Comments

David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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30/11/11

Retail banking must get back to basics: Gareth Morgan


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Gareth Morgan writes about the problems in the banking sector since 2007  in an article for the Herald:

Three decades of sub-par central banking governance has seen an utter neglect of prudential policy and since 2008 it's been dawning on creditors that they've lent too much to those whose whole existence depends on their ability to raise ever more debt.

Meanwhile, the profits made by banks and their senior executives who organise these credit lines have been obscene and even after politicians have generously provided taxpayer funds to rescue the system, the profitability and bonuses of the bankers continue. It is one sick system.

Now that Europe, that bastion of monetary conservatism, is being rendered asunder as a consequence of the ravages of unfettered finance and the socialisation of bad lending (ie; issuing government debt to replace private debt that is "too big to fail"), we're witnessing some of the most bizarre political pressures and policy recommendations as politicians flounder to respond cogently.

He also comments on what can be done to minimise further damage:

The solution seems obvious. If a taxpayer guarantee is in place for depositors then the institutions taking in those monies should be severely restricted in what they can do - such as lend them according to old-fashioned prudential principles.

Since financial deregulation, the Bank of International Settlements and all its member central bank leaders have totally lost the plot on the practice of being prudent.

What should be beyond the scope of an institution that takes in deposits under a government guarantee is any ability to raise other monies that aren't taxpayer guaranteed, to issue bonds and subordinated debt and go and play in the shady world of derivatives.

The moronic "Quants" of the financial engineering world have blown up the financial markets by assuring their banker bosses they can quantify the risks. The bosses don't have to care, courtesy of the taxpayer guarantee.

A "back to basics" of retail banking is the place to start. If the central bank wants to control the risk to depositors in approved institutions it has to effectively control the risks that those banks take with those deposits.

This is a very simple principle that went out the window with the financial deregulation of the early 1980s.

Nationalising institutions that have a taxpayer guarantee is logical. At the very least a far more stringent, flexible and coherent prudential supervision from central banks is years overdue.

 

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10769426



tags: deposit guarantee, bank regulation, reserve bank

comments

1 Comment(s)



New Zealand Bank - 28 March 2012 at 1:57 AM
retail banking is all what an economy needs, I mean what are the governments are doing on this.

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Please play the ball not the man.