Showing posts with label mortgages. Show all posts
Showing posts with label mortgages. Show all posts

Saturday, April 25, 2009

Bank Guarantees: The Return of Bryce

I mentioned to one of my email correspondents that I would return in a few months to see my bank manager, "Bryce" at the ASB Bank in Albany after having seen him first late one Thursday at the end of February to re-negotiate the terms of our rather large mortgage.

I did, sort of.

This time Bryce was unwilling to see me after my hard workday so we discussed the matter over the mobile.

I would have preferred to see him in person but he insisted I couldn't.

I pointed out to him, again, that the New Zealand taxpayer was guaranteeing banks in New Zealand so they could borrow cheaper money from abroad to lend to us.

Bryce pointed out to me that it wasn't the taxpayer that was going guarantor,it was in fact the Government.

After pointing Bryce to the error of his ways over the fact that Government and the taxpayer were one and the same (Bryce still doesn't think they are) I thought out loud that wasn't it funny that as a borrower from his bank, the ASB, that I was now a guarantor for my loan but also as a taxpayer I was going guarantor for his bank to borrow the same money to lend back to me.

This seem to confuse Bryce but it was very clear to me.

I added what I said at our Thursday evening meeting in February, that we are clearly living in exceptional economic times, something Bryce agreed with during the mere half dozen times I repeated that same mantra.

Bryce said I would be breaking my contract with the bank if we re-negotiated without an outrageous bank fee and I agreed with Bryce at that stage but had to point out that the terms of our contract had clearly changed because I was now going guarantor for both his and my borrowing, hence making it cheaper for Goldstein and his fat American buddy to borrow money in the first place.

We both became dizzy as I reiterate the above several times (I don't let go once I sink my teeth in) to no effect at all.

The bank will not negotiate at all, that is all he had to say from the get-go

Before we both left the conversation, Bryce pointed out that the bank had been around for 100 and something years and was "very safe" immaterial of any taxpayer/Government guarantees and then I asked him why then did the bank sign up to the guarantee and he kindly pointed out because that is what the other banks were doing and it wouldn't "be fair" to the ASB if they didn't join the party.

Fair... mmm, yes but, why?...

A asked whether the bank had these sort of guarantees during the 1930s, he didn't know, I left none the wiser and Bryce left probably wishing he hadn't returned my call.

I don't think Bryce is going to take another call from me.

I will however have another go in a few more months.



More Banking Madness @ Shareinvestor

Westpac: I'm Thinking of Returning





c Share Investor 2009



Thursday, February 26, 2009

Bank Guarantees: Time for New Zealand Banks to return the Favour

This week ASB Bank got more publicity milage than Goldstein on speed when they announced via press release that they had NZ$ 1 billion burning a hole in their pocket and they wanted to use it to help out business to "encourage employment" during these hard economic times that all of us are facing.

Cynicism aside the announcement had everyone in Joe citizen land jumping for joy and business writers and politicians verbally clapping ASB on the back.

All well and good you might say, it was a brilliant move by the Bank, genuine or not but it left me thinking-what have you done for me lately.

I have been thinking that for the last 3 weeks when I took it upon myself to go down to my ASB in Albany, speak to my "personal banker" and ask him to see what he could do about my mortgage.

After Bryce reluctantly decided to meet with me "after hours" -6.00pm Thursday when the bank had a late night, I got down to business.

I wanted to renegotiate a lower mortgage interest rate, mine has 2.5 years left to run at 7.25%.

Now before you send me rude emails, yes I did sign a contract for 5 years so you are thinking I have some sort of obligation to my bank right?

Well, yes I do, in "normal" circumstances.

But as I rightly pointed out to Bryce at ASB Albany these sir are not "normal circumstances".

The world is facing financial oblivion, etc, etc( are you weeping yet? I really laid it on with a trowel)

Well, Bryce wasn't having a bar of my sob story ( I really was trying to squeeze him, I'm not hard-up, not yet anyway.) and he said we couldn't negotiate because it "wasn't bank policy", I pointed out to him again that the world was facing financial Armageddon and he gave me a poker face so good it seems he was well practiced at his craft.

I then thought to myself, I really had to pull out the big guns.

So I hit him with it!

But Bryce, the New Zealand taxpayer(what socialists call the Government) is guaranteeing your deposits and your borrowings from overseas (stony faced expression again) which makes your borrowing easier and cheaper, surely we can negotiate my mortgage.

"Its not our policy Darren".

Well, I thought this man is an immovable brick wall and I am wasting my time here. (nice coffee, water and kids games though.)

I then shook Bryce's hand, thanked him for his time and told him I would be back in a few months when things got worse and perhaps his bank would then reconsider their "policy".

Imagine the publicity should Brendan and ASB say yes next time I meet with him.

It would be worth at least a billion or two.


More Banking Madness @ Shareinvestor

Westpac: I'm Thinking of Returning





Friday, April 25, 2008

Notes from San Francisco


Just some observations before I kick off writing on the Share Investor Blog again next week.

I have spent the last week and a bit touring around San Francisco and attending the wedding of my Texas outlaws.

I have been commenting for several months on the nature of the credit crunch, economic conditions and things sub prime and it is interesting to see and hear the reality of things when you actually get to speak to the people that it is most directly affecting.

The majority of individuals that I spoke to were largely uninterested in talking about important issues like the coming election or the state of the economy but those who were seemed unconcerned about a probable recession and generally viewed such things with a stoic matter of fact nature.

Getting on with the business at hand seemed the order of the day.

Talking to Chuck from Manhattan, a real estate investor with years of experience, on the airport shuttle to our hotel in Geary Street, I was engaged by the positive attitude to his investment outlook. He was in San Francisco to do business and back in New York he was buying commercial property with a view to a long term gain by buying run down properties on Long Island and refurbishing for higher rentals.

Americas favorite pass time, shopping, seemed in good health in San Fran, as I imagined it would be, and tourists like my good self, from inside and outside America, were spending bucket loads of money on food, goods and services.

On the unfortunate side,depending on which side you are on, one of my Texas outlaws has just spent US$220,000.00 on a foreclosed house in Dallas that cost the previous owners $325,000.00. She has a 30 year mortgage at 5.75%! Kind of puts New Zealand rates of nearly 10% in the shade huh?

In a related matter, it seems the sub-prime lesson hasn't been learnt yet. Glancing at bank windows with "sweetheart" interest rates of 0% for business loans left me with a cold uncomfortable feeling. Like the sub prime loans for mortgages the low rates were for a limited time, after which more substantial rates would kick in.

I know there is cheap state funded credit out there but I'm just hoping the borrowers are such that they can afford to repay their loans. We don't want to be re-visiting a similar credit blowout story a few years from now.

Finally I'm heartened and disgusted at the same time by the huge numbers of "homeless" people begging for money on the streets on San Francisco.

Heartened because at least Americans don't hide their indigent by handing out welfare and disgusted because, well, these people are walking the streets and have no shame anymore.

American capitalism at its best, or worst, depending on ones world view.

Oh, the Golden Gate was lovely...Dude.

Related Share Investor reading


State backed Sub-prime Mortgages in NZ a recipe for disaster

Current credit crunch a blessing in disguise
What happened to risk?

c Share Investor 2008

Monday, February 25, 2008

State backed sub prime mortgages in New Zealand a recipe for disaster

http://media.komotv.com/images/070816_countrywide.jpg

If large banking institutions like Countrywide, Citibank &
Bank of America are affected by todays sub prime mess why
is the New Zealand Labour Government about to embark on
our own sub prime fallout in the future by lending taxpayer
money to individuals to buy houses who wont be able to pay
back the loans?


"government is not the solution to our problem; government is the problem".

Ronald Reagan, Inaugural Address
West Front of the
U.S. Capitol
January 20, 1981.


The fuss made last Tuesday over Helen Clark's "state of the nation" address by politicians on the left and their supporters has left me dazed and confused.

There was much talk of the "problems" that must be solved post a 2008 election and also that the Labour Government had worked hard for the last 8 and a half years to solve many of the problems that faced the nation over that time.

Surely if the hard work had been truly fruitful we really wouldn’t be facing any major problems now?

That’s where I got confused, the dazed part came after Helen Clark’s address but more about that below.

Ronnie was and is right, Governments, of all colours, make problems and then politicise these problems in the media when they offer to “fix” them.

Labour though has been the biggest problem maker in this small countries political history.

The most public example of that lately has been the anti graffiti legislation. Something made worse by Labour’s casual attitude to law enforcement and socialist family centered legislation like family group conferences instead of jail time or appropriate punishment are the problem.

The legislation is actually there already, but it is election year and Labour are merely grandstanding for votes.

You can pick through any of the huge problems that this Motley Crewe have either engineered or been responsible for and it is quite clear that Labour cannot “fix” what it has fucked up.

From the crippled health “service”, crumbling education standards, record high crime figures to record numbers of New Zealanders on welfare.

I would like to dig deeper on a future “fix” that Labour seem stuck on.

In Clark’s verbose and unsustainable “address to the nation”, she mentioned the word “sustainable” more than a dozen times, she made a feature of her governments efforts to fix the “housing unaffordability crisis”, whatever the hell that means.

The fact is, houses have always been “unaffordable” but in this day and age it seems unacceptable to those on the left for people to start at the bottom, earn their own money, save for a house and then buy one themselves. Logical isn’t it but it worked for us in a previous less politically correct life.

"The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help".

Ronald Reagan, 1984


Don't worry citizens, Labour is going to help you buy a house, providing taxpayer funded loans or “shared equity” subsidized hand outs to those on “low wages”, in most cases up to 100% of the value of the house!

To fix the “housing unaffordability crises” Labour also propose to build more cheap taxpayer funded homes in increased densities, you know, like the ones they built in the 1930s onwards, the ones that still breed poverty, crime, dependence and hopelessness. Most sensible individuals call those housing developments slums.

http://www.focusjapan.com/upload/a124_p1.jpg

Little boxes made of "ticky tacky" should remain as
part of a song or on the monopoly board, not causing
repeated social decay generation infinitum as State

housing always turns out to be.


They will go further than that though. They will force local government to get involved and local housing commissions set up, ones that in the United Kingdom in the past were filled with corruption and favouritism and led to the current social mess they are having. Tower blocks of hell filled with poor dependant UK nationals and disaffected immigrants, some with Koranic scythes to grind.

It’s a fact that slums don’t and never have worked. Labour propose to follow this well worn path of failure, evidenced here and in every other nation. If they did work we wouldn't still have them decades after they were introduced.

You want to know the really funny thing about Labour’s ultimate “solution” to this thing they call a “home unaffordability crisis”?

They helped cause it!

Record high taxes have burdened lower paid workers with low take home wages, while those same record high taxes have funded a government that have spent the proceeds recklessly on social interference and handouts to those undeserved of taxpayer largesse.

Even a third form economics student at the bottom of a class full of deaf and dumb mutes could tell Michael Cullen that his spending was inflationary.

That reckless spending has led to record high mortgage rates, the highest in the “developed world” and increases in local rates, petrol and food prices and all the essentials of life.

Not much left over for mortgage repayments huh Helen and Mike?

I haven even got to the main thrust of this piece though(I’m sure many of you lefties wish you hadn’t read this far-I hope you can grasp what it is I am saying)

By attempting to “fix” this self made “problem” Labour will set up the economy for a fall, one such fall that is having repercussions on us at this present moment.

I’m talking about the sub-prime mess in the United States.

The sub prime fallout was basically caused by defaults in fringe private institutions and Freddie Mac and Fannie May, two state run lenders, lending money to those borrowers in the USA that wouldn’t normally be able to get funding to buy a house.

Surprise, surprise, they eventually couldn’t pay back the loans. Labour propose to State back these same sorts of loans because they are being politically and philosophically motivated to get another 3 years at plundering the treasury benches.

If we in New Zealand are unlucky to get this vermin voted back in again will the same government propose to “fix” our own sub prime fallout when it inevitably happens here and will we forget that they caused the problem in the first place?

I question the veracity and honesty of Labour’s position on this and urge them to seriously rethink a socialist backed dream of all of us owning a state funded house. I question a New Zealand mainstream media, especially the business and finance sector, that would let this lunatic idea go unscrutinised and unaddressed.

Here at Political Animal and Share Investor, we see our job as that of informing readers of things that are not ordinarily looked at or maybe looked at in a deeper or alternative way. A commonsense approach if you like.

Labour’s intention to foist this future “sub prime” housing fallout on Kiwis should be a major concern to all sectors of the economy, from business, to the higher and lower wage earners. It will impact on all of us if their plan gets snowballing.

http://www.insurancebroadcasting.com/080207-p2.jpg

The push into the Sub Prime lending market in New
Zealand will affect more than house prices, the economy
will be seriously affected when the fallout comes, and it will.


Look around now. The US sub prime fallout is already negatively affecting your share portfolio, your mortgage rates and is having a serious impact on business lending and therefore business and economic growth.

Imagine if you will the direct impact it will have on a small fragile economy like New Zealand.

The word serious would be understatement.


“The best minds are not in government. If any were, business would hire them away”.

“Don't be afraid to see what you see”.

Ronald Reagan


Related Political Animal and Share Investor reading

Political Animal Blog

Labour's Socialist Peril
Labour's State control out of control
Pointing fingers in the playground

Share Investor Blog

Current credit crunch a blessing in disguise
What happened to risk?

Share Investor Friday free for all: Edition 12 -
2nd story "I'll be baacck"


c Political Animal & Share Investor 2008