Hard News: Meaning well with the money of others
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Cancelling the world cup would just about leave us level.
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Old Alan Hubbard
Went to the cupboard
To rotate his savings and loans
The cupboard was bare
‘I should’ve called Maier
Cos there’s nothing in here but bones’ -
Cancelling the world cup would just about leave us level.
Or ditching/scaling back the Holiday Highway for that matter.
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Cancelling the world cup would just about leave us level.
Or ditching/scaling back the Holiday Highway for that matter
The latter is the one that wouldn't put us in default of various legal agreements or make us an international laughing stock, so I'm going with that.
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Any thoughts on the effect of that much money freeing up for re-investment more-or-less at once? It seems like a huge amount to me, but how does it actually compare to a typical say, month on the NZ markets?
Part of me would love the government to say: "Okay, here's your capital back -- but you can't re-invest it in property."
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Look fuck it we're New Zealanders , let's just tell the Aussie banks to fuck off, we're scrubbing debt because of historical injustices , they'll love it, Aussies just love that kind of stuff from us.
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As others have pointed out the govt hasn't collected enough money to come vaguely close to covering this.
It's worth comparing the temporary scheme with what was the norm in the US - the FDIC only insures money from banks that meet certain requirements to do with their practices they collect insurance fees in good years and bad (used to)have a limit on the size of accounts covered, require a percentage of the bank's assets to be on deposit etc etc
They'd never cover the equivalent of a NZ finance company. And when the crunch came even the FDIC needed bailing out - partly due to the recent deregulation
I think that having a FDIC style scheme here would be a good thing but we need to have it in good times and bad like any other insurance
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3410,
I think it might be the other way round.
I think you're right, Steven. 'Twas the odd way they phrased it, I think, that gave me that impression.
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Socialism for the Rich.
30,000 SFC investors, who vote National just got what they voted for. -
And you declared him an "arsehole" on Twitter today for his troubles.
Yup. I'm a big fan of holding politicians accountable for their screwups, and if I can no longer vote them out of office, the least I can do is make my contempt and hatred plain.
If you think that's unduly personal, then don't blame me when they use you for toilet paper.
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Any thoughts on the effect of that much money freeing up for re-investment more-or-less at once? It seems like a huge amount to me, but how does it actually compare to a typical say, month on the NZ markets?
Its ~0.8% of GDP, all in one hit, and quite geographically concentrated. The most likely result, given how badly people have just been burned and the lingering legacy of the 1987 sharemarket crash, is a South Island property boom. A good time, if you're a dairy farmer, to look for that bigger fool...
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South Canterbury Finance (SCF) ramped up its risky real estate loans after it signed up to the Government's scheme that protected its investors' money, the company's chief executive Sandy Maier said tonight.
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Bad loans were the main reason for its downfall, and Mr Maier revealed the high risk tactic in an interview on TV3`s Campbell Live programme.
Asked whether it had been cynically exploiting the government guarantee, Mr Maier replied: "It might have been cynical, it might have been merely incompetent... it probably violated a lot of prudent lending criteria."
This isn't just leaving your car unlocked with the keys in the ignition - its pure financial arson. No insurance company in the world would cover this sort of insanity, and if the RDGS does, then the people who designed it and the people who failed to conduct proper due diligence to prevent this sort of abuse need to be held to account.
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Every deposit taker in the country is going to be focussing a huge marketing campaign on Timaru before the SCF investors are paid out. That money has to now go somewhere new. And I think that the SCF investor list might be able to be sourced under the OIA and is public privacy-compliant info for direct marketing use.
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South Canterbury Finance (SCF) ramped up its risky real estate loans after it signed up to the Government's scheme that protected its investors' money, the company's chief executive Sandy Maier said tonight.
"Ramped up" , I mean where's the logic to abuse a scheme that was built to keep you afloat. Going for the gold, the only reason?
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Stupid and stupider - two streams of thought Late one night:
STUPID
It's not the economy stupid.
The people are still here; the ability to provide good and services is still there; the purpose of the economy to provide goods and services to people.
It's the manner the economy is run and regulated, stupid.
That failure rests with the (successive) governments both globally and nationally.
STUPIDER
I am not sure whether the ACT party shoudl be called the Kamikaze Party of the Hara-Kiri Party - they really are a laugh and a half.
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"Ramped up" , I mean where's the logic to abuse a scheme that was built to keep you afloat. Going for the gold, the only reason?
@Jeremy: I usually despise parlour psychoanalysis, but aren't we talking about the same mental wiring as compulsive gamblers -- next time things will turn for the better, and I'll make back everything I lost and more. Just one more fix and everything will work out fine.
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The so-called Adolf Fiinkensein has an interesting comment in a Dim Post thread. In real life he's actually in farm finance:
Having spent a good part of my life in the rural sector and in farm financing, I have a particular interest in the caterwauling coming from South Canterbury. Amongst all the rhetoric it’s worth noting the gummint has collected thus far from the guarantee scheme some $250 mil worth of fees and accrued interest therefrom which is a legitimate offset against any loss which may arise from the receivership. You don’t see anything of this in the media.
I see from an earlier comment that SCF just scraped in back in April when the scheme was extended. That certainly calls into question the screening carried out by authorities at that time now that the extent of the internal malaise is becoming evident. Having said that, it seems to me this receivership will be a hell of a lot less damaging to the country than the ongoing debacle of Hanover which now has taken with it Allied Farmers (as well as all the depositors), one of the countries pre-eminent rural secondary lenders.
I suspect in a couple of years, people from all sectors will look back and thank God Cullen put the scheme into place and English extended it.
I think SCF was actually downgraded to BB -- the lowest rating allowed for entry to the scheme -- around the time that Bill English extended it in August last year.
I would very much like to hear more about the managers who gorged on risky loans after SCF received coverage under the scheme. Who were these people?
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I would very much like to hear more about the managers who gorged on risky loans after SCF received coverage under the scheme. Who were these people?
I believe the lending practices encouraged by the former CEO, Lachie McLeod, may now be under scrutiny.
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Be interesting to know where 'Adolf' gets his figure of $250m, given that it's several times more than the one we've seen elsewhere.
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It's also a lot less than the $900m printed by the Herald yesterday.
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In fact today the paper has reprinted the figure:
While it laid out $1.775 billion yesterday, the Government expects its eventual loss will be reduced to about $600 million once the company's assets are realised over three or four years. That is included in $900 million it has set aside to cover its net losses under the guarantee.
It's become less clear (at least to me) if this money set aside came entirely from the levy.
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The $250 million odd paid by institutions under the scheme is similar to the fiigures I've seen mentioned. I'm not sure what the exact amount currently is.
The $900-odd million is not money they've made from the scheme, but money they've set aside in the accounts to cover liabilities under the scheme. They had already been expecting some liability, so had made an allowance for it in the books some time ago.
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According to the herald, they only release the amount collected by the scheme at the end of each year, and as of June 30 2009 had collected $228 million.
The $900 million is money set aside to pay for defaults. The difference of $700 million is crazy - insurance generally takes in more than it expects to pay out. The $700 million difference could do a bunch of better things - like universal student allowances ($728 million).
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Or starting an aerospace industry from nothing, yes.
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