General Debate 3 March 2009

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gomango

Where is the sense of outrage about the bailout of Mascot Finance. An absolute disgrace – why were they ever eligible for the deposit guarantee scheme? Now that the first one has gone there will be a race to default by the directors of many of these companies. If you are a director of one of these failing companies the smartest thing to do is default now, claim the guarantee, feel good about yourself because investors are made whole, and avoid any legal action. Pay yourself a bonus for the only good action you did in the last 5 years – wriggling into the deposit guarantee scheme. No brainer.

We have over 70 companies participating in this scheme. The scheme has become a subsidy for a bad business model – over concentrated lending to one sector, lack of effective risk management. Most of these finance companies should be allowed to fail. Drive around Queenstown, any upper north island beach, or lifestyle developments on the fringes of Auckland. Tell me these finance companies have not extended too much credit to dodgy developers with shit, unsaleable developments.

Heres my prediction – take out the first tier organisations covered by the guarantee – banks, top end finance companies – you are probably left with 60 companies covered by the scheme. A fee of 3% for the guarantee crudely implies 1 in 30 will fail. We’ve had one. I predict at least 20 of these companies if not more will require a bailout by Treasury.

I also predict a policy disaster at the 18 month point. No one will roll money over with these companies beyond the scheme end date. What happens then?

The real irony of Mascot (among many) is they did not even pay their 3% insurance fee to Treasury!

This is without doubt the worst policy introduced in NZ to combat that catchall excuse for shit management – “The Global Credit Crunch”. Labour are guilty for being stupid, National are guilty for not fixing it in a hurry.
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March 3, 2009 8:32am
Murray

I see The One has decided to fund Hamas to the tune of a billion.

Let the taxpayer funded, liberal supported murder of Jews proceed.
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March 3, 2009 8:36am
MyNameIsJack

gomango, I was just about to post my outrage on this, you beat me to it, but you are right. It is a stupid policy, put in palce by stupid people, to support other stupid people.

Investments in finance companies carry risk, this risk is priced and reflected in the interest rates. The govt gtee has removed the basis for pricing the risk.

Even MORE stupid is that this did not add a single dollar of new cash to mascot, it simply underwrites thsoe who invested before the guarantee, knowing full well the risk and the price of the risk.

I invest with the TAB, as i find its returns outweigh anything kin the finance sector; however, if I have a downturn, why should’t I also benefit and have my investments repaid?
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March 3, 2009 8:37am
MyNameIsJack

Murray, do you also support the taxpayer funded murder of palestinians?
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March 3, 2009 8:38am
Murray

What fucking taxpayer funding of the IDF are you claiming you utter moron?

How many Jews put on bomb belts and teach their children to do the same?

Why has there not been one single shisper ffrom you and your Naziesque kind about the daily ceasefire violations by Hamas?

And I support the right of Israel to defend itself unlike you lot who think killing kids is just another day at office while its Jewish kids.

Ntoe: You can cram your demerits for hitler comparasions as well David. As long as you host you host the onely anti-semitic you’ll have to deal with it.
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March 3, 2009 8:45am
Glutaemus Maximus

How is it that the Auditors of the Banks and Insurance Companies around the world signed off their accounts?

Biggest Losses in Corporate History being reported now. This didn’t happen overnight!!
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March 3, 2009 8:52am
MyNameIsJack

Do Jews not pay tax? Is Israel a tax-free zone?

Naziesque is an interesting word, probably best describing those who froth at the mouth while using it.

killing kids is just another day at office is again an excellent description of the way Israel goes about its indiscrminate attacks in Palestine.

palestine belongs to the palestinians; all Palestine, not just the little bits Israel doesn’t want.

There will be no peace in the ME until Israel is driven in to the sea and every Jew is back where they belong, in Europe.
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March 3, 2009 8:52am
dime

Jack is a psycho.
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March 3, 2009 8:58am
Frank

“The economy is weaker; the markets are lower; consumers are more frightened; and businesses of all shapes and sizes continue to struggle.

February brought a comprehensive stimulus package, a blueprint for a complete budget overhaul, and several bailout plans. At some point, these ideas by the smartest men/women the country has to offer have got to start working (don’t they?). Analysts will be working overtime as data from housing, manufacturing, and labor is set to be reported. Bear in mind, in January, the unemployment rate soared to 7.6% and 600,000 jobs were lost from the economy. With companies announcing major layoffs each day, The National Association now predicts further job losses”
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March 3, 2009 8:58am
big bruv

I normally stay well clear of this topic because its a waste of time, nobody listens to each other and the left excuse any acts of terrorism simply because they hate anything and anybody who sides with the USA…..however this little “gem” from Jack the cunt cannot go unchallenged.

“There will be no peace in the ME until Israel is driven in to the sea and every Jew is back where they belong, in Europe”

I cannot even begin to comprehend the hatred, small mindedness and outright bigotry that poisons the mind of anybody who would write something like this.
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March 3, 2009 9:01am
expat

Gomango and mynameisjack talk absolute bollocks, again.

Whats the other choice monkey boys?
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March 3, 2009 9:03am
lofty

You really are a shocker jack.
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March 3, 2009 9:04am
expat

I suppose after being reamed by Komrade Trotter in the weekend the junior communits at the substandard feel duty bound to ‘prove themselves’.

Suggest they improve themselves & try updating their politics circa 21st century.
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March 3, 2009 9:05am
bearhunter

Jack you’re a complete cnut. Shrill sloganeering is not what the Palestinian/Israeli conflict needs, but that’s just what you’re going to give it anyway, isn’t it? Because you know soooo much more about it than anyone, don’t you? Twat.
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March 3, 2009 9:06am
petal

“The teenager who admitted the brutal murder of Scottish tourist Karen Aim has hired a new lawyer and plans to retract his guilty plea.”

Am I getting even more cynical or is this just a lawyer sucking on the legal aid teat?
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March 3, 2009 9:07am
bearhunter

As regards the Mascot bailout, what worried me about it was learning that the fund guarantees only extend to NZ citizens. I’d better remove my investment money and shift it overseas then, since despite 15 years of permanent residency and excessive tax payment, I am deemed of lesser value when it comes to protecting my money. Real classy.
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March 3, 2009 9:09am
bearhunter

Petal, no you’re not getting more cynical. That lawyer’s another cnut. I hope the judge takes this arseholism into account when he is sentencing the ill-named little wankstain.
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March 3, 2009 9:11am
Tuglatonic

It saddened me to read that our greedy, environment destroying, baby killing milk company managed to raise $800 million to continue their work killing children and ruining the country.

The world has been brought to its knees by greed and now we just continue the trend.

When will we ever learn?
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March 3, 2009 9:11am
big bruv

Right about now Jack is sitting naked at his PC, in one hand he has his incredibly small penis and with the other he is squeezing one of the numerous monstrous sized zits that cover his teenage face, he is chuffed that he has managed to get a reaction from some of us as the boys he fancies at school just seem to ignore him, indeed I suspect that everybody ignores him.
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March 3, 2009 9:14am
sbk

“greedy, environment destroying, baby killing milk company “…..Tuglatonic ,dont you mean Sanlu, and 22 other Chinese dairy companies.
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March 3, 2009 9:20am
NOt1tocommentoften

Bearhunter, Petal. If you’ve ever looked at the pittance lawyers get for legal aide then you’d be far less inclined to make such comments…
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March 3, 2009 9:21am
big bruv

On another subject….

Did anybody watch Coast watch last night? I was amazed at the patience and class with which the fishery’s officers dealt with the low life Maori scum who seem to think that being Maori excuses them of all crimes, the level of abuse they hurled at the fishery officers was unbelievable.

Nobody would put up with a white man abusing a Maori in such a racist fashion, why should Maori be allowed to get away with it?
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March 3, 2009 9:23am
dime

tug – lighten up
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March 3, 2009 9:24am
Brian Smaller

palestine belongs to the palestinians; all Palestine, not just the little bits Israel doesn’t want.

Here we go again. In 1967 Israel captured Gaza off EGYPT – that was the country that owned it. When they gave Sinai back to Egypt the Egyptian government didn’t want Gaza back. If they had taken it back would Jack and all his lefty twat mates be slagging off at Nazi Egypt? Of course not. Egyptians aren’t Jewish.
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March 3, 2009 9:27am
expat

amazing to see the sycophantic little boys from the substandard trying to kill nz business .
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March 3, 2009 9:28am
Tuglatonic

SBK: I know the facts ie that Fonterra’s did not have controlling shareholding in Sanlu but they obviously made the investment earn some returns. Their judgement was atrocious. Food safety and China are not normally linked. But their greed and their desire to show how international they were by taking a position in a Chinese company was lamentable.

They are severely tainted in my view and not worthy of our support. We are talking about dead children here.
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March 3, 2009 9:30am
expat

tuglatonic plays the ‘power’ card, cause he’s dim and cant work out a strategy.

much like labour and the substandard.
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March 3, 2009 9:33am
Tuglatonic

Hmmmm…so being critical of business practice that results in the death of innocent children equates to taking a left wing position and somehow destroying NZ business. That’s a twisty turny one.
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March 3, 2009 9:40am
expat

You are twisty turny and ultimately arrogant and without guile.
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March 3, 2009 9:42am
Tuglatonic

Pursuing profits and wealth creation while at the same time having a sense of safety, integrity and excellence is not some unachievable objective. My profit and loss statement does not have a debit for “customers killed while shopping”.
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March 3, 2009 9:44am
Tuglatonic

Geez expat, who pissed on your cornflakes this morning?
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March 3, 2009 9:46am
expat

bzzzzzzzz, hear that chardonnay socialist wine fly?
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March 3, 2009 9:47am
gomango

expat: The other choice is let the shitty little 3rd tier finance companies fall over. They don’t meet any reasonable test of good governance, sound management, sensible planning, some decent attempt at risk management.

I have no serious problem with the major banks and properly capitalised finance companies (SCF, UDC etc), building societies etc being covered. But undercapitalised, related party lending captive vehicles being run for the benefit of a clique of property developers. WTF. Capitalism fails when Governements start subsidising inefficient sectors. It also fails when there is a complete lack of regulatory oversight (NZ prospectus law is a disgraceful embarrassment).

You also seem very big on off the cuff, derogatory comments with no logical argument behind them. Can you contribute an argued opinion (whether others agree with it or not) without the sideline sniping?
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March 3, 2009 9:48am
expat

Yeah, let all the 60+ “shitty little”, “3rd tier”, “clique”, finance companies plunge another rank of kiwi investors into financial purgatory. And speaking of jingoistic, uneducated, halfwitted statements – pot, kettle, black boyo.

HTH’s.
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March 3, 2009 9:56am
Komata

If anyone is interested in another of Dr Cullen’s ‘mistakes’ have a read of the article ‘Treelords: show us the evidence’ in the latest (March 2009) Investigate magazine which is out now – absolutely amazing!

Truly, money DOES grow on trees – especially if you’re Maori and have a totally incompetent Minister of Finance who believes he know best – and won’t let facts get in the way of a perfectly good ideology.!!

And, of course, not a ‘peep’ from the MSM (odd that!)

Read – and weep!
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March 3, 2009 10:01am
gomango

Expat, some questions for you to think about.

Why are mascot debenture owners getting made whole but not Capital and Merchant or Bridgecorp (or plenty of others)?

What percentage of outstanding finance company debentures covered under the guarantee scheme are issued by these crappy finance companies versus those issued by the better ones?

Why is the taxpayer bailing out one sector while ignoring others?

What happens when no investor is prepared to roll over debentures a month before the guarantee expires?

How did Mascot get a guarantee when it has been technically insolvent for at least 9 months?

Why did so many finance companies fall over before the onset of the “Great Credit Crunch”?

Would letting Mascot enter bankruptcy without the guarantee have irreparably harmed the NZ economy?

C’mon you can hardly be on the side of rational economics without having answers to all these questions.
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March 3, 2009 10:14am
Inventory2

expat said “amazing to see the sycophantic little boys from the substandard trying to kill nz business .”

It’s not amazing at all expat – it’s their mantra “Business bad; unions good” – their problem is simple though – no-one’s listening any more, let alone believing!
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March 3, 2009 10:19am
gomango

The Standard has become even more of a preach to the converted, inward looking clique than it ever was. Ignore it, eventually it will implode under its own narrowmindedness.
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March 3, 2009 10:23am
lofty

“Business bad; unions good” – their problem is simple though – no-one’s listening any more, let alone believing!

No I reckon their problem is “no business: No workers”

The conundrum for them is, how do you have workers who blindly follow the socialist mantra, when there is no business & tax to steal for the non workers, (jeez I think that makes a bit of sense).
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March 3, 2009 10:25am
big bruv

A very interesting discussion on radio live this morning re the nine day fortnight and the affect that will have on the average wage.

Given that the pension, the dole and perhaps even the DPB are set relative to the average weekly wage then there is a definite and vital need to reduce these benefit payments.

The government should move on this immediately.
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March 3, 2009 10:27am
dime

this from the standard.. irish “disagree with me and youre banned” bill laments:

“Looking back on the emergence of Act and what they ultimately stand for I can’t help feeling there is something wrong with a world, or perhaps just an electoral system, in which the Alliance disappears off the map but Act gets five MP’s and cabinet standing.”

HAHAHAHAHAHA

i get goosebumps whenever i think about the alliance party self destructing.
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March 3, 2009 10:33am
PhilBest

Expat, we have a major problem with an economic model where most credit has been extended to people who are not using that credit to earn a return based on “production”, they are using it to earn a return based on “suckers gambit” speculation on the price of existing assets, land foremost. It is actually an unsustainable model and it needs bankruptcies and losses to shut it off, not guarantees funded by the already beleagured taxpayer who depends on “production” based returns for his survival.

The taxpayer is being triple whammied here; the original source of his income, “production”, has been crowded out of finance markets; the cost of the roof over his head has been bidded up out of all proportion to what he earns; and now, the crowning insult is that he is expected to fund the continued operations of the people who are responsible for all this.

While wishing to dissociate myself as far as possible from “My Name Is Jack”, there is a lot of correspondence between what fat-cat-hating Lefties and economic libertarians like myself, are saying on the subject of finance sector failure. I believe we and the taxpayers of many countries are going to deeply regret not having just let the “too big to fail” institutions, fail. They are going to fail anyway, the only difference we have in our power to make, is how much money the fat cats will have been able to do a runner with before “we” wake up to their game.
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March 3, 2009 10:33am
Inventory2

I disagree lofty – they don’t yet seem to have worked out that no business = no workers. They are in mortal danger of cutting of their respective noses to spite their anonymous faces!
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March 3, 2009 10:33am
PhilBest

Where us economic libertarians differ completely from people like MyNameIsJack, is that we wish the “productive” sector all the best; low taxes, low regulations, relaxed labour and environmental laws, property rights as the paramount principle. That is the “engine” of the economy, and we have strangled it at our peril. The finance sector should be the handmaiden to this sector, not a bloated parasite sucking it dry and distorting whole economies in ways that add cost and taxation burdens to every citizen. If politicians and central bankers have let it thus get out of hand, widespread bankruptcies are the essential solution; we need to clear the field for honest operators and new institutions who will have learned from these lessons, along with all investors.

Investors and people who work in the financial sector need to get out of the sort of mentality that is as if they are playing a board game like “Monopoly” or “Careers”, and actually make the effort to acquaint themselves with economics and history. I suggest that this is the secret of the success of George Soros and Jim Rogers and John Paulson and all the other financial operators who make a killing every time a crash comes.
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March 3, 2009 10:42am
lofty

yes thats it Inventory, thanks
I cannot get the grey matter fizzing today, I need to stop working and go on holiday next week for 3 weeks.
So I am!
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March 3, 2009 10:45am
side show bob

Gomango how long will the government guarantee deposits?. I heard on the radio this morning it will only be a short time. How long is a short time , 1 month, 1 year, 1 decade?. At what stage will the government remove this guarantee, when the share market hits a certain level, when the GDP climbs to a certain level?. If you ask me this is a stupid idea and following it to it’s logical conclusion this scheme will only promote sham finance companies that really won’t give a toss about the punters money. Why care when the taxpayer will pick up the bill. More lunacy.
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March 3, 2009 10:46am
PhilBest

Lofty, and Inventory2, you are both on the same page; that is the Unions summed up exactly. No business = No workers; it is hard to tell whether they have worked this out or not. Those that have, actually want to bring about the demise of free market democracy and establish an NZSSR……..
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March 3, 2009 10:47am
gomango

Well said PhilBest. For the avoidance of doubt I’d also like to exclude myself from membership of the lunatic left.

The too big to fail argument is full of moral hazard and unintended consequences. Globally, we seem to be going for a middle ground that is prima facie appealing – provide sovereign guarantees to debt holders, and dilute equity holders. The problem is that with this managed pseudo default there is no long term incentive for the managers/owners of the business to change their behaviours. I see in the (global) organisation I am involved in, management is merely biding time until the balance sheet can be ramped up again, of course in a way that is significantly smarter, better risk adjusted blah blah way than before, having learned all the right lessons in 2008/09. Sure.

I never thought I’d say this, but nationalisation of large “too big to fail” failing banks doesn’t seem the worst case scenario. Why not nationalise, recapitalise and distribute equity to individual tax payers in their own name?
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March 3, 2009 10:48am
Ratbiter

Our very own Lisa Lewis is all bitter and twisted with the Brisbane Sexpo after managing to break her nose during a pole dancing routine AND being asked to leave for getting too raunchy…

http://www.news.com.au/couriermail/story/0,23739,25123549-952,00.html
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March 3, 2009 10:49am
gomango

Bob: The guarantee scheme expires in October 2010. Thats why all these shit box finance companies are only able to raise 12 to 18 month money. If you invest in a guaranteed company now, you are only covered if the maturity of your deposit is prior to 12 October 2010. After that you are on your own.

So a lot of these companies now have property loans that are paying little or no interest with maturities after October 2010. Almost all of the funding has a maturity before October 2010.

Question – What happens in late 2010 as every investor doesn’t roll over their deposit and asks for their principal back.

Answer – Bill English owns a whole pile of non-performing second and third lien property loans with negative LTV’s. Actually its not Bill English, it is you and me.

Oh, and by the way – ask any corporate/securities lawyer at top end firms like RMV, Bell Gully etc and the boutiques like MW, and ask where most of their billable fees have come from since late last year. Yes thats right, helping finance companies negotiate the Treasury approval process.
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March 3, 2009 10:58am
Inventory2

PhilBest – I suspect that Andrew Little has worked that simple fact out, but some of the less insightful from the “labour movement” are still blissfully unaware of the simple reality that workers need places to work. Helen Kelly from CTU would be a prime candidate!
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March 3, 2009 11:00am
PhilBest

“A wealth-eater administration”

By John Derbyshire

“If professional investment advisors sometimes can’t make sense of the economy, how good do you think politicians and bureaucrats are at it? Right. They don’t have the beginning of a clue. Keep that in mind when you hear them talk about “stimulating consumption” and “creating jobs.” The congresscritters, paper-shufflers, and gubmint time-servers of Washington D.C. don’t have a freaking clue. They’re not wealth-creators; they’re wealth-eaters.

That includes the new administration. Why would they have a clue? Very few of them have ever done anything an ordinary citizen would recognize as work. Here’s the Obama cabinet.

• Position • • Name • • Work experience •
Attorney General Eric Holder Government lawyering
Secretary of Agriculture Tom Vilsack Lawyering, politics
Secretary of Commerce Judd Gregg Lawyering, politics
Secretary of Defense Robert Gates CIA, MilInt
Secretary of Education Arne Duncan Education bureaucrat (never taught)
Secretary of Energy Steven Chu Research physicist, academic
Secretary of Health
and Human Services Tom Daschle MilInt, politics
Secretary of
HomelandSecurity Janet Napolitano Lawyering, politics
Secretary of Housing
and Urban Development Shaun Donovan Govt. bureaucrat
Secretary of the Interior Ken Salazar Lawyering, politics
Secretary of Labor Hilda Solis Professional Hispanic
Secretary of State Hillary Clinton Politician’s wife, Politician
Secretary of
Transportation Ray LaHood High School teaching, politics
Secretary
of the Treasury Timothy_Geithner Lobbyist, bureaucrat, diplomat, tax evader
Secretary of
Veterans’ Affairs Eric Shinseki Military

“………Nobody in that list, though, not one, has any acquaintance with the production of wealth.

Our civilization rests on our having enough citizens possessed of the ability to turn a nickel into a dime, and a government that keeps out of the way while they do it. Nobody in Obama’s cabinet has any idea how to turn nickels into dimes, least of all the Wealth-Eater-in-Chief. In his autobiography, Obama described his one brief experience in the world of private enterprise as a sort of endurance test—a purgatory he had to suffer before ascending to the heaven of “community organizing.” He felt, he tells us, “like a spy behind enemy lines.” Those private-sector money-grubbers, trying to squeeze some wealth out of a reluctant world—that’s the enemy in Obama’s universe……

“…….If you were to sit at Obama’s cabinet table with all officers present and ask them where money comes from, they would reply in happy unison: “Why, from a government paycheck, of course! Everybody knows that!” The grubby, demeaning work of pulling things out of the earth, or harvesting things grown on the earth’s surface, or turning things into other things, or persuading people to buy things—all of that is mysterious to them, and they would prefer it to remain so…..

“……Sooner or later the U.S. government is going to have to get serious about stripping the assets of those of us who have tried to live within our means. Sooner or later, the profligate are going to take from the prudent, the grasshopper is going to confiscate the property of the ants…….”

http://article.nationalreview.com/?q=NzgwNzIyMmU3OTQ3NjA4Njg1MmNmYjU1YjQ3MjI1Mjc=&w=MQ==
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March 3, 2009 11:04am
PhilBest

Hmmm, where have we encountered that sort of Cabinet before………. much more tragic that the once great USA has fallen into such hands, though.
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March 3, 2009 11:05am
bearhunter

Not1tocommentoften: Pittance? I suppose it is relative to what the Crown Prosecutor gets, but in comparison with the hourly rate of say, a nurse, or a firefighter, then I would suggest it is quite some distance from being a pittance.
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March 3, 2009 11:23am
PhilBest

Nice contributions, gomango. Keep it up.

The trouble with recapitalising bad banks, even with nationalisation, is that the question then needs to be resolved, which creditors get paid out, and by how much in the dollar? The liabilities that are extant after this crash, under a model where derivatives to the tune of tens of trillions have been issued as insurance on the investments that are now failed, are just colossal, way bigger than the government can take on. Halting the payout of these derivatives is urgent, they are a black hole sucking in all new deposits and government bailout money. Bankruptcy is the cleanest way, if governments want to “nationalise” instead, they are going to have to be prepared to unconstitutionally abrogate trillions of dollars worth of contracts.

“Recapitalisation” money, if it is to make a difference, needs to go into new, or identifiable existing “good” banks. Instead of buying the finance sectors bad debts, the governments should be buying their identifiably GOOD ones and shifting these into the “good banks” to keep them safe from the liabilities black hole.

There is a fatal conceit at work on the part of most politicians and central bankers; they think they are going to ‘turn the economy around” and if they understand the role of derivatives at all, they are assuming that these liabilities will diminish as they, the politicians, “turn the economy around”. Good luck with that. George Soros and Co. have moved up from outwitting the politicians and central bankers of Great Britain. They will break the US Federal Reserve and US taxpayers if these fatal conceits persist.
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March 3, 2009 11:28am
PhilBest

Gomango:

“……Bill English owns a whole pile of non-performing second and third lien property loans with negative LTV’s. Actually its not Bill English, it is you and me……”

It WAS Helen Clark and many cabinet colleagues who owned investment properties over the last few years………so much for the beat up of John Key’s Tranzrail shares. But you can get away with hypocrisies of this enormity if the country’s journalism sector are dumb enough and biased enough.
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March 3, 2009 11:31am
wreck1080

Will someone be jailed for hiding ACC blowout?

Seems that this is becoming more of a possibility.

Please let it be Cullen. Love to see that smarmy prick imprisoned.

More likely, it will be an underling as noone takes responsbility.
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March 3, 2009 12:04pm
lofty

What do you think of all this Mallard???

We know you are watching….. by the way you still have not commented on your ridiculous statement yesterday re people avoiding work with firms of less than 20, cause they will be bound to get the boot before 90 days.
Come on you are the one who stuck your head over the parapet, give us your explanation.

Does your new visibility on a right wing blog mean that Phil has to watch his back even more closely???

Look forward to your comments.
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March 3, 2009 12:06pm
gomango

I think you misunderstand me re Bill English – I’m saying when these finance companies are unable to roll over funding the crown will end up owning a whole lot of worthless second lien mortgages, but its not really the crown it is you and me the taxpayer.

And re the derivative exposure of AIG, the reinsurance companies, and some of the banks – most of this was written at super senior level – ie (according to the failed correlation models of the ratings agencies, better than AAA.) Not much of it has actually defaulted – the real problem is one of valuation. The typical super senior tranche might be on 30 to 100% of the capital structure and has a modelled value now of (say) 50 cents, but in many cases will be money good in 3 or so years when much of this rolls off. But in the meantime under credit support language the protection seller (AIG etc) have to come up with plenty of collateral which they don’t have. Looking at AIG’s quartley result (-62 billion), 60 billion of this was revaluation losses (ie mtm on derivative positions), 2 billion was cash P&L.

So in the sense of underwriting derivative exposures the current model may be helpful (I wont say “may work” as I’m not that confident) as long as the securities underlying the derivative contracts don’t have default events. That is a big maybe but could be the path thru the great global credit crunch. I don’t think any politicians really believe they can turn the economy around in the short term (or any term) unless they are mad. Maybe they are……

Next big trades? Long inflation linked securities, short sovereign default swaps, long high yield credit spreads.
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March 3, 2009 12:06pm
Glutaemus Maximus

Did Klark feather her nest in a proper way, or in a dubious way?

Wonder how the interview went in NY?
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March 3, 2009 12:12pm
Inventory2

It’s official – Labour breached the Public Finance Act over the ACC shortfall

http://keepingstock.blogspot.com/2009/03/public-finance-act-breached.html
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March 3, 2009 12:19pm
wreck1080

I have been predicting Helen Clarks governments social policies will result in increasing youth violence and crime.

We see a teacher has been stabbed at avondale college, and I assume that it was not self stabbing, or another teacher so my predictions are coming true. Does this mean I should be in government because I can see what their legions of consultants and bureaucrats cannot?

No one really disagrees with me, so why did we let helen get away with this. We will end up like the USA / UK. Ie, metal detectors , police at school.
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March 3, 2009 12:28pm
Tauhei Notts

Free advice is usually worth what you pay for it, but here goes.
Fonterra, an A+ company had bonds on the market at 7.75%.
Contact, a BBB company is offering 8%.
If A+ offers 7.75% then BBB should be at least 9.75% or even 10%.
Go figure that out.
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March 3, 2009 12:29pm
dunedinBlogAl

The Government has decided to underwrite $15 million for the new Stadium in Dunedin. This $15 million, to allow the Stadium to go ahead, means that the Ratepayers will have to pay $250 million. Will Rodney Hide please stop talking about keeping Local Body rates down, when the Government is supporting such a big spendup.
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March 3, 2009 12:32pm
getstaffed

IV2, so lemme get this right…

The former Minister of Finance, supplied with the very best expert advice and with access to untold state resources, breeched the Public Finance Act?!?

Can we please have a quick trial and get Cullen into the slammer très rapidement !
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March 3, 2009 12:40pm
lofty

mmmmm have a look at Whale oils blog re the response from Cullen to his officials, horrible little man
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March 3, 2009 12:45pm
Inventory2

Q1 this afternoon when the House resumes:

CRAIG FOSS to the Minister of Finance: Has he seen any recent reports relating to the Public Finance Act 1989?

You bewdy!!
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March 3, 2009 1:03pm
thedavincimode

oh deary me Mr thingyjacky. perhaps you should try the little fluffy rabbit therapy.
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March 3, 2009 2:03pm
grumpyoldhori

Murray, you are being inaccurate in using the term anti-Semitic, a lot of Israeli Jews are not Semitic, they are Jewish but they are not Semitic.
Remember the Jewish faith is a religion not a race, any race can become or be born Jewish including a couple of horis I know, because their mother was born Jewish.
A higher proportion of Arabs in Israel the West bank etc are Semitic compared with Israelis of the Jewish faith.
Here is an interesting thing, it seems a lot of Arabs in the West bank etc would prefer to have a single state now, which gives the Israeli government three choices, become a proper democracy with the vote for all, stay Jewish but not be a democracy, or have a final solution for all Arabs.
http://www.timesonline.co.uk/tol/news/world/middle_east/article5828517.ece
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March 3, 2009 2:29pm
Komata

And if the question IS asked in the ‘House (we’re hoping, we’re hoping) any takers on a bet that the MSM won’t cover it?
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March 3, 2009 2:31pm
Right of way is Way of Right

I see Labour have maintained their sense of urgency and fiscal responsibility by acting very rapidly in this time of financial crisis.

They have appointed Luamanuvao Willie Laban as the Labour Spokesperson on Interfaith Affairs!

Umm, what?
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March 3, 2009 2:53pm
big bruv

If what dunedinBlogAl says about Key and the Nat’s underwriting a rugby stadium in Dunedin is true then it is an outrage, it is something that none of us should let pass simply because we prefer a National government.

At times like this we simply cannot afford to be funding stadiums, rugby world cups or America’s cups.
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March 3, 2009 3:20pm
Paul Marsden

Ironic that a Korean student stabs his teacher in the back at Avondale High, on the very day there’s a full page ad in the NZ Herald “Welcoming a new era in friendship between NZ and Korea”. Oh dear.
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March 3, 2009 3:32pm
PhilBest

Gomango at 12.06; understood, thanks, you and I are definitely on the same page.

THIS is well said:

“……in the sense of underwriting derivative exposures the current model may be helpful (I wont say “may work” as I’m not that confident) as long as the securities underlying the derivative contracts don’t have default events. That is a big maybe but could be the path thru the great global credit crunch. I don’t think any politicians really believe they can turn the economy around in the short term (or any term) unless they are mad. Maybe they are……”

We live in interesting times. The amount of derivatives bets out there seem to indicate to me that there is big money being bet on the securities underlying the derivative contracts HAVING default events, not “not having” them. I reckon these people are more likely to be right than the politicians and central bankers.

The other possibility is that certain politicians, central bankers, and bankers and investors are colluding in a gigantic scam of the taxpayer.
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March 3, 2009 4:06pm
wreck1080

Keith Locke said the New Zealand cricket team would be safe in Pakistan because they love cricket and would never attack a visiting team.

He should visit the Sri Lankan team and espouse his peace loving ways. Hope they are OK, but what a loser keith locke turned out to be.
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March 3, 2009 5:59pm
TimG_Oz

goh – there is a fourth option – do nothing.

Given the West Bank was never part of Israel since the partition plan, there’s no requirement to just grant citizenship to the Arab inhabitants.

There is of course, always the option that both sides continue the peace agreement and two states coexist, which would seem a more likely scenario, although incredibly distant at the moment.
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March 3, 2009 7:58pm
TimG_Oz

Wreck – if Keith Locke is consistent with all his other policies, he’ll blame the Sri Lankans for causing the problem.
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March 3, 2009 7:59pm
lofty

Me…I am still waiting for mallard to explain things to us.
Like I always say mallard, you can’t bullshit a bullshitter.
By the way you looked old tired and down right rooted today in the house, the prospect of tipping over phil getting to you bully?
In fact you were down right useless today in the house.
Come on back now you hear.
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March 3, 2009 8:31pm
grumpyoldhori

TimG_Oz , one problem with that, too many of the settler types believe in the greater Israel bullshit etc, and the Israelis have just announced plans to build another 60,000 homes on the West Bank.
Now Israel can run Bantustans like South Africa did but how long will it be until the anti apartheid sanctions start to bite ?
Hell, there are so called kiwis who believe any thing Israel does is right and they would be making excuses for apartheid.

Maybe it is time those sods learnt to live together.
I recommend compulsory mixed marriages, that would learn them.
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March 3, 2009 9:04pm
TimG_Oz

Mate you don’t need to talk to me about Settlements. They are the last thing Israel need. You are aware that about 50% of the Israeli population don’t want them?

Of the other 50%, so many are disillussioned with the peace process that they are unlikely to argue. The actual Settlers themselves make up a minor part of the population it’s not funny. It’s bit rich to call it apartheid though – Israeli Arabs are definitely a big part of society there, as are Druze and Bedouin.

Compulsory mixed marriages would be interesting. You do know the Muslims consider more of a sin as the Israelis…
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March 3, 2009 9:37pm
slijmbal

Interesting that the stranded is posting more and more obscure threads – I see this as a good sign – goodbye mainstream
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March 3, 2009 9:50pm
Glutaemus Maximus

Well Karen Aim’s killer has changed his plea.

There is something very, very wrong with the legal aid system that allows this to continue to run.

The miscreant deserves all that he gets in prison.

Nasty little shit. So what was in his head? He deserves to have a stone bashed on his head repeatedly.

Had the Police not been so fast to accost him, he would have terminated a 3rd victim.

I hope he gets sick, and dies a very painful death. Bastard.
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March 3, 2009 10:53pm
wikiriwhis business

“Well Karen Aim’s killer has changed his plea.”

Glut, its a good thing

He’ll get a heavier sentence for showing no remorse.

The lil idiots been listening to the ‘wise guys’ in prison.

All those losers who are so wise they spend half their lives locked up. But they could’ve done you and me a great favour whisperin in that boys ear!!
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March 3, 2009 11:18pm
ScaryThoughts

When is the SSC’s 10 days up for reporting on Corrections? Or did I miss something?
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March 3, 2009 11:35pm
Glutaemus Maximus

Apparently we have to respect the human rights of miscreants.

So the little shit that bludgeoned Karen Aim to a painful and dreadful death should really be pardoned.

Just like Cullen, Klark, and Cuntliffe.

They all have human rights, and can do exactly what they want, whenever they want.

The victims of course have zero rights as they are dead or bankrupt.
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March 4, 2009 12:43am

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