Hard News by Russell Brown

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Hard News: Meaning well with the money of others

195 Responses

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  • Rich of Observationz,

    Cancelling the world cup would just about leave us level.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Ross Mason,

    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’

    Upper Hutt • Since Jun 2007 • 1590 posts Report Reply

  • Kumara Republic,

    Cancelling the world cup would just about leave us level.

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

    The southernmost capital … • Since Nov 2006 • 5446 posts Report Reply

  • Russell Brown,

    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.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Russell Brown,

    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."

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Jeremy Eade,

    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.

    auckland • Since Mar 2008 • 1112 posts Report Reply

  • Paul Campbell,

    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

    Dunedin • Since Nov 2006 • 2623 posts Report Reply

  • 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.

    Auckland • Since Jan 2007 • 2618 posts Report Reply

  • Just thinking,

    Socialism for the Rich.
    30,000 SFC investors, who vote National just got what they voted for.

    Putaringamotu • Since Apr 2009 • 1158 posts Report Reply

  • Idiot Savant,

    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.

    Palmerston North • Since Nov 2006 • 1717 posts Report Reply

  • Idiot Savant,

    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...

    Palmerston North • Since Nov 2006 • 1717 posts Report Reply

  • Idiot Savant,

    Oh for fuck's sake:

    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 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.

    Palmerston North • Since Nov 2006 • 1717 posts Report Reply

  • Andre,

    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.

    New Zealand • Since May 2009 • 371 posts Report Reply

  • Jeremy Eade,

    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?

    auckland • Since Mar 2008 • 1112 posts Report Reply

  • Kumara Republic,

    The southernmost capital … • Since Nov 2006 • 5446 posts Report Reply

  • DexterX,

    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.

    Auckland • Since Nov 2006 • 1224 posts Report Reply

  • Craig Ranapia,

    "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.

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

  • Russell Brown,

    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?

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • ScottY,

    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.

    West • Since Feb 2009 • 794 posts Report Reply

  • Sacha,

    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.

    Ak • Since May 2008 • 19745 posts Report Reply

  • giovanni tiso,

    It's also a lot less than the $900m printed by the Herald yesterday.

    Wellington • Since Jun 2007 • 7473 posts Report Reply

  • giovanni tiso,

    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.

    Wellington • Since Jun 2007 • 7473 posts Report Reply

  • ScottY,

    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.

    West • Since Feb 2009 • 794 posts Report Reply

  • jeremy gray,

    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).

    point chev • Since Apr 2008 • 44 posts Report Reply

  • giovanni tiso,

    Or starting an aerospace industry from nothing, yes.

    Wellington • Since Jun 2007 • 7473 posts Report Reply

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