Adrian Orr’s war with the Banks and why it matters
In his book ‘Crisis‘, Former Reserve Bank Governor, Alan Bollard, points out that during the GFC meltdown in 2007/8 we were weeks away from a total crash of liquidity. His memoir and the disbelief he felt when he realised no other Reserve Bank Governor had any idea what the bloody hell a Credit Default Swap was makes essential reading for anyone wanting to understand Adrian Orr’s war with the Banks and how important a battle it is.
Central banks around the world responded to the Global Financial Recession by printing billions and pumping them into stocks and bonds. This falsely created the lowest interest rates in 5000 years. The entire last decade of growth has been built on hope wrapped in snot and Adrien Orr understands this, that’s why he has been demanding the big Banks hold more money to cushion any sudden external shock.
It led to the extraordinary situation recently of ANZ being publicly reprimanded and punished for failing to stick to the minimums alongside withering criticism of John Key’s lacklustre leadership.
Orr knows all to well that if the big Australian Banks (who have recently been outed in an enormous inquiry into the industry’s culture and who were found to be acting like piranhas with the kind of lending ethics reserved for drug cartels) get hit, the first thing they will do without a care is strip their NZ rental franchises of everything to keep the Australian parent banks afloat.
If you think any of the big Australian Banks would look after us over them, you are day drinking and smoking meth.
By demanding the big Australian Banks hold enough cash for the looming economic shock, Orr is closing off an escape rout for the big Banks should the worst eventuate. They are responding with an enormous panic campaign warning NZ mortgage holders that they will ultimately pay for Orr’s meddling.
Orr must stare these threats down if he is to protect NZ over the interests of the banks. Threaten a financial transaction tax or a profit windfall tax which is a tax on top of their profits.
The spectre of the last crash and how close it came to plunging the NZ Shire into Mordor haunts The Reserve Bank, Orr can’t forget that fear as he battles the banks.
I must say the idea that running an economy is something anybody can do without any education or training is absolutely nuts btw. We don’t let a panel of “farmers or union workers” run the Atorneys office, or the High Court.
But the economy? Adrian Orr should be encouraged. I’d rather see a Reserve Bank Govenor fight till the end rather than sit in his chair steering out the window.
Great post!
Go Adrian Orr!
…protect NZers hard earned savings against the OZ banksters
…we dont want to take another bath courtesy of the Australians ( we have already had one cross the ditch this year and create mayhem)
….and while we are on the topic of Australians….didnt Russel Norman and the Greens suggest NZ should print money to solve economic issues ?.
https://www.nzherald.co.nz/wanganui-chronicle/news/article.cfm?c_id=1503426&objectid=11080240
https://www.odt.co.nz/business/printing-more-money-answer
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10839073
(printing money is what the Americans have done ..funny money?…fake money?
‘Keiser Report: A Printing Press on Fire’
https://www.youtube.com/watch?v=q9Kk6BhbbKA
“In this episode of the Keiser Report, Max and Stacy discuss the coming debt crisis that Donald Trump says is fine as he won’t be here when it blows. They also look at comments by Ray Dalio, the founder of the biggest hedge fund in the world, who warns that the US dollar might actually look like the Turkish lira in the next 24 months once the sugar high of tax cuts wears off. In the second half, Max interviews Roy Sebag of Mene.com about the de-dollarization of the world economy which has already begun and why everyone will soon realize that all fiat currencies are just pieces of paper backed by a printing press on fire.”
A year or so ago I read an article describing how the IMF had given two of it’s economists the job of analysing whether there was ultimately any restriction on the ability of banks to issue new money. The answer they came back with was No.
In the existing arrangement the money supply (all debt of course) is limited only by a bank’s assessment of the viability of the investment they are entering into. And increasingly in this day and age that has to be a speculative investment because very few productive investments stack up.
This is only going to get worse as fewer and fewer people have any “discretionary” funds , and most have ever increasing household debt gust to live.
Ultimately this is an unsustainable situation. It should have come to a natural correction in 2008 but the chaos it would have caused prompted the powers that be to do this QE thing to rescue the money system from imminent collapse judging that the terrible transfer of real wealth from the many to the few in so doing was justified by postponing the period of chaos.
Eventually control of the banking system will have to be restored or society will collapse for want of buying power in the hands of western populations , and the want of attractive social or productive investments in the hands of those few with all the money.
D J S
Just more proof that we need to get rid of foreign ownership – especially of business.
A business will always operate for the primary benefit of its shareholders which will always be detrimental to the people and the economy. This applies even more so when the business is majority owned offshore.
Of course, we shouldn’t have privately owned banks anyway. They’re nothing but a drain on society due to charging interest on money that they create ex-nihilo.
The only bank that should have the power to create money in NZ should be the RBNZ. That money could then be loaned out through Kiwibank at 0% interest for businesses and mortgages and spent by directly government.
A-Orr will definitely require Labour’s wrap around services if the market poos itself (or at the very least a mental wellbeing seminar with former pork on seller Mike King) As for new home owners and others leveraged up to the hilt, the prospect of lifetime mortgage negative equity means they should sell now and cut their losses. SELL!