Hard News by Russell Brown

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Hard News: Fun while the banking system collapses

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  • JohnAmiria,

    Okay. Let me try to prove my 'Liberal' credentials:

    I was completely unimpressed by the Weekend Herald's trumpeting of Taranaki-born Stephen Jennings, one of New Zealand's richest men. The front page item was a once-over-lightly "I got rich and we all can too if we just give it the ol' kiwi try" but the feature story inside was more telling. Jennings made is fortune in the frontier days of post-communist Russia. Originally employed by Credit Suisse First Boston to privatise Russia's first-ever company, Jennings realised the 'assets' were being sold cheaply:

    The factory sold for less than $1 million. Jennings had seen a similar factory sold in Poland for more than $100 million.

    He saw the profits to be made. He also saw the way the world was changing, and that there were not just more Bolshevik Biscuit Factories, but many more countries like Russia as well.

    Yes indeedy. Jennings now has an eye on Africa and sees opportunity to 'help' in Zimbabwe:

    Zimbabwe looks good in Jennings' "medium-to-long-term view". It has resources, a good education system, "the best management in Africa, is in a high growth region, with a seven million-strong diaspora that will come back if things go well."

    Damn that liberal media! I had no idea Zimbabwe was a nation of plum trees ripe for the picking.

    Jennings, 48, is talking to the Weekend Herald because he believes New Zealand is "squandering" its potential. He's ready to give away his low profile here, saying he wants to pass on what he's learnt.

    So we should go to distressed economies, buy their assets at fire-sale prices, and then resell them to global corporates at market rate? Nice for us, but not so nice for the locals. But still, Jennings left me wondering if Fay Richwite has just been sitting on her ass all these years:

    Last month, Forbes magazine put his stake in Renaissance Group at $5.2 billion, much higher than previous estimates of his wealth at $1.6 billion.

    My point? ~ don't try to suggest Key was a member of the Hitler Youth when there are plenty of real Nazis around.

    hither and yon • Since Aug 2008 • 215 posts Report Reply

  • JohnAmiria,

    er ... the last bit is metaphorical! (or is that allegorical?)

    hither and yon • Since Aug 2008 • 215 posts Report Reply

  • Duncan Stevenson,

    The Fed Reserve is "Govt controlled", and Privately owned. But do people realise that they "LEND" money to the government. And they do not have to have an asset such as GOLD to back up their currency.

    So, for the price of paper and ink, they can 'print' a trillion $, and then lend it to the economy with interest, and obviously make a massive profit, which would be distributed to the owners being private people!

    So as a result, the Fed Tax (read, interest payment to private people) will rise to cover this loan, which has cost the FED ink and paper.

    What a scam. Makes you wonder how involved these private owners are! Anyone interested in shares in the Chase Manhattan Bank?

    Melbourne Australia • Since Jan 2007 • 1 posts Report Reply

  • giovanni tiso,

    Spare a thought for moi: I may have to cancel a trip to Italy next week due to the fact that my son broke his foot and I've just discovered that my insurer is... AIG! Yippeee.

    Wellington • Since Jun 2007 • 7473 posts Report Reply

  • Rich Lock,

    I was completely unimpressed by the Weekend Herald's trumpeting of Taranaki-born Stephen Jennings, one of New Zealand's richest men.

    I was also extremely unimpressed with the feature on the Taranaki carpetbagger.

    If he likes it so much, he should go back to Russia.

    back in the mother countr… • Since Feb 2007 • 2728 posts Report Reply

  • JohnAmiria,

    Russia has been picked clean, hence his desire to go to Africa.

    hither and yon • Since Aug 2008 • 215 posts Report Reply

  • Rich Lock,

    I was more using it in the context that that sort of phrase ("if you don't like it, go back to Russia!") became a standard response from certain quarters during the cold war to any criticism of the USA. The implication being that anyone who had the terminity to even dare to question US policy rather than lap it up unquestioningly was a filthy commie.

    I've been waiting to use it as a reversal on a capitalist big beast for some time.

    "I think we as a nation have a lot we could learn from unrestrained firesale stripping of state assets"

    "Hey man, this is New Zealand! Learn the rules! If you don't like it, go back to Russia!"

    back in the mother countr… • Since Feb 2007 • 2728 posts Report Reply

  • Mark Harris,

    Duncan wrote:

    So, for the price of paper and ink, they can 'print' a trillion $, and then lend it to the economy with interest, and obviously make a massive profit, which would be distributed to the owners being private people!

    Thanks, Duncan. Pretty much what I was "implying".

    Waikanae • Since Jul 2008 • 1343 posts Report Reply

  • Blake Monkley,

    Russia has been picked clean, hence his desire to go to Africa.

    When I was a union negotiator,I used to converse at breaks with the EMA,HR or C.E.O teams about where the world was going. My point was always that it would end in Africa,strategically Africa was closer to the consumer's of Europe and the USA.
    So many people think of Africa as just hunters- gatherers,it's a sleeping giant waiting to be exploited by the likes of Jennings.

    Auckland • Since Jul 2008 • 215 posts Report Reply

  • Stephen Judd,

    Duncan, Mark: simply not true.

    The Federal Reserve itself pays all profits back to the US Treasury.

    The member banks are not operated for profit. They do pay a 6% dividend back to their owners, which is a mingy return on capital by banking standards, and set by law.

    You sound like conspiracy nuts, frankly.

    Wellington • Since Nov 2006 • 3122 posts Report Reply

  • Sacha,

    All I needed to read was who was bringing Jennings back to lecture us on what's good fer us.

    Ak • Since May 2008 • 19707 posts Report Reply

  • stephen walker,

    and of course Paulson isn't conspiring with anyone to get his Wall Street mates out of their multi-trillion dollar hole.

    way too much moral harard and way too obvious a ruse to be a (gasp) conspiracy.

    you'd have to be nuts to think such a thing. too much tinfoil for breakfast.

    nagano • Since Nov 2006 • 645 posts Report Reply

  • Stephen Judd,

    I'm sure he is. It's a lousy plan for lots of reasons that have been well-canvassed. Paulson and Cox and Phil Gramm and all the rest of those well-heeled pigs are about to take the American taxpayer for a ride so that they don't have to give up their private jets.

    That doesn't mean we have to sling outright untruths around about how central banking works in the US.

    In my online reading experience, claims like Duncan's are usually followed by appeals to Austrian economists, then calls to go back to the gold standard, then social credit, and ultimately fingerpointing at the international Jewish conspiracy are, depending on your level of scholarship.

    Wellington • Since Nov 2006 • 3122 posts Report Reply

  • Mark Harris,

    In my online reading experience, claims like Duncan's are usually followed by appeals to Austrian economists, then calls to go back to the gold standard, then social credit, and ultimately fingerpointing at the international Jewish conspiracy are, depending on your level of scholarship.

    Not my intention at all. Please don't impute such. What I wanted to point out was that the 'central bank' of the USA is not as our central bank (the Reserve Bank), which is a state institution. The Fed is a privately-owned institution which takes some direction from the USG. I accept that they return profits to the Treasury (I was not aware of this) but they don't have a shining history as an impartial creator of monetary policy, either.

    You don't have to be a conspiracy nut to be suspicious of large institutions.

    Waikanae • Since Jul 2008 • 1343 posts Report Reply

  • Mark Harris,

    In other news:
    Largest US Bankruptcies
    Lehman Brothers’ chapter 11 bankruptcy protection filing is the largest in history, dwarfing all others.

    Take a look at the ten biggest corporate filings in US bankruptcy court, based on pre-bankruptcy assets.

    10. United Airlines
    Assets: $25.2 billion
    Date Filed: Dec. 9, 2002

    9. Pacific Gas and Electric
    Assets: $29.8 billion
    Date Filed: April 6, 2001

    8. Global Crossing
    Assets: $30.2 billion
    Date Filed: Jan. 28, 2002

    7. Refco
    Assets: $33.3 billion
    Date Filed: Oct. 17, 2005

    6. Financial Corp. of America
    Assets: $33.9 billion
    Date Filed: Sept. 9, 1988

    5. Texaco
    Assets: $35.9 billion
    Date Filed: April 12, 1987

    4. Conseco
    Assets: $61.4 billion
    Date Filed: Dec. 18, 2002

    3. Enron
    Assets: $63.4 billion
    Date Filed: Dec. 2, 2001

    2. Worldcom
    Assets: $103.9 billion
    Date Filed: July 21, 2002

    1. Lehman Brothers
    Pre-Bankruptcy Assets: $639 billion
    Date Filed: Sept. 15, 2008

    Source: CNBC

    Waikanae • Since Jul 2008 • 1343 posts Report Reply

  • Stephen Judd,

    The Fed is a privately-owned institution which takes some direction from the USG. I accept that they return profits to the Treasury (I was not aware of this) but they don't have a shining history as an impartial creator of monetary policy, either.

    Dude, the head and the governors are appointed by the President. That's not "some direction". If you're thinking about crony capitalism, which is not unreasonable, the cronyism isn't in the ownership or management structure per se: it is in the appointment choices made by the president. Which in the US would apply if the Fed was purely publicly owned. It is honestly irrelevant.

    Wellington • Since Nov 2006 • 3122 posts Report Reply

  • Rich Lock,

    back in the mother countr… • Since Feb 2007 • 2728 posts Report Reply

  • Russell Brown,

    Hey, I've lost all my money. Can I come home and fuck that up for you lot, too?

    Regrettably, the prick still has plenty of money for his purposes.

    It would, however, be nice if the Herald stopped treating him like some kind of oracle. Really.

    Auckland • Since Nov 2006 • 22830 posts Report Reply

  • giovanni tiso,

    The last bulletpoint was truly alarming

    Two metres tall, enjoys rugby and surfing. Employs All Black great Sean Fitzpatrick.

    To do what?

    Wellington • Since Jun 2007 • 7473 posts Report Reply

  • Rich Lock,

    the prick still has plenty of money for his purposes.

    I know, but the kind of finance guru who gets hit by this crisis with "disorienting speed"? (implication: he didn't see it coming and wasn't prepared).

    The kind of finance guru who has to sell 50% of his company at 50% of it's previous worth?

    The kind of finance guru who has to axe 1/3 of his employees from the core businesses, and even then only just manage to avoid following Lehman down the tubes?

    Now that's the kind of success New Zealand really needs at the moment, right?

    The last bulletpoint was truly alarming

    More alarming than: "His solution includes...abandoning MMP for [a] system that allows the Government to make "bold" decisions."?

    back in the mother countr… • Since Feb 2007 • 2728 posts Report Reply

  • Caleb D'Anvers,

    More alarming than: "His solution includes...abandoning MMP for [a] system that allows the Government to make "bold" decisions."?

    He sounds like someone playing a really bad game of Civ. Oh no! We've had a couple of turns of anarchy! What do I do? I know -- DESPOTISM!

    London SE16 • Since Mar 2008 • 482 posts Report Reply

  • Sacha,

    Another Herald handjob for the right. I love the prize doofus clinging to "freeing up business" as the answer - talk about not grasping what's just happened to him. And yes, "bold" might look normal to someone who has been doing business in Russia at the pleasure of Putin and co.

    Ak • Since May 2008 • 19707 posts Report Reply

  • DeepRed6502,

    He sounds like someone playing a really bad game of Civ. Oh no! We've had a couple of turns of anarchy! What do I do? I know -- DESPOTISM!

    Sounds remarkably like Pinochet's Chile.

    The southernmost capital … • Since Nov 2006 • 19 posts Report Reply

  • ScottY,

    So the boss of a failed finance company is telling us how to run our country. No wonder the Business Roundtable loves him.

    I wonder who'll give next year's Trotter lecture - Rod Petricevic? Mark Bryers?

    West • Since Feb 2009 • 794 posts Report Reply

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