It's a wrap

05:00am 20 Oct 2010 54 comments

Over the last two years, I have been deliberately controversial on a number of issues to spark readers to debate. To a degree this has been successful.

I have also endeavoured to counter-balance popular theories, proven of course by much research which as a result is then dressed up as fact. All theories are nothing more than well develop opinion and some research is commissioned, meaning it has a purpose which is not always what it seems.

I have tried to encourage readers to develop a healthy cynicism, and also to provide an alternative view of the world of finance economics and wealth creation.

Why have I done this? Because the world is dressed up as way more complex than it is, and the purpose of this complexity is to employ people to manage your finances, to make rules, police them, snitch on people and otherwise consume needless resource.

And why do we need the policemen and snitches because the created complexity has disempowered people thus allowing those who pretend to know how to play the game to skim an enormous amount of wealth off the top.

Citizen rights and obligations

05:00am 01 Oct 2010 67 comments

BY BRUCE SHEPPARD

New Zealand is one of the few countries in the world where non citizens and citizens have substantially the same rights.

Maori for the last 170 years have been made to feel like second class citizens in NZ. In reality the last 50 years has resulted in the erosion of  pride of citizenship for all NZers, so they are not alone, despite the fact that they think they are in this respect. It is also pretty clear that Maori as an identity, (it is not universal at a personal level) have rediscovered some pride in their history in this land, and it should not be threatening to any of us that they assert this.

But those of us who are non Maori also have a heritage in this nation and feel threatened for asserting that heritage.

I love the fact that my family arrived here in the early 1860s and settled in Northland in Matakohe. My great grandfather served in the Maori Wars in the Waikato and I too have an oral history of that. His daughter married a George Smith and established a wonderful home in Matakohe known as Totara House, still occupied by my great aunty's daughter Mavis who is approaching 100 years. She is my cousin and I share this relationship with her with Lockwood Smith. He hates to be reminded of this - the Sheppards were the shepherds, while the Smiths were, and are, the gentry.

To me, it feels like where my roots are. It gives me a sense of belonging in a land that I feel just as passionately as many Maori. I feel intensely annoyed that I now should not feel this pride, as it is not politically correct to remember our respective legacies in this land let alone celebrate them. I have considerable pride that Matakohe does celebrate its colonial European and Croatian heritage in its Pioneer Museum. And I have even more pride that Mavis on her death has donated her home to the Museum charitable trust (or at least that is what she told the assembled family when she turned 90).

Local body electoral farce?

05:00am 23 Sep 2010 33 comments

Once every three years we get to postal vote for a number of local bodies, from city councils through to health boards and every conceivable quango in between. At least in Auckland this year it is simplified.

Outside of the mayoralty, virtually none of the other candidates are widely identifiable, but certainly there may be some subconscious recognition in local areas for local people.

Party politics is alive and well, but slightly buried so it is not obvious. Citizens and ratepayers have always been National in drag.

Thank god we are not like Australia where it is compulsory to vote (at least in national Politics). Can you imagine what the outcome could be if this were the case in local body politics in NZ? 

For heaven’s sake, the top polling mayoral candidate in one poll, for the Auckland super-city elections, was Bob Parker. He is mayor of Christchurch and not standing in Auckland.

Greed, stupidity and moral hazard

05:00am 16 Sep 2010 8 comments

BY BRUCE SHEPPARD

Now that the government has agreed to pay out all of the SCF depositors to the tune of $1.8b, the second order effects should be fully considered.

it's dangerous to take your stock tips from a cab driver, but cab drivers and barbers are an interesting place to hear what real people think. Barbers of course are an aging population and have been investors in both share markets and finance companies over the years. This particular subset poured their money into SCF, with maturities expiring just before the crown guarantee. The rest, as they say, for SCF is history.

The question now is what is going to happen to the cash coming out of SCF.

Well this particular subgroup - which could be considered representative of the 60 plus age group - seem to intend to pile their money into Marac. Now from their point of view this is perfectly rational. Why put it in the bank at 5 percent when you can get 7 percent with the same risk from Marac?

So even if only half of these cash return end up in one or two finance companies, it will almost certainly guarantee to take down the recipients of the dopey old bugger's largesse - at the taxpayer's expense.

The new normal

05:00am 07 Sep 2010 16 comments

BY BRUCE SHEPPARD

If you live long enough, and most of you will, you will see that what is vogue now,  in 30 years will become in vogue again and will be branded as the new normal.

This is the last blog in what has been quite a long series intended to be a guide to the principles that will enable you to achieve freedom and independence in your lives, at least financially.

Let us start with the old normal, then the new normal and the possible paths towards the new normal and the equally possible diversions from it. The old normal was, at least for the Western advanced economies, economic activity that had these characteristics:

• Thrift was bad, want was good, consumerism was the religion and earning a dollar and spending more was enabled by easy credit.

• Asset values continually inflated thus enabling more credit to be advanced thus allowing production and consumption to advance.

• The economics of Comparative Advantage fuelled the mantra of free trade, so that those who could produce things with a comparative advantage over others could export to each other.

• Continual population growth and aspiration growth fuelled economic growth and rising real incomes for some but not all.

• Immigration and foreign investment was good, because this too fuelled asset value growth and economic activity.

• Governments were allowed to get bigger, as the pie, at least in nominal dollars, was growing bigger perpetually and thus central government sizes crept up, largely to deal with the consequences of free market activity left unchecked (welfare) but governments largely left economic activity unregulated.

This state of affairs has existed for the last 60 years and accelerated dramatically over the last 25 years. The culture of greed, winner take all, free market where everyone aims to maximise their own position and do so in a monetary sense was the "Old Normal".