finance

Labour finds some bludgers it doesn’t want to give more money to

Labour usually think they can win power by giving away more of other peoples money.

They try to out bid National to win votes. Usually chucking mountains of cash and any bludgers who simply puts their hand out.

This election they have come up with a slightly different approach.

They are making irrigators pay for their own schemes rather than making the rest of us pay for them like the socialists in the National Party want us to do.

“There are also changes proposed to the funding of new irrigation schemes. Labour proposes withdrawing taxpayer support for new schemes and will instead recycle the funds raised by the charge on freshwater into that support.

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Time For Dotcom To Take Off The Onesie And Reveal All

Having this sort of order against your client is a nightmare.  It matters not so much when the client isn’t living in that jurisdiction but when he is trapped from leaving it is game over time.  With only an appeal in sight.

On one hand the billable hours record for the year are about to be smashed, but on the other hand you have to explain to a mad German whinging online about his rights that he has to actually tell you the truth now about his asset base.  Definitely time to convene at a bar for a think.

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“Legally and beneficially owned” is a rather wide definition and it is an extremely wide order and definitely a “fishing expedition”.

Given his break up with Mona any assets in her name are half owned by him as well.  It will be interesting to see how his lawyers can squeeze around that.

Wide fishing expedition orders like this are very much common place in offshore jurisdictions and I have seen many in the past few years.  Dotcom is not special nor is he being picked on, it is happening everywhere.

Lawyers won’t get much love on appeal arguing they are too wide when it comes to a sophisticated subject who has operated offshore for years from many locations.  Your only advice to the client is to be truthful as their pants are about to be removed.    Read more »

Oram justifies borrow and spend from Brown

One of the left’s biggest apologists, Rod Oram, has penned an article which basically forgives and encourages Len to borrow and spend and particularly for his train set and then at the end of the articles we find Oram is on the payroll.

So he gets hired by the ratepayers and the coincidently uses his weekly column to write nice things about his paymaster.

Ratepayers should be asking what this guy is paid and Fairfax should never have accepted the column and asked him to write about something else, in fact Fairfax should get a proper business columnist who actually knows something about business.

The fight is on for the future of Auckland. The choice is: a healthy one driven by ambition, or a dysfunctional one dragged down by a penny-pinching mentality.

The issue has come starkly to a head with the deliberations over the council’s 10-year budget. The decisions the council will make over coming months, guided by public opinion, will set Auckland’s course for years to come.

So far the pessimists have dominated the debate with their wildly inaccurate and irresponsible claims that the council’s finances are shambolic. Only savage budget cuts can save it, they say.

To set the record straight:

The council runs a budget surplus on operating expenses. In 2012/13 it was $246m.

Rates provide only half the revenues for the council’s $3 billion annual budget. The rest come from a variety of sources.  Read more »

NY Supreme Court says websites don’t have to reveal their anonymous contributors in potential libel cases

Another case in the US upholds the rights of bloggers and online media to protect their anonymous sources and contributors.

Joshua Benton at Nieman Journalism Lab writes:

Seeking Alpha is a site for people to write up and share their investing ideas —“a platform for investment research, with broad coverage of stocks, asset classes, ETFs and investment strategy.” Some of its contributors use pseudonyms, and earlier this year, someone using the nom de investissementof “Pump Terminator” wrote a piece arguing that a company named NanoViricides was wildly overvalued and using sketchy business practices.

NanoViricides went to court, demanding that Seeking Alpha turn over the real identity of Pump Terminator so that it could pursue a libel claim against him or her. Seeking Alpha fought it, and now, in what the site is calling a victory for free speech, the New York Supreme Court has denied NanoViricides’ demand. (You can read the court’s opinion here.)

Of interest: The very nature of open crowdsourced platforms — the ruling lumps them together under the rubric of “message boards,” though that seems imprecise in 2014 — makes it harder to pursue the sort of claim NanoViricides was trying to make. Quoting an earlier ruling (emphasis mine):

[i]n determining whether a plaintiff’s complaint [or pre-action petition] includes a published ‘false and defamatory statement concerning another,’ commentators have argued that the defamatory import of the communication must be viewed in light of the fact that bulletin boards and chat rooms ‘are often the repository of a wide range of casual, emotive, and imprecise speech,’ and that the online ‘recipients of [offensive] statements do not necessarily attribute the same level of credence to the statements [that] they would accord to statements made in other contexts.’ 

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The ultimate example of the perils of dealing with second tier financiers

No matter how well heeled one is, there can often be a time when a second tier financier is required to bridge the funding gaps the normal trading banks won’t.

Our main banks are conservative with a capital C but in a twisted manner. They take enormous risks funding home owners into mortgages that at times are greater than 95%. But when it comes to property development they will generally only fund upto 70% of the total costs and they expect to be the last cab off the rank but first ranking – reducing their risk exposure to almost nothing.

Developers often undertake huge projects. Hardly any developer will sit on millions just to plug into a development when logic persuades them to invest their equity.

That ultimately leaves the necessity of dealing with second ranking funders. The types of which existed in spades before the GFC when most in our country were wiped out.

Most second ranking finance companies are scoundrels and owned by private individuals. Half the time the Modus Operandi is to screw the developer and the financiers look for any opportunity to pull the rug on unsuspecting developers.

Hardly a surprise to see this developer have the embarrassment of  having a trick played by a financier in the public domain. What is most interesting in this instance is that the developer has settled the matter which clearly signals he had no issues with finance and more clearly signals that the financier was the issue.

Tony Gapes is set to take back control of New Zealand’s most intensive affordable housing project after receivers last night confirmed the property developer has settled a company debt.

Some 420 apartments and townhouses are planned for the Springpark estate on a 10.5ha site in Auckland’s Mt Wellington. The first stage is expected to be completed next year.

Springpark is seen as an affordable homes project, with townhouses in stage one priced from $399,000 to $554,000. Most have already sold.   Read more »

Sin taxes and stealth taxes affect the poor more

All sorts of people are proposing taxes on sugar, fat and other supposedly bad things.

They are modelling their taxes on tobacco taxes without thinking through that in the case of tobacco it is the smoker who pays With sugar taxes it will be everyone who pays and the burden for these stealth taxes falls disproportionately on the poor.

Chris Snowden explains this very well in this video:

[T]he IEA’s Director of Lifestyle Economics Chris Snowdon examines the extent of the burden of indirect taxes and government sin taxes on the poorest groups in society and how these have changed over time. This film is an excerpt from a recent IEA panel debate event on the ‘Cost of Living’ crisis, in which Chris was outlining the findings of his recent paper ‘Aggressively Regressive’.

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Rodney Hide demolishes Russel Norman and his Carbon Tax

Rodney Hide tears apart Russel Norman and his unwanted Carbon Tax.

Financial whiz Dr Russel Norman is promising a new tax, one that will make us rich. His CO2 emissions tax will make “New Zealand households … several hundred dollars better off every year.”

Cool. A tax to make us rich. I don’t know why other political parties haven’t thought of it. Their old-fashioned taxes only make us poor. They, too, should be doing a Russel-Norman.

I also don’t know why Dr Norman isn’t doubling his tax. Why be stingy? Doubling it would make us thousands of dollars better-off. If he quadrupled it, we could all retire.

But maybe that’s his plan. He says his tax will “initially” be set at $25 a tonne.

Politicians normally deliver a new tax promising it won’t go up. But not Dr Norman. His only promise is for the initial rate. He clearly has a higher rate in mind.

Good. The higher he cranks it, the richer we get.

Fascinating isn’t it. In the old days people who made promises like Russel Norman were called snake oil salesmen.

I don’t profess to understand how his tax works. Somehow he taxes us on our CO2 emissions but then gives us back the money through tax cuts. I sort of get that bit.

But I am struggling to see how he gives back more than he takes. That’s what he promises. There’s something about the Russel-Norman that multiplies the money as it passes through government.

It could be that taxing CO2 is special or that Russel Norman himself is special. Certainly, no other tax returns more than it taxes. But the Russel-Norman does.

All other taxes also distort prices leaving us making poorer decisions than otherwise.

Income taxes discourage investment and employment. Capital gains taxes discourage trade, investment and entrepreneurship. And so on.

The resulting cost is what is known as the deadweight cost.

But it seems there’s no deadweight with a Russel-Norman. Sure, it changes our behaviour. That’s its point. It’s to make us give up the V8 in favour of the bike. And to plant trees where we once grazed cows. Read more »

Well, doesn’t this just spoil the narrative that National only looks after its rich mates

The government has announced an initiative to assist the poor with interest-free and low-interest loans to low-income borrowers that banks don’t normally lend to.

Helping the poor?

Pity the narrative doesn’t fit with Labour’s claims of helping rich mates….

A Government initiative will offer interest-free and low-interest loans to low-income borrowers banks don’t normally lend to.

BNZ announced today it would commit $10 million to a community finance initiative in partnership with the Government, Good Shepherd NZ and The Salvation Army.

BNZ spokesperson Michelle van Gaalen said the programme, to start with a one-year pilot, was designed to help people become self-sufficient and get away from using payday lenders and loan sharks.

“BNZ wants to help all New Zealanders be good with money, including those who currently don’t have access to conventional sources of credit,” van Gaalen said.

“Traditionally banks haven’t provided loans to customers with minimal income, so those people have been using the only other option they feel they have – borrowing at extortionate rates.”

BNZ will draw on the experience of its parent National Australia Bank which has been running a successful community finance programme for more than 10 years.  Read more »

Forsyth Barr doesn’t think much of Labour and their new ‘big tool’

Here are some flippant comments from broker Forsyth Barr on Labour’s policy announcement re compulsory savings and legislating savings rates.

Kiwisaver: as per yesterday’s commentary, the brains trust at the Labour Party met in a very small phone booth and decided to propose some changes to the way monetary policy works if we were to be placed in the frightening situation of having it lead a coalition government.

The key one is giving the RBNZ the ability to change the rate (they call it a Variable Savings Rate tool) at which workers would have to contribute to a Kiwisaver scheme that would become compulsory, instead of simply having the OCR  rate to play with.

The wording would appear to still give the government a veto over an increase in contribution rate so you do have to wonder how reserve bank independence looks under this, also on our maths the changes need to be fairly solid, e.g. we reckon a +1.5% lift in the Kiwisaver contribution rate would be  equivalent to a 50bp increase in the OCR.

The attached note gives you a good overview of the situation, personally I’d back Richie McCaw switching to league as a higher probability than this coming in to play.

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Labour’s ‘big tool’ policy turns out to be a big dog

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Aside from a half hearted attempt from the Labour Party spokesman for Fairfax, Vernon Small, and Brian Fallow who has taken time off looking around the globe for catastrophic global warming and a carbon trading system that works it’s not been a particularly welcomed policy release. The exporters love it though with a free lunch on the backs of the working poor.

We wait for the endorsement and backing of Labour from the Property Council, first of all Labour are going to drop their tax rate from 28% to 15% by introducing a CGT and now they are going to give them the gift of lower interest rates which is generally the biggest cost by taking money out of the lowest paid who will now be earning more in retirement than when they are working.

 

Labour’s proposals to allow the Reserve Bank to adjust KiwiSaver contributions rather than interest rates to control inflation could hurt savers and see debt repayment delayed until retirement, KiwiSaver experts warn.

The Labour Party this morning announce proposals to change New Zealand’s monetary policy tools by introducing a variable savings rate for KiwiSaver.

The policy would require the Reserve Bank to use changes to the rate of people’s KiwiSaver contributions rather than interest rates to control inflation while taking pressure off the over-valued kiwi dollar.

Labour would also make KiwiSaver compulsory and increase contributions from the current 6 per cent combined employee and employer contribution to 9 per cent over time.

According to sorted.org.nz  if you earn $600pw and you save at Labour’s compulsory rate you will enjoy a retirement income of $496pw and when added to the super payment of $366 you will be earning $262 a week more in retirement than when you were working and struggling to get ahead.   Read more »