If a firm stopped taking deposits last September, and was heavily exposed in the current economic climate to a major loan to a Queenstown property developer, you’d think that might be ringing a few warning bells, wouldn’t you? Yet on 13 January Mascot Finance got Treasury’s nod for entry into the retail deposit guarantee scheme whereby it gets all its failed investments paid out bv the taxpayer, Barely seven weeks later, the taxpayer is on the hook for at least $10 million, and up to $70 million. Prime Minister John Key says that ‘with hindsight’ Mascot should not have qualified for a taxpayer bailout.Duh.
What the hell? Surely the Treasury has been observing the successive collapses of finance companies over the last few years? Why am I as a taxpayer carrying the risk for these Southland bozo’s. As Gordon Campbell points out.
How on earth did Mascot ever qualify in the first place for this gold-plated bailout scheme ? After all, people who invest in finance companies are supposed to accept the inherent risk involved, in return for the higher returns compared to them leaving their money in the bank. The potential for failure comes with the territory. Now they get to keep the returns from these speculative investments if they win, and they get the taxpayer to meet their losses if they lose. Incredible. That’s sometimes called privatizing the gains, and socialising the losses.
I repeat – why am I having to pay for this Southland finance firm? I’d call it “the NACT nanny state for mindless investors”. After all it does seem to be a feature of this ‘free-enterprise’ government, that they take from the poor and give to the affluent. But of course it is a feature of the wingnuts from Act and the right of National. They of course still follow the precepts of the other part of Gordon’s article.
Celtic Tigers, Nordic Tigers
If you want a few minutes grim amusement, try Googling the words ‘Nordic Tiger’ and ‘Celtic Tiger’ these days. What you get are many enthusiastic endorsements of the economic policy in Ireland and Iceland dating from a couple of years ago, and written by the likes of the Cato Institute and other right wing think tanks. Huzzah for the low tax, de-regulated, privatization model that Ireland and Iceland were following ! Before, that is, they went down in flames. These days, the Irish are once again trying to emigrate.
The think tank articles have all the hollow, doomed quality of a black box recording just before an airline crash. We know where these policies are leading to Ireland and Iceland, and Singapore and Taiwan becoming the basket cases of the global economy – but the authors don’t know this yet. Flash forward to New Zealand in 2009, and its as if the news hasn’t reached here yet. Politicians from the twilight zone Sir Roger Douglas, Rodney Hide etc continue to make the same zombie calls for de-regulation, lower taxes and reduced government spending, as if the global financial crisis had never happened.
Yep. Those nutters have been around this blog since its inception and they’re still here. They keep telling us of these wonderful and far away economies. For some strange reason their economies change over time. As they crash one economy then their yellow brick road passes another (soon to fail) economy. For some reason their favourite economies don’t have a lot of resilience in bad times. Probably because they stole the sinews of the state and gave it to their friends. Now of course they want the state to bail out their friends rather than helping the people who actually need help. But then we’ve always known that these neo-liberal ideas were really about the needs of the greedy and selfish..
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