Welfare for bankers. There’s a lot of it about. [Updated]
‘Tis the season to give welfare to bankers. Unfortunately, New Zealand is not immune.
What is Kiwisaver, after all, but a giant welfare scheme for local paper shufflers; the nett result of which is that NZ’s overall level of saving hasn’t changed a whit—just the places where saving is done, and the levels of the taxpayer subsidy for it.
And what is the call for compulsory saving but even more welfare for those same suits with nothing in them—suits who’ve already failed to grow the money they’ve been give voluntarily, so that giving them your money by force just looks like rewarding failure.
Which is pretty much the case with Kiwibank. A bank set up simply to assuage those New Zealanders who are frightened of foreigners—one that gives no returns at all to its shareholders (i.e., you, whether you like it or not), that makes virtually no return on the enormous capital you and I have sunk into it, and on the back of its lower profits has been rapidly expanding its loan book ((by $2.2 billion last year) by propping up the rapidly deflating housing bubble.
And its reward for its dismal return on your involuntary investment of more than $300 million? That’s right: another hit of the same. A promise from Bill English to pour $150 million more of your money down its black hole, just so it doesn’t lose its credit rating.
There is no rational argument for Kiwibank to exist as a state-owned bank, nor for it to keep sucking in more taxpayers’ money just because (with its unprofitable business model) it can’t generate enough itself. There are four other big banks and fifteen smaller ones doing the job banks actually need to be doing without having otherwise productive capital tied up in a bank whose advertising and very existence is based on little more than NZers’ xenophobia.
New Zealand has a small labour force, and it enjoys among the developed world’s worst figures for labour productivity. A primary reason for that is because entrepreneurs have so little capital with which to put labour to work. Yet this government and the last one seem insistent on making the little capital we do have is put to the least productive uses they can find for them.
It makes no sense. But then, xenophobia never does.
National’s decision to use taxpayer funds to prop up Kiwibank’s credit rating ensures not only will this dog remain on the government’s books but also the liability will continue to grow.
Only a few months after considering at least a partial sell-down of Xenophobiabank, the government has decided to give it a credit facility, allowing it to borrow about half a billion dollars more to try to keep the housing bubble inflated.
Massey University banking studies lecturer David Tripe told media the facility was basically a government guarantee that gave Kiwibank an unfair competitive advantage over the other main banks.
But there should be no surprise the spineless National Party has continued to pander to unthinking nationalism and economic illiteracy.
Just as with Kiwirail, that other capital-destroying “investment” made by the previous Labour government, National opposed Kiwibank when it was created.
However, when handed the levers of power it decided to send more funds down this giant black hole for taxpayer money, just as it did with Kiwirail.
Throwing good money after bad is a strategy only governments can get away with for any length of time, because they can continue to thieve from taxpayers to fund the stupidity.
If a private company destroyed this much wealth it would go bust faster than you can say “malinvestment.”
Magnificent! I’d be proud to have said it myself. :-)