Hard News by Russell Brown

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Hard News: Fun while the banking system collapses

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  • icehawk,

    "Republican-controlled US congress in 1999 repealed Depression-era laws which separated commercial banks and investment banks."

    And?

    NZ has never had any such laws. Thank goodness. Because right now it's the "pure" investment banks in the biggest trouble - those that combine boths sides of the business are (mostly) not as badly off.

    NZ banks (and the Ozzie banks that own them) are okay largely because they've got a lot of volume of boring retail and commercial banking - deposits, loans, etc, the things that make an investment banker yawn. That business isn't flashy but it's much safer than the wierd and wonderful world of investment banking.

    (investement banking can be done safely too. but only with managers who avoid quick profits in favour of safety - and they don't tend to get promoted.)

    Wellington • Since Sep 2008 • 49 posts Report Reply

  • stephen walker,

    interview from Tuesday

    Stiglitz: The globalization agenda has been closely linked with the market fundamentalists -- the ideology of free markets and financial liberalization. In this crisis, we see the most market-oriented institutions in the most market-oriented economy failing and running to the government for help. Everyone in the world will say now that this is the end of market fundamentalism.

    In this sense, the fall of Wall Street is for market fundamentalism what the fall of the Berlin Wall was for communism -- it tells the world that this way of economic organization turns out not to be sustainable. In the end, everyone says, that model doesn't work. This moment is a marker that the claims of financial market liberalization were bogus.

    and this is before the last-gasp desperation and panic of Friday morning's announcement...stopping short selling of all these financial shares is pretty much the end of the line...a huge short-covering rally followed by the death spiral...IMHO

    nagano • Since Nov 2006 • 646 posts Report Reply

  • icehawk,

    But here is the true index for measuring Wall Street hard times: the High End Girlfriend Index

    Wellington • Since Sep 2008 • 49 posts Report Reply

  • Sacha,

    She just seems to lie as a matter of course

    Par for the Republican course:
    http://www.salon.com/opinion/feature/2008/09/18/lies/index.html

    Ak • Since May 2008 • 19745 posts Report Reply

  • Mark Harris,

    Something to remember: the Federal Reserve is privately owned. While the head is nominated by the President, the entity is not part of the Government.

    Waikanae • Since Jul 2008 • 1343 posts Report Reply

  • giovanni tiso,

    the Federal Reserve is privately owned

    Seriously? Who owns it then?

    Wellington • Since Jun 2007 • 7473 posts Report Reply

  • Stephen Judd,

    You can read the details on Wikipedia, but essentially the Federal Reserve is owned by 12 regional banks which themselves are owned by member banks across the US.

    the entity is not part of the Government.

    That's a bit misleading. At the top level it is entirely controlled by the US government. It's extremely regulated and the governors are selected by the President. Although it's constituted as a privately-owned setup, it doesn't operate like one.

    I really don't know what Mark is implying.

    Wellington • Since Nov 2006 • 3122 posts Report Reply

  • Jan Farr,

    High End Girlfriend Index

    In Auckland in the 80s they were called 'handbags'. They also disappeared after the crash.

    Carterton • Since Apr 2008 • 395 posts Report Reply

  • HenryB,

    The financial crisis is Obama's fault?

    Well, actually Colin and Guyon Espiner would have you believe that Michael Cullen was blaming it on John Key. Maybe JK is Obama after all!

    Seriously, though, people have been too dismissive of Cullen asking a very legitimate question: Should we entrust the country to somebody whose only job (`real' or not) has been to be one of the `fat cats' that are now being seen to have at the heart of our crisis.

    As far as the `sub prime' crisis is concerned: this in not just a sub-prime crisis. The delinquent behaviour around credit goes way beyond just the housing market. Yes, this has been the most dramatic and obvious thing to fall over but the other dominoes will follow.

    And Don Christie

    Borrowing for infrastructure, nowt wrong wi' tha'.

    Why borrow? Cullen just bought back Kiwirail - a crucial bit of infrastructure. Much as I love broadband and much as I would love to see it improved, I think the former might actually be just as good an investment because it will be used to move goods around.

    To borrow to give tax cuts seems nuts to me but then I haven't been involved in the funny money business like JK.

    Palmerston North • Since Sep 2008 • 106 posts Report Reply

  • HenryB,

    Having just read the Obama transcript I would note the following:

    Obama said

    The recklessness of some of these executives has helped to cause this mess, even as they walked away with million-dollar -- multi- million-dollar golden parachutes while taxpayers are left holding the bag.

    And the point I would make is that some walked away several years ago but are no less culpable. This mess did not start in the last 5 years. It's relevance to our current political scene shouldn't need spelling out.

    Palmerston North • Since Sep 2008 • 106 posts Report Reply

  • HenryB,

    And (thanks for the reference, Lucy) it would seem the next domino, after the sub-prime mortgages, is the money-market mutual-fund sector which is already the subject of concern

    Palmerston North • Since Sep 2008 • 106 posts Report Reply

  • JohnAmiria,

    Seriously, though, people have been too dismissive of Cullen asking a very legitimate question: Should we entrust the country to somebody whose only job (`real' or not) has been to be one of the `fat cats' that are now being seen to have at the heart of our crisis.

    Seriously, though, people have been too dismissive of another very legitimate question: Should we entrust the country to somebody whose only job (`real' or not) has been to be a politician? Seriously, has anyone in Labour actually worked in the real world, or did they all just leave University and go straight into politics? Of course not, some got into Teaching first. Or the Union Movement.

    And the point I would make is that some walked away several years ago but are no less culpable. This mess did not start in the last 5 years. It's relevance to our current political scene shouldn't need spelling out.

    No, go on Henry spell it out for us cos we're stupid. John Key is a rich prick, the sort of rich prick that got us into this financial mess, and shooting's too good for him (is that what you mean when you say he should be culpable?). Keep the red flag flying Henry and feel free to trot out that old standard: "__When the revolution comes__ [insert chosen Enemy of the People here] will be the first to be lined up against the wall..."

    Nevermind that Labour have been in power for the last 9 years and could have regulated if they chose to, it's John Key's fault.

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

  • HenryB,

    John, you may sneer at educational institutions like universities and those who work in them but, yes, they are `real' jobs doing useful things - not trying to make money out of money which is all that high-flying currency trading is.

    As for the Red Flag your reference to it is a useful reminder of how relevant the lyrics are. The blood is not that of the rich but that of workers - and, in case you haven't noticed, one of the commodities that has come under pressure recently as part of this crisis is food. It won't be the rich paying the price but workers. The Red Flag is a song of hope for workers in troubled times. I'd suggest listening to Billy Bragg singing it.

    As for "lining them up against the wall": well, actually it is my experience it is the "right" who are in favour of the death penalty for all sorts of things. Their more excessive demands for the use of this penalty have, thankfully, been relegated to the unthinkable. That said, a lot of people ARE troubled by the fact that the `fact cats' will get away without any consequences for their actions. One of the major demands being placed on those who are trying to put together `rescue' packages is to also find some way of, if not punishing those who have been so delinquent, at least finding some way to make sure that they don't profit from this kind of delinquency in the future. Obama expresses that sentiment.

    As for "rich pricks" - you don't have to be rich to be a prick and it is definitely not the case that all the rich are pricks. The issue is what kind of "rich" you are. Those who have been making money out of money are those who have been in truly unreal jobs and whose profit is based on taking money from those who have actually done the work - business entrepreneurs, farmers, workers, etc - and creaming it. Which is where JK's totally neutral reaction to Andy Krieger's raid on the NZ currency in the late eighties is relevant. Whether or not he had a direct hand in this - and there are still questions to be answered - his lack of moral engagement with this kind of activity is absolutely relevant to our present situation. But once again JK reveals himself to be the most Hollow of Hollow Men. Don Brasch was a man of substance compared to him.

    Palmerston North • Since Sep 2008 • 106 posts Report Reply

  • Jan Farr,

    Seriously, has anyone in Labour actually worked in the real world, or did they all just leave University and go straight into politics? Of course not, some got into Teaching first. Or the Union Movement.

    Seriously? Really? Are you serious that teaching and working in the union movement isn't 'real work' and doesn't prepare a person for working pollitics? Please explain. And what work would qualify as 'real work' that prepares a person for political life?

    Carterton • Since Apr 2008 • 395 posts Report Reply

  • Russell Brown,

    Seriously, has anyone in Labour actually worked in the real world, or did they all just leave University and go straight into politics? Of course not, some got into Teaching first. Or the Union Movement.

    Why not go and look it up instead of recycling a cliche? Cunliffe was a Boston Group analyst if that helps.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • giovanni tiso,

    Seriously? Really? Are you serious that teaching and working in the union movement isn't 'real work' and doesn't prepare a person for working pollitics?

    Of course they aren't, because 'real work' is an activity that enriches the nation via the production of material goods and the creation of jobs. Like, you know, currency trading.

    Wellington • Since Jun 2007 • 7473 posts Report Reply

  • JohnAmiria,

    Are you serious that teaching and working in the union movement isn't 'real work' and doesn't prepare a person for working pollitics? Please explain.

    Sure, I'm happy to explain - I'll type slowly so you can understand:

    I did not say that Teaching or Union work is not real work - that is an inference you have applied to my comment in order to divert focus from what I said. What I actually said was: has anyone in Labour actually worked in the real world, or did they all just leave University and go straight into politics? and then I answered my own question with Of course not, some got into Teaching first. Or the Union Movement.

    I posed the question to highlight the equally absurd suggestion that Key is not fit to lead because he worked in 'High Finance' five years ago. I did not sneer at 'educational institutions like universities' having been to one myself (and not business or economics either!) but I do raise an eyebrow at those that come out of Uni and launch straight into a political carreer - be it on the Left or the Right. (Some of those on the Think Tanks and Roundtables don't have much actual business experience either - it's all theory).

    Suggesting that Henry keep the red flag flying was baiting (naughty, but it was 2am) but lo he does indeed know the words. If he's going to suggest I listen to Billy Bragg sing it he could at least provide a link to it

    I have another comment I'd like to make but it will take a while so I'll leave you with this:

    Nevermind that Labour have been in power for the last 9 years and could have regulated if they chose to, it's John Key's fault.

    Oh, I'm sorry - am I repeating myself?

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

  • JohnAmiria,

    Why not go and look it up instead of recycling a cliche?

    See my explanation above. Or do we only trot out cliche from one side here?

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

  • Jake Pollock,

    Nevermind that Labour have been in power for the last 9 years and could have regulated if they chose to, it's John Key's fault.

    How, exactly, would the New Zealand Labour Party have regulated the American financial markets that John Key was trading in? I'm a bit unclear on this point.

    Raumati South • Since Nov 2006 • 489 posts Report Reply

  • giovanni tiso,

    I posed the question to highlight the equally absurd suggestion that Key is not fit to lead because he worked in 'High Finance' five years ago. I did not sneer at 'educational institutions like universities' having been to one myself (and not business or economics either!) but I do raise an eyebrow at those that come out of Uni and launch straight into a political carreer - be it on the Left or the Right.

    I'd take issue with that too. Universities are part of the real world, and how many students do you know who've never had to work while they were studying? Besides, postgraduate work is a complex and demanding job. And finally entering politics doesn't mean becoming an MP straight away - there's a great deal of organising and activism involved, which again occurs in the real world and seems to me to be pretty formative.

    The thing is that you can be a narcissistic idealogue with tunnel vision regardless of how long you spent in academia of how many jobs you've held.

    Wellington • Since Jun 2007 • 7473 posts Report Reply

  • Russell Brown,

    See my explanation above. Or do we only trot out cliche from one side here?

    Oh, okay, you said it because it was a cliche ...

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Jan Farr,

    What I actually said was: has anyone in Labour actually worked in the real world, or did they all just leave University and go straight into politics? and then I answered my own question with Of course not, some got into Teaching first. Or the Union Movement.

    Thank you John - I have now read your message slowly and realise that what you really mean is the people who teach the country's children and organise the country's workers do not work in the real world - or were you writing against type here and failing to be ironic?

    Carterton • Since Apr 2008 • 395 posts Report Reply

  • JohnAmiria,

    a lot of people ARE troubled by the fact that the `fact cats' will get away without any consequences for their actions. One of the major demands being placed on those who are trying to put together `rescue' packages is to also find some way of, if not punishing those who have been so delinquent, at least finding some way to make sure that they don't profit from this kind of delinquency in the future. Obama expresses that sentiment.

    And I share that sentiment. Which is why I say Labour had the chance to regulate, but didn't. But there's no reason they (because does anyone really think the Maori Party are going to side with National?) can't regulate in the future.

    FYI: When I bought a new house in the 90s I kept the old one and rented it. I rented it below market rate and I found it was never short of tenants. As the property market exploded I was able to remortgage my properties and buy another rental property. Lucky me. Then Cullen (about 2001/2002?) started making signals that too many people were entering the property rental market because of the tax benefits, implied they were fat cats making it tough for real kiwi's (despite many Labour MP's also having rental properties in Family Trusts), and said Labour would prefer people invested in the Share Market, as this would help NZ business and be better for our economy. And then Labour started work on changing the Residential Tenancies Act, and asked the IRD to look at LAQC's and Trusts ...

    So I figured the writing was on the wall, sold my rentals, and invested the after-tax proceeds in the NZ sharemarket. Big mistake. What I have learnt is that little people have absolutely no control over share prices, you basicly hitch your wagon and hope for the best. I didn't invest in Finance Companies, just Index stocks like TENZ, Mid-Cap, and so forth. Oh, and some AirNZ shares after Helen told us not to sell. Despite reading about how well the share market was doing I was surprised at how low my returns were after fees and taxes were deducted. It's my feeling that the only people who make money out of the market are the brokers, managers, and traders. The rest of us are just there as some sort of mattress for their gang-bang.

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

  • JohnAmiria,

    Oh, okay, you said it because it was a cliche ...

    Er... yes, actually. My point (obviously poorly made) was that if you are going to demonise Key because he once worked for Meryll Lynch therefore he must be one of those bastards who fuct the global economy then the same 'logic' holds true: Labour don't understand business because they've never run a business. (And spare me the Chris Anderton story, please). What do I want in a political party? A well rounded group with some real world life experience.

    [I] realise that what you really mean is the people who teach the country's children and organise the country's workers do not work in the real world

    Again, where did I say that?

    How, exactly, would the New Zealand Labour Party have regulated the American financial markets that John Key was trading in? I'm a bit unclear on this point.

    Well, duh. I'm suggesting Labour could have regulated our own market. But one example: Up until recently anyone could set themself up as a 'Financial Planner', take people's money, and invest it on their behalf. They didn't need any qualifications and they didn't have to declare whether they were getting any commissions from the companies they were investing in. Or if they were investing your money in their cousin's Ostrich Farm.

    Earlier this year Lianne Dalziel had this to say:

    "Though we are regulating to improve the quality of financial advice in the market we all know that ultimately the responsibility for financial decisions and risks lie with the individual decision maker", she said.

    "I confess that I do not understand why people who have spent their lives working hard to save their money can invest in products without doing the same level of hard work and taking independent professional advice."

    Well, the problem is that most people thought they were taking professional advice, but it turned out that the anyone with offices and a big radio/TV campaign could hold themselves out to be a Financial Planner/Advisor.

    how many students do you know who've never had to work while they were studying?

    Well, duh, again. Zero. I worked while at Uni, my wife worked, my friends worked ...


    But anyway ... I _still__ haven't got to the bit I wanted to say. I shall do that now. Chat amongst yourselves...

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

  • 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

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