Thursday, 5 February 2009

NOT PJ: Haven’t the Vegas Idea

Bernard Darnton invents a government department that will make us all rich . . .

The banking crisis can be fixed by making banks less profitable and the value of their loans less certain.

This nonsense comes from Phil Goff Goof, who is supposed to be “on the right wing of the Labour Party” – suggesting, presumably, slightly more economic nous than the rest. Every major political party in New Zealand has policies to ignore property rights in our planning laws; for heavy progressive income taxes; for a national bank with state capital; for state ownership of roads, rail, and an airline; and for free education for children in public schools, giving them all at least five out of ten on the Communist Manifesto checklist: so “on the right wing of the Labour Party” is presumably a relative term. As is “slightly more economic nous than the rest.”

Goof Goff suggested that banks should be punished for charging “break fees” for switching from fixed rate mortgages to lower floating rates, following the Reserve Bank’s kamikaze interest rate policy. He believes that the Government should “make it clear” to banks that they “have got to come to the party.”

The phrase “make it clear” sounds like a request for a stiffly-worded letter. It sounds like a terse but rational appeal and that banks might have a choice. In truth, backed with absolute power, governments “make things clear” clear in the same way that Attila the Hun “made it clear” that he and his hundred thousand mounted archers would like to “come to the party” across the Rhine.

Fixed rate mortgages are a gamble. They’re your bet against the bank about which way the interest rate is going to go (and you’re betting against the house). You swap the possible benefit of a rate drop for the certainty that your repayments will never increase. If only some Government official with a magic wand – or a big stick – could let you have it both ways.

Much financial pain could be avoided if everyone who lost on their financial gambles was compensated. The Government urgently needs to create a Lotteries Ombudsman. Customers who, through no fault of their own, didn’t win Big Wednesday could line up outside the Office of the Lotteries Ombudsman on Thursday morning and have their numbers replaced with a winning array.

When someone is made redundant and then doesn’t win Powerball it can cause huge financial stress for a family. The Lotteries Commission makes huge surpluses and it’s inequitable that people have to choose their numbers before the results are drawn. Aston Martins for everyone!

Regulating banks to make them act against their best interests isn’t going to fix the credit crisis. As Don Brash noted recently, New Zealand has one of the least regulated banking systems in the civilised world and our banking system is one of those least affected by the current economic cyclone. Let’s try not to bugger that up.

One way not to bugger that up is for politicians to think before they speak. I know that the job of an opposition leader is to utter short words and try and get on the telly – and it probably plays well with Janice from Porirua – but suggesting quack remedies that will further debilitate the patient is a gaffe.

* * Read Bernard Barnton’s NOT PJ column every Thursday here at NOT PC * *


  1. Not PJ: Much financial pain could be avoided if everyone who lost on their financial gambles was compensated.

    Exactly right. I'm still stuck with my fixed rate for another 1.5 years!!! I thought Bollard couldn't be so stupid to lower the rates as he did.

    So I want to have it both ways. Now please.

  2. Berend, the Lotteries Ombudsman would only compensate people who suffered through no fault of their own.

    By betting that the government would soundly manage the economy, you demonstrated very poor thinking. You should be justly punished.

  3. "the Lotteries Ombudsman would only compensate people who suffered through no fault of their own."

    And as the Lotteries Ombudsman would take forever to process my application, I'd be dead and buried a decade before I "got me compo", chalking up yet another glowing govt dept success story!!

    (Based on the interminable experience of dealing with an Ombudsman and her chinless, spineless, humourless fuck of an offsider a couple of years ago). But don't get me started! :/


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