Productive Economy Council'
So the recession is over. At least Bill English is happy to say so and will spend the next month telling us we are out of recession and it's business as usual. That's fantastic news, or at least it would be if he was right.
But, says Selwyn Pellett of the Productive Economy Council, unfortunately he's wrong.
"Prior to the recession 30 percent of our GDP was from the export sector and that 30 percent is still very much in recession," says Pellett.
"How can we borrow $250 million a week to stimulate consumer and housing spending, thereby lifting the exchange rates and putting further pressure on the remaining exporters and then turn around and claim we have a sustainable recovery? The government can pump as much money as they like into the internal economy but it won't earn a cent towards paying it back," says Pellett.
"This bizarre idea that we can make exporters the whipping boys for the excesses of the internal economy has to stop. What is this government is doing for the Farmers and other exporters who are collectively having the hardest time in recent history?"
Federated Farmers have already come out and warned the government that the choice is either a short dose of reality now or the abyss when the economy inevitably crashes into a 'W' shaped recession, with spokesman Philip York saying :"If the Government believes its own rhetoric of an export led recovery then some hard decisions are needed immediately."
The export sector, says Pellett, don't want hand outs and don't want the internal economy getting them either.
"What we desperately want is for the hand outs to stop so the exchange rate can drop back where it belongs and that's less than 65 cents to the USD. The current rate is insanity relative to the state of the economy. "
"Bill English can talk up the economy all he likes but the reality is our real income as a country is export earnings and that income is plummeting. Even worse, the means of production and income generation are no longer being invested in due to the uncertainty of the returns."
"We have watched $7 billion in new loans go into new property lending while witnessing a reduction of $3 billion in business lending under this government's alleged focus on productivity," says Pellett.
"That's a recipe for disaster, and Bill English should understand that."
Bill English may talk about the government's "vision" to re-balance the economy but while those at the coal face of the economy continue to be hammered by policies aimed at pleasing the voting public rather than doing what is right for the country, that vision is merely a mirage, says Pellett.
"The exchange rate is killing sustainable jobs in our economy in the thousands. But as other countries have proven, you don't have to be a victim to the exchange rate. It is controllable if you implement the right policies. Those policies are well known, they are proven and they are within the Government's power to enact if it could muster the clarity of vision and fortitude to do so," says Pellett.
"When the export economy collapses Bill English won't be able to say it wasn't foreseeable, he won't be able to say he wasn't warned and he won't be able to blame it on the other guy. What will he say? Sorry?"
no polly's don't say sorry
no polly's don't say sorry
If Cullen won't say sorry
If Cullen won't say sorry , why should Wild Bill ? Remember Les , we had appalling hands at the economic tiller from 1999 to 2008 , steering us into the rocks of debt . All the Nat's are doing , is having a little snooze , to while away the journey .......... Ka- Booooomie !!!
"Those policies are well known,
"Those policies are well known, they are proven and they are within the Government's power to enact if it could muster the clarity of vision and fortitude to do so," says Pellett."
Such as?
regards
Steven - have a look
Steven - have a look here:
http://www.interest.co.nz/ratesblog/index.php/2009/10/23/opinion-why-new...
Plus variants as suggested in some comments. If complemented with unbiased/rebiased tax policy, then more effective.
@RT: Appalling, no....appalling was Muldoon
@RT: Appalling, no....appalling was Muldoon IMHO.
These days it seem the voters are their own worse enemy, Cullen et al just want to stay in power so give in. We've been on this merry go round of making paper wealth easily at the expense of the real productive economy for some decades. The Pollies and us in our fantasy world thought the good times would never end...wake up time...
regards
As a starter for 10
As a starter for 10 Steve.
Stop giving PAYE deductions to property speculators (ring fence losses as Australia does)
Bring in Capital Gains Tax (CGT) on everything other than the family home (as Australia does)
At introduction of CGT exempt all current investment so that CGT is not retrospective (as Australia did)
Capital Gains Tax only applies on the difference between inflation and the realised value (as Australia does)
Progressively introduce compulsory superannuation (as Australia and Singapore did)
Increased contributions in times of pending inflation and reduced contributions during recessionary periods (as Singapore does)
Adopt a managed dollar as part of our monetary policy, against a basket of our trading partners that ensures both price stability as well as protecting our tradable economy (as Singapore does)
Recapitalise Kiwi Bank to take market share and hard wire its behaviour to the needs of the RBNZ thus reducing the negative impacts of the big four Australian Banks on our economy
When we have addressed the current distortions then we should consider promoting "˜winning behaviours' through the tax system (as Australia does)
Roger - I agree, "Remember
Roger - I agree, "Remember Les , we had appalling hands at the economic tiller from 1999 to 2008 , steering us into the rocks of debt . All the Nat's are doing , is having a little snooze , to while away the journey "¦"¦"¦. Ka- Booooomie !!!"
There's nowt between em' really, hence my new names for their parties see:
http://www.interest.co.nz/ratesblog/index.php/2009/10/23/opinion-why-new...
Singapore has just delivered 15%
Singapore has just delivered 15% GDP growth compared to our 0.1% but their exchange rate in the last 30 days went up a 1/3rd of ours. Why?
They have their economy under control, money in the bank instead of being on the verge of an economic meltdown with debt to GDP here of 100%. They can buy and sell us if they wanted to but why would we want to look at winning formula.
I dont want to be Singapore I just want to have the sanity of their monetary policy.
Just a thought about banks.
Just a thought about banks. They borrow at 2.50% from the RBNZ and lend at 5.65%, a margin of 3.15%.
Am I right in thinking their markup is 126% ??
I think I might have missed my calling.
Steven : Be very careful
Steven : Be very careful wotcha say about Rob Muldoon . Iain Parker might catch sight , and that'll unleash a tirade upon us all .......... Good , God , Iain's sentences are longer than those of the judge who sent Bernie Madoff to gaol !
@Les, read it....wasnt impressed....I think
@Les, read it....wasnt impressed....I think care should be taken when assessing ppls solutions to problems....From my perspective generally problems seem reasonably easy to agree on, where it goes to custard is when politics/ideological bias write the "solution[s]".....
".....printing and then selling New Zealand dollars as the United States and the United Kingdom have done is one way to build up reserves......"
So buy USD as every other central banker tries to sell them off?....ummmm....if the Fed hasnt bailed out the world, do you really think NZ could?
"An overvalued currency and a repeat of the political inaction we saw in the last currency cycle will push any hope of a sustainable recovery further away."
Agree with that......but I dont think there is a thing we can do, we are caught between a rock and a hard place IMHO. Japan tried to devalue in the 1990s....it almost could because no one else did, its still a basket case....now when everyone else is....
Example,
Print to devalue the dollar, and buy USD that leads to a credit downgrade....so it costs more to borrow......and printing your local dollars is widely regarded as the road to hell and sure hyper-inflation...also can we control the degree of currency de-basement? I dont think so....
How will this helped exporters?
A good example is Japan...they did indeed improve exports, but their banks were/are still zombies......they have massive debt....
Some of this is "horror" reading....
http://en.wikipedia.org/wiki/Lost_Decade_(Japan)
This is a good one.....and looks like just how not to do it....
http://businessmirror.com.ph/home/opinion/17696-lost-decade-is-heading-t...
So maybe National's "in-action" is the lesser of evils.
@Selwyn: Trouble is, are these
@Selwyn:
Trouble is, are these what
1~6) Agreed
7) "Adopt a managed dollar as part of our monetary policy".... floating is floating...
eight) I think Kiwibank should be left as is...
9) ikky....Govn's always screw up something like that...."winning behaviors" becomes "whinnying behaviors" IMHO.
I dont see anything on cleaning up the share market and making business accounts simple and transparent so investors can be confident on what they are buying in to....ppl invest in housing because its perceived as less risk and is understandable....Bruce Sheppard seems to have some good points on that.
regards
@RT: My father-in-law worships the
@RT: My father-in-law worships the hallowed ground Muldoon is buried in. Its interesting that those advantaged by Muldoon seem to revere him, while those dis-advantaged, dont....For me the "donts" win as NZ was in a bad way economically after him....
Indeed Muldoon's policys outcomes should be a warning to us not to repeat them today....IMHO.
regards
IMHO used to stand for
IMHO used to stand for " Iain mauls Hickey over " . 'Cos Iain used to let rip at Bernard . You be careful the abbreviation doesn't change to IMSO ! ( I'm no fan of the Muldoon legacy , either ) .
Steven... 7) “Adopt a managed
Steven...
7) "Adopt a managed dollar as part of our monetary policy""¦. floating is floating"¦
No its managed as per Singapore! Steven if you get time do have a look at http://www.pec.org.nz/wp-content/files/Lets-look-again-at-monetary-polic... as its covered in there. Also some global economist talking about how it's a model to be admired.
If you listening to Bruce Sheppard well done. He has his critics but I think he is a decent man prepared to stick his neck out to get some transparency into our financial markets. That's leadership with conviction and oh for more of that in New Zealand. Sel
Steven - in regard to
Steven - in regard to the Singapore artcle, were there other aspects of their economic policy set that might be useful to us, either whole aspects, in part or adaptions thereof?
http://www.interest.co.nz/ratesblog/index.php/2009/10/23/opinion-why-new...
Les : pop over to
Les : pop over to Business Spectator for a good article by Alan Kohler " Dollar Disaster " . Echoes of wot we face here , pollies distracted with ETS , etc . Whilst massive damage is being wrought upon the manufacturing sector........Not sure about the " a thousand flowers will die " bit ........ These Aussie guys have softened alot since I lived there ......... 1000 flowers ............Jeepers !
A question for Selwyn or
A question for Selwyn or some else who understanding the detail banking better than me. With all the new IT technology we have these days is there really a need for so called reserve currencies ? For example , if I am exporting to Korea today I would have to quote in US$s but why should the banks not be able to handle Korean Won for me ? Korea is one of our major trading partners after all. The NZ$/Won rate is much more stable so it would be better for the NZ exporter and obviously the Korean customer would be happy.
Obviously the same question would apply for many other currencies.
Ross, there is nothing (technically)
Ross, there is nothing (technically) stopping exporters doing as you suggest, pricing goods and accepting payment in either Korean Won or NZD$ to use your example.
Roger - thanks, useful read:
Roger - thanks, useful read:
http://www.businessspectator.com.au/bs.nsf/Article/Australian-dollar-dis...
"A good start in Australia would be some recognition of what's going on."
Replace Australia with NZ and you have another truth based statement.
Cheers, Les.
Selwyn, Totally agree with your
Selwyn,
Totally agree with your top 10.
Just need a Govt now to impliment them.
Problem is we don't have one yet, well not in the form of all political parties formats in NZ at present.
Justathought says: about 21dec 2012 11.11am {The Mayan crop o prediction}
Makes me laugh that one ... very good.. even sounds like a Train Time Table !!
The "Singapore Model" is so
The "Singapore Model" is so different from ours it is hard to know where to start with a comparison.
Take compulsory super, for example. The contribution rate for a 40 year old earning more than S$1500/month is 20% from the employee and 34.5% from the employer. At times in the past, the Singapore Provident Fund has received more than 50% of GDP (although it is now less than that). Incredible. It is really a "forced savings/investment" model. See
http://mycpf.cpf.gov.sg/NR/rdonlyres/9F114FAD-9ED0-479E-BC80-875DEBFA37D...
Or state control. In Singapore the government controls 60% of the economy.
Or how about education. In an international comparison (in which 500 = world average), year 4 Singapore students were 2nd in the world for mathematics with 598, while NZ was 23rd with 492. (US = 529). Year 8 Singapore students were 3rd in the world, while NZ did not take part in the study at year 8.
Robert - ditto my question
Robert - ditto my question to Steven:
http://www.interest.co.nz/ratesblog/index.php/2009/10/27/top-10-at-10-us...
Matt S -- the problem
Matt S -- the problem is , at present , the big trading banks don't deal in Won ( using my example ) and similarly in Korea the banks don't deal in $NZ. Hence my question , in general why can't it be done today? Are the banks just sticking to their "old methods" ?
Take a map of South
Take a map of South East Asia onto the street Robert and invite members of the public to stick a pin in Singapore for a dollar prize. Charge them fifty cents a shot.
Ross / All: Does being
Ross / All: Does being easily traded help or hinder a small economy?
Can anyone tell me which part of this wouldnt make sense for New Zealand and why it gets caught up in anything other than monetary policy discussions.
"¢ The Singapore $ is managed against a basket of trading partner currencies
"¢ The trade-weighted exchange rate is allowed to fluctuate within a "policy band"
o level and direction of which is announced to the market periodically
"¢ The exchange rate policy band is reviewed to ensure that it remains consistent with the underlying fundamentals of the economy.
"¢ The band can move up or down (to allow for expected appreciation or depreciate
"¢ The level and slope of the band may also be adjusted
"¢ The adjustments are made in a manner that is designed to promote price stability.
"¢ Thus the type of exchange rate employed is very different from a traditional fixed exchange rate.
In addition Singapore employed Capital Management Techniques with the purpose of
"¢ Insulating from disruptive speculation
"¢ Protection of the soft FX peg
"¢ Increased financial stability
"TVNZ pays 168 of its
"TVNZ pays 168 of its employees more than $100000 a year, with the top salary of more than $830000 paid to chief executive Rick Ellis" (web) easy loot if you can get it.
A wad of loot greater than that paid to the President of the USSA. No bloody wonder we need to borrow 40 billion.
@Wally, It is interesting to
@Wally,
It is interesting to know the outcome. It would tell us something, right?
Are we so used to be comparing ourselves to maybe some of the OECD countries?
Are we missing on something, are we conscious to know about non-OECD countries that might be doing well in certain areas? or those smaller countries that are successful in certain policies?
Do we tend to look at others' failure or their success?
Interesting questions to ponder, cheers.
"The cost of New Zealand
"The cost of New Zealand government protection of Anglo-Australian mining giant Rio Tinto from carbon and electricity charges means taxpayers will pay the equivalent of $NZ225,000 ($A183,980) for each job at the Tiwai Point aluminium smelter, says a carbon expert."
"It would be cheaper for the New Zealand taxpayer to pay every single Tiwai Point worker and contractor $NZ200,000 ($A163,539) per annum for the rest of their lives to simply stay home," said Kent Duston of Wellington-based Autonomic Consulting"
The Age.
This stuff is not radical
This stuff is not radical its just common sense.
Should Financial Flows Be Regulated?
Gerald Epstein, July 2009, Political Economy Research Institute (PERI), University of Massachusetts, Amherst
"capital management can enhance democracy by reducing the potential for speculators and external actors to exercise undue influence over domestic decision-making either directly or indirectly (via the threat of capital flight)"
"Capital management techniques can promote financial stability through their ability to reduce currency, flight, fragility, and/or contagion risks"
"Capital management can discourage less desirable types of investment and financing strategies by increasing their cost or precluding them altogether"
Or perhaps........... Optimal Bank Regulation
Or perhaps...........
Optimal Bank Regulation and Monetary Policy,
John J. Seater, October 2000, The Wharton Financial Institutions Center
"Optimal monetary policy and bank regulation are simultaneously determined, implying that there must be tight coordination between the central bank and the regulator."
"Bank regulation affects the money supply, so it ends up being chosen simultaneously with and therefore influenced by monetary policy. However, bank regulation directly affects output, so monetary policy affects output indirectly. Optimal choice of monetary policy takes this indirect effect into consideration."
"Bank regulation should be active rather than passive, continually changing in response to economic conditions."
"New results are that monetary policy affects the expected level as well as the variance of output, bank regulation should change continually in response to the state of the economy, and bank regulation and monetary policy should be tightly coordinated. This last result has important implications for the institutional arrangements for conducting regulatory and monetary policy
Good point Wally. I've said
Good point Wally. I've said before, Tiwai Point uses 15%+ of NZ's electricity at a "confidential" rate probably not much above cost. Better to either charge Rio Tinto normal rates or let them close and use the capacity elsewhere. So too Methanex in Taranaki. Imagine how much more money the country could make with normal rates for natural gas. The jobs don't justify the huge subsidies.
The fastest company turnaround I
The fastest company turnaround I ever did was in Australia and i only really did one thing. I ran a report on all the stuff that was being sold (and already in backlog) below 5% margin and stopped selling it.
It was amazing how busy that company was shipping shareholder dollars to customers. I am sure that story and solution would also work in New Zealand.
Wally : The CEO of
Wally : The CEO of TVNZ gets a salary twice that of the prime-minister of the country ............... I'm like , bowled over and spinning out , they're both public servants , but running a totally misguided shite TV station is more highly ranked than running the whole country , lock-stock-and indebted barrel......Saints preserve us !!!!
As I always knew, the
As I always knew, the Sir Humphrey snouts are the biggest snouts of the lot. Can you see how the weeny piglet politicians are finding it so hard to shove themselves to the front and get some of that easy public cash from the trough! What say you John Key..is this a joke being played on the taxpayers...are we really to be expected to believe it is not possible to find someone well qualified who will run TVNZ just as bloody well if not a dam sight better for less than half the fat wage paid to the suit there now?
CEO compensation is the biggest
CEO compensation is the biggest rort out. "market rates" and "commercially sensitive" are two of the bulls**t terms used to justify exhorbitant salaries out of all proportion to the rest of the staff (with the possible exception of CFO's)
"are we really to be expected to believe it is not possible to find someone well qualified who will run TVNZ just as bloody well if not a dam sight better for less than half the fat wage paid to the suit there now?" - You hit the nail on the head Wally. That would apply to every government dept, SOE and publicly listed company in NZ. Replace the lot of them with fresh blood at a fraction of the cost.
@Wally, stevek, you might be
@Wally, stevek, you might be onto it, in terms of generating some massive savings -cull from the top - the very top - not the bottom. I was in an organisation once that practicsed those at the top being incapacitated shall we say. It was amazing how well those at the next rank and the rank below them coped with the change. Plus they were usually younger (say Gen X&Y) and the award of position coupled with inexperience led to humility and a decent performance as a 'servant leader'.
Yeah, cull the old, fat b*st*rds and let's change. Who should we start with?
Jacko - How about the
Jacko - How about the top 5 people in every Govt dept, every SOE, every quango, every publicly listed company (especially banks) every finance company and every politician who's been there more than 3 terms. Oh and no more "consultants", ever! Remove all perks and bonuses. Make top salaries no more than a multiple of 5 of their lowest paid staff. No politician can become a consultant, advisor to govt or a board member of a listed company for 5 years after leaving parliament. That should help get rid of the vested interests and old boys network that rules in this country for their own benefit.
And no more commercial sensitivity
And no more commercial sensitivity excuses. If you work for the government or a publicly listed company there will be absolute transparency when it comes to salaries and benefits.
Anyone seen Bill's Latest endevour
Anyone seen Bill's Latest endevour on TV ? Yes that bad probably written by overpaid dorks at TVNZ too Ha ha.
Anyway a month ago or so I used the phrase "If anyone Can A Kiwi Can"
Well Bill loves this saying just can't stop saying it in this Ad !
Yeah I know should have taken a copywrite out on the phrase of course!
Like The Other One His Brother likes Using " Business As Usual despite Difficult Cirumstances"
Hell he even got B O [Barrack] using that one after his visit there couple month back!
Hey so BE @ JK i'll quite happly phase your speeches for you at a fraction of the cost TVNZ is charging you.
Thus saving Us taxpayers heaps and NZ because Remember
" IF ANYONE CAN A KIWI CAN " ha ha...
Gotta go work shift now help pay for all the Rortes.......
wally, stevek, jacko et al:
wally, stevek, jacko et al: I'm with you all the way. One of the specious arguments I saw recently (can't remember which rationilsation it was there have been so many) was : "It's a global marketplace for talent so we have to pay the going rate". Absolute rubbish; NZ is country of 4 million people. The global centres are much bigger, they can afford to pay more with more customers and bigger tax bases. We're tiny. If you want to be a suit here, do what the rest of us do: accept the trade-off of lower pay for living a better life. Managerialism is just such nonsense.
BTW, who apart from me is passionate about loathing HR?
Re TVNZ - get rid
Re TVNZ - get rid of it
Re Plonkers - our own government is run by two of the best JK and BE
That TV7 promo by Bill English is a shocker
Ruru - “It’s a global
Ruru - "It's a global marketplace for talent so we have to pay the going rate". Absolute rubbish; NZ is country of 4 million people.
If these guys think they can get more overseas and somebody is stupid enough to pay them, then good bye and good luck. There are plenty of young up and comers ready to take your place and without the baggage.
I see the US banks are now saying "we can't restrict compensation because we have to retain talent". Hello, it was that talent that caused all the mess. They should be out the door!
TV7- English. When these silly
TV7- English. When these silly buggers think that they want to have a connect with the peasants, they trot out the word" Kiwi" Remember how many times Clark said " the ordinary Kiwi knows whats happening", Hard working "Kiwi folk,""Kiwi" rail, hell she even loved having her photo taken with the the" Kiwi" rugby league boys. Now English has started. Bloody simpletons the lot of those politicians!
Bobby: The Nats seeem to
Bobby: The Nats seeem to be channelling Clayton Cosgrove at the moment. You could just about hear him wailing "why wasn't I allowed to do that" when Judith Collins got her car crushing. Kiwi is another one. And "working hard". And Anne Tolley. on second thoughts it's all pure Rob's Mob (don't get excited Wally).
As soon as a company starts putting the word "kiwi" or NZ on its products you know its been bought by foreigners.eg: Watties Baked BeaNZ (owned by Heinz).
Selwyn, No idea why you
Selwyn,
No idea why you think existing assets should be immune from capital gains tax. Wont this be even more of an incentive for people to hold on to loss making assets??
And as i pointed out the other day Aus CGT was halved under howard and is NOT inflation adjusted anymore.
Other than that I agree.
@Selwyn Says: October 27th, 2009
@Selwyn Says:
October 27th, 2009 at 4:27 pm
What? Would you have John Key turn his back on his past - all those mentors and masters and mates who helped him make his millions?
The more I read your posts - the more I believe he is a Wall Street plant.
I'd be wiling to take a bet he won't be living in NZ in 10 years time.
He's setting us up to set himself up for life.
He’s setting us up to
He's setting us up to set himself up for life.
....use exit mould and walk awwaaayyyyy !
Exactly, Walter! :-)
Exactly, Walter!
:-)
This post from ZeroHedge points
This post from ZeroHedge points to Citi sending letters to cardholders offering a 47% haircut in their balance if they pay up before November 11th.
http://www.zerohedge.com/article/increasing-signs-stress-citi
If Citi falls, then the farce is over. The FDIC can't cover the losses. AIG will never be able to cover the swaps, and given the tangle of the big 7 banks - the whole lot could crash. Again, ZeroHedge on the inter-trading between the banks.
http://www.zerohedge.com/article/wall-street-circle-jerk-trust
Just amazing.
If it's good enough for
If it's good enough for the Fonterra boss to trim a tiny bit of fat from his bloated wage, it's certainly time for the state serpents to see their fattened wages cut down to size. Don't hold your breath...the Cabinet has not the courage to go after the Sir Humphreys in wgtn. We have a Cabinet of gutless wonders who see merit in doing nothing and in protecting their mates in the old boys club.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a7T5HaOg
http://www.bloomberg.com/apps/news?pid=20601109&sid=a7T5HaOgYHpE another very interesting article on the bailout, never seen so many important people declining to comment, an outrage
For more on the TVNZ
For more on the TVNZ promo check out this in the Herald this morning:
It's their story on the English/promo saga, and guess what was in the advertising space at the top...
http://www.interest.co.nz/images/plainEnglish.jpg
Cheers
Alex
@Selwyn: Already read it, I
@Selwyn: Already read it, I have re-read (skimmed) it....
1) Singapore is way different to NZ, before you can determine why Singapore is/was a success, decide what success is and compare apples with apples.
2) Looking at the past is no guarantee of the future. Look at peak oil, Singapore is based on sea trade with cheap bunker fuel for the last 40 years....what happens when bunker fuel's cost out ways the advantage of cheap asian labour? At that point its cheaper to make the goods in the country of consumption....
3) I think MPolicy and OCR as it stands is toast.
4) The devil is in managing the eXRate if it can be done.
5) Short term v long term. Huge growth may not be sustainable or advised. Take China, its regarded as essential to grow at 10% to provide enough jobs for the ppl coming off the land.....if that cannot be sustained then that might lead to political/economic chaos, in fact I suspect it will. there are huge worries about water, minerals, pollution and food in china and elsewhere....so 15% per annum might be good now but weaning off it later when things change might well prove impossible, the re-alignment might be drastic.
Bruce S. "I think he is a decent man prepared to stick his neck out to get some transparency into our financial markets. " - exactly, if he stood as an MP he'd get my vote, despite his right wing tenancies.
@LES: "Singapore article" lets see, suppressing democracy, maybe? Just why has Singapore grown and what is/was the human toll of its growth? for how long can it grow? Its something to study IMHO...I cant really comment because I have no depth of knowledge in this area unlike say peak oil or AGW where I have studied and read up....
@ruru:"loathing HR?" me....idiots...IMHO. regards
@ruru:"loathing HR?" me....idiots...IMHO.
regards
@Doug: One more nail in
@Doug: One more nail in Citi/Wall Street....though maybe "nail" is too small a term....what's larger...one *&^%& huge I beam dropped on edge from a great height springs to mind....if it hits I think its going to be messy.
A 53% on a recovery with an otherwise 100% loss seems prudent in some ways ie...I wonder if they did a background check on the person and decided fat chance otherwise......
regards
That 'Plain English' commercial is
That 'Plain English' commercial is a serious concern - not only because he's talking crap, but because he's doing it for free on the taxpayer account. Worst example of an attempt by a government to manufacture meaning that I've ever seen in NZ media.
steven - “Singapore article†lets
steven - "Singapore article" lets see, suppressing democracy, maybe? No, I think we've had enough of that in NZ already. I was thinking of an adaption of part of the inflation control mechanism that I've suggested, here in this comment:
http://www.interest.co.nz/ratesblog/index.php/2009/10/23/opinion-why-new...
Would the PRR thing I have described reduced or increased the following in the last 10 years?:
apparent NZD value
NZD volatility
property prices
national debt
With the 'self-interest' shoes on, I can understand why many would like to maintain the status quo with the first three, but why would we not ALL want to reduce national debt? Who benefits from keeping that where it is, or increasing?
Cheers, Les.
PS - re. Peak Oil and all that, I guess you have come across Chris Martenson's 'Crash Course'. Have recently watched it; quite enlightening.
Kiwibank should be doing for
Kiwibank should be doing for the New Zealand community what the Tsb does for Taranaki. By John Key, the central banker on sabatical, giving it the political decree to borrow the created credit of the privately owned central banking network, instead of the profits remaining at home, they start to go offshore in tribute payment to the money masters.
http://banks.t5.co.nz/tsb.html
http://www.tsbtrust.org.nz/11/History-of-the-Trust.htm
i love 2ne1!!!
i love 2ne1!!!
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