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Banks settle structured finance tax disputes with IRD for NZ$2.2 bln (Update 1)
December 23rd, 2009New Zealand’s big four Australian-owned banks and the Inland Revenue Department have announced a settlement of their disputes over structured finance deals that involves the banks paying the government a gross NZ$2.2 billion. This represents 80% of the amounts owed by the banks and is the largest commercial settlement with the IRD in its history. (Updated with comment from ANZ, ASB, BNZ, Westpac and the IRD)
The settlement follows years of legal fights and two high court rulings in favour of the IRD. The banks will not pay penalties and the full details of the settlement are confidential, although they are paying 80% of the total tax owed plus interest. The amount was enough to boost New Zealand’s current account into a surplus in the September quarter for the first time in almost 21 years.
The Commissioner of Inland Revenue, Robert Russell, and the Solicitor-General, David Collins, said they were pleased the long-running tax disputes involving four major banks had been settled.
Russell said it had been Inland Revenue’s long-held view that the transactions amounted to tax avoidance.
“Our decision to pursue these cases has been shown to be absolutely right, and it has returned a very good result for the taxpayers of New Zealand,” Russell said.
“We believe this sends a strong signal to companies operating in New Zealand – like all taxpayers they must meet their obligations,” he said.
Russell and Collins said the cases showed that Inland Revenue and Crown Law had the resources and ability to pursue very complex cross-border transactions.
Westpac said its agreement related to 9 structured finance transactions done between 1998 and 2002. Westpac had already made a provision in its 2009 result for A$703 million and said it would be able to write back NZ$190 million into its accounts, implying at an exchange rate of 80 Australian cents that Westpac will pay the IRD around NZ$690 million.
Westpac New Zealand Chief Executive George Frazis said: “We entered these transactions relying upon expert advice and a ruling issued by the IRD in relation to a similar transaction, but we accept the court has ruled and that, on balance, it is best that we accept this industry settlement and move on.”
ASB said its settlement with the IRD related to four structured finance transactions. ASB chief executive Charles Pink said ASB has settled the dispute by agreeing to pay NZ$264 million. He said the bank’s existing provision was enough to cover the settlement.
“ASB entered into the transactions on the basis of the best tax and legal advice available, and accepted banking practice at the time. However, in light of the High Court’s recent decisions in cases involving structured finance transactions of other banks, we have decided to conclude this matter by negotiation with the CIR (Commissioner of the Inland Revenue),” Pink said.
BNZ said it had reached a full and final settlement with the IRD over 6 structured finance transactions entered into between 1998 and 2005. BNZ said it had paid Inland Revenue NZ$658 million, which was just below the NZ$661 million provision made by BNZ in its accounts released in August.
BNZ CEO Andrew Thorburn said: “This is a complex and technical issue, and it has been the subject of much debate. Simply put; we acted in good faith at the time, the High Court has delivered a judgment, and now it is time to settle so that we can move on and move forward.”
ANZ said it would pay NZ$413.7 million to the IRD in its settlement over 6 structured finance transactions. ANZ said it was still in dispute with the IRD over one transaction involving NZ$27 million.
ANZ National Chief Executive Jenny Fagg said she was pleased the matter was largely behind the bank.
“We have operated in New Zealand for over 150 years. It has always been our approach to pay all appropriate tax and we believed the transaction structures were appropriate given the independent received on the relevant law and rulings held by the industry,” Fagg said.
“Given recent legal cases however, it is clear we need to approach these transactions differently and today’s settlement reflects this,” she said.
The total of the 4 banks individually declared payments was NZ$2.025 billion, but some of the bank declarations may be net figures taking into account that interest payments on the penalties are deductible for tax purposes. The banks all said the industry settlement amounted to NZ$2.2 billion, while the IRD said the settlement exceeded NZ$2.2 billion.
Tags: Andrew Thorburn, ANZ, ASB, BNZ, Charles Pink, George Frazis, Jenny Fagg, National, Structured Finance, Westpac
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December 23rd, 2009 at 9:37 pm
Hadn’t they already allowed for it in their reduced profits? I thought ANZ would have had a pretty big profit had it not been for the tax write down.
Maybe they were still considering appealing even though their bank statements had already taken it into account?
December 23rd, 2009 at 9:50 pm
Any additional costs to banks will be passed onto the customers, by higher loan interest rates or/and lower deposit rates & higher taxes.
So any negative solution to the banks would not be appreciate by ordinary NZers. Result would be same as increasing taxes, more money for goverment, less in our pockets…
December 23rd, 2009 at 10:25 pm
Phil,
The banks had already made provisions, but were still fighting the rulings in the courts. This settlement ends that.
cheers
Bernard
December 23rd, 2009 at 10:27 pm
I think some NZ companies got the benefit of tax breaks already as part of these tax deals the banks put together some years back
December 23rd, 2009 at 11:21 pm
I guess the Harris Gang can go back to living their life of luxury now on the Welfare State. Rodney can take another holiday with his bit of fluff. John can go have a good time in Hawaii.
With the taste of blood in their fangs, the IRD will now go ruthlessly for the productive, mincing them up in the sausage maker of State, the very ones that pay their own wages. Next year, lets destroy the landlords. Thanks for giving them the excuse Bernard. Battern down the hatches, though, for when they go after e-commerce.
My recommendation: we might as well all just go on the dole and wait for the end of days. Starve the bureaucrats out. Start it all over. It’s all such an ignoble, slummy little mess.
Appalling, as ever, in our little socialist slum.
[Better keep you eye on your bank fees. If these banks are going to bother carrying on to transact in NZ, they're going to want to get their money back. The loser, the honest, hard done taxpayer, as usual. Beam me up Scotty, please. I've had a gutsful.].
December 24th, 2009 at 12:39 am
If only rouge tenants paid up so nicely…
December 24th, 2009 at 12:45 am
Pres : Rouge tenants ? Wear alot of make-up in your doss house , do they . LOL !!!
If its any consolation , Mark , many of us feel the same way you do . Day after grinding day . At least you have the ability to elucidate your thoughts coherently . Best I can manage is a gummy bear spittle and rant over poor sods at my work .
December 24th, 2009 at 8:09 am
Interesting. Wish I could resoundingly lose all my cases against the IRD then still get a 20% discount on my tax. And no penalties.
There’ll be lots of high-fives among all those expensive QC’s about this one. Bluffing the State into a, what, $400million discount? That’s a hell of a lot of hip replacements.
December 24th, 2009 at 8:34 am
Anyone know how one goes about “settling” with a government entitiy?? I’ve got a few speeding tickets I’d like a discount on.
December 24th, 2009 at 8:36 am
“We entered these transactions relying upon expert advice….”
“ASB entered into the transactions on the basis of the best tax and legal advice available, and accepted banking practice at the time.”
“This is a complex and technical issue, and it has been the subject of much debate. Simply put; we acted in good faith at the time,….”
“It has always been our approach to pay all appropriate tax and we believed the transaction structures were appropriate given the independent [advice?]* received on the relevant law and rulings held by the industry,” [*Methinks you missed a word here.]
Interesting, if not a little laughable too. Thought this was funny,
“…. was pleased the matter was largely behind the bank.”
Like it wasn’t skulking around at the back trying to shelter in the shadows all along, really?
December 24th, 2009 at 8:50 am
Peter Dunne speaks: http://www.newstalk.co.nz/newsdetail1.asp?storyID=168385
What part of the system is that? Not binding rulings, that’s for certain. The one thing this has proven is even taxpayers with the deep pockets of our banks can’t know with any clarity their position before our complex taxing laws, even when they have sought binding rulings.
I think this is the most important thing any minister has said since the financial crisis started. This government is indenturing another generation to a voracious tax take to pay for the thieving corrupt largess of a Nanny State out of control.
But he couldn’t bring himself to say it: that the fix to this is slash the size of the State (payroll) and Welfare State (send Harris gang out to work, stop buying them ’stuff’ with our hard earned money) … no, unfortunately, government will never reduce itself, that’s the self serving nature of it, they’ll just put even more funds aside to clobber the next group of poor sod taxpayers for whom the tax law is so vague and subjective, so badly and inanely written, that they cannot know their position before the law with any type of certainty whatsoever: landlords. Even better, most of them won’t have the money to fight, even when they have very arguable cases.
The fix is to ‘free’ one bureaucrat in every two. Now. Help half the new sickness beneficiaries over the last decade get well again, miraculously, by transferring them back to the correct benefit, where they have to look for work. Now we know that you can be on sickness benefit by mere dint of a cannabis addiction … And then there’s DPB: why do we pay DPB for children born on DPB? Why do we pay it to 18 years of age, when most social democracies only pay to five and six years old?
The government needs to get itself in order, and leave taxpayers alone. They can’t afford to pay for ‘all of this’ Statism …
December 24th, 2009 at 9:17 am
Alen Says:
“Any additional costs to banks will be passed onto the customers, by higher loan interest rates or/and lower deposit rates & higher taxes.”
Even if this was the case, it is no arguement legally or morally to to purse.
And Im sure between the media, and other Consumer agencies, all hell would break loose….not somewhere banks or whatever would like to get into, espec with the numbers involved….
December 24th, 2009 at 9:17 am
I find these comments astounding.
A binding ruling is for one particular transaction – if you then choose to interprete that it is aslo applicable to other transactions, which are similar, but NOT the same, then it is your risk.
ALL taxpayers should pay the amount of tax due to from them – no matter their size. It is hard enough for ordinery salaried taxpayers tooperate without having to subsidise persons wiht companies, trusts and corporations that seek all sorts of ways to avoid paying tax. This sends a strong message that ALL are equal before tax law.
Finally, if all persons paid the amount of tax due, then the total amount of tax take would riise and overall we would be able to reduce tax.
In respect of removing civil servants and beneficiaries – remember if you dont like it you have the ultimate power – LEAVE.
Civil servants and benficiaries will generally sort themselves out to an acceptable level – problems will always be at the extreme – but I would rather have that than a totally open economy wihtout any safety net.
Finally – a little dig at all who dig at WFF (which by the way I dont qulify for) -I earn too much) – you see no problem with companies arranging their affairs to reduce tax paid – why not individuals
December 24th, 2009 at 9:26 am
Civil servants and benficiaries will generally sort themselves out to an acceptable level
Well, currently we have 1.7 million people in the private sector having to support 1.7 million people either on the state payroll or a benefit, that’s one for one, and further, having to support a population of 4.3 million. Is that an acceptable level Duggie? Mathematically, given it is the State sector that is growing still, how does it become possible to run a society on this basis? Answer, borrow $240 million a week. Well how long can we do that for?
The size of state has to be slashed.
In respect of removing civil servants and beneficiaries – remember if you dont like it you have the ultimate power – LEAVE.
No, you bugger off. I live here, and I happen to resent the fact that Gangster Harris quite possibly has a greater net worth than most of my private sector clients, and he’s never worked a day in his life, just sits around smoking pot. If we’re talking about people leaving, let’s start with him.
(And nowhere in my post did I make a distinction between corporates and individuals: all of us in the private sector are paying far too much tax, and given government borrowings, to fund huge spending, with no will whatsoever to reduce this, I can’t see it changing in my lifetime, only getting worse and new taxes are added to old. Oh yeah, reduce income tax, but will have a land tax by then, and this tax and that tax… It’s madness. If I had a dollar for each economist in here wanting a new tax, I’d be as well off as that Harris. Well, you see what I mean.)
December 24th, 2009 at 9:37 am
Now Bill English won’t have to borrow any money for approximately 9.16 weeks.
December 24th, 2009 at 9:42 am
Actually, I should have been more Socratic, rather than just attacking all the time. Duggie:
Civil servants and beneficiaries will generally sort themselves out to an acceptable level
By what mechanism, and for what reason, will civil servants and beneficiaries voluntarily reduce their numbers?
December 24th, 2009 at 9:54 am
Its a good result for the taxpayers of NZ.
Oh really!
Its a far better result for the 55% who are nett takers and contribute no tax. Lets them have more time off the responsibility hook.
The real question is who will spend that money in the most productive way. Government spending to capture future votes or banks lending that money amongst private enterprise?
Mark Hubbard is on target with his comments.
December 24th, 2009 at 10:58 am
even our trusted banks are trying to rip! the system.
December 24th, 2009 at 11:21 am
lindsay – is that an intentional oxymoron?
December 24th, 2009 at 11:38 am
I suppose what else could we expect with 9 years of Labour govt, why are people so surprised the welfare state is being abused on a grand scale after that.
December 24th, 2009 at 11:44 am
@Duggie
A little story for ya….. Where I live the traffic sux but recently they installed these fancy new traffic lights to ‘help us’ get on the motorway in a more orderly fashion. Admittedly they seem to help those who live a little further out who are already on the motorway but I think in general we all get to work faster (and living closer in has other advantages). But you see there is this thing call the ‘Transit Lane’ whereby if you have more than one person in the car you get to jump the queue and cruise straight onto the motorway. Hey I don’t mind these car poolers or public transport users getting a little reward so good for them. The problem is I see more single occupancy cars using this ‘Transit Lane’ than those that are actually allowed to use it. I sit there in my little queue each morning watching them zip pass and by the time I get on the motorway I am so damned pissed off I long for the days when it took a little longer to get to work but at least it was fair and nobody could take any short cuts. Pretty soon if the abuse of this lane keeps up we’ll be back to where we started and only the mugs will be left sitting in the queue and it will probably take them twice as long to get to work. You see Duggie I can’t move house and pulling the traffics lights down will hurt those that deserve them but what I can do is moan about it to my friends and every now on a special day I can get out of the my car, wait for a single occupancy car in the transit lane and THROW A ROCK THROUGH IT’S BL##DY WINDSCREEN!!!! It may not change much, it may deter only that individual but the main thing is it will make me and those others sitting in that queue feel that much better.
December 24th, 2009 at 11:58 am
Barry- Mark Hubbard is defending criminals.
Theft is theft.
December 24th, 2009 at 12:24 pm
Wait a minute Ray. I’m confused. I thought it was the Harris Gang, the recipients of this money which otherwise was available to loan to businesspeople and homeowners, who were the criminals?
Hey, why is a Welfare State always going to devolve down to a violent state? Answer: because Nanny not only gives birth to the crims, she then nurtures and rewards them on the money taken from honest taxpayers: corporates, trusts, individuals:
http://lindsaymitchell.blogspot.com/2009/12/remote-client-unit-too-hard-basket.html
December 24th, 2009 at 12:39 pm
So….. having the funds in Australian share-holders pockets rather than having them in NZ tax coffers….and for us still having to pay for scum like Harris is better…..how?
December 24th, 2009 at 12:52 pm
Nothing stopping you buying shares in the banks last time I looked Ray. Or any Kiwi. That’s the great thing about capitalism.
But this is all beside the point. The point is the huge and intrusive size of state, that is the problem, and can only be fixed by reducing that size and intrusiveness, not by continually taxing a more and more hamstrung productive sector, with a stop-gap government borrowing (which just takes us back to more tax anyway). The fact that this huge ‘windfall’ for the government from the banks, as Dunne comments, makes little difference to the States parlous financial position, should have us all very worried. That, again, is the nub of the problem. And there is no one in government who seems to want to tackle ‘that’. Sorry, I should have said, of course there is no one in government who wants to tackle that. Taxes are the easy route for them, even if that route just leads to bigger and bigger structural imbalances (and slavery for the hard workers).
December 24th, 2009 at 1:02 pm
I’m already a share-holder, Mark. And a bank employee to boot!
You can use bold-type all you like, but you’re grasping at straws if you think this topic is about how our tax dollars are spent. We are all well aware you favour as low a tax rate as possible under your “libertarian” stand-point. I think you have your head in the clouds if you think that it would actually work in NZ, but THAT is besides the point.
Start another thread, by all means….perhaps you could label it “Nanny State Rip-Offs, Rants and Assorted Angst”……I’m sure you’d get hundreds of replies. I’d be happy to contribute.
Unfortunately though, THIS thread is about the biggest tax avoidance case this country has ever seen and how major banks ripped off the NZ tax-payer(!) to the tune of two billion dollars.
They were caught, prosecuted and have settled.
I’m guessing you think tax fraud is fine but benefit fraud is deplorable?
December 24th, 2009 at 1:11 pm
Yes, benefit fraud is deplorable.
But tax fraud is patently stupid. You’d have to be a moron to practice it, because if nothing else, ethics of professional bodies aside, the penalty system is such, it will destroy you. So, back to my first posts: why would intelligent people and advisors deliberately set about tax fraud on this scale? They wouldn’t. And that’s the signficant thing. How did this happen therefore? Complex tax laws before which taxpayers cannot be expected to know their position, but will be destroyed should IRD be able to prove via a lengthy, costly – Commissioners costs paid for by his victims – process.
Dumb. And all this taxing, but no one looking at the true elephant in the room: the size of the State.
And good you own shares in the bank: so why all the tears about money going back to Australia when it’s coming to a dividend near you?
December 24th, 2009 at 1:16 pm
I’m guessing you think tax fraud is fine but benefit fraud is deplorable?
Interesting point – and yes, I’d say many (if not all) tax accountants think exactly in that manner, Ray. The ones I’ve worked with indeed measure the quality of their service and competance on discovering and exploiting every available tax loophole to the benefit of their clientele.
As Gareth Morgan suggested regarding his Big Kahuna tax/welfare structure proposal, Mark’s profession would need to move into some type of work which actually produced something tangible for a living. Hence, the reason it will never fly – their are too many people like Mark whose very income is derived from the status quo.
December 24th, 2009 at 1:28 pm
BS Kate. I am extremely conservative around the taxing Acts. I’ve just stated above why those who are overly aggressive are stupid.
This is about how badly written our taxing legislation is, and how a taxpayer can often not know their position before it, and how this will always lead to injustice.
The IRD settled this case. If they thought this was blatant fraud, they would not have settled, they would have gone for 150% penalties. Everyone here assumes the banks were deliberately defrauding the tax system, they were not; that this is black and white on the issues, it is not. The banks would not be this stupid. If this were clear cut, the IRD would not have settled.
The cases are a comment on our tax system. Showing how lethally defective it is. Ad hoc legislation year on year on year, and next year I bet we’re going to see more of it.
And again, no one addressing the real problem NZ has.
December 24th, 2009 at 1:50 pm
“….Everyone here assumes the banks were deliberately defrauding the tax system, they were not”.
….I have to disagree.
BTW, the tears are for the pay cut due to the lost $600M+!!
________
The real problem is a lack of quality candidates to stand for public office.
I hear a lot of chirping against pollies in this country, but how many of us would be willing to open up our personal lives for public scutiny?
I’m not defending MP’s- far from it. I think JK is a bad joke and Bill English a hypocrite.
But would I want their job?
So how about it ….. how does ‘The Right Honourable Mark Hubbard’ strike you?
December 24th, 2009 at 1:58 pm
Isnt perception a wonderful thing. Fairness and theft are such interesting words and individual interpretation will vary greatly. Is it fair that some individuals contribute hundreds of thousands in taxation and the majority contribute nothing.
In my neck of the woods the chefs work 12-14 hours non-stop. The shearers sweat from 7am till 6pm. The fishermen take danger in their stride, work endlessly in rough seas. The miners long shift covered in grim. The dairy farmer who hasnt had a decent sleep for years.
Nothing unusual in this I know but their reward is a 39% tax rate and the knowledge their earnings provided free travel to Rodneys lady friend and 25 years of welfare to the Harris family in Christchurch. So debate fairness and theft now.
Government does not have money. It is always someone elses money re- distributed to maximise the vote. With a worker to benefit ratio of 1:1 no government is going to isolate that section of voters so the far reaching bold decisions that are needed for change will only happen at snail pace and certainly from John Keys approach so far.
Mark Hubbard hard hitting comments are so true
December 24th, 2009 at 1:58 pm
I think Mark got about 1,100 votes in the last election, Ray. But he did give it a go….
December 24th, 2009 at 2:05 pm
Actually, in Selwyn, I got seven votes (and my wife wasn’t one of them). But yeah, gave it a go.
Ray, with your attitude toward your employer, I’m sure glad I’m not the bank employing you.
Barry sums up many of the issues above, vis a vis fairness and justice, very eloquently.
And now it’s Christmas Eve, I just blew much of my morning on this thread, I’ll have to work it back between Xmas and New Year, because from now until next Monday morning, I am on holiday.
Merry Christmas freedom lovers. The rest of you, well …
December 24th, 2009 at 2:19 pm
” Merry Xmas….but only if you agree with my political views.”
Sums you up to a T, Mark.
December 24th, 2009 at 2:25 pm
Never shake the hand that’s going to shoot you Ray, or is about to take your money.
‘Merry Christmas Mr and Mrs Harris. Hope you enjoy the toys ..’
Nuh, that’s just not me. Ciao.
December 24th, 2009 at 3:09 pm
No sane person would defend the Banks given waht has already been exposed about their practices all over the globe.
December 24th, 2009 at 3:15 pm
Mark Hubbard, probably not said often enough but I like to thank you for standing up in these forums. You are not likely to educate the vocal socialists on here but for every noisy one there may be another few that might start thinking.
You certainly manage to put down a clear case for freedom and capitalism and I want to thank you for that.
December 24th, 2009 at 3:41 pm
Did it take 4 or 5 years for IRD to prove their case against the banks ? Which shows how convoluted and open to interpretation our taxation ( and anti-smacking ! ) rules are . Back to government to implement simple laws . The last lot , the Clark & Cullen fiasco , took an imperfect system and overlaid it with more legislation . Key & English appear content to ride along with Labour’s nanny state foolishness . Unless a viable third party emerges , we are destined to remain in the politically correct nanny state loop of National & Labour .
December 24th, 2009 at 4:01 pm
As Mark said, This is about how badly written our taxing legislation is, and how a taxpayer can often not know their position before it, and how this will always lead to injustice.
Exactly.
But when GM put up a proposal that made it all so simple it would wipe out tax avoidance opportunities in one fell swoop – none of the freedom-seeking libertarian minarchy capitalists supported it.
Why?
Too simple – too equitable – and we can’t have something like a GNI which treats the haves equal to the have-nots now can we? Oh no, we need a prescription under which the haves are totally unfettered in their ability to further exploit the have nots.
December 24th, 2009 at 4:11 pm
I did . But I prefer Steve Forbes taxation plan , for sheer simplicity , and all inclusiveness …… Lobbyists bugger the system . No tax for charities , there’s one . There are 22000 registered charities in NZ . Probably the Harris goons have one for the re-tyre-ment of their car . One charity per 200 people !
What’s a GNI ?
December 24th, 2009 at 4:41 pm
These are not cases of fraud. We may argue about their prices or lending policies etc, but banks value their integrity and try not to put it at risk – that talk is emotive and popularist stuff from the usual non-thinkers. These were transactions that the banks did to minimise tax, as all businesses should do, that they thought was fine based upon a ruling from the IRD and other tax experts – it has been challenged later by the IRD and deemed avoidance….the banks have paid up. I dare say in future the wheels will turn much slower with everything non-vanilla referred to the IRD first
December 24th, 2009 at 5:13 pm
Have to agree with Jacks post above….
This part sums up
“that they thought was fine based upon a ruling from the IRD and other tax experts”
They thought….no they assumed ASS-U & ME..or someone did and it was never followed up.
December 24th, 2009 at 5:36 pm
Im with MH on this one.
1. Binding rulings are not binding .
2. The Govt carps on about lowering the corporate tax rate to compete with AUst but what corporate in their right mind would establish in a tax jurisdiction where the goal posts keep moving ?
3. The majority of taxpayers in NZ would not have been able to cut this sort of deal unless they were on the verge of going under….the IRD dont generally do deals as generous as this. This is not a good outcome for the NZ taxpayer.
Im not a supporter of the banks by any means….but the tax laws in NZ are a mess…and the solution seems to be more of it. Go figure.
Merry Xmas all.
December 24th, 2009 at 5:38 pm
Roger – GNI = guaranteed national income – GM’s proposal would see the abolishment of WINZ and a GNI established whereby every 18yo+ would receive an income. His proposal suggested $10K.
Therefore, no super, no sickness, no DPB, no unemployment and/or any other means tested and/or dependant-number deternmined type benefits – just a flat GNI for every person over 18.
It equates to the first $40K for all workers as tax free (as his proposal also includes a flat tax of 25%) and a capital tax of 1.5% on all land, buildings, plant and machinery.
December 24th, 2009 at 5:49 pm
Thanks KATE . So many gummy bears , forgot that GNI abbreviation . The idea was mooted years ago , overseas . And utterly derided . Yet I love the simplicity of it . The lack civil servants required ( another saving ) . The idea is all inclusive . And allows those who choose to , to push onto greater financial rewards …………..So it will not happen , never in a month of Sundays . …………. Ahhh well , back to the gummys ………….. Merry Christmas Kate .
December 24th, 2009 at 6:53 pm
Australia always wins.
December 24th, 2009 at 11:05 pm
That’s the problem. Ideas such as the GNI are always labelled “radical” once politicians have fed the idea through the votermeter and received a negative result. Many of these ideas are not radical at all but they demand we deal with the hard issues. That’s where parliament always falls short.
December 27th, 2009 at 7:02 pm
The coughing up of a little created credit is a public relations excercise when compared to the $39 billion plus that leaves this nation as tribute paid to the private international banking network for rent of our credit money supply. The light is once again beginning to be shone on banking and credit systems both in NZ and internationally. They have realised that they have grown to cocky and have all but openly disclosed their predatory lending pyramid scam by their relentless greed, or some among their number thinking they now have sufficient power and control to no longer have to hide their slaveminded scheme. But just as the old story from the Roman days when after a couple of localised slave uprising, a member of the senate suggested that they get the slaves to wear a destinct colour in order that the Romans can keep tabs on them, but a far wiser senator then said that would only assist the slaves to know how much they out number their masters.
This exercise here in NZ and Barrack Obama calling the banking execs in for a wee chat suggesting they may need to be seen as to have pulled their heads in a little more than they have in order to quell rising discontent:
” “My main message in today’s meeting was very simple: that America’s banks received extraordinary assistance from American taxpayers to rebuild their industry, and now that they’re back on their feet, we expect an extraordinary commitment from them to help rebuild our economy,” Obama said. “That starts with finding ways to help creditworthy small and medium-size businesses get the loans that they need to open their doors, grow their operations and create new jobs.”
http://www.latimes.com/business/la-fi-obama-bankers15-2009dec15,0,5709730.story
But no mention of a move to nationalise credit creation and remove the credit creation from the commercial banks, thus continue to borrow and pledge a fortune of future taxes to address the symptoms whilst leaving the cancerous tumor of compounding interest at the core of the debt based monetary system to grow unimpeeded.
“Separating The Two Functions
15. A basic monetary reform consisting of two complementary measures will separate the two functions.
(1) It will transfer to nationalised central banks the responsibility for creating, not just banknotes as now, but also the major component of the supply of public money that consists of bank-account money now mainly held and transmitted electronically.
(2) It will prohibit anyone else, including commercial banks, from creating bank-account money out of thin air – just as forging metal coins and counterfeiting paper banknotes are criminal offences.
16. These complementary measures will genuinely nationalise the national money supply but not the commercial banks. After the reform, when the present crisis is stabilised, the commercial banks that have been nationalised can be denationalised, and can compete freely in the profitmaking market for borrowing and lending already existing money.
2 For details of how this works see David Begg, Stanley Fischer and Rudiger Dornbusch,
Economics (‘the student’s bible’), McGraw-Hill, 7th edition, 2003, pp 316 and 318 -
http://www.mcgraw-hill.co.uk/textbooks/begg
17. The first of the two measures will make an agency of the public responsible for directly creating and maintaining the public money supply in the public interest. The second will lead to a more competitive market for facilitating loans between lenders and borrowers than today. Losing their present privilege of creating the money they lend will bring the commercial banks into line with ordinary private-sector businesses that are not given their main materials as a free gift. It will encourage them to provide more services to customers more efficiently than now, and also make it easier to attract new entrants into the payment services industry.
http://www.jamesrobertson.com/g20monetaryreform.pdf
December 27th, 2009 at 7:19 pm
Iain : 4 lines & 2 sentences , remember , wally ! Did you look at Alex’s link : $ 6 million bonuses for the feckers who bankrupted Fannie and Freddie Mac ? Crikey Iain , I am beginning to see the light . Keep educating us . But please keep it simple , ‘cos us gummy bear suckers – at the back of the class – b’aint rocket scientists ‘like you .