NZ ECONOMY: STORMY WEATHER ON THE WAY


James Ayers looks at the housing mortgage crisis in the United States and warns that New Zealand could soon be facing a financial crisis.

As most readers will be aware, the international financial markets have been rather jittery over the past few months. In New Zealand this has been reflected by Kiwis abandoning finance companies in favour of perceived safer havens, namely deposits in commercial banks. But they are not necessarily safer - more on that later.

The international jitters originated from problems in the United States housing market, and in particular the sub-prime mortgage market in which Countrywide Financial Corporation is the largest provider.

Since Countrywide first admitted an increasing number of its mortgage loans were defaulting, a contagion spread quickly into other mortgage providers, and into the various funds which had invested in these mortgages - not just in the US but throughout the world.

Within weeks, central banks in the main financial centres had to cough up hundreds of billions of dollars to stop the financial markets going into full meltdown. And of course these billions were just book entries, i.e. created out of thin air.

Countrywide had been a very profitable company, exploiting people desperate to buy a home. They had a range of mortgage products for just about anyone, as long as the borrower was willing to commit to exorbitant fees and penalty interest rates.

The borrower didn't have to put down a deposit, or borrow 95 percent and did not have to provide any documentation of his or her income. The borrower could have filed for personal bankruptcy, or faced foreclosure notices on a property and Countrywide would still lend to them!

And according to Countrywide's own manual, a loan to a single borrower could be made, even if the person had just $550 to live on each month.

In return for being so 'generous', Countrywide would charge all sorts of fees.

A prepayment penalty could be the equivalent of six months worth of interest at three percentage points higher than the prevailing market rate.

Late charges generated $268 million for Countrywide last year.

When borrowers closed their loans, fees were charged for flood and tax certification, appraisals, document preparation and even e-mailing, at rates typically double their competitors. This sounds similar to excessive fees the Australian-owned banks charge Kiwis, helping then make some $3 bilion in profits in a country of just four million people.

And, of course, this greed isn't limited to Countrywide as the company needed a source of funds to lend as mortgages. Investors lined up to buy securites backed by Countrywide sub-prime mortgages because of the higher cashflows from prepayment penalties and interest rates resetting at higher levels. These securites were often packaged as collateralised debt obligations or CDO's, essentially a mix of prime and sub-prime loans. And it was this combination of Wall Street ingenuity and greed that has put the world financial markets at risk.

Here in New Zealand, commentators are quick to point out that we don't have the same sub-prime problems.

Perhaps not yet, but it will happen.

Over the past few years, banks in Aotearoa have been gradually relaxing their lending criteria so they can lend larger and larger amounts to the average Kiwi - not just with mortgages but with all their lending products, especially credit cards. How many of us have received unsolicited increases in our credit card limits without the bank asking for updated information on our income level? They don't want to know, they just want you to borrow more and more, so they can meet their ever-increasing growth and profit targets.

With household debt at record levels, higher interest rates and the cost of home affordability doubling in the past five years, many Kiwis are struggling to keep themselves afloat. Throw in a rapidly cooling and soon to be falling property market, and you will soon see mortgage repayments fall behind. The banks will start to look as jittery as some of the finance companies that have made the news in recent months.

In fact, as it stands at present under the fractional reserve banking system, the main banks have less capability (as a percentage of their total assets) than the perceived more dodgy finance companies to pay cash out to their depositors should those depositors want their money back. YOU HAVE BEEN WARNED!

James Ayers radio show, The Corporate Nemesis, can be heard on Plains FM, 96.9 Christchurch, every Tuesday at 11am.

SURPRISE! SIDESHOW BOB BACKED BY PROPERTY DEVELOPER!


It's been widely suspected that Sideshow Bob's mayoral campaign was partly funded by property developers and that was confirmed today.

The Press has revealed that David Ogilvie-Lee, a Melbourne-based developer, sunk $10,000 into Sideshow's $60,000 campaign.

Ogilvie-Lee, who was raised in Christchurch and who owns the Triangle Centre in the Cashel Mall, is a member of the Christchurch Business Association. Among other things, it has long campaigned for Cashel Mall's demise as a pedestrian-only mall - something that Sideshow supports.

Sideshow Bob has until December 17 to lodge his election return.

Sideshow, in a staggering display of political pomposity, has said he might release the details of his financial backers before the December 17 deadline but only if it is treated 'responsibly' and not the subject of 'political games'.

This suggests Sideshow will lodge his return on December 17 in the hope it will get lost in the pre-Christmas rush.

KIWI FM: MAHAREY BACKS A RATINGS DISASTER


Last July , Broadcasting Minister Steve Maharey announced it would grant music station Kiwi FM access to new FM frequencies set aside for new public broadcasting services.

"We support the concept of a station that plays 100 per cent Kiwi music, and we're keen that it has the opportunity to develop and expand the range of Kiwi music it plays," Maharey said.

The station was granted the use of three FM frequencies for an initial period of one year, from July 2006, during which time it would supposedly work towards becoming "a not-for-profit organisation".

Those frequencies had been set aside for a public youth radio network.

This really got up the nose of New Zealand's most successful songwriter Neil Finn.

Finn, who has long been a campaigner for a non-commercial youth radio network, accused the government of cosying up to 'commercial interests'.

In a letter to The New Zealand Herald, the former member of Crowded House and Split Enz asked why Kiwi was being propped up "when it has proved to be a failed concept with the listening audience".

At that time Kiwi FM was attracting just 0.7 percent of the Auckland radio audience.

Finn then went on to criticise CanWest chief executive Brent Impey, a high profile opponent of government-funded radio

"He was the arch enemy of a public youth radio network and yet he has now asked for, and received, Government assistance for Kiwi FM," Finn wrote.

At the launch of Kiwi FM, Impey said the station demonstrated there was no need for a public youth network because commercial radio was "doing the job" - apparently Impey believes that youth radio is a kind of giant jukebox, playing hour after hour of pop music.

But as Finn has often said, a youth radio network is about more than music, that it's about giving young people access to important information untainted by commercial interests.

Well, the new radio ratings were released today and provide irrefutable evidence that Kiwi FM is a failed concept. New Zealand youth aren't interested in it - as Neil Finn predicted.

In Auckland Kiwi's ratings slipped from 0.7 percent to an abysmal 0.2 percent. In Wellington Kiwi attracted just 0.3 percent of the listening audience and in Christchurch Kiwi was at 0.2 percent.

In nationwide wide terms Kiwi FM is only listened to by an abysmal 0.1 percent of the total radio audience.

'All Kiwi FM has done is provide Karyn Hay (general manager) and hubby with some nice salaries,' is how one radio insider cynically put it to me today. 'Maharey backed a loser from the very beginning. He played into the hands of commercial radio because it wants to prevent the establishment of a youth radio network because it would lose a share of its youth audience -possibly a big share.Commercial radio isn't interested in serving the needs of New Zealand's young people - all its interested in is audience share and advertising revenue.'

Defending his decision to give the frequencies to Kiwi FM Steve Maharey said; "It's a one year trial to see if people like Karyn Hay can make a go of it."

He also said once the year was up, Kiwi FM would have to give up the frequencies which would go back to being 'parked' for youth radio.

It remains to be seen if this does, in fact, happen.

PM: MALLARD FULLY SUPPORTS ANTI-VIOLENCE CAMPAIGN


Prime Minister Helen Clark told a packed press conference today that Minister of Economic Development Trevor Mallard fully supported the government's $14 million anti-violence campaign.

When asked about his scuffle with National MP Tau Henare, Clark said it was all Henare's fault.

'Mr Henare needs to take a good hard look at himself,' she replied. 'There's absolutely no excuse for hitting a lame duck.'


NB. Will Mallard be up on assault charges for whacking Henare? Wlil it go to the Privileges Committee? Or will Mallard get away with it? Or is it a case of different rules for parliamentary politicians?

GEORGE ORWELL'S 1984: LESSONS FOR TODAY


'It was a bright cold day in April and the clocks were striking thirteen.'

The famous opening sentence to a famous novel. George Orwell's 1984. A set text in some high schools and universities. Made into a movie. The novel that inspired a wave of grim fictional visions of the future. And Orwellian terms have become part of the popular vocabulary - although I don't think 'Celebrity Big Brother' was what George had in mind all those years ago.

Orwell's novel is often used by the political right to bash the socialist project. Indeed when 1984 was first published in 1949 it was marketed in the United States as an anti-communist tract - these were the days of the McCarthy witch hunts.

While 1984 can be read as an allegory of the Stalinist corruption of the Russian Revolution (Big Brother is Joe Stalin, party opponent Leonard Bernstein is Leon Trotsky, leader of the Left Opposition) Orwell did not write 1984 as an attack on socialism.

Some twelve years earlier he had gone to Spain to fight against Franco and his Nazi-supported fascists. He was to witness first hand how the Spanish Communist Party, acting on instructions from Moscow, betrayed the left and made a deal with Franco to create a government of 'national unity'. As noted American writer Thomas Pynchon once wrote, 'Orwell quickly learned the difference between real and phony anti-fascism'.

Orwell despised the Stalinists and his sympathies clearly lay with the Trotskysists and anarchists. Orwell later wrote in a letter: 'Every line of serious work that I have written since 1936 has been written, directly or indirectly, against totalitarianism and for democratic socialism.'

But Orwell was no wishy-washy liberal - which was perhaps why the liberal intelligentsia were uncomfortable about Orwell. In fact they were often antagonistic. Pynchon observes that Orwell 'found an analogy between British Labour and the Communist Part under Stalin - both, he felt, were movements professing to fight for the working classes against capitalism, but in reality concerned only with establishing and perpetuating their own power. The masses were only there to be used - for their idealism, their class resentments, their willingness to work cheap - and to be sold out, again and again.'

Stalinism and social democracy, thought Orwell, were two sides of the same coin.

Orwell's resentment was further fuelled as he watched much of the British left (and the western left in general) pledge their allegiance to Stalinism. In early 1948 - as he was revising the first draft of 1984 - he wrote; 'Nearly the whole English left has been driven to accept the Russian regime as 'socialist'. He saw this as political and moral cowardice on a grand scale.

Like the Trotskyist movement, Orwell found himself trying to keep the socialist flame alight as the Stalinist shadow fell across the Soviet Union and much of Europe.

It's mildly entertaining but ultimately pointless to discuss what Orwell got right about the future. In fact it's been said often that Orwell's vision of the future where all opposition has been crushed by the jackboot of the police state has been well wide of the mark. Rather capitalism ahs been rather more imaginative and 'flexible' in keeping the working class in line. Indeed there's an entire academic discipline devoted to studying this phenomena (eg the role of the media, cultural hegemony, trade unions, etc).

But is it now so clear-cut? In the aftermath of 9/11 civil liberties have been widely encroached upon under the banner of 'fighting terrorism.

In the United States, which has a President who talks about 'spreading democracy', civil liberties have been seriously undermined. A person I know, who has lived in the Unites States for three years, has been fingerprinted four times by the federal authorities in the past two years. Why? Simply because he is a foreigner. Un-American. Shade of Orwell's Un-person.

Here in New Zealand, we have seen the police raidng the homes of various political activists - and the homes of friends and family - under the guise of 'fighting terrorism'.

On the surface, the conclusion to 1984 is pessimistic and downbeat - Winston Smith learns to love Big Brother. However Orwell was always impatient with predictions about the inevitable and he always remained confident that ordinary people could change anything.

1984 is George Orwell's warning to us today not to accept the world as it is.

SIDESHOW BOB STILL HASN'T DISCLOSED HIS FINANCIAL BACKERS


Some eight days after he got elected Christchurch mayor, Sideshow Bob is yet to reveal who financially backed his election campaign.

Last Wednesday he told the Christchurch Star that 'receipts were still being collected by his campaign manager.' Apparently once they are all 'collated' Sideshow will file his election return with the chief electoral officer.

Clearly there are a lot of 'receipts' out there to be gathered, because Sideshow is still no closer to filing that election return.

Of course it remains to be seen whether the list of financial backers will be a full and frank one, or whether some backers will remain anonymous.

TUHOE 'TERRORISM'


As the shakedown continues on Monday's police 'anti-terrorism' raids, the focus appears to be on Tame Iti and his supporters.

While they have obviously been playing Cowboys and Indians in the Urewera's, there's no evidence of 'the arms training camps' the police alleged were hidden away in the forest and bush. Indeed, some media went looking for these camps and found nothing except for evidence of camp fires and an old billy can hanging from a tree.

But the police have gone ahead and arrested Tame Iti and sixteen others and charged them under the Firearms Act - it remains to be seen whether there is any concrete evidence to pursue charges under the Suppression of Terrorism Act.

What's alarmed the police is that the stated aim of Tame Iti and his supporters is to create a 'Maori nation'. The state, especially under this Labour Government, has embraced and integrated a 'safe' brand of Maori nationalism. It seeks only to assert itself within the capitalist status quo. It's a cuddly brand of Maori nationalism that liberals are comfortable with.

However Tame Iti's brand of Maori nationalism seeks that which the state cannot countenance. An independent Maori nation is never going to get the support of the establishment.

As Tuhoe, Tame Iti's focus is on creating an independent Maori nation on Tuhoe land

Of course nationalism, Maori or otherwise, is ultimately a reactionary phenomenon. Having identified the 'white state' as the problem, Tame Iti should not be surprised that he and his supporters are largely viewed as a bunch of disaffected Maori who don't like white people very much.

However there is precious little evidence that Tame Iti and his supporters (and I suspect there are only a handful) were about to launch some kind of 'guerilla war' to pursue their cause - although its already been reported by some media that Tame and co wanted to launched an 'IRA style war'.

However it appears that whatever was going on in the Urewera's has given the police a convenient Trojan Horse to target other activist groups around the country - some of which have a more sophisticated class-based view of the capitalist state and who have no sympathy for 'race-based' politics.

It'll be interesting to see how the Maori Party reacts. As a race-based party, logic suggests it must support Tame Iti.

MEDIA MADNESS: LOUISE WALLACE


More incisive politcal anaylsis on struggling talkback station, Radio Live.

Tame Iti should be put into prison and the key thrown away, says redneck caller.

'I couldn't agree more,'' responds host.

And that host was Louise Wallace, sometime actor and TV presenter.

Well done, Louise. Keep taking the tablets.

STATE PARANOIA


The police raids against various political activist groups has resulted in several individuals appearing in court on firearms charges. As well, there has been a whole load of unsubstantiated stories about 'arms training' camps in the Urewera's which seem to involve well known Maori activist Tame Iti.

Oh, and a forty-something man, Jamie Lockett, has appeared in court who police say 'declared war on New Zealand' in communications that the police bugged.

The police described Jamie Lockett as someone who was an 'active participant in a group that had the potential to make a violent impact on New Zealand society'.

But Judge Josephine Bouchier didn't appear that impressed by the police claims and said that on the evidence before her , Lockett could not be considered to pose such a significant danger to the public that he should be in custody. So Lockett was granted bail - so clearly he is not the dangerous terrorist that the police are suggesting.

As I write this, the talkback station Radio Live are highlighting a call from 'Bob' who says he attended a training camp and that army members were also participants - of course 'Bob' could be making it all up. Already an army spokesman has said that the story is nonsense and have asked 'Bob' to get in touch with them so they can fully investigate his story. What's the bet 'Bob' doesn't?

Yes, paranoia and hysteria is in the air - most of it coming from various arms of the state.

What we do know is that the police have brought charges against several people under the Firearms Act. But, despite police claims of terrorist activity and threats to public safety, no-one has been charged under the wide-ranging Suppression of Terrorism Act.

In fact as John Minto has pointed out the police are handing this particular hot potato to the Attorney-General - he'll have to make the decision whether charges will be laid.

Yet the police have had several activist groups under active surveillance for over a year! You would of thought the police would have been able to gather evidence of 'terrorist activity' by now!

What the police have done is blur the distinction between criminal activity and legitimate political activity.

And they are a generating a climate of fear, raising the spectre of terrorism whenever individuals or groups legitimately protest against activities of the state or corporate interests.

And of real concern is that the intelligence arm of the state has been actively pursuing legitimate political protest groups for well over the year, including the bugging of telephones, e-mail interceptions and the infiltrating of groups by agents of the state.

POLICE LAUNCH RAIDS AGAINST POLITICAL ACTIVISTS


Police today launched a widespread operation against political activists.

Early this morning there were simultaneous police raids across the North Island, in Auckland, Wellington, Whakataane, Hamilton and Rautoki.

There was a later raid in Christchurch, targeted at the Save Happy Valley anti-mining protestors. This raid was apparently led by a detective from the Organised Crime Unit in Wellington.

Seventeen people have been arrested so far and some media outlets are reporting that the police are looking for a further sixty people.

The raids were conducted under the Suppression of Terrorism Act and the Firearms Act.

The police have claimed there are ' arms training camps' in the area around Rautoki. Police allege that a napalm bomb was detonated at one of these camps.

According to one news source, the Prime Minister's office has been closely involved in the so-called anti-terrorist operation with Police Commissioner Howard Broad stating that he had initiated the raids 'in the interests of public safety'.

There appears to be a diverse range of groups targeted including anti-capitalist groups, environmental groups, Maori sovereignty groups and peace groups.

Dr David Small, the man who successfully sued police for illegally searching his home at the time of an APEC Conference in 1996 has labelled police raids of the homes of social activists this morning as draconian and probably illegal. The Canterbury University academic said the police seem to have learnt nothing from Justice Young’s judgment condemning the police for failing to distinguish between political and criminal activity.

Dr Small, who addressed a public meeting in Christchurch last Thursday on state security and surveillance, expressed particular concern about the use of the Terrorism Suppression Act in association with the raids.

“The public has been softened up with the threat of Islamic terrorism to give massive increases in the powers and resources of intelligence and security agencies. But it is now clear that the focus of their attention is really on social activists in New Zealand,” said Dr Small

This is exactly what happened in 1996 when opponents of the SIS Amendment Act were called paranoid for saying it would be used against local groups, and less than two weeks later, the SIS were caught breaking into an activist’s home.

“Democratic societies need free and open debate. And groups engaging in this kind of critical activity need the law to protect their rights to do so. Today’s raids have the opposite effect and are clearly designed to intimidate and silence these voices of dissent,” said Dr Small

MORE HUFFIN' AND A PUFFIN' FROM SIDESHOW BOB



Sideshow Bob, having been voted a minority Christchurch mayor, feels he can now reinterpret the facts to suit himself.

The latest piece of claptrap from Sideshow, is that his election and the re-election of sitting councillors is a 'vindication' of present council policies.

A total voter turnout of 43 percent of eligible voters is hardly a vindication of council policies. Of that total vote, Sideshow was unable to convince even half of them that he was the man for the job.

And, of course, Bob and his esteemed councillors pulled a swifty on the Christchurch citizens by voting to spend some $103 million on new civic offices just two days before polling closed. By this stage the large majority had voted - many of them would have voted differently if they known what Sideshow and co were about to do.

Meanwhile we await for Sideshow to release details of who financially backed him - as he promised to do during the election campaign. Although, surprise, Bob will not be providing details of his biggest financial supporters.

Property developer David Henderson, a man with very right wing views, denies he made a financial contribution although another property developer, Ian McKenzie, may of assisted.

SIDESHOW BOB BLOWS UP!



Sideshow Bob, newly elected Mayor of Christchurch, hasn't taken much time to start playing up.

Why is the Christchurch City Council so unpopular? Why are the citizens of Christchurch so cynical about their councillors?

Could it be because the last council kept on putting the rates up, well ahead of the rate of inflation? Could it because the last council stymied the democratic process by closing meetings to the public? Or possibly it's because the last council set up several shelf companies in order to avoid public scrutiny?

Sideshow Bob Parker doesn't think so - but he wouldn't because he voted for all these things.

No, Sideshow Bob thinks its fault of his political opponents. Sideshow's crazy logic is that if his opponents had not raised these issues then everything would be fine and dandy. Why couldn't his opponents just kept quiet and allowed Sideshow Bob and co to increase the rates with a minimum of fuss?

Of course what this latest outburst from Sideshow Bob reveals is that Sideshow thinks neither he or his councillors are at fault about anything at all. It's always someone else's fault - and they're always liberal or left wing!

If Christchurch isn't careful, its going to get another three years of political arrogance, undemocratic behaviour and looking after 'mates'.

SIDESHOW BOB IS VOTED MAYOR - AND TELLS HIS FIRST BIG WHOPPER!


Christchurch - this is your life! Or for the next three years anyway. Yes, former TV presenter and Mayor of Akaroa, Sideshow Bob Parker was voted Christchurch mayor today. In a low poll (only 43 percent of eligible voters bothered to vote) he beat his main opponent, 2021's Megan Woods, by some 17,000 votes.

But Sideshow Bob has always proven to be flexible with the truth and he's already told his first big porky.

In a staggering display of political arrogance, the outgoing Council voted to spend $105 million on new offices - just two days before the mayoral and council election closed.

Furthermore, councillors were given only twelve hours notice that the massive commercial project would be on the agenda of the final council meeting - and the councillors were only provided details at the meeting itself. Demonstrating its contempt for the very people it claims to represent, the council meeting was closed to the public - and not unusual occurrence with this council.

Councillors voted 12-1 in favour of the shonky project, including the vote of Sideshow Bob.

However during his election campaign Sideshow Bob told the public he would defer a decision on new offices until after election.

But to add insult to injury, Sideshow then lied that he had lied.

Sideshow Bob, acting all aggrieved, claimed he had made no promise about deferring a decision on the civic building. 'It is really sad when my opponents feel that the best they can do to win is to put lies in my mouth and repeat them ad nauseum.'

But why would anyone want to put lies in Sideshow's mouth, when he does such a good job all by himself?

Sideshow Bob's sob story is also nonsense - which The Press exposed in today's edition.

It pointed out that at The Press mayoral debate, 'Parker said he would be prepared to defer a civic building decision until after the election.'

So Sideshow Bob was exposed telling another porky.

But Sideshow is always keen to try a new line, so he's been trying the angle that the deal was 'a use it or lose it deal' - a decision had to be made immediately.

More Bob bullshit. Nga Tahu, the owners of the former Post Office building destined to be new council HQ, have had enormous difficulties in finding either a buyer, partner or tenant for this building. It's been a big, empty white elepahant for years.

So Sideshow Bob is off to the mayoral office, a story for every occasion..

We'll be tracking his adventures...

SIDESHOW BOB IS A PHONEY!




Sideshow Bob Parker wants to be Mayor of Christchurch and he's spent some $60,000 on his election campaign which has been orchestrated by a public relations firm.

Bob has been portraying itself as a candidate who is above petty party politics. Bob has been presenting itself as the plucky independent (albeit in expensive Italian suits) fighting the good fight against his main rival, 2021's Megan Woods - who is backed by the Labour Party. Bob has even gone as far to imply that Labour have been running a smear campaign against him - although there is no evidence of that.

But is Bob really the political 'independent' that he says he is? We think not.

Take his billboard campaign. Many of them are on the properties of a well known National Party stalwart. Strangely, Bob's defence is that the billboard campaign is the responsibility of his wife.

And Bob talks about being financially backed by his 'friends' -although he refuses to divulge who has helped to fund his campaign. That's probably because most of them occupy the right side of the political spectrum.

One of Bob's supporters is local property developer Ian Mckenzie, a man not known for his liberal views.

Meanwhile a Bob Parker spoof has appeared on You Tube (see my last post) which has annoyed Bob no end. He says its vindictive but he's probably more unhappy that it underlines that as Banks Peninsula Mayor, Bob oversaw saw some big rate hikes.

Indeed Sideshow Bob Parker claims he's against a rates increases - but as a Christchurch city councillor he voted for the last two increases.

As Bart says, Sideshow Bob is a phoney..

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