Kiwibank CEO Sam Knowles, who owes the existence of the bank he manages to Jin Neanderton’s jingoism and taxpayers’ largesse , was not returning Old Jim or the Labour Party who extracted that largesse any favours at yesterday’s banking pseudo-inquiry.
The pseudo-inquiry is an attempt to position the Labour lightweights as the poor man’s economic heavyweights when it comes to bashing banks. It was ostensibly intended to “investigate claims that banks are not giving customers the full benefit of Reserve Bank rates cuts.”
It was over however from almost the first question.
Knowles was the only banker to show up at the pseud’s inquiry. Asked by opposition Punch ‘n Gro spokesman Clayton Cosgrove whether other banks’ higher rates were evidence that Kiwibank's larger rivals were "rorting Kiwis," Knowles short answer was “No.”
His longer answer , which was probably too long for either Punch ‘n Gro or Neanderton to digest, involved pointing out that if you already have customers (like the bigger banks do) then in order to take those customers yourself (which is what Kiwibank has been trying to do) then you have to offer a better deal. Hence Kiwibank’s lower rates.
And at that point the whole raison d'être of the psuedo-inquiry collapsed in a heap. Only thing was, the pseuds themselves didn’t appear to notice.
UPDATE 1: Banks maximising profits? People say that like it’s a bad thing. But as David Rawcliffe points out at the Adam Smith Institute’s blog,
The argument for profits is so simple as to be trivial: firms, provided they are subject to laws preventing theft and violence [and fractional reserve banking], can only gain revenue by selling things that people want; they can only make a profit if they sell these things for more than they cost to produce; and in the process of production they employ people who prefer that job to any other they could find. That is, profit-making firms create wealth (in the broadest sense of the word) for their customers, owners, and employees. They take wealth from no-one.
FSA chief Lord Turner talks vaguely of the banks failing to be ‘socially useful’. The truth is this: any industry that makes money is ‘socially useful’, in the very concrete sense that it makes all those involved better off.
As you can see, I only needed to add one phrase to make it strictly accurate.
UPDATE 2: Give the state of BERL’s own economic literacy, isn’t it a bit rich for BERL’s senior alleged economist Ganesh Nana to be pointing fingers at the economic literacy of other New Zealanders?
And if it’s true that New Zealanders are more interested in property prices and mortgage rates than another other economic phenomenon, could it be that New Zealanders are simply responding rationally to distorted incentives – i.e., to investment incentives severely distorted by the Reserve Bank’s dictatorship of the money supply and their overseeing of the profligate issue of counterfeit capital – credit expansion (measured in M2) at the rate of over ten percent a year.
Since the dollar in your pocket is diluted every time a new tranche of money is issued, it’s no wonder that NZers prefer a “flight into goods” rather than be left with holding too much of the Reserve Bank’s risky paper.