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Speaker: The Voyage: The Engine Room Dilemma - All Hands Below Deck

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  • Angus Robertson,

    Usually, that is bank shareholders, bank bond holders and then bank depositors, in that order. In 2008 this didn't happen. Governments chose to take over the bad debts to protect bank bondholders and managers. This shifted bad debts from one group of private lenders to taxpayers in general.

    NZ is potentially such a marvellous place to live, because we don't have many banks to fail.

    The collapse can happen and we can be not on the hook.

    Auckland • Since May 2007 • 984 posts Report Reply

  • Bart Janssen,

    Rocket scientists got jobs at investment banks

    It's somewhat telling that we (the voting public) chose an investment banker as PM and not a rocket scientist. We value the opinions of bankers and economists much more than the opinions of engineers and scientists.

    Why would anyone want to work in the engine room when all the glory is on the main deck?

    Auckland • Since Nov 2006 • 3414 posts Report Reply

  • Rich of Observationz,

    we don't have many banks to fail.

    This round, we isolated the clearly reckless lending into a tier of unregulated institutions like South Canterbury. That kept the impact of the crash on the mainstream banking sector to a minimum.

    I don't think we'll be looking so good after China crashes. The Aussie banks we rely on are exposed to the commodities sector and to sourcing finance from mostly Asian offshore investors. Lose those, and they're in trouble.

    Back in Wellington • Since Nov 2006 • 4463 posts Report Reply

  • Ian Dalziel,

    Ship of fools...

    We need all hands below deck to rebuild and
    restart the engine while we still have time.

    Failing that we'll
    all be down there
    pulling against oarlocks,
    tugging our forelocks,
    losing our shirts
    to make sails, as
    the Galley of State,
    rudderless, drifts
    reefward...

    Christchurch • Since Dec 2006 • 5046 posts Report Reply

  • Russell Brown, in reply to Angus Robertson,

    NZ is potentially such a marvellous place to live, because we don’t have many banks to fail.

    The collapse can happen and we can be not on the hook.

    You're not the first to remark on this. Having an outsized financial sector has turned out to not be a good thing at all.

    Auckland • Since Nov 2006 • 18957 posts Report Reply

  • Lilith __, in reply to Ian Dalziel,

    pulling against oarlocks,
    tugging our forelocks,

    Having a rowlocking good time! ;-)

    Dunedin • Since Jul 2010 • 3466 posts Report Reply

  • Ian Dalziel, in reply to Rich of Observationz,

    Soap Opera Houses...

    The Aussie banks we rely on are exposed to the commodities sector and to sourcing finance from mostly Asian offshore investors.

    The bubble is breaking...

    Christchurch • Since Dec 2006 • 5046 posts Report Reply

  • Rich of Observationz,

    The world’s ability to invent and develop new tools and techniques to increase productivity has atrophied over the last 30 years

    We've developed plenty of technology - it's how the productivity increase from that technology has been used.

    The amount of 'blue-collar' effort required to produce valuable goods steadily declined through the 20th century. In its place, we've seen increased 'white-collar' effort applied to design, production and marketing. As an example, in 1920, Ford employed many thousands of manual workers and a much smaller number of clerks and draughtsmen. Today, they have many less manual workers but proportionately many more in sales, marketing, finance and the supply chain.

    Many modern businesses are built on entirely pointless activity. Powershop, for instance, enables customers to get a cheaper price for electricity - which has a fixed cost of production and is largely produced by publicly owned generators. Basically, it's the equivalent of Keynes' digging holes and filling them in.

    What this diversion of technological gain has done is to enable a large and moderately affluent middle class to grow up - and in doing so enable capitalism to dodge the Marxian bullet of revolution - which, had we persisted with a society dominated by industrial workers, would indeed have been as inevitable as Marx thought it was.

    However, as the 'benefits' of technological advance have spread beyond Europe and her former colonies, that 'wealth' has been more thinly spread. With less opportunity to keep the middle class contented with earned income, unearned incomes (from leveraged borrowing and speculation) become more important.

    That lacks sustainability however, as it requires more and more to be borrowed and used to buy goods which aren't increasing in supply. Eventually, things snap, and that's when we get a financial crash.

    Society (aka the 1%) might yet invent a new way to bribe the middle classes, but if not, I think we're headed along a more revolutionary path.

    That was long. I'd have done shorter, but didn't have the time

    Back in Wellington • Since Nov 2006 • 4463 posts Report Reply

  • Angus Robertson, in reply to Rich of Observationz,

    Lose those, and they're in trouble.

    Well yes, but assuming the eurocollapse/chinacrash global crisis thingamajig happens and causes that stress to hit the Aussie banks. Then they'll go bust and after that we get some new banks.

    Worst that happens is we lose some deposits.

    But we don't have to bail them out, if the Aussies want to then sweet - their money, their problem. We don't have to pay money to banker scum.

    Auckland • Since May 2007 • 984 posts Report Reply

  • Richard Aston,

    Aging populations are going to retire and get sick over the next 20-30 years, leaving a smaller group of passengers working and paying taxes for health care costs and pensions

    Well I don't know about that . It may have been true 20- 40 years ago when those aging were flogged out manual workers but I think the future of aging may be different. I am 60 and am not expecting to retire for quite some time and like many of my friends we are looking after our health a lot more than say, my parent's generation did.
    I wouldn't be so quick to write off the aging population as a liability too soon.

    Auckland • Since Nov 2006 • 503 posts Report Reply

  • Rich of Observationz, in reply to Angus Robertson,

    Worst that happens is we lose some deposits.

    No, worst thing that happens is that the cash machines stop working. And the EFTPOS, because one bank can't accept payment off another. So most people aren't being paid and can't buy food. Even if you have cash, the shops can't pay their suppliers and the suppliers can't buy diesel to truck the food anywhere, so the shelves are empty.

    Within a few weeks, we'll be 'starving with full barns'.

    Back in Wellington • Since Nov 2006 • 4463 posts Report Reply

  • Ian Dalziel, in reply to Rich of Observationz,

    shedding weight...

    we’ll be ‘starving with full barns’

    Will no one think of the empty bairns?

    Christchurch • Since Dec 2006 • 5046 posts Report Reply

  • Allan Moyle,

    .. the energy of the world’s best and brightest over the past two decades has gone…

    into endless patent litigation and defense tactics around every new nuance of an idea/concept/IP stifling advances that could provide compound results.

    Auckland • Since Nov 2006 • 91 posts Report Reply

  • Angus Robertson, in reply to Rich of Observationz,

    Within a few weeks, we'll be 'starving with full barns'.

    Or we can change banks to ones which are solvent. New banks will arise take over the business from those that go bust. Everything continues pretty much as per normal.

    Auckland • Since May 2007 • 984 posts Report Reply

  • Angus Robertson, in reply to Rich of Observationz,

    The choice is to either pay $trillions to banker scum, have a "revolutionary path" or change banks.

    I think we should consider changing banks. If our savings aren't safe and there is potential strife on the horizon for Australian owned banks, we can maybe change banks?

    Auckland • Since May 2007 • 984 posts Report Reply

  • Bart Janssen, in reply to Angus Robertson,

    New banks will arise

    Interestingly they may not look like banks. A lot of the functions that banks perform now can be carried out by other methods now. Do you need a bank to send money overseas? Do you need a bank to finance a new venture? Do you need a bank to store your money? Do you need a bank to pay your staff?

    I think one of the issues around the financial institutions is that as technology has advanced it has made them in many ways irrelevant.

    Auckland • Since Nov 2006 • 3414 posts Report Reply

  • Stewart,

    I am still concerned that we (western economies) are still working under an outdated and increasingly irrelvant system. A system that was formulated and had useful(?) application when most western countries had manufacturing and processing industries, but is not so good for modelling the 'late-stage capitalism' we currently experience where services (& especially financial services - spinning gold from straw) are the primary wealth 'generators'.

    Is anyone anywhere investigating a different paradigm that might lead us out of this? The western economies seem to be trying the same old things but with no change in the success rate (approximating towards zero).

    Some sort of post-capitalist system???
    (I'm not an economist so I don't really know where one would start, but I can see a pressing need for it.)

    Te Ika A Maui - Waitakere… • Since Oct 2008 • 572 posts Report Reply

  • andin, in reply to Bart Janssen,

    one of the issues around the financial institutions is that as technology has advanced it has made them in many ways irrelevant.

    So they are just filling their pockets while they still can?
    I would not miss them if they disappeared

    raglan • Since Mar 2007 • 1227 posts Report Reply

  • DeepRed,

    NZ is lucky to have a firewall between retail banking and investment banking. Even so, the contagion of overseas banking woes will likely land on our shores, if it hasn't already.

    And, like Rob Muldoon in 1983, the usual suspects are basically saying that average NZers wouldn't recognise a current account deficit if it punched them in the face.

    The southernmost capital … • Since Nov 2006 • 4351 posts Report Reply

  • Fooman,

    Passenger jet speeds haven’t increased for 50 years

    Poor example. This has got something to do with transonic shock waves forming on the aircraft requiring exponential increases in thrust to overcome the aerodynamic forces, rather than a lack of innovation or evolution of technology.

    The technological progress is shown by the fuel consumption per passenger dropping to 30% of what it was in 1960 (1). At the same time as improving reliability.

    The drive in aerospace technology is, in fact, driven by civil aerospace requirements for fuel efficiency, high specfic performance, and longer maintenance cycles. Military applications, less so.

    FM

    Lower Hutt • Since Dec 2009 • 87 posts Report Reply

  • Bart Janssen, in reply to Stewart,

    where services (& especially financial services – spinning gold from straw) are the primary wealth ‘generators’

    You hear this a lot. And while I agree there is some truth in it I wonder if it isn't in part rationalisation for people getting paid large amounts for jobs that don't really contribute to the wealth (social and financial) of the nation.

    Auckland • Since Nov 2006 • 3414 posts Report Reply

  • Martin Lindberg, in reply to Bart Janssen,

    Do you need a bank to store your money? Do you need a bank to pay your staff?

    Umm, yes?

    Stockholm • Since Jul 2009 • 797 posts Report Reply

  • Stewart, in reply to Bart Janssen,

    I just feel that the 'paper shuffling' and all the smoke & mirrors around the financial instruments that led to the global financial meltdown do not adhere to the basis on which our economies were founded.
    I would love to see an economic equivalent to quantum theory and relativity and the new ways of thinking that they generated. (Current economic theory = mechanical physics & current practice may be better suited to some 'relativistic' economic theory.)

    Te Ika A Maui - Waitakere… • Since Oct 2008 • 572 posts Report Reply

  • DexterX,

    New Zealand, like many other developed economies

    Isn't the problem the narrow nature of our undeveloped economy?

    Auckland • Since Nov 2006 • 1199 posts Report Reply

  • Bart Janssen, in reply to Martin Lindberg,

    Umm, yes?

    Really. I store bytes on a secure server. I then can manipulate those bytes to transfer the "value" to other people. Not sure I need a bank to do that really. I do need a secure network and secure servers.

    Real physical money ... well typically I get $200 cash and put it in my wallet and it lasts 2-3 months.

    Auckland • Since Nov 2006 • 3414 posts Report Reply

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