sharetrader
Page 8 of 8 FirstFirst ... 45678
Results 106 to 120 of 120
  1. #106
    Veteran novice
    Join Date
    Jun 2007
    Location
    , , .
    Posts
    6,588

  2. #107
    Permanent Newbie
    Join Date
    Mar 2010
    Posts
    941

    Default

    Quote Originally Posted by macduffy View Post
    Maybe they need to reduce their proposed increase, it sounds like the banks will run out of money to lend. Although personally I don't think that is a bad thing I appreciate everything needs to be kept afloat with more and more debt.

  3. #108
    Veteran novice
    Join Date
    Jun 2007
    Location
    , , .
    Posts
    6,588

    Default

    Quote Originally Posted by Aaron View Post
    Maybe they need to reduce their proposed increase, it sounds like the banks will run out of money to lend. Although personally I don't think that is a bad thing I appreciate everything needs to be kept afloat with more and more debt.
    I don't know about "everything" needing more debt but in a growing economy/ growing population new businesses rarely flourish without borrowing at some point in their development and first time home purchasers likewise.

    Personally, I think AO is letting his dislike of Australian banks and their NZ profitability affect his view on the capital adequacy question.

  4. #109
    Permanent Newbie
    Join Date
    Mar 2010
    Posts
    941

    Default

    Quote Originally Posted by macduffy View Post
    I don't know about "everything" needing more debt but in a growing economy/ growing population new businesses rarely flourish without borrowing at some point in their development and first time home purchasers likewise.

    Personally, I think AO is letting his dislike of Australian banks and their NZ profitability affect his view on the capital adequacy question.
    OK not everything but at least property prices and the share price of publicly listed companies.

    No doubt new business and first home buyers require debt, but my concern would be more about the size of the debt.

    A spiral of ever increasing land prices and valuations justifying larger mortgages which in turn further increase land prices as well as interest rates coming down improving debt serviceability. We didn’t have the lower interest rates until after 2007-2008 but it was a similar cycle and finance companies were coming up with a lot of the development debt.
    Since then the finance companies have largely disappeared and it was the depositors into those companies who would have probably taken the biggest hit from the GFC in NZ.

    As a percentage of GDP I understand debt has been growing for households https://tradingeconomics.com/new-zea...ds-debt-to-gdp
    Hopefully a reliable website as I googled debt to gdp, and this was near the top. Although that said since 2008-2009 it has levelled off. I would have thought that with the increase in GDP from business and housing investment this ratio would find a sustainable level as gdp growth increases and debts get repaid maybe 100% is the natural level I don’t know. Possibly something wrong back in the 80s and 90s with such low levels of debt to gdp.

    Although our government seems to be more responsible than households. https://tradingeconomics.com/new-zea...nt-debt-to-gdp

    I also understand that first home buyer’s debt as a percentage of income is larger although this graph only shows a 60% increase since 2000.
    https://www.rbnz.govt.nz/statistics/...household-debt

    I would like to think that AO is concerned about depositors rather than what you suggest as NZ is one of the few countries without deposit insurance. We saw how depositors were treated in the GFC until the taxpayers of NZ guaranteed the banking and finance industry. I guess AO doesn’t want to see that happen again and I would tend to agree with him on that one. The role of the reserve bank is to promote the maintenance of a sound and efficient financial system. Not one that relies on the taxpayers of NZ when it gets into trouble. Although there appears to be room for debate regarding the level of capital the banks should hold.

    Unfortunately AO's concern for depositors doesn't extend to getting interest rates on deposits above the inflation rate so he is reaming depositors slowly rather than quick in a violent bank collapse.

    Disclaimer; I own no shares in Australian Banks, how about you?

  5. #110
    Veteran novice
    Join Date
    Jun 2007
    Location
    , , .
    Posts
    6,588

    Default

    A lot to agree with there, Aaron. A few points, though.

    We certainly need a deposit insurance scheme although it's anyone's guess as to who will end up paying for it. Mostly the depositors themselves via even lower interest rates, is my guess. Incidentally, the fact that Aus had insured/guaranteed deposits prior to the GFC forced our govt to act - or risk an outflow of funds. And the banks/depositors paid the insurance premium, let's not forget.

    We don't get to hear a lot about the effect of low deposit interest returns on either depositors or the economy. It's one thing to seek to stimulate the economy by knocking 50 basis points off already low rates but there is a cost in terms of lower spending power on the part of depositors, who, we have been told, heavily outnumber borrowers. The RB really hasn't much choice but to follow the rest of the world there but it's a moot point whether we should try to lead the pack. Question. To what extent does this affect business/consumer/investor confidence?

    Yes, I hold Aus bank shares, around 5% of a widely diversified investment portfolio- about 70/30 equities/bonds - built over the last 50+ years. Another question. How much do NZ Kiwisavers have invested in Aus bank shares? Do we have any idea?

  6. #111
    Permanent Newbie
    Join Date
    Mar 2010
    Posts
    941

    Default

    I suppose someone has to pay the premiums, not sure how it works to be honest. If it is a national scheme then depositors across all banks will pay to help out those in crappy banks that fall over reducing premium costs. Still better than taxpayers bailing them out, insurance also takes the smaller depositor out of the picture in a crisis as insurance will have them covered and the govt may not feel the need to bail the banks out.

    No one is talking about how the current economic system is trying to generate inflation to reduce over-indebtedness by stealing from depositors through inflation. It is an outrage but no one seems to be talking about it. I guess I am a dummy thinking targeted inflation, protecting borrowers at the expense of savers, negative interest rates etc etc is nonsensical. I will be broke before central banks do the right thing and let markets decide interest rates and stop propping up asset prices with easy money and low interest rates.

    I too would be less inclined to agree with Adrian Orr if I owned Aussie bank shares. Not sure about Kiwisaver ownership in general. My Kiwisaver fund doesn't own any as I switched to as close to cash as possible some time ago (so hoping banks don't go under). That is why central bank intervention propping up asset prices is making me so mad. Self interest as always, also I think it is exacerbating inequality and not giving the next generation the same chances that we had to secure our financial future.
    I don't understand the US repo market but basically banks were asking for higher interest rates to reflect risk so the federal reserve comes in to suppress them. Total bull****. Money is worthless in the current environment so I take my chances that we have a market crash prior to people losing confidence in Money. Looking at the NZ govts debt level if there is a crisis of confidence in money the $NZ should appreciate significantly although if commodity prices drop at the same time who knows.

  7. #112
    Ignorant. Just ignorant.
    Join Date
    Jan 2005
    Location
    Irresident
    Posts
    815

    Default

    Out of idle curiosity, does the RBNZ run stress tests on the banks registered in New Zealand?

    I seem to recall that some were done a couple(?) of years ago, but I've heard nothing since.

    Perhaps there's been another round and some banks failed?

  8. #113
    Senior Member
    Join Date
    May 2009
    Posts
    1,049

    Default

    Quote Originally Posted by GTM 3442 View Post
    Out of idle curiosity, does the RBNZ run stress tests on the banks registered in New Zealand?

    I seem to recall that some were done a couple(?) of years ago, but I've heard nothing since.

    Perhaps there's been another round and some banks failed?
    I read an article saying they do. The writer was therefore a bit bemused by this tinkering, because the banks had been passing them. He wondered whether the RBNZ sees something more calamitous than is already factored into their models. Those models contained extreme scenarios around house prices and dairy payouts along with a bunch of other stuff.

  9. #114
    Veteran novice
    Join Date
    Jun 2007
    Location
    , , .
    Posts
    6,588

    Default

    RBNZ's latest stress test was in 2017. See Post 106 above.

  10. #115
    An Awesome Cool Cat winner69's Avatar
    Join Date
    Jun 2001
    Location
    , , .
    Posts
    24,284

    Default

    We (some) seem to have upset our Adrian

    What a weird statement - sometimes it best just to shut up

    Acting with integrity - for all New Zealanders

    Release date11 October 2019
    Statement from the Reserve Bank of New Zealand’s Senior Leadership Team

    Leading the people at the Reserve Bank of New Zealand is an absolute privilege, and we never take that for granted. We are surrounded by incredibly clever and dedicated people who are driven by the shared values we have at Te Pūtea Matua: inclusion, integrity, and innovation.

    Every day we come to work with the same ambition and drive – to serve all New Zealanders so they can live their lives with prosperity and the reassurance that the financial system we regulate remains stable and productive. To do that we need to have the brightest and best people who come from all sorts of backgrounds with a wealth of experience, wisdom and knowledge.

    We are immensely proud of our workforce and the contribution they make – we make no bones about that.

    Sometimes we make difficult decisions that are unpalatable for a few, but we do that with the many in mind. We are not looking to win votes or accolades – we do what’s right for the good of all New Zealanders for today, tomorrow and for generations to come.

    As global economic environments throw challenges at central banks, more than ever we need to be innovative and the best way we can do that is to ensure we have diverse and fresh thinking in our midst. That’s the smart thing to do.

    We’ll continue to have informed and mature conversations on the remit we hold on behalf of Aotearoa.

    We’ve charted our course, prepared for whatever is on the horizon and will weather the storms. New Zealanders can depend on that.

    This is the only statement we will be making on the recent remarks about the capabilities of our people.

    The Reserve Bank of New Zealand’s Senior Leadership Team

    https://www.rbnz.govt.nz/news/2019/1...new-zealanders
    Last edited by winner69; 12-10-2019 at 03:23 PM.
    “In a roaring bull market, knowledge is superfluous and experience is a handicap.”

    –Benjamin Graham”

  11. #116
    Ignorant. Just ignorant.
    Join Date
    Jan 2005
    Location
    Irresident
    Posts
    815

    Default

    How bizarre! And prickly! As I have read it, the recent commentary has been about the people leaving, not the capabilities of the people staying.

  12. #117
    Guru peat's Avatar
    Join Date
    Aug 2004
    Location
    Whanganui, New Zealand.
    Posts
    4,591

    Default

    I believe there is a problem to solve with banks whereby the government should attempt to ensure that it doesnt have to bail them out. Technically it doesnt have to of course but we all assume it would, and history confirms such behaviour. I'm not really a fan of Deposit Inurance however I think I do have to concede that the larger trading banks rely on an implicit govt guarantee and hence charging insurance is fair
    I think some formula should be applied using number of years paying this insurance premium to calculate minimum capital ratio with limits on how low it can go. After 10 year of payments
    (without claiming)
    then, you can have say a capital ratio at todays levels or higher. Otherwise its at some high level up towards Orrs figures.
    For clarity, nothing I say is advice....

  13. #118
    Ignorant. Just ignorant.
    Join Date
    Jan 2005
    Location
    Irresident
    Posts
    815

    Default

    How do they get on in the Channel Islands?

    They make much of their "guarantee", but from what I have managed to figure out, the fund backing it is only about GBP100m. Which kind of indicates that it's not all that much of a scheme, given the size of the banking system there.

    But I may well have this wrong - I have no money there so have put little time into it.

  14. #119
    An Awesome Cool Cat winner69's Avatar
    Join Date
    Jun 2001
    Location
    , , .
    Posts
    24,284

    Default

    Reddell concerned about Orr’s behaviour and writing to the Board and to Robertson.

    Reddell might be just be grumpy but he could well be doing a good thing for the people of Aotearoa.

    https://croakingcassandra.com/2019/1...board-members/
    “In a roaring bull market, knowledge is superfluous and experience is a handicap.”

    –Benjamin Graham”

  15. #120
    Guru peat's Avatar
    Join Date
    Aug 2004
    Location
    Whanganui, New Zealand.
    Posts
    4,591

    Default

    yeh I've been reading Reddell lately and he sure has an axe to grind about Orr.
    I guess technically he (Redell) is right in that Orr is operating both unuseally for a RB governor but perhaps more importantly outside the RBNZ's mandate.
    For all his wordiness Redell is quite factual and isnt adverse to being shown the numbers that prove high capital ratios for banks would be beneficial but Orr is not providing these.
    For clarity, nothing I say is advice....

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •