Bankers

Has NZ been left with a financial T-Rex?

New Zealand’s Prime Minister John Key has resigned.  I’m surprised at the timing – just after the Kaikoura earthquakes, and on the same day that Italy’s prime minister resigned.

It reminds me of that scene in Jurassic Park where the kids got left with T-Rex.  But let’s hold that uneasy thought for the time being.

he-left-us

Key should have resigned like he promised when it was proven that the GCSB is carrying out mass surveillance of us New Zealanders.  But when the Snowden revelations did indeed show that in 2015, nothing happened.  At least he would have had some credibility if he’d kept his word.

But he hasn’t kept his word.

For instance, he wasn’t going to raise the GST tax.   John Key’s changing opinion on GST rise.

On gay marriage – before his government passed it into law in 2013, he previously said “he did not believe there was a big demand for gay marriage in NZ and that civil unions were enough.”

Has John Key left big shoes to fill?  No, those big shoes look more like flip flops.

John Key flip flops like a girl changes clothes

His comments were flip and his neo-liberal financial leadership was a flop.

flip-flops2

So what has John Key done in the three terms he’s been in?

He raised GST to 15%, turned NZ into a tax haven for the one percent, sold NZ land to overseas investors thereby pricing our children out of the domestic housing market, signed NZ up to the TPP, sold state houses – which forced vulnerable NZ families into living in cars, and under his watch New Zealand’s gross debt has soared to a whopping half trillion dollars.

That’s what we know he’s done.  So what’s happening behind the scenes that we don’t know about?

How about New Zealand’s exposure to derivatives? 

Former Canterbury University accountancy lecturer Dr Susan Newberry, now professor of accounting at Sydney University’s business school, still keeps a fascinated eye on the “New Zealand experiment”. And some of what she sees she finds a little alarming.

Does the average Kiwi know the country’s balance sheet now has a derivatives exposure of $180b, she asks? That is rather a lot of those “financial weapons of mass destruction”.

It means the NZ tax-payer is on the hook if it all goes wrong and there is the international equivalent of a bank-imposed mortgagee sale. (Think Greece, Iceland and Ireland.)

But hey, what could go wrong?  It’s like 2008 never happened!

John Key was directly involved in the development of derivatives – the financial contracts and credit default swaps that no-one understands, which led to the toxic sub-prime housing loans, which led to the Global Financial Crisis. The likes of Merrill Lynch and the Bankers Trust profited from foreign exchange trades and derivatives speculation at the expense of national economies.

In transforming NZ into a tax haven and creating the speculative housing bubble, he’s done the same thing to NZ that he did to Ireland, when as head of global foreign exchange for investment giant Merrill Lynch he shifted a considerable amount of his business to Ireland in the mid-1990s to take advantage of a 10% tax rate for foreign investors.

Fran O’Sullivan: Key chases luck o’ the Irish

That’s what you get when you elect a banker for Prime Minister.  He’s done really well for the one percent.

Meanwhile, have we in NZ been left with a financial T-Rex?

derivatives

Other links:
The great big list of John Key’s big fat lies

Another Very Short Collection of John Key’s Lies

Trading Places: Running NZ like an investment fund

Don’t let the door hit your arse on your way out Johnny

NZ government in denial over housing crisis

Auckland Housing Crisis cartoonNew Zealand has got a previously unheard of problem – homeless families are sleeping in cars, while nearly half of the houses in our largest city Auckland (49%) are being snapped up by foreign investors and then sitting there empty!  The Chinese were the biggest group.  Last year in June it was 41% of Auckland homes. 

John Key, our prime minister and former banker who worked at Merrill Lynch, glibly believed most of the investors in the property market would be locals.  It was clear the government either didn’t have a clue or didn’t care.  NZ doesn’t have a foreign buyers register or any rules around speculation on houses.

Last year a whistle-blower from the real estate industry said mainland Chinese money snapped up at least 80 per cent of residential sales in parts of Auckland in March but were nearer 90 per cent in May, 2015.  Of course the whistle blower lost his job.

Here’s the radio interview about it: Property insider: It’s bigger than you think
“Property speculation is rampant, and I believe on the strength of these numbers that offshore Chinese investors are a very significant part of what’s going on,” said Phil Twyford, the MP for Te Atatū.  When he was accused of being racist for pointing it out, he said “I’m speaking for young New Zealanders who want affordable home ownership. If we solve this problem, if we ban foreign buyers, that will make a big difference.”
Leaked data shows Chinese offshore buyers fuelling ‘rampant’ Auckland property speculation, Twyford says.

“What I’m saying is that there is a tsunami of Chinese investment headed towards international real estate markets, including New Zealand. These numbers are coming from Juwai.com, the preeminent Chinese website that markets real estate, including New Zealand real estate. There’s a whole industry marketing our houses to Chinese investors.”

There are more than 6,000 real estate agents in Auckland.
Here’s a quote from Juwai.com about their buyers,

“Property is investment of choice – a stable investment exemplifying wealth & status. Chinese buyers spent US$37 billion on international residential property in 2013. 70% pay cash for property purchases.”

It quoted there are 63 million upper-middle-class Chinese and 2.8 million high-net-worth Chinese.  Less than 1% of them can read English.

The Chinese have deeper pockets than New Zealanders.  Our children will be the tenants of Chinese landlords – if they’ll even rent to them.

And then we hear that while people sleep in cars as the city grapples with homelessness, more than 33,000 Auckland dwellings are officially classified empty.  They’re called ghost houses.” That’s the size of a NZ town.  Running on Empty: Auckland’s “ghost” house problem.

The Minister for Housing Nick Smith replied “Diddly Squat” when asked about the percentage of foreign property buyers.  In fobbing the journalist off, it appears our government favours money over people.

Diddly squat

Opinion: ‘Diddly squat’ – Govt incompetent on housing

An article from June 2016, Why MPs may want house prices in New Zealand to keep rising

This is an article from 2012: Bernard Hickey: Govt eyes blind to housing crisis


More links:

1949-state-house-in-taita

Homeless family: The realities of living in a van

Kids living in vans? I’m mad as hell

The above blog post was written in 2016.


How are we doing in 2020?

73-year-old faces long wait for social housing in Christchurch

The pensioner is among a growing group of older Kiwis who are finding themselves priced out of the rental market. 

There’s no political will to fix the housing crisis which was caused by Helen Clark and John Key.

KiwiBuild: You can’t live in a reset – New Zealand’s housing crisis still looking for a fix

What has become crystal clear in the past few years is that the political will to build houses is not nearly enough.

 

NZ in Panama paper leak 60,000 times

key-panama-lieHere’s a story of greed and hypocrisy.  This is what happens when a country elects a banker as prime minister. 

New Zealand is one of the highest taxed nations when it comes to income tax, and we also pay 15% GST on everything we buy.  Even children have to pay tax after the government cut children’s tax credits in 2012.

There’s no privacy protection for us when it comes to the government or IRD.

Also, under the US FACTA law (Foreign Account Tax Compliance Act), any NZ citizen unlucky enough to be born in the US will be reported on by the NZ government to the IRS if they try to open a bank account, or file a company return.

So that’s what happens to individuals.

But if foreign investors park their money here, no questions are asked and no tax is paid.

Our prime minister John Key got the law changed for this in 2011 when he wanted to turn NZ into a “financial hub” – like Ireland.  When he was head of Merrill Lynch’s derivatives and global foreign exchange business in London, he shifted a lot of the bank’s business to Dublin.

The result was Ireland’s financial crisis, where the clever use of tax-haven rules and a huge credit boom permitted real estate prices and construction to grow quickly before declining ever more rapidly.

Even though John Key was fully cognisant of Ireland’s collapsed banking system and financial hub collapse, he was cock-a-hoop about doing the same thing to New Zealand.

Glib, smooth and dismissive, in December 2010 Key rubbished objections to his plans and directly specified a 0% tax rate, telling the Minister of Economic Development Gerry Brownlee to deliver him a paper that had zero rating of funds.

In February 2011 Gerry Brownlee (Minister for Economic Development) delivered what he wanted, and in May 2011 the international financial “advisors” started drooling.

The law change in September 2011 to 0% tax  for foreign investors made NZ a tax haven.


When a 60 minutes report came out in 2012 about wealthy foreigners dodging tax, Peter Dunne (government lapdog minister) and John Key described it as “legitimate tax avoidance.”  Under the law John Key said that tax evasion is illegal, but tax avoidance is not.

But this is what the IRD department says to the NZ tax payer about tax avoidance:  What’s wrong with tax avoidance

Nothing got done about this issue.

Now in 2016 the birds are coming home to roost.  We have NZ trusts at the centre of Malta money scandal, and NZ is mentioned in the Panama paper leak 60,000 times.

What else are we going to find?

Prime Minister John Key’s register of interests has revealed he has a short-term deposit in a company specialising in New Zealand foreign trusts.  Source: Edwin Mitson, Business Desk, Yahoo! Finance.

He has refused to disclose his tax details.

When Key was asked if it was right that trustees did not have to tell the IRD who was behind the trust, what assets it had, its income, its beneficiaries, the residence of its settlor nor the nature of its assets, Key deflected reporters by saying they should “ask the IRD.”  Even though he was the one who demanded the tax shelter for foreign investors in 2011.

Iceland’s prime minister resigned last week after being the first major casualty of the Panama Papers leaks which revealed how the super-rich manage their money.

Will there be calls for John Key to resign if we find his hand in the cookie jar?  Unlikely.  He previously promised to resign if it was proven that the GCSB carries out mass surveillance of New Zealanders. When the Snowden revelations did indeed show that in 2015, nothing happened.

key-resign-no1


snowden-key-lying-lie



Links:

2010 Key itching for quick action on financial hub

2011 Key changed the law to extend NZ as a tax haven

New Zealand now an attractive tax location for offshore managed funds

2016 Panama papers: NZ trusts at the centre of Malta money scandal, Mossack Fonseca papers show

Panama papers: Mossack Fonseca ‘bragged about lax New Zealand tax rules’

Calls mount for tighter rules on foreign trusts as Key denies NZ a ‘tax haven’

Quote: “Whilst the PM has been shaking hands with devious financial operators around the world and promoting our tax system, and doing little to ensure its integrity, we are now known as one of the world’s ‘quiet tax havens’ as the leaked documents reveal.”

He said Key and his colleagues were doing nothing for NZ’s international reputation, with more than 12,000 trusts set up here that pay no tax on their overseas’ earnings.

Tax toll on NZ

Greece was fleeced and made to fail

greek-bailout-cartoonGreece did not fail on its own. It was made to fail.

In summary, the banks wrecked the Greek government, and then deliberately pushed it into unsustainable debt … while revenue-generating public assets were sold off to oligarchs and international corporations.

The rest of the article is about how and why.
Greece — The One Biggest Lie You Are Being Told By The Media.

I recommend the associated video: Confessions of an economic hitman.  It’s 24 minutes long and explains how a global empire has been created by the oligarchs.

The corporations identify a country that has resources that they covet.  First they’ll arrange a huge loan to that country, but it won’t go to the people, it will go to corporations and infrastructure projects; things that will benefit the rich.  But the whole country is left holding huge debt ….

Conquering by debt