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Finance companies – a graphic explanation

Written By: - Date published: 2:48 pm, July 24th, 2008 - 54 comments
Categories: economy - Tags:

With the collapse of Hanover Finance, the 25th finance company to go under, Hanover co-owner Mark Hotchin has declared ‘the finance companies’ model is broken’. Here’s an illustration of that model:

I think they went wrong at step 1. Of course, as always, it’s the schmucks who lent Hotchin and Watson the money who lose out. Meanwhile, construction work on Hotchin’s $30 million mansion continues.

54 comments on “Finance companies – a graphic explanation ”

  1. T-rex 1

    Might work better with a white background?

    I don’t think step one is part of their model in reality.

    It’s actually

    Step 1: Trust house prices will go up really fast for 4 or 5 years, long enough to make it look like you’ve made huge profits on paper so your depositors won’t complain when you draw truly obscene ‘fund management’ fees.

    Step 5: Realise that all your paper gains were actually a crock, and watch company fall into receivership. Cackle over the fact that your ‘fund management fees’ are not a company asset, flip your investors the single finger salute, and move to hawaii.

    ‘Silly’ and ‘Schmuck’ – yeah.

    ‘Greedy’ though is perhaps a little harsh. People are told all day and all night to invest in their future and plan for their retirement, and these finance companies have been largely unquestioned until they all started falling over.

    Despite being a liberal at heart, I think the government should try to protect people from their own stupidity. Problem is that whenever it does it’s accused of being a ‘Nanny State’.

    Govt: “Hey, dude, don’t stab that knife into your hand, it’ll hurt”

    Family First supporter: “THE GOVERNMENT IS INTERFERING WITH MY FREEDOMS!”

  2. yeah, greedy is harsh but this is all a bit of a reflection on the babyboomer mentality. They’ve had it all their own way since they were teens – policy and the economy has moved to suit them for decades (hell, who is the Cullen Fund for?) – and the gimme gimme attitude saw them get into property speculation directly or indirectly because they expected high returns and didn’t think risk applied to them. Of course, they were all betting that each other would keep on betting more, so it came falling down in the end.

  3. MikeE 3

    Just out of curiousity, if say Kiwisaver funds were invested in such a scheme would they still be consdiered greedy?

  4. MikeE. Not worth the hassle of your ilk running distraction, I’ve removed the word.

  5. Matthew Pilott 5

    Well MikeE, if someone invested retirement funds in get-rich-quick investments, wouldn’t the answer have to be yes? If KS fund managers are doing this with, say, more than 20% of their fund, I’d like to know who, so I know which funds to avoid!

  6. Another one bites the dust, but Aunty Helen won’t worry as the big bad wolf can’t blow her house down.

    Edit – I meant houses and I do huff and puff.

  7. T-rex 7

    Matt – Look at the Aussie managed funds.

    Avoid ALL of them! I ticked the big ‘ol conservative box. I don’t mind taking risks, but I’ll do it myself so I can see what’s going on rather than trusting some asshole fund manager who “just wants to get out before it all comes crashing down”. The quote is from a couple of traders in the UK… though I think they had “house of cards” in there somewhere.

    Always thought that was a bit unfair… houses of cards are built on solid design principles and are quite sturdy really!

  8. T-rex 8

    That’s erie d4j, Lukas was right, you and Trav do sound just the same!

  9. higherstandard 9

    SP – T-Rex

    While I pretty much agree with you wholeheartedly, I think there is substantive room for some regulatory body or regulations regarding disclosure from these companies – if you looked at a large portion of the investors you’d see elderly who probably thought they were doing the right thing and believed their money was as safe as being in a bank.

  10. T – Rex be well warned there is only one dad4justice!Who the hell is Trav or Alex Burns that cost me two months !!!

  11. T-rex 11

    HS – Every such company is required to make available an ‘Investment Statement’, which details how they’ll behave etc etc. The thing is that something like ‘risk’ relies so heavily on a value judgement that it’s almost meaningless in such a form.

    I can’t see how it could be regulated without the govt being, probably rightly, accused of undue meddling.

    Sueing all the directors for negligence (for which they CAN be held personally liable) would be a very, VERY good start in my opinion. Off you go people, if you lost money in a finance company and you’re not pursuing a personal liability claim you should get on it.

  12. You must be a lawyer T-Rex.As you know it’s very expensive and time consuming trying to sue for negligence ( thank you Minister of Courts Rick Dumb Bell).Lawyers always like meandering civil cases!~!

  13. T-rex 13

    No, I’m not. But fair point.

    Ok – better idea – “If you lost money in a finance company and you’re not getting a mob together to lynch the directors and demand they return the money they made through directors fees then get on it”

  14. I just love those cartoons. Especially the rabbit and the piggybank.

  15. Agreed T -Rex, hang em high, hang em all.

    Edit ; Steve – I like the bottom cartoon as I am sure its the good Doctor Caustic Cullen in the vault?

    Whats up Doc ?

  16. T-Rex basically got it right in his first post. I would add:

    (1) It seems to me that in step 2, the finance companies didn’t actually need to offer terribly high rates due to many NZers’ low financial literacy, and didn’t. Part of the problem was that the rates didn’t reflect the risk, which in turn mean that the warning signals weren’t there. I was happy to hear Diane Crossan on NatRad today outlining steps to increase the teaching of financial literacy in schools. Why has it taken so long?

    (2) Where’s the National Party on this? We do need better governance requirements, oversight, etc in the financial sector, but the neo-liberals prefer wild-west light regulation and don’t give a damn about the “schmucks” as you call them.

    (3) I blogged on this yesterday.

  17. Draco TB 17

    …the finance companies didn’t actually need to offer terribly high rates due to many NZers’ low financial literacy, and didn’t. Part of the problem was that the rates didn’t reflect the risk,…

    I’d say that, due to low financial literacy, NZers don’t equate high returns with risk at all.

    I was happy to hear Diane Crossan on NatRad today outlining steps to increase the teaching of financial literacy in schools. Why has it taken so long?

    Definitely something that’s needed. IMO, a significant reason why a lot of people are poor is because they don’t understand the financial system.

  18. vto 18

    I am heavily entangled in this area. Your assessments imho are in the vicinity but wobbly. A few two cents’s..

    Investors should do their homework more. I borrow from these organisations, and I warned my own parents about investing in them (and they are so very thankful now!). It was well known what the business was – borrow from the public at say 9% and lend to others at say 15%. It was not hard to find out where and what the finance companies lent the money to. Generally more risky property ventures (not overly risky, just more so). The question each person that invested in these outfits should have asked is: Would I put my own money directly into these property projects that these outfits lent my money to? If investors had asked that particular question they would have, I reckon, said NO lets put our money elsewhere because that development is too risky for us.

    So, why was that question not asked? Financial advisers who advised Bridgecorp Hanover etc and got a heavily conflicted commission? Lazy investors who saw an extra 2% per annum and couldn’t be bothered reading the prospecti? That question is for someone else to answer.

    Now its a stampede. Immensely simple equation here – if everyone asks for their money back, who then is re-investing to enable that money to be paid back? Answering against the stampede now – if everyone had remained calm and kept investing in the same manner as before and getting their 9$ per annum then this would not have happenned. So, investors in dorchester provincial hanover north south east west, you are the author of your own demise. But go against the herd at your own risk … hence the strain to be at the front of the queue (should I dare mention pulling your money from the foreign owned banks Westpac, BNZ, ANZ, ASB, etc? it doesn;t bare thinking about that particular consequent calamity)

    The owners and operators of these finance companies were generally prudent wise business folk who got caught up in things as much as anyone else. Don’t go looking to them personally for reimbursement – that shows huge naiveity and immaturity. The limited liability company was created to allow people to take business risks without putting their personal position at risk. This creation, back in the 1700’s, is more responsible for the comfortable state of the mostly western nations who have made use of the limited liability company than almost anything else in subsequent history. But it obviously comes with a risk. One of those risks has just come to fruition.

    If I can be brutal to all those caught – grow up.

    (but that doesn’t help those whose life-savings are now gone. sad very sad. if its any consolation we are about to be donged on the head too)

  19. milo 19

    First time I’ve seen a documentary in cartoon format. Well done.

  20. Brownie 20

    Steveo,

    One point, mate and its a bit technical but what the hell.

    Hanover has not gone under YET. They have placed a moratorium on repayments which is quite a bit different. It doesn’t mean that all is lost at this stage ( though admittadly it is shakey).

    I have been in the industry (property and development) and know full well the place that second tier lenders occupy. Granted it is riskier however the rewards are generally higher than, say, the banks.

    In good time, people are happy to take the risks and perhaps should do so as PART of a diversified portfolio (I welcome the suggestion of more training in financial literacy for this reason) as it can improve the performance of said portfolios.

    To have a crack at Hotchins is a bit puerile though, steveo. The guy put his bollocks on the line and has created a lot of wealth for ordinary New Zealanders over the past few years. So what if his house is bigger than mine or yours, a great many people have been able to make a lot of money off Hanover and, if he and watson front up with a sizeable chunk of cash to ensure Hanover’s survival, I would be impressed. It is entirely disparate from the likes of Petrecivic who, it looks like was raping Bridgecorp knowing full well it was going down the tubes.

    The current economic situation is largely to blame for this – not how much the guy is “alledgedly” spending on his house.

  21. Positive and ambitious 21

    The punters think a currency speculator/merchant banker will be a ‘safe pair of hands’to run the country. Talk about lack of financial literacy. It’s a pity Watson and Hotchin aren’t politicians, they’d be polling through the roof, they’re much richer (safer pairs of hands) than Mr Key.

  22. (safer pairs of hands)

    Wrong PA, when pretty boy Watson had the blow hard lemons -the Warriors they dropped more ball than safe hands Burnside Rugby Key boy.

  23. Brownie 23

    Dad, suggest that you not only sign up for Financial literacy courses but for ordinary english comp as well.

  24. Great one Brownie, I suggest you got back to sleep. What a mullet.

  25. Hi Steve,

    You might want to have a look a beautiful model for fraud.
    It goes a long way into explaining why John Key and National don’t stand up for what will be a large portion of their voters; middle class mom and pop investors still believing that they too can reach financial independence.

    Slippery John was after all the head of the European department for Bonds and Derivatives for Merrill Lynch. He may very well have been peddling crappy bonds to our very own collapsing Finance Companies or to the institutions that those companies relied on for refinancing. I would sure like to ask him under oath.

    T-rex,

    Still fighting to regain your comfort zone I read. You become smaller and more pathetic with every attempt you make at bullying and stigmatising me.
    It is just not going to happen, let it go. Chill, have a long cold shower or a w*^k or something. Perhaps you should lay of the Standard for a bit and get some fresh air. Your beginning to look a tad obsessed with the failed debunking bit. LOL.

    It is a fact that another finance company just bit the dust so it is very likely people will use the same term.

    You are right d4j there is only one d4j.
    Misogynist and angry to the bone.
    I’m definitely not in your league.

  26. T-rex 26

    /\
    |
    |
    |

    Please stop talking to me.

    Brownie – The point that Hanover has not gone under is a fair one. Freezing repayments is a reasonable action. I don’t even know if I’d go as far as to say it’s even ‘shakey’ – as long as their lending has been reasonable then it’s highly likely all will be repaid in time.

    However:

    1) “Granted it is riskier however the rewards are generally higher than, say, the banks.”

    I haven’t looked at the particular case of Hanover, however most of these finance companies don’t seem to have even come close to paying an adequate level of interest to make up for the increased risk.

    2) “In good time, people are happy to take the risks and perhaps should do so as PART of a diversified portfolio (I welcome the suggestion of more training in financial literacy for this reason) as it can improve the performance of said portfolios.”

    Ya reckon? As above, I’m unconvinced that the return has justified the risk in examples to date. But certainly I accept it COULD be true in future if lenders were more prudent.

  27. Rocket Boy 27

    The sad thing with the finance companies is all the risk is carried by the ‘investors’ and little or no risk is carried by the ‘fund owners’. The Rod Petricevic’s of the world have all their assets in trusts and they can’t be touched. They also help themselves to large management fees all paid for by the Mum and Dad investors who have trusted them with their retirement savings.

    As well as relying on the property market having long term high growth they also rely on more money going in (or staying in) than coming out, it is a house of cards that really only has one possible outcome and that is collapse.

    I do hope that at some stage, someone is held accountable, it is pretty clear that behind the scenes they are aware of the impending collapse of their finances yet still carry on with their ‘safe-as’ or ‘weathered all kinds of storms’ advertising campaigns.

  28. “Misogynist and angry to the bone.”

    How could this be pathetic tulip? FYI my house is home to many ladies.
    What a clog hopper, surely your home land calls for another finger in the dyke.

  29. Brownie 29

    Nice post T-Rex.

    Generally the 2nd tier providers were offering up to 1 – 1 1/2% higher, which is, if you had $250,000 invested is a goodly sum. Taking that on average, every investor in Hanover is ON AVERAGE has invested $37k, it doesn’t sound a lot but 1% of $500m is.

    With regard to your second point, I think that this is the part where regulation could play a role. I think that there have been far to many “cowboys” out there playing fast and loose with other peoples money and, when they tumble, have affected the better ones such as Hanover, in a far more serious way that the situation dictates.

  30. T-rex 30

    “I do hope that at some stage, someone is held accountable” – I wonder if the govt could fund a class action personal liability suit. Would probably be cheaper and more effective than regulation 🙂

  31. With all these finance companies going down and some alleged skullduggery I cannot for the life of me understand why Labour removed the Serious Fraud Office?

  32. d4j,

    I rest my case. LOL.

    T-rex,

    My pleasure. What’s with the arrows anyway?

  33. Brownie 33

    Travellerev.

    What a crap post, full of insinuations that are not backed up by the facts.

    Forget that Slippery has been out of that business for a while, forget that most of the 2nd tier lenders have based their portfolios on property which the Reserve Bank took the acid to.

    I know that my middle class family is struggling a lot harder under 9 years of governance by Labour than someone that hasn’t had a chance to do things his way yet. Its just a fact that most other middle class AND lower class famillies are struggling to. That it has happened under Labour’s watch is a fact.

    Is it all Labour’s fault? No. They can’t help what happens to the world economy.

    So why try to blame Key? You must have taken a leaf from Winston’s book and are trying to paint a picturte without base, truth or evidence and are just sensationalising, trying to create a climate of fear.

    I suggest you take up writing fiction, you seem to have a talent for it instead of trying to debate the issues and offer constructive reasoning.

    If you had your way it would be Aotearoa: The Narrowest Perspective

  34. T-rex 34

    “1 – 1 1/2% higher, which is, if you had $250,000 invested is a goodly sum”

    This is my point right here. That is low. Even for commercial property. For consumer lending it is simply disgusting.

    Current call rates are 8% in RaboPlus – risk ~ very low.
    You’re telling me you think 9.5% is remotely attractive?

    Let’s assume you put 1k in each of 10 banks, and 1k in each of ten finance companies.

    Ok, I’m not going to copy and paste the spreadsheet, but if I get time later I’ll graph it and get Steve to post it up – but suffice to say that at those relative interest rates (and assuming no bank failures), to break even you can have ONE of your finance companies fail every 8 years.

    Over 10 companies, that means an annual probability of failure of 1.25%. Given recent events, I think it’d be pretty hard to argue the true probability is that low.

  35. Looks like something a twelve year old would do. LOL

  36. Brownie 36

    While the interest rates were low, 8% was better that 6.5% and most people can’t afford to buy a commercial property thats why they invest in the likes of Hanover or Goodman etc.

    I see what you are getting at though and accept what you mean.

  37. T-rex 37

    Brownie – don’t bother engaging. Travelerev is an idiot, her ‘facts’ are from videos she spends her whole day watching on youtube.

    She is almost incapable of critical analysis, for example:

    “It is a fact that another finance company just bit the dust”

    Yeah. Except for how it’s not. It’s a possibility.

    If you’re considering arguing the point I suggest you flip through the thread: ‘Taxing Choices‘ to get an idea of the rhetoric and quality of debate you’re going to have to endure.

  38. T-rex 38

    “While the interest rates were low, 8% was better that 6.5% and most people can’t afford to buy a commercial property thats why they invest in the likes of Hanover or Goodman etc.”

    True – and as long as the finance company’s lending is sound then it’s all good. I don’t mind commercial property lending as much, at least the risk is reasonable. Consumer goods lending – forget it.

  39. Moderators,

    While I don’t mind T-rex or anybody else for that matter calling me names or debating me vigorous in person or telling me I’m incapable of critical analysis to my face (they ar entitled to their opinion after all)but I draw the line at his comment telling people not to talk to me and calling me an idiot while doing so.

    T-rex feeling threatened to the point of forbidding me to speak to him and then feeling entitled to interfere with my capabilities to express my opinions and reasons for doing so by calling me names and attempting to stop others from interacting with me based on their own opinions and reasons sets a dangerous precedent.

    I do not tell other people to hate, kill or discriminate.

    I only express at times unpopular opinions supported by links for other people to research so that they can form their own opinion.

    It takes enormous effort and courage to express unpopular views and by telling other people not to engage with me he is bullying not only me but everybody else who has a different point of view from him into not expressing their opinions if they deviate from his.

    I know for a fact for example that there are at least three others commenting here who feel that there are a lot of unanswered questions about the events of 911 yet none of them are forthcoming in what should be an open debate.

    We are involved in a genocidalwar in Afghanistan as a result of these events and laws that limit our freedom have been introduced in its wake in this country.
    The raids on environmentalists, “Anarchists” and on the Tuhoe in the Uruwera’s are examples of the application of that law that come to mind. By the way no terror charge stuck but you don’t read that in the mainstream news.

    John Key’s position and connections in the international banking world need to be investigated and we need to know what the repercussions of those connections might be in case he gets elected. We need to question how and why and about what he is so secretive. We need to debate these issues freely in order for us to be able to decide if we should vote for him.

    We need to ask questions and if strange and contradictory stuff pops up we need to bring it to the fore.

    For example why was John Key meeting with Tame Iti in mid August in a remote Marae in the Uruwera’s only accompanied by to other Maori’s and only two months before the 15th of October raids if Tame Iti was allegedly involved in a plot to assassinate him?

    If people want to challenge me on info like this than it does not behove T-rex to call me an idiot and to tell people with me not to engage with me. If he wants to partake in the discussion he should do so based on reason not on slander.

    Telling other people not to talk to me and calling me an idiot to others is against all netiquette and as such I call upon you to take your responsibilities as moderators and help all your commentators to take part in these debates without fear of ridicule and bullying. Even, in fact especially, the ones who express unpopular opinions.

    The killing of free speech starts after all when one person tells the other to stop expressing him or herself and more often than not it is those with unpopular opinions who get told first.

  40. T & T. Can you two just cut it out? Just don’t converse, it’s not going anywhere, plenty of other people to talk directly to.

  41. T-rex 41

    I no longer have any interest in conversing.
    I’m just passing on to Brownie the advice that Bill Brown gave me several weeks ago and I wish I’d taken – what a waste of energy.

    Travllerev is a complete hypocrite, as anyone who does a modicum of research can easily discover for themselves, and her reasoning is atrocious.

    Bronwnie is free to do whatever s/he wants, as is everyone else. I’m just trying to give them the benefit of my UNBELIEVABLY frustrating experience.

  42. Sorry Steve,

    Not good enough, there is a principle at stake here. I do not tell people who to converse with,T-rex does.

    You took on a responsibility when you started this blog and allowed for reasoned debate.
    It is your job to make sure everybody who stays within the bounds you set is safe to comment even if the comments do not reflect popular views.

    Allowing one person to tell others not to engage with someone on the grounds that that person is an “idiot” is allowing that person to take over the moderation of your blog. It means T-rex is setting the boundaries of your blog whereas I don’t and telling both of us to “cut it out” is reneging on your responsibility and allowing T-rex to set the boundaries of your blog.

    If you think it is OK for T-rex to behave the way he does then you have just made it impossible for people like me and others who do not conform to T-rex’s opinion and who are capable and willing to stand up to him to engage here safely and with some form of protection against his anger and frustration.

  43. T-rex 43

    I suggest you read this.

  44. lukas 44

    …crikey SP you have a hell of a lot of responsibilities! personally I don’t remember seeing any agreement to that effect though… as far as I am concerned (and I don’t mean this in a bad way) its a dictatorship here… what the Standard writers says goes… unless you are a conspiracy theorist then you will think its the CIA shutting down the debate so they can keep a strangle hold on the oil price…

    [lprent: It is a dictatorship – private property uses that as its general operating principle. However the comment areas are reasonably open for you to have your say. However the same principles apply as a ‘public’ area like a restaurant or pub. You are expected to follow some basic rules listed in the Policy which are designed to make the comments area an interesting place and not a sleaze pool.

    I don’t like trolls, personal attacks, attacks on the posters and a number of other behaviors. Don’t do them and you’ll find me a benevolent dictator. Cross them and you’ll find my bastard personality. In any case I can’t see you having had problems with my alter personality.

    You can argue with the writers with some facts at your disposal – you just can’t attack them.]

  45. Greedy Pig 45

    Apparently the big black hole is Queenstown. In 2004 a travel writer form the Boston Globe called it over developed (“serving only as a warning to the perils of over development”) in 2008 a planning lawyer is telling a zoning change hearing that Queenstowns development potential has “only just begun”.

  46. Greedy Pig 46

    vto says:
    “The owners and operators of these finance companies were generally prudent wise business folk who got caught up in things as much as anyone else. Don’t go looking to them personally for reimbursement – that shows huge naiveity and immaturity.” The limited liability company was created to allow people to take business risks without putting their personal position at risk. This creation, back in the 1700’s, is more responsible for the comfortable state of the mostly western nations who have made use of the limited liability company than almost anything else in subsequent history. But it obviously comes with a risk. One of those risks has just come to fruition.

    If I can be brutal to all those caught – grow up.”

    Lucky you told your parents

  47. Jasper 47

    Hanover has been struggling since as far back as april. They released a one liner “in the current market conditions, we do expect some pressure for Hanover Finance”

    That was in April. However, most people ignored it, Rod Oram told me that I was being stupid, Bernard Hickey told me that I was stupid, and Bruce Sheppard said that he agreed. Of course none of the dailies chose to do anything about it. Must be some pretty financially illiterate editors out there too.

    The likes of Rod Petricevich, and others linked to the 87 crash should have been enough to warn people away from them. Allan Hawkins’ seems to be the major one that people are shying away from as he’s got the stigma of “being in prison” when conversely Cynotech seems to be doing rather well. http://www.cynotech.co.nz/2008_Mid_Year_Report.pdf

    I find it both highly amusing, and ironic, that the majority of people who’ve lost their money with Finance Companies, are the self same people who lost money in the sharemarket crash of 87.
    If those cashed up boomers had in fact increased NZ’s net worth and productivity by investing on the NZX over the past 5 years, the NZX would be sitting around 5000 points, and our companies would have had a boom time.

    People would have made a $4000 gain on a $10,000 investment spread on selected companies. I know I have, but tis only on paper until I choose to sell some off.

    I did make a $8000 gain toward the middle of last year, but not too worried as that’s the swings and roundabouts of the investment game.
    Still, $4000 in 5 years… higher return than from finance companies which is in negative territory now.

    Who says kiwis are financially illiterate? It doesn’t take much to not be so.

  48. Greedy Pig 48

    Off with their heads!!!!!!!!!!!!!.

  49. El_Pinko 49

    “I do hope that at some stage, someone is held accountable, it is pretty clear that behind the scenes they are aware of the impending collapse of their finances ”

    My 6cents….

    Who has to be held accountable?! All the information was there in the various prospecti; its called capitalism; it is undertaken by consenting adults under the premise of Caveat Emptor “Buyer Beware”

    Sometimes it fucks up and people get burnt that is why there is something called a “risk-premium” included in the interest rate which forms part of the difference over and above the base rate. As people have alluded too it is clear that the risk premium wasn’t high enough

    But generally capitalism is pretty good and to quote Peep Show…

    “Oh, and while we’re at it, there are systems for a reason in this world: interest rates, growth – if it wasn’t for the miracle of consumer capitalism you’d all be dying of rotten teeth at 42, it’s not a conspiracy, it’s just common sense, and a little pill with a chicken on it isn’t going to change that. Now: Fuck off!”

    If people thought that the return justified the risk they invested; all those that are now pissing and moaning should be aware of this.

    If you got suckered in by a Gordon Gecko type then you are an idiot…

    The system isn’t going to change so perhaps the best way to prevent this happening again is mandatory financial literacy up until a certain age.

  50. T-rex 50

    Pinko – I love that quote.

    I agree with you except for the following:

    1) The risk premium wasn’t high enough, and the fund managers should have been aware of this.

    2) Caveat Emptor is fine, but relies on transparency. Otherwise it just comes down to trickery. You say “idiots”, but when the companies in question are hiring psychologists to create their marketing material, and the people falling for it have suffered the absence of financial education mentioned earlier it’s not exactly a fair contest. As mentioned in the video above, the names of the funds are totally misleading. If someone puts their money into the “First ranking ultra secure debenture enhanced leverage quantum awesomeness fund” they probably aren’t expecting it to be risky.

    3) I’m not sure mandatory financial literacy will help that much. There will still be suckers, and their will still be theives. Less of them, maybe, and what would be REALLY great is if the increased financial literacy collapsed the ultra-high-risk (unemployed guy buying an impreza wrx fund) lending due to lack of demand.

    We can dream.

    I do think that one thing not often considered is the financial literacy of the lenders. Some of those useless hack finance companies in south auckland probably had little more idea than their investors over what they were doing. Setting up a company to lend out money is pretty simple. Risk analysis is somewhat trickier. However, given they DO assume the responsibility I think they should be obliged to have some fair fraction of their “fund management fee” put into escrow to secure the investors funds.
    If they’re not making bad decisions it won’t matter, and if they are making bad decisions why should it only be their investors who lose out?

  51. Greedy Pig 51

    Whats happened to Bruce Shepard’s blog?

  52. randal 52

    who cares?

  53. Greedy Pig 53

    Shareholders.

  54. Nedyah Hsan 54

    GP

    it’s at businessday.co.nz

    http://www.businessday.co.nz/blog/stirringthepot

    Stupid Fairfacts moving to a non place and keeping that imposter Hickey on the main site~!

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    6 hours ago
  • Community launch marks next step in addressing racism in education
    The launch of Te Hurihanganui in Porirua today is another important milestone in the work needed to address racism in the education system and improve outcomes for Māori learners and their whānau, Associate Education Minister Kelvin Davis says. Budget 2019 included $42 million over three years to put Te Hurihanganui ...
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    6 hours ago
  • Government to consider recommendations on DNA use in criminal investigations
    The Minister of Justice has received the Law Commission’s recommending changes to the law governing the way DNA is used in criminal investigations. The report, called The Use of DNA in Criminal Investigations – Te Whahamahi I te Ira Tangata I ngā Mātai Taihara, recommends new legislation to address how ...
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    8 hours ago
  • Speech to Wakatū Nelson regional hui on trade
    First, I want to express my thanks to Te Taumata for this hui and for all the fantastic work you are doing for Māori in the trade space. In the short time that you’ve been operating you’ve already contributed an enormous amount to the conversation, and developed impressive networks.  I ...
    BeehiveBy beehive.govt.nz
    10 hours ago
  • Speech to Primary Industries Summit
    Thank you for the opportunity to speak to you today about the significant contribution the food and fibres sector makes to New Zealand and how this Government is supporting that effort. I’d like to start by acknowledging our co-Chairs, Terry Copeland and Mavis Mullins, my colleague, Agriculture Minister Damien O’Connor, ...
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    11 hours ago
  • Fast track referrals will speed up recovery and boost jobs and home building
    The Government is taking action to increase jobs, speed up the economic recovery and build houses by putting three more projects through its fast track approval process. “It’s great to see that the fast-track consenting process is working. Today we have referred a mix of potential projects that, if approved, ...
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    1 day ago
  • Papakāinga provides critically needed homes in Hastings
    A papakāinga opened today by the Minister for Māori Development the Hon Willie Jackson will provide whānau with much needed affordable rental homes in Hastings. The four home papakāinga in Waiōhiki is the first project to be completed under the ‘Hastings Place Based’ initiative. This initiative is a Government, Hastings ...
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    3 days ago
  • New Zealand ready to host APEC virtually
    Prime Minister Jacinda Ardern took over the leadership of APEC earlier today, when she joined leaders from the 21 APEC economies virtually for the forum’s final 2020 meeting. “We look forward to hosting a fully virtual APEC 2021 next year. While this isn’t an in-person meeting, it will be one ...
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    4 days ago
  • Revival of Māori Horticulturists
    The rapid revival of Māori horticulture was unmistakeable at this year’s Ahuwhenua Trophy Awards, with 2020 marking the first time this iconic Māori farming event was dedicated to horticulture enterprises. Congratulating finalists at the Awards, Māori Development Minister Willie Jackson said growing large-scale māra kai is part of Māori DNA. ...
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    4 days ago
  • Emergency benefit to help temporary visa holders
    From 1 December, people on temporary work, student or visitor visas who can’t return home and or support themselves may get an Emergency Benefit from the Ministry of Social Development, Social Development and Employment Minister Carmel Sepuloni announced today. Previously, temporary visa holders in hardship because of COVID-19 have had ...
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    4 days ago
  • School sustainability projects to help boost regional economies
    Forty one schools from the Far North to Southland will receive funding for projects that will reduce schools’ emissions and save them money, Education Minister Chris Hipkins announced today. This is the second round of the Sustainability Contestable Fund, and work will begin immediately. The first round announced in April ...
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    4 days ago
  • Farmer-led projects to improve water health in Canterbury and Otago
    More than $6 million will be spent on helping farmers improve the health of rivers, wetlands, and habitat biodiversity in Canterbury and Otago, as well as improving long-term land management practices, says Agriculture Minister Damien O’Connor. Four farmer-led catchment group Jobs for Nature projects have between allocated between $176,000 and ...
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    4 days ago
  • Tupu Aotearoa continues expansion to Pacific communities in Nelson, Marlborough, Tasman & Northl...
    Pacific communities in Nelson, Marlborough, Tasman and Northland will benefit from the expansion of the Tupu Aotearoa programme announced today by the Minister for Pacific Peoples, Aupito William Sio. The programme provides sustainable employment and education pathways and will be delivered in partnership with three providers in Northland and two ...
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    4 days ago
  • New primary school and classrooms for 1,200 students in South Island
    Education Minister Chris Hipkins unveiled major school building projects across the South Island during a visit to Waimea College in Nelson today. It’s part of the Government’s latest investment of $164 million to build new classrooms and upgrade schools around the country. “Investments like this gives the construction industry certainty ...
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    4 days ago
  • Minister of Māori Development pays tribute to Rudy Taylor
      Today the Minister of Māori Development, alongside other Government Ministers and MP’s said their final farewells to Nga Puhi Leader Rudy Taylor.  “Rudy dedicated his life to the betterment of Māori, and his strong approach was always from the ground up, grassroots, sincere and unfaltering”  “Over the past few ...
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    4 days ago
  • Prime Minister to attend APEC Leaders’ Summit
    Prime Minister Jacinda Ardern will attend the annual APEC Economic Leaders’ Meeting and associated events virtually today and tomorrow. “In a world where we cannot travel due to COVID-19, continuing close collaboration with our regional partners is key to accelerating New Zealand’s economic recovery,” Jacinda Ardern said. “There is wide ...
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    4 days ago
  • Speech to Infrastructure NZ Symposium
    Tena Koutou, Tena Koutou and thank you for inviting me to speak to you today. This is a critical time for New Zealand as we respond to the damage wreaked by the global COVID-19 pandemic. It is vital that investment in our economic recovery is well thought through, and makes ...
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    5 days ago
  • Pike River 10 Year Anniversary Commemorative Service
    Tēnei te mihi ki a tātau katoa e huihui nei i tēnei rā Ki a koutou ngā whānau o te hunga kua riro i kōnei – he mihi aroha ki a koutou Ki te hapori whānui – tēnā koutou Ki ngā tāngata whenua – tēnā koutou Ki ngā mate, e ...
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    5 days ago
  • Huge investment in new and upgraded classrooms to boost construction jobs
    Around 7,500 students are set to benefit from the Government’s latest investment of $164 million to build new classrooms and upgrade schools around the country. “The election delivered a clear mandate to accelerate our economic recovery and build back better. That’s why we are prioritising construction projects in schools so more ...
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    5 days ago
  • Keeping Pike River Mine promises 10 years on
    Ten years after the Pike River Mine tragedy in which 29 men lost their lives while at work, a commemorative service at Parliament has honoured them and their legacy of ensuring all New Zealand workplaces are safe. Prime Minister Jacinda Ardern attended the event, along with representatives of the Pike ...
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    5 days ago
  • Additional testing to strengthen border and increase safety of workers
    New testing measures are being put in place to increase the safety of border workers and further strengthen New Zealand’s barriers against COVID-19, COVID-19 Response Minister Chris Hipkins said today. “These strengthened rules – to apply to all international airports and ports – build on the mandatory testing orders we’ve ...
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    5 days ago
  • More public housing delivered in Auckland
    The Government’s investment in public housing is delivering more warm, dry homes with today’s official opening of 82 new apartments in New Lynn by the Housing Minister Megan Woods. The Thom Street development replaces 16 houses built in the 1940s, with brand new fit-for-purpose public housing that is in high ...
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    5 days ago
  • Agreement advanced to purchase up to 5 million COVID-19 vaccines
    The Government has confirmed an in-principle agreement to purchase up to 5 million COVID-19 vaccines – enough for 5 million people – from Janssen Pharmaceutica, subject to the vaccine successfully completing clinical trials and passing regulatory approvals in New Zealand, says Research, Science and Innovation Minister Megan Woods. “This agreement ...
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    5 days ago
  • Jobs for Nature funding will leave a conservation legacy for Waikanae awa
    Ninety-two jobs will be created to help environmental restoration in the Waikanae River catchment through $8.5 million of Jobs for Nature funding, Conservation Minister Kiritapu Allan announced today. “The new funding will give a four-year boost to the restoration of the Waikanae awa, and is specifically focussed on restoration through ...
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    5 days ago
  • New Dunedin Hospital project progresses to next stage
    As the new Dunedin Hospital project progresses, the Government is changing the oversight group to provide more technical input, ensure continued local representation, and to make sure lessons learnt from Dunedin benefit other health infrastructure projects around the country. Concept design approval and the release of a tender for early ...
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    5 days ago
  • Jump in apprentice and trainee numbers
    The number of New Zealanders taking up apprenticeships has increased nearly 50 percent, and the number of female apprentices has more than doubled. This comes as a Government campaign to raise the profile of vocational education and training (VET) begins. Prime Minister Jacinda Ardern and Education Minister Chris Hipkins announced ...
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    6 days ago
  • ReBuilding Nations Symposium 2020 (Infrastructure NZ Conference opening session)
    Tena koutou katoa and thank you for the opportunity to be with you today. Can I acknowledge Ngarimu Blair, Ngati Whatua, and Mayor Phil Goff for the welcome. Before I start with my substantive comments, I do want to acknowledge the hard work it has taken by everyone to ensure ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • New Zealand's biosecurity champions honoured
    Biosecurity Minister Damien O’Connor has paid tribute to the winners of the 2020 New Zealand Biosecurity Awards. “These are the people and organisations who go above and beyond to protect Aotearoa from pests and disease to ensure our unique way of life is sustained for future generations,” Damien O’Connor says. ...
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    1 week ago
  • Tourism Industry Aotearoa Conference
    speech to Tourism Industry Aotearoa annual summit Te Papa,  Wellington Introduction Nau mai, haere mai Tēnā koutou, tēnā koutou, Ka nui te mihi, ki a koutou. Thank you Tourism Industry Aotearoa for hosting today’s Summit. In particular, my acknowledgements to TIA Chair Gráinne Troute and Chief Executive Chris Roberts. You ...
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    1 week ago
  • Supermarkets announced as Government’s second market study
    The Government has today launched a market study to ensure New Zealanders are paying a fair price for groceries.   “Supermarkets are an integral part of our communities and economy, so it’s important to ensure that Kiwis are getting a fair deal at the checkout,” Minister of Commerce and Consumer ...
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    1 week ago
  • Masks to be worn on Auckland public transport and all domestic flights
    Masks will need to be worn on all public transport in Auckland and in and out of Auckland and on domestic flights throughout the country from this Thursday, Minister for COVID-19 Response Chris Hipkins said today. “I will be issuing an Order under the COVID-19 Response Act requiring the wearing ...
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    1 week ago
  • New Zealand signs Regional Comprehensive Economic Partnership
    Increase to New Zealand’s GDP by around $2 billion each year Increase opportunities for NZ exporters to access regional markets Cuts red tape and offers one set of trade rules across the Asia Pacific region New government procurement, competition policy and electronic commerce offers NZ exporters increased business opportunities Prime ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Minister acknowledges students as exams begin
    Education Minister Chris Hipkins has recognised the extraordinary challenges students have faced this year, ahead of NCEA and New Zealand Scholarship exams which begin on Monday. “I want to congratulate students for their hard work during a year of unprecedented disruption, and I wish students all the best as ...
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    1 week ago
  • Prime Minister meets with key ASEAN and East Asia Summit partners
    Prime Minister Jacinda Ardern today attended the ASEAN-New Zealand Commemorative Summit and discussed with Leaders a range of shared challenges facing the Indo-Pacific region, including: The ongoing management of the COVID-19 pandemic; The importance of working collectively to accelerate economic recovery; and Exploring further opportunities for partners to work more ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Veterans Affairs Summit held in Korea
    A Ministerial Summit on Veterans’ Affairs was held in the Republic of Korea this week. Ministers with veteran responsibilities were invited from all 22 countries that had been part of the United Nations Forces during the Korean War (1950 – 1953). The Summit marked the 70th anniversary of the outbreak ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Clear direction set for the education system, skills prioritised
    The Government has released a set of priorities for early learning through to tertiary education and lifelong learning to build a stronger, fairer education system that delivers for all New Zealanders. “The election delivered a clear mandate from New Zealanders to accelerate our plan to reduce inequalities and make more ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • A Progressive Agenda
    Speech to the Climate Change + Business Conference, November 12, 2020 Tena koutou katoa Thank you for inviting me to speak here today. It is great to see us all come together for a common cause: to redefine our future in the face of unprecedented times.  Covid-19 and climate change are ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Wellington Pasifika Business Awards
    Thank you for having me join with you as we celebrate the success of Pacific businesses tonight, and recognise the resilient and innovative entrepreneurs who lead them. Equally important to me is, that we are also able tonight to offer up our gratitude to those leaders who have organised and ...
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    2 weeks ago
  • Commemorative address at Act of Remembrance for Armistice Day
    Tuatahi māku  Ka mihi tu ki a koe Pita E pīkauria ana i te mana o Ngā tūpuna o te whenua nei. Thank you Bernadette for your warm introduction. I would also like to reflect on your acknowledgments and welcome Peter Jackson, Taranaki Whānui; Members of the National War Memorial ...
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    2 weeks ago