Bollard pleads

Keep going guys, Alan Bollard pleads. He asks banks and businesses not to hibernate. What?!

Is he suddenly the Finance Minister? It’s really quite odd to see a central bank governor talking like this especially since the last few years he’s been going on about house prices and overborrowing without doing a great deal about it.

Now he’s saying don’t let credit constraints get in the way.

At the same time the Commerce Minister tells investors to get savvy or get “burned”. I love it especially from a Labour government where many ministers have invested in property themselves. Financial literacy? We’d certainly like some.

The facts are very simple. Too much leverage, much of it unseen, caused an asset bubble. That bubble is now deflating and there will be some major fallout. Add to that concerns over global food and energy prices and you have a perfect storm. So for banks now to put the shutters up whilst they count the cost is simply sound business practice.

Westpac has already adjusted its loan criteria. This just fuels the need for lower house prices and demonstrates the role that banks have played in the boom. Yes the interest rate is important but only at the margin. The real issue is how much will they lend: 100% or 65%.

It’s a big difference in what people can afford to pay.  Now landlords have the power as they can raise rents and people will just have to bear it. So along with an increase in mortgagee sales we will see an increase in rent arrears if rents increase beyond peoples’ means.

So it’s a bit late for the officials to weigh in with their comments. They have had plenty of time to look at banking regulation and have completely missed the boat.

Free Trade:China and New Zealand

So New Zealand have signed the first Free Trade Agreement with China. It’s quite a big deal really and there is no doubt New Zealand has been chosen by China as an easy country to do business with and there is a fairly long and open history between the two countries.

There’s been a bit of concern over the human rights aspects of the deal and what it means for workers conditions but it’s really simple to deal with that if it is a concern of yours:

Buy goods that you are happy to buy. Buy Kiwi made or buy ethically certified. But ultimately as a consumer you have the final say on what you purchase. So ask more questions and you’ll find your enquiries work their way up the chain. Business is business and the customer is always right. Over time wokplace conditions will improve and as China becomes more wealthy they will be able to move towards standards we take for granted here.

Lance, Jim and the NBR have all commented on the ins and outs of the deal but I think it’s a positive step to open up markets as it breaks down barriers.

However consumers will always have the final word so we’ll wait and see what the actual impact is.

Anderton lays into greedy banks

Jim Anderton, a senior member of cabinet and supporter of Helen Clark, has had a good crack at the NZ banks calling them “authors of their own misfortune”.

With lending up 14.3% in the last year he’s not wrong.

And with Lombard the 17th NZ finance company to hit the wall some serious questions must be asked about the health of the NZ financial system.

Deborah Hill Cone , the Hermione Granger of NZ journalism, has been banging on about this for many years now focusing mainly on the Hanover Group which surprisingly hasn’t gone under….yet.

Back in March 2004 she wrote a big piece on it for the NBR which prompted me to write to various MPs and the Finance Minister to express concern about the finance company sector as a whole. The only MP who took interest in it was John Key, the then shadow finance minister, whilst Michael Cullen, the current one, gave the standard response that the system was well regulated.

We also hear that Tower has closed a mortgage fund after a run on funds on a day that centre left leaders met in London to discuss urgent reform of global financial markets. Helen Clark was there and no doubt expressed her concern.

Perhaps her focus should be a little closer to home?

American Monetary Reform Act coming to Washington

Following on from my piece on the AMRA, I’m posting a message from Stephen for all Washington D.C. locals who can attend his meeting below. Spread the word if you cannot.

Dear Friends of the American Monetary Institute

Please take a moment to concentrate on this message, and consider the very particular action it asks of you, to help our nation achieve meaningful change to assure that no “Wild West” banking system ever again despoils our people.

Place: Busboys and Poets Restaurant (Langston Room)
2021   14th St.   NW,    Washington DC  20009

 Date:  Thursday, April 10, 2008                  Time: 6:00 PM to 8:00 PM

Late arrivals OK                 Dress: Informal; all are welcome

 

Reservations not necessary but really appreciated 

Call 224-805-2200  or email  [email protected]

RETURN TO AMI HOME PAGE

Genocide: We’re so good at it

I was reading an obituary today for Dith Pran, the man who brought the “Killing Fields” of the Khmer Rouge to a global audience. Not only was it a moving story as portrayed in the film but it was a first hand account of the Cambodian genocide. It reminded me of some of the news stories recently about the men involved in carrying out orders from their leaders.

There was Kaing Guek Eav, better known as Duch, who processed thousands through S-21, a prison and torture centre. As he tells it he simply followed orders and after a time realised either he carried on or he and his family would be killed like all the others. This is a common theme: the chance of survival at any cost or certain death. Once you’ve killed a few another hundred or thousand is just numbers.

What about Joseph “Zig Zag” Marzah, a “lieutenant” of Charles Taylor, Liberian warlord. He recalls a culture of fear and severe repression within which there was no escape. Henchman who failed to carry through vicious killings were dispatched in similar fashion, on one occasion completely dismembering a former rebel leader and eating his liver. Cannibalism was encouraged as a weapon of fear.

Anyone who has seen “Blood Diamond” or even the new “Rambo” film will have seen theatrical glimpses of the way ordinary civilians are routinely tortured and killed in various parts of the world.

Never mind the 20th century as the bloodiest on record the 21st is shaping up to be pretty wet also.

Branton posted recently on the film “Beowulf” and how the myth demonstrates that we manifest what we truly believe about ourselves. The birthing of monsters is something we see all the time today. Did the US not support and fund the Khmer Rouge initially? Did they not fund Saddam initially as well as the Taliban?

So what can we learn from all this? Not that there is somehow a solution to genocide or that, as was said post-Holocaust, it will never happen again. It will happen again, somewhere and somehow. Sure we can make changes to the system that generates conflicts and doesn’t provide for all but really it’s ourselves that need to change. What we believe about ourselves is what comes out into the world. Will we continue to be like Hrothgar or will we be like Beowulf? Will we unite with the source or continue to separate ourselves and descend into a world of monsters?

The choice is ours.