Thieving from New Zealanders

Thieving from New Zealanders

They are lined up to bludge from hard-working wage and salary earners trying hard to save while rebuked for putting investment money into housing – and told they should be building up healthy savings accounts. We are now in weasel territory. But who is “they’?

Hot on the heels of the revelation that the world’s richest companies and individuals avoid paying any tax in this country – and wherever they can dodge doing so – (surprise, surprise) – it is being brought home to many that the general public is being taken for a ride by the big banks being granted the right by the Reserve Bank of New Zealand to rip off their customers when they get themselves into trouble.

The implications of the quite staggering fact, revealed in the latest Investigate in editor Ian Wishart’s column on the Canadian writer Mark Steyn’s analysis that the West is “sleepwalking to national  suicide”, are almost incredible. However, the fact stands: the Reserve Bank recently, with minimum publicity and no comment that I have come across from other journalists, has approved its new OBR – the Open Bank Resolution scheme which will enable a bank’s customers’ savings account to be raided overnight without warning. The term colloquially used is applying “haircuts” – minimising what would be essentially theft by a  bank – with no hope of customers getting their money back if the bank has performed poorly, closed its doors on, say, a Wednesday at 5 p.m. and then notified the Reserve Bank that it is in difficulties. 

From March 11, 2011, following the announcement from the Minister of Finance, New Zealanders’ savings accounts have no longer been guaranteed as safe in our banks.

What the OBR now ratifies, as Investigate points out, is that if you have saved say $10,000 or $100,000,  in a savings or cheque account,  you are liable to find that any of the big banks possessing $1 billion of their customers’ investments can now, with government approval, appropriate a percentage of your savings to pay the bank’s debts.

Remember when the safely wealthy castigated the Mums and Dads who thought they were doing the right thing in maximising their chances for their future and that of their children by investing in finance companies, both to help provide a larger pool of investment money for entrepreneurs and developers, and to sensibly maximise their own returns? Out came the accusation of greed – the usual telling off by the wealthy self-righteous whose own healthy returns have been ever so safely taken care of. Apparently  Mums and Dads should have kept their money “safely in the bank “ earning the usual minimum rates of interest – as now, about 4%, if that, while the banks latest profits soar sky high. The ANZ alone reports a profit of $1.27 billion in this recent financial year, while laying off staff and denying this has happened. Its more than healthy profit margin was not reflected in increased interest rates provided for its customers.

The message was clear: finance companies, bad news: banks, good news. However, when banks collapsed overseas, the free market philosophy of allowing the poorly-governed to fall by the wayside was shown as impossible in practical terms. Millions of “the little people” (those who trust banks and have not learnt to rip off the system) were threatened with total ruin and the loss of all their life savings.

In England they were bailed out by the government – similarly to how Air New Zealand was bailed out here – great news for those who owned shares in this company – not so good for the taxpayers subsequently subsidising those shares.

So much for the ideologies of the free-market – which basically has never been any more than an ideology in a world arguably now far too complex for those individuals, countries, industries and entrepreneurs who do not meet on equal terms to compete fairly. Governments, in fact, if they have any sense at all, will not allow their most important industries and manufacturing bases to simply fold up, creating a constantly enlarging pool of unemployment and emigration because such a country’s people simply aren’t able to compete with overseas competitors – when the latter have huge advantages such as a grossly underpaid or even virtual slave workforce making their products.

It is tedious to read Sean Plunket’s DomPost column’s unreasonable and confused assertion that we should all collectively share the blame for Pike River as, he claims, we “collectively allowed successive governments to obsess about the price of everything and the value of nothing (sic)”. Plunket may well have connived at this happening, but there were intelligent New Zealanders who didn’t. This very typical everyone-is-to-blame nonsense fails to give credit to those who are often isolated and targeted with unpleasantness by the usual media columnists for raising the very questions he says should have been asked. They were – even if he was not among those who raised them.

Where are the columnists to now question the proposal to virtually thieve from those who work hard to save for their future? It parallels the way our government is now working to change its own rules retrospectively to remove the past guarantees of protections for trusts established by parents who have long played by the rules to take care of their children after their death. Retrospective legislation is always intrinsically underhand and unfair – and when it applies to the hard-working ants in a population to essentially advantage the grasshoppers – now guaranteed a share of the ants’ long hard-won savings – the question of such a basic injustice should be far more rigorously addressed.

And now with the government no longer guaranteeing bank deposits, the situation is completely reversed. If a bank fails to perform, it can steal from its customers. The rationale is breathtakingly dishonest, given that long-term encouragement to New Zealanders to increase their savings in banks rather than invest in the housing market. Apparently it is now their own fault for adding to the burdens of the bank. Too bad about any losing the proceeds, for example, from the sale of the house, temporary lodged “safely in the bank”   – or their retirement savings  – as Wishart points out – providing more information about the implications of this all in his book Daylight Robbery.

By implication the thinking is that bank customers should bear some responsibility for bank losses, and that it is only fair for the bank to thieve from its customers’ accounts rather than expect the taxpayer at large to prop up such a bank.

The breathtaking cheek of such reasoning defies analysis. But one thing we would be sure of is that the CEO of such a bank would certainly not forego his multi-million-dollar yearly salary package, or indeed his bonus. We already have precedents in poorly performing managers claiming these as of right even while the ship is sinking.

Even those of us well aware of the evils perpetrated under the ideologies of communism and its near-twin, socialism, with their oppression of the individual and their constrictions of freedom, have had any faith in the much-touted superiority of the free market severely challenged in recent years. The question is whether there is the possibility for those opposing the arbitrary and oppressive control of state ownership and the compulsion of socialism to find a reasonable third way, fair to the people of a country such as New Zealand.

 The near perfection needed for the operation of a genuine free-market was no doubt available in far simpler times when a farmer could take his cow to market and decide whether or not to accept a neighbour’s offer of a donkey, together with twelve laying hens, as a fair market trade. But the world has moved on past solutions by cliché, and New Zealand’s openness in unilaterally dropping trade barriers is looking more and more like an extraordinary naïve and unrealistic undertaking, if our free-market theorists really think that America, for example, can afford to put a voting block of dairy farmers at a disadvantage, possibly ruining many, by allowing our dairy products to undercut their family farm livelihoods.

 “Although there has been a massive decline in the number of actual dairy farms in the US (an over 60% drop in the last 20 years) mostly due to the rise of corporate dairy farms, over the same period of time the number of actual cows has slightly increased to about 9.5 million, and milk production is up 15% just between 2001 and 2009… So you could approximate the increase in actual milk production over the last 20 years at 25%” (These figures are supplied by one of the very many New Zealanders who have given up on this country to live overseas because of the consistently misapplied and damaging  policies of our present and recent governments.)

Who really believes that this powerful American dairy industry and voting block will allow itself to be undercut by competition from New Zealand as part of a pie in the sky “free trade” bargain?

Without being at all antagonistic to the notion that freedom and trade is to be far more preferred than state control, we must do justice to the notion that manipulation of the market is only too possible and is continually occurring. It is a naive comment for example, by the executive editor of The Economist, Daniel Franklin, reported in a recent NBR column as:  “My main piece of advice for New Zealand is to stay open – to trade, to other people and cultures, and to ideas. There’s always the temptation when things are changing very fast around you to close up. New Zealand needs to compete in the world of ideas and the more open New Zealand is, the more likely it is going to be able to take advantage of the opportunities.”

Such largely meaningless and vague analysis is typical of that by The Economist’s young writers who have previously been under fire before for themselves knowing little except the price of everything and the value of nothing. Similarly, this sentiment can be challenged as over-glib.  There are disadvantages as well as advantages “to stay{ing} open” – especially for such a small country as New Zealand and a lot of people have already paid the price for this.

Individuals count… And the notion of the constant sacrifice of some for the supposed greater good of the majority was debated right throughout the 19th and 20th centuries, and always will be. There is no room in debate for shallow observations without even a whiff of a mention of caution… And of course there is a downside to being a country embracing unilateral reform…with a naive expectation that it is going to bring its own reward from others doing the same. I recall the palpable anger on the part of the NZBR,  for example, when the controversial and punitive Tun Dr Mahathir bin Mohamad, Prime Minister of Malaysia at the time, refused to follow the West’s prescription for economic recovery. While his antagonism to Western interests in relation to economic policy made his relationship with Western countries difficult during his tenure as Prime Minister, Malaysia nevertheless experienced rapid modernisation and economic growth, and his government initiated a series of bold infrastructure projects. Its success has been far greater to date than that of New Zealand itself – in spite of the severe criticism which greeted his refusal to follow the NZBR advocated and free-market recipe for recovery.

And in New Zealand? We have long been bombarded with slogans such as A rising tide lifts all boats – which is certainly not at all guaranteed… A rising tide can dash some against the rocks – or sink those already holed close to the waterline. And the most strongly advanced of all has been the trickle-down theory. However, there is growing recognition that the actuality has been a trickle-up of advantage these recent decades. The tightening of the screws underpinning the “meeting targets” philosophy has seen an expectation that anything is justified, provided the profits of a bank or an already wealthy corporation are constantly ratcheted up. The consequences? More and more industries and service organisations closing down; more and more job losses; more and individuals with families to care for and mortgages to service denied tenure; university staff and other professionals with student loans to service having to rely on on short-term contracts only or dispensed with; more and more New Zealanders leaving for overseas…

Ian Walthew’s rather solipsistic book – A Place in My Country – in search of the rural dream, nevertheless highlights the problem in England today of ordinary people, including those who service the land, simply unable any longer to afford to buy even basic cottages given the shift to the countryside by the wealthy from the nearby cities – including those from overseas who are basically extraordinarily wealthy absentee or weekend owners. We may well be heading in the same way with New Zealanders being little by little dispossessed of their own land, including farmland and our most attractive coastal areas, while the government guarantees access to those wealthy enough to buy up citizenship. So much for the principle of democratic equality.

Meeting targets? Walthew also describes in his introduction, in his somewhat tortured prose that, before he temporarily moved to the country, while a young executive director with a recently awarded bonus, he passed the office of a man* who worked for the same newspaper for most of his life. The latter had now been sacked “as part of a process to save a few hundred thousand dollars  which will have no material input on the future fortunes of the company, as a sop to absent owners. Soon he will be gone. He has been fired, based on the plan I have written.

“ ‘Make this plan; save more,’ the leader had said, and I rewrote it and it did.

“Good morning,” I say to him. *A minute or so later he comes into my office, unannounced.

‘Don’t ever speak to me again,’ he says and walks out.”

Meeting targets…I am reminded of the middle-aged professional man who lost his own job as a result of the over-praised Roger Douglas reforms and recall the pathos of his continuing to leave home every morning dressed in a suit and carrying a briefcase, leaving for the public library for the day as he did not have the heart to tell his wife that he had his job had gone.

Meeting targets? The human cost… Elsewhere in his book Ian Walthew lets a New Zealander called Alison tell her story of the consequence of the same reforms.

“Alison was one of three daughters of a South Island sheep farmer who once had over 1000 acres. The reform of the New Zealand agricultural industry and the end of subsidies, held by some as a model for the future of British farming, meant that Alison’s family farm, built and planned on a budget that included ongoing subsidies, was lost: her father was now a picture framer. An entire community of small farmers she had grown up with had been devastated. Many of her family’s neighbours and friends had seen their homes, land and communities go to cash rich Cantabrian and Aucklanders with money to spend, no debts to carry, and cheap land to buy.

“Perhaps New Zealand’s farming was now healthier, more profitable and sustainable, but just as with the coal industry in the UK, the social consequences of those reforms on Alison’s community had been tragic.” And indeed, with the day of the family farm now being threatened by New Zealanders being outbid by Communist China-backed, supposedly independent Chinese investment companies, in addition to German and Russian ownership of our farmland, it is high time we debated whether the social consequences to a country of being too open, too naïve, may be a very heavy price to pay. How many New Zealanders, for example, are aware that the OIO has no mandate to consider the downside of any proposals for ownership of New Zealand land…only the supposed advantages?

It certainly seems that sanity has been long been on the side of those advocating fair trade – not free trade – a point still not recognised by those who yet argue, contrariwise, that nothing is ever free if it is controlled by either a government. Yet the big corporations, wealthier and more powerful than their smaller competitors, traditionally drive them out of business. There is little freedom in such trade and choices left, and it is not uncommon for an inferior product to drive out a better one.

When these corporations are driven by the kind of morally ambivalent or morally bankrupt individuals found both in government and in the high risk finance areas which we have come to recognise as precipitating the global collapse in 2008, then we need to recognise that the world is old, that real greed existed and still does in these areas, and that we have no excuse for later complaining if we do not now insist on accountability from those who govern us.

Why, for example, was the OBR allowed to be passed? What has changed in the thinking so that ordinary New Zealanders, formerly chided for doing the best for themselves in a low wage and low salary economy by supporting finance companies that they envisaged, in turn, supporting entrepreneurship and development, were then abandoned by the government, even when facing financial ruin – while bank deposits were guaranteed?

But not now: it is apparently the fault also of those hard-working New Zealanders saving their money for the future, if a bank is mismanaged and collapses. It apparently serves the hard-working ants right if they have disadvantaged the grasshoppers by being frugal and self-sacrificing. It serves New Zealanders right if the government is forced to sell the assets paid for by New Zealanders because the government has so mismanaged the economy. It also serves New Zealanders right if we have become economically poorer because our successes  Ministers of Treaty Negotiations  have signed off vote-buying deals with greedy, manipulative and in some cases dishonest iwi claiming insufficient compensation which flies in the face of  genuine evidence from the past.

Apparently it is only too convenient that the public at present should also be excluded from any Transpacific Partnership or TTP trade talks. Even our parliamentary representatives in what has long passed being a democracy are to be excluded. It is Cabinet – a hand-picked non-representative hierarchy, including List members whom no one even voted into Parliament …what can be regarded as the inner cabal surrounding a Prime Minister whose experience lies only in commerce and trading – which will impose its decisions upon us. And if there’s one thing most New Zealanders are now aware of it is that we have no guarantee whatsoever of our interests being protected – not when we are ruled by those wedded to ideologies.

I think of a New Zealander who remarked in relation to many of the issues relevant today that “It’s also kind of insulting to be asked for your opinion, just to learn that the government couldn’t care less for what you think.”

Do governments, in fact, care about individuals? What happens when power corrupts, when the very wealthy or the arguably mad, want to dominate over others? The answer of course is to be found in history – an answer which the present EU leaders, very possibly each of the above, are determined to ignore as in their attempts to deny the parliaments of their own members the power to set their own budgets. Their intent to aim for, even to force a political union where Eurozone countries must surrender economic sovereignty to the EU is revealed in statements such as that by Herman Van Rompuy, the EU President declaring in essence that national parliaments are not in the best position to make the right decisions for their own people.

Thomas Jefferson believed that experience has shown that even under the best forms of government those entrusted with power, have, in time, and by slow operations, perverted it into tyranny.

There are those who would argue that we have today a double-sided tyranny of the increasing power of the state – as well as that of the financial institutions which operate as our banks are increasingly doing. Interestingly enough, Jefferson also argued that “banking institutions are more dangerous to our liberties than standing armies.”

When New Zealanders find that they are being dominated by both these over-powerful institutions – in conjunction too, with a judicial sector indulging in political activism – then it is more than time to claim back this country.

Watch for the release of the blueprint for directions ahead in 100 Days – Claiming Back New Zealand – what has gone wrong and how we can control our politicians …to be published early in the New Year.

 © Amy Brooke