Ryansway (Wellington)
10:59AM Friday, 03 Sep 2010
Forget Allan Hubbard Bernard, he simply took the money others freely gambled…

Because this investment system is a donkey. If its attributes were crossed over to the…

From today's Granny... 'Bad bank' sent another 20 firms to wall
Sound familiar?

So Henderson had his hooks in SCF for $20-$30 million, guess none of the $17 million he got from the City Council here went to defray those borrowings...
and I assume some of…

Still, most people don't know the difference between a million and a billion.

From today's Granny... 'Bad bank' sent another 20 firms to wall

So the firms were in default of their repayments, what was SCF meant to do? Sure, it indicates poor judgement on SCF's part in lending them money in the first place, but should they have waited until the arrears…

South Canterbury Finance's collapse appears to have been caused in part by rich investors pulling out cash to get below new limits for the government's deposit guarantee scheme.

Trustee Executors regional manager Yogesh Mody said "many investors" with deposits above the $250,000 limit that will…

Sound familiar?

As a former roadie for the Basket Cases...

Willow never, weave come a long way...

They were also known as The Detroit Haemorrhoids (rust never seeps)...

... aah the '70s, I miss those strange days & nights at The Gresham, back when Cashel street
(in Christchurch,…

Chicken census...

My Mother always told me to never put all my eggs in one basket. Sound advice without a financial advisor in sight.

Shares in a wickerwork enterprise then? If extra baskets are to be a growth industry...

...I wonder if Dave Henderson met the deadline to buy…

it was already out of control by mid-2008 as a result of Hubbard's decision to allow his wonder boy manager Lachie McLeod to bet too much of the bank on property investment, over-valued dairy farms and (of course) related party transactions.

Perhaps we now have an idea of who the…

Make no mistake about this.

South Canterbury Finance would not have lasted long without the government guarantee. It was already out of control by mid-2008 as a result of Hubbard's decision to allow his wonder boy manager Lachie McLeod to bet…

I am still at a loss as to where the money has gone, or was it just imaginary money to start with?

Where the capital's gone, I think you mean, it didn't grow by much, because most of the loans were invested back into crap like finance companies, rather than…

Now they can get treatment....at long last.

Problem was, analysts warned of runs on higher-risk finance companies if they weren't covered as well. Vested interests, methinks?

This is dumb, because basically the real banks have an implied state guarantee. If a major bank failed and people couldn't access their funds, then things would be so stuffed that the government would…

it doesn't reassure when the so-called informed media financial commentators can't agree on the figures either...

The Herald has it that: "...or $405 for every man woman and child in New Zealand" on a $1.775 billion bailout...

(I guess they are adding in the $175 million loan…

http://observationz.blogspot.com/2005/03/accidents-waiting-to-happen.html

If they're after the dumb money, it's because the smart money won't touch them.

My Mother always told me to never put all my eggs in one basket.

"It's the eggs — they're releasing chemicals to tranquillize you. It's a mechanism used by parasitic insects."

Well, that doesn't count. But is there something inherently wrong with the business model that finance companies adhere to?
Again, I'm not personally interested, I'm just wondering if this can be done right?

Curiously (especially with someone suggesting back a few pages that the returns were so high), there is…

Another thing to look at is the board. If the board is stacked with representatives of the biggest…

Well, that doesn't count. But is there something inherently wrong with the business model that finance companies adhere to?

Again, I'm not personally interested, I'm just wondering if this can be done right?

I would be interested to hear ideas around what to look for also.

Brian Gaynor said this…

I saw this in today's paper...

...Her profile on the C&R website praised her exceptional leadership skills and said she would help pursue greater vibrancy in the community.

...that vibrancy would be shuddering, right?

When the share price is that low, things can only go up, right?

oh forget Allied Farmers, I can take that troublesome cash-cow off your hands in
exchange for these magic beans...

Well, there are many still covered by the govt guarantee

Well, that doesn't count. But is there something inherently wrong with the business model that finance companies adhere to?

Again, I'm not personally interested, I'm just wondering if this can be done right?

I believe pyramid schemes are illegal -…

anti-intellectualism (expressed in the form of scorn of properly implemented management systems, and the ignoring of business best practices and standards

I have been forced against my will to take graduate-level management classes. They are, in fact, the purest form of anti-intellectual busywork known to humanity. I can't imagine they…

are there any finance companies that would be worth investing in?

Forget finance companies. Invest in Allied Farmers shares. If I were you I’d invest every cent into that company. In fact, I’d borrow heavily to invest in Allied Farmers.

When the share price is that low, things can only…

Are there any good ones? And how would I be able to tell if they are any good?

Well, there are many still covered by the govt guarantee, so from a purely financial perspective you can easily find safe havens for your $$

The Government this morning paid out $1.7 billion to cover investor losses – about $150 million more than it was required to

Anyone know more about that last bit?

Recently a firm called Torchlite had arranged the injection of some capital into SCF to…

I'm curious – sssuming for a moment that I have money to invest – are there any finance companies that would be worth investing in?

No.

And we should punish you for buying property to – even though your real estate agent is unlikely to dismantle your house and make…

If the sewer commentators are generally employed in the secondary finance industry (as opposed to living with their parents at the age of 37, which I thought to be the norm) it explains a lot.

In the case of SCF, we've…

Timaru is the kind of swing-vote provincial territory National must hang onto to win next year's election.

To date, fees collected under the current fee structure are approximately $87.4 million per annum ($81.9 million from banks and $5.5 million from non-banks).

However, the net costs of the Scheme extend beyond just fiscal: there are also economic…

The $900 million is money set aside to pay for defaults. The difference of $700 million is crazy – insurance generally takes…

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…

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…

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.

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…

"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…

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…

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…

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.

...

Bad loans were the main reason for its downfall, and Mr Maier revealed the…

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…

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…

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.

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…

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…

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.

Cancelling the world cup would just about leave us level.

Or ditching/scaling back the Holiday Highway for that matter.

" Ah, Alan can I have a word to you after morning tea."

I am still at a loss as to where the money has gone

In a whole lot of brown envelopes scribbled on in builder's pencil and buried in suitcases in the backyard Timaru soil..

I am still at a loss as to where the money has gone, or was it just imaginary money to start with?.

Isn't that what the banks did (do), lend money they haven't got yet.
Capitalisation baby.

20/20 hindsight would be a wonderful thing if we didn't have to put up with crappy reality,

But Craig, dear chap, it's not the reality were looking at, it's the collapse of fantasy that is the problem here. The system is supposed to work like this.
You give me your…

We're really talking about welfare for National voters here, aren't we.

Yes, I'm sure that's exactly what Mr Cullen's plan was when he set the deposit scheme up.

We're really talking about welfare for National voters here, aren't we.

Really? No – if anything, this is a political lose-lose for the Government no matter what happens. And if you don't believe me, just look at the battering the Democrats are taking in the polls because they got stuck…

Find the applicable scientists and get them on to it.

Physicists. The financial institutions paid shitloads for them because they were "good" at modelling chaos.

.......I wonder how many are left....???

We're really talking about welfare for National voters here, aren't we.

Blaming Michael Cullen is very unfair. A lot of his work has been undone by this government.

@Hillary: Would it be OK to grant that not every thing Michael Cullen did as Minister of Finance was a heartbreaking work of staggering genius laid to waste by the evil baby-eating Tories?…

Careful. That's "mum and dad investors"™ you're talking about.

hell no, they're all waiting in the wings to invest in KiwiBank – The Willy Wally from Wallace, er Bill English, told us so...

In the US after the '29 crash and the great depression Roosevelt passed a bunch of laws…

Can I slap both Cullen and Bill English as long as I promise not to put my jewellery back on when it's Mike's turn? :)

No, Mike would slap back, Irish primal shit.

Given the global context, I doubt the response would have been any different no matter who was in government – and didn't they explicitly work together on it anyway?

Can I slap both Cullen and Bill English as long as I promise not to put my jewellery back on when…

But all the big banks will have provided the money which goes out the door to investors

Ah, no.

The government has collected $74 million, and has budgeted to pay out $900 million

Why? Because he was a lovely guy? Or he saw how best to run such a wild machine.

There's a statue somewhere in Washington depicting trade as a wild horse being bridled by a man. IIRC it was a federally-funded art piece as part of the response to the Depression.…

It wasn't just "Michael Cullen" — the scheme had cross-party support because there was a real risk of a ruinous loss of confidence in the banking system.

Sure — but I don't think you had to be a ding-dong Tea Bagger (since you brought them up) to be ever so…

It would perhaps be more sensible to put away the bad words for once and take a break from pointlessly personalising the issue.

Quite so. You make points clearly here and on your blog. There's no need to smear invective over them.

People make the wrong decisions, for the wrong…

The scheme will be free for institutions with total retail deposits under $5 billion. A fee of ten basis points per annum will be charged on total deposits above $5 billion. This means that a bank with $20 billion in retail…

the scheme had cross-party support because there was a real risk of a ruinous loss of confidence in the banking system.

Given the global context, I doubt the response would have been any different no matter who was in government – and didn't they explicitly work together on it anyway?

Michael Cullen. We should all send him the bill.

And you declared him an "arsehole" on Twitter today for his troubles.

It would perhaps be more sensible to put away the bad words for once and take a break from pointlessly personalising the issue.

It wasn't just "Michael Cullen" --…

Michael Cullen

Well, yeah, there is that. But I mean specifically SCF. Can we sue a ratings agency or something?

Wasn't the deposit scheme financed partly by a levy on financial institutions and banks?

Yes. The government has collected $74 million, and has budgeted to pay out $900 million (it's government maths! Like normal maths, but different!). So, we are paying for this. Not the banks, but ordinary taxpayers.

Any word yet on who's to blame for allowing SCF into the scheme in the first place? It's looking more and more that they had no business being accepted for cover.

Michael Cullen. We should all send him the bill.

about $150 million more than it was required to

Anyone know more about that last bit?

This, I think (from Stuff):

* The Crown has made a loan to the reciever of $175 million, which allows it to repay all of South Canterbury Finance's prior ranking debts. Once this transaction is…

First I must apologise to Steve for not having taken all the degrees on offer at University.

Accepted, slacker.
;-)

The Government this morning paid out $1.7 billion to cover investor losses – about $150 million more than it was required to

Anyone know more about that last bit?

The RDGS turns risky financial investments into a one-way bet.

I'm certainly no financial expert, but it strikes me that the scheme, far from encouraging stability in the sector, actually encourages only the appearance of stability, and in fact at the cost of some actual stability.

Any word yet on…

Instead we're gifting several hundred dollars a head to gamblers too stupid to understand that high interest = high risk.

That's not quite true – we also gave money to people who invested in SCF after the guarantee came into place, knowing that they had nothing to lose.

Bastards.

The RDGS turns risky financial investments into a one-way bet.

It'd be interesting to know what advice the government has recieved from Treasury regarding the RDGS, and SCFs eligibilty for it. I suspect they've been too busy urging the government to sell KiwiBank to pay it much attention.

Except that in this case, apparently high interest = no risk at all.

Indeed. The RDGS turns risky financial investments into a one-way bet.

Instead we're gifting several hundred dollars a head to gamblers too stupid to understand that high interest = high risk.

Except that in this case, apparently high interest = no risk at all.

Thank fuck. I thought we were being lined up to gift several hundred dollars a head to farmers, property spivs and an overseas billionaire.

Instead we're gifting several hundred dollars a head to gamblers too stupid to understand that high interest = high risk. Its no different from guaranteeing people's…

Govt pays $1.7bn to Sth Canterbury Finance

The Government this morning paid out $1.7 billion to cover investor losses – about $150 million more than it was required to – as New Zealand's largest locally owned finance company South Canterbury…

And the applicable Scientists are?
Here is a list...
We can't use these...
Statistician, not a science.
Economist, not a science.
Feel free to expand this list.

There is science to everything

Statistician, not a science.

Since when is statistics not a science?

The best way to do it is...

Find the applicable scientists and get them on to it.

Others were greasy pieces of crap that made you feel like taking a bath after meeting with them

Bob Jones, Michael Fay, Ray Smith, Micheal Hill Jeweller have the same effect on me, business is run by some weird boys.

The problem is the designers of business are basically guessing and its time the whole game was given new workable sustainable rules.

People think I'm joking when I say the rules of economics should be based on Thermodynamics, Money cannot be created…

and I'd imagine that didn't help SCF find new investors...
(I'll also be interested to know if the Dave…

And I don't…

Really, the previous government should have shut down the secondary finance sector years ago. It was obvious that failure was only a matter of time…

"There is $900 million in the scheme, calculated to be enough to cover all the companies which signed up to it."

(Not to contradict, but to clarify:) Rod Oram says $885m. I can't imagine that the second half of that quote is accurate. For starters, that's not how insurance works.…

"There is $900 million in the scheme, calculated to be enough to cover all the companies which signed up to it."

That's anarchist clap trap Steve is spouting, it is not mainstream right-wing.

Angus, darling, please don't interfere with the tease.

This debacle also shows what a dumb idea it was to extend the RDGS to finance companies. It is one thing to protect customers, who are innocent third parties. It…

Thank fuck. I thought we were being lined up to gift several hundred dollars a head to farmers, property spivs and an overseas billionaire.

This debacle also shows what a dumb idea it was to extend the RDGS to finance companies. It is one thing to protect customers, who are innocent third parties. It is quite another to protect investors.

The idea was to prevent a run on the Finance Companies, followed by a…

Crime is easy,
it's the not-getting-caught bit
that demands thought.

this is a classic – T-Shirt please!
or at least a mail sack sampler... :- )

And just how would that be done Graeme? I mean NZ is not exactly flooded with FakeReceipt 1.0 software, is it?

If you can't think of at *least* three ways to evade tax in this manner – at least initially – you're not trying hard enough. Crime is easy, it's…

if South Canterbury Finance has poor record keeping, poor lending policies, questionable governance and probably lacks the financial resources to pay back its investors then how did it get the ok to join the guarantee scheme in the first place?

A very good question. The RDGS is insurance. Every insurance…

Wasn't the deposit scheme financed partly by a levy on financial institutions and banks? Do we know if the scheme has been triggered before, and how much money has gone into the coffers as a result of the levy?

And how much do ya want to bet it found its…

if South Canterbury Finance has poor record keeping, poor lending policies, questionable governance and probably lacks the financial resources to pay back its investors then

There are multiple entities involved with Hubbard, of which South Canterbury Finance is one. You are confusing, I think, some of the allegations related to…

We are probably lucky our banks are Australian owned so we couldn't screw them up to badly.

The phenomenal growths of credit since…

This entire debarcle proves that dairy farming is not economically sustainable. We know it will move offshore in the next 15-20yrs and where to from there, with such capital investment?

We know Dairy farming isn't environmentally sustainable.…

Currently we turn water into milk. That makes sense.

Where's that sarcasm tag..........

"We are decimating our fish stocks mainly with the help of the government"
"And the government is just dying to mine in conservation areas."
"........ our local bodies are fighting tooth and nail to stop renewable energy…

then how did it get the ok to join the guarantee scheme in the first place? Don't they check on the viability of an organisation before they guarantee it? And if somebody did check them out, who is it who does the checking?

I think its something to do with…

Liam Dann: Hubbard owes New Zealand an apology.

Andre's expectation that others are here to help those who wont help themselves. There's more than a little of that viewpoint among some of the Hubbard supporters.

A page late, but amen to that. Although I suspect there will be a few unwitting victims in the mix also.

Those are…

Our little systems have their day;
They have their day and cease to be:
They are but broken lights of thee,
And thou, O…

You have to have assets or be an investor to be affected by the collapse of the finance firms.

Do you think ONLY asset holders or investors were affected by the collapse of Lehman Brothers in September of 2008?

How frightfully right-wing of you, Steven. Unacceptable degree of moral hazzard and let the market red in tooth and claw take its course? Would you include folks like our host's mother in that general anathema?

Craig,

That's anarchist clap trap Steve is spouting, it is not mainstream right-wing.

Any faithful…

all younger generations I assume?

"are being made to pay

how?

"so that the older generations can continue to remain "asset rich".

So we evil older generations dont pay taxes, rates, upkeep on our properties?

And "If they all…

And if somebody did check them out, who is it who does the checking?

Reputable credit rating agencies, their reputation is legendary.

For Andre's info, babyboomers were born between 1945 & 1960. In ANZ, very few of us are able to access a reverse mortgage – yet. But people like my 83yrold mother ...have every right to choose to do whatever they want within the asset-rich…

And just how would that be done Graeme? I mean NZ is not exactly flooded with FakeReceipt 1.0 software, is it?

Microsoft Word? Have you seen what counts as a legitimate and proper receipt for many tax purposes (perfectly reasonably, I hasten to add).

It's not the first time he – or someone using similar language – has whinged about 'babyboomers' selfishly depriving younger generations of "their due."

For Andre's info, babyboomers were born between 1945 & 1960. In ANZ, very…

And now they are taking "reverse mortgages" as well to ensure that there is nothing left when they die. ban overseas land sales before we become a tenant nation.

Do you know how a reverse mortgage works?
And what the money is borrowed against? What are you, just pissed off…

Can we sell Timaru to the Chinese to get our billion dollars back?

I hate to say it. But there probably is ( more than) the odd billion going out through Timaru/ Chch/Dunedin wharfs. And probably to China!

The fact is that south of Kaikoura, until we get our main…

MP for Cthulhu-Southland

That's just awesome.

A wage-earner who claims a tax deduction for making a charitable donation which was not actually made

And just how would that be done Graeme? I mean NZ is not exactly flooded with FakeReceipt 1.0 software, is it?

...and someone will head south,
till this whole thing cools off...

$600 million isn't exactly Small Change.

in Canterbury before deforestation
and dairying took over
it used to be I lamb...
...therefore I am

Perhaps the view from Timaru is of Hubbard as a maligned saviour, carting our sins away in the unassuming managerial VW Beetle while delivering us from the cursed blood of the lamb with…

I insist: if you subtract wage and salary earners – who can't cheat...

And there's your problem. I won't claim an intimate knowledge of the Italian tax code, but most allow for deductions and write-offs and things like that.

In New Zealand, charitable donations are tax deductible. A wage-earner who…

...sorry that should be Illam ...

Brownlee's motto – Iran for Ilam...
...and its mine, mine, mine!

in Canterbury before deforestation
and dairying took over
it used to be I lamb...
...therefore I am

and I can see why…

In Italy commentators say that 42% of the population are tax evaders

So everybody is not either unemployed or a wage and salary earner? Thank you for the vote of confidence there, commentators.

It is possible – I'd go so far as to suggest the norm – for tax evaders…

This isn't simply, as the Air New Zealand bailout was, a matter of rescuing a trading airline business

There was also something about preserving national landing rights, as I recall.

Would you include folks like our host's mother in that general anathema?

I am unaware of Russell's Mum being a speculative Diary Farmer, that label is, deservedly, hanging around the necks of the Crafers and their ilk.
I am still shuddering at the shock of being described as "Frightfully Right Wing"…

So, when Blinglish decides what he is going to do about SCF I wonder how much of our "Hard Earned Money"™ will disappear with those failed Dairy Farmers?

How frightfully right-wing of you, Steven. Unacceptable degree of moral hazzard and let the market red in tooth and claw take its…

In Italy commentators say that 42% of the population are tax evaders

So everybody is not either unemployed or a wage and salary earner? Thank you for the vote of confidence there, commentators.

Man tries to pay bill with spider drawing

The NZ domestic economy is suffering as a result – all the savings that disappear represent the loss of present and future spending in the domestic economy and an increased burden…

Can we sell Timaru to the Chinese to get our billion dollars back?

Not even close. That's like trying to pay off your mortgage with a lettuce.

I've heard Matthew Hooten say something absolutely right on Nat Radio.

... and indulged in a bit of teacher-bashing along the way.

Can we sell Timaru to the Chinese to get our billion dollars back?

I was really trying to avoid the Timaru jokes — but the current Air NZ inflight mag has a story by Paul Little about the unknown delights of the city that is ... underwhelming.

What's really starting to piss me off are as the Hubbard supporters who say he can't have done anything wrong because of his "long history of philanthropy".

For me, it's them all saying that he's "done nothing deliberately wrong", as though any negligence would be entirely acceptable.

I know this is going to cause PAS-rage, but I've heard Matthew Hooten say something absolutely right on Nat Radio. Politically, this is a "damned if you do, damned if you don't, damned no matter what do you" deal for the Government.

No rage here. I'd hate to be making…

The pressure on all concerned is enormous, and I think Bill English did a good and appropriate job of saying nothing until he has something concrete to say.

I know this is going to cause PAS-rage, but I've heard Matthew Hooten say something absolutely right on Nat Radio. Politically, this…