I got my Kiwibank debit VISA card late last week and I've activated it and had the opportunity to use it over the past several days.
Things I like are:
I can't borrow any money on it. It's not a credit card.
I can use it online like a credit card to buy stuff.
I can use it in ATMs to access my account.
I can use it for EFT-POS transactions.
Overseas, I can use it as a credit card would be used, except I'm spending my own money.
Overseas, I can use it like an EFT-POS card in some countries, like Australia.
Overseas I can use it in any ATM, like my regular ATM card, to get cash.
I haven't found any things I don't like yet.
If you're a Kiwibank customer, it's worth getting one of these, even if you only use it to pay cash for things online, instead of buying on credit. It costs $10 / year to have the card.
I rarely ever have cash in my pocket any more. I'm thinking about cutting up the (potentially mortgage-sized) regular credit card. The features it provided that I couldn't get on an ATM / EFT-POS card can now be had via the Kiwibank debit VISA, without a debt exposure.
I think the 21st century actually started for me over the past 3 months. My pocket-sized iPod Touch is my new PC. The Kiwibank debit VISA is all my daily financial instruments in one bundle. My cell phone is my 3G multi-media bridge. I'm starting to feel like I'm finally living in 'the future'.
Bernard Hickey's "Top Ten Links" Friday included a link to a commentary by Robert Gottliebsen, reporting ANZ Bank CEO, Mike Smith, as calling for the nationalisation of troubled banks in the US and UK.
As well as the obvious motivation so see stability restored to global banking and finance, there may also a desire on Smith's part, as ANZ Bank CEO, to secure the repayment of debt owed to ANZ Bank by any of the insolvent banks he refers to, or their subsidiaries. He may also want to see these banks operating securely to avoid them calling in funds loaned to the ANZ.
But what does nationialisation mean - especially of the existing shareholders get nothing? Who are the existing shareholders?
I'm guessing institutional investors making bets with people's retirement money would represent a big chunk of ownership in the world's major banks. Or did until recently. Maybe they have cut their losses and fled. Or maybe they just moved banking stocks from the "low risk" category to the more risky "dynamic" category. Or maybe the "insane" category.
In any nationalisation process, some thought should be given to whether or not it makes sense to allow exposed pension funds of millions to be trashed entirely. These are the same taxpayers who, in the US and the UK in particular, are expected to fund the bailouts.
Any way you look at this, the blameless people who lost no one anything stand to lost a lot - or everything. Meanwhile the family trusts of the people who forgot about risk and embraced CDS and CDO junk will retire to enjoy their millions and billions.
Something not right there. I'm all in favour of sorting out the banks, but let's understand what that really means for these anonymous "shareholders".
Looks like debts in Swiss Francs going bad in Eastern Europe could make a mess of the Swiss financial sector. The Swiss Franc has long been viewed as one of the most stable around. That reputation has seen the value of currency rising rapidly, making those Eastern European debts even more precarious.
In another interesting development, the Swiss National Bank recently began selling debt in US dollars. This story suggests it is doing this to cover part of the US$60 billion in toxic debts held by UBS, Switzerland's largest bank.
The more you look into the detail, the more all this looks like a bathtub full of worms....
No Right Turn blogs today about a UK bank (Lloyds TSB) who recently received a huge pile of money to bail them out.....and is now attempting to translate that into a dividend for shareholders.
Under the term of the bailout agreement, they supposed to pay back the funders of the bailout first....not their shareholders.
Shameless.
Socialise the losses and privatise the....bailout cash.
How quickly they forget their very recent desperate situation.
Despite early appearances there might be an agreement on the US financial crisis, it now appears party political considerations have taken over and any deal is now in tatters.
Democrats had insisted the interests of taxpayers, who will be funding the bailout, be given priority. This included equity stakes in banks who got the billions and a share of any profits that flowed from the bailout over time.
US House Republicans turned up at a White House meeting convened by President Bush and announced they could not support such a bailout. Objecting to the government having any equity role in the banks, instead they want taxpayers to underwrite an insurance guarantee without taking any equity in the banks being bailed out.
Democrats, who were ready to support a bailout, reportedly felt betrayed and it went downhill from there, to the point were US Treasury boss, Henry Paulson, went down on one knee imploring Democrat House Majority leader, Nancy Pelosi, to not "blow it up". She responded that it wasn't Democrats who had blown it up and Paulson resportedly agreed.
Finger-pointing ensued, including - tellingly - the Republicans accusing the Democrats of trying to rush through a bailout agreement before Republican Presidential candidate, John McCain, could get to Washington and participate in the forming of any agreement.
Hang on a minute.
Is the bailout urgent or not? Why is making John McCain look good suddenly the overriding aspect of any deal to be brokered? Accusing the Democrats of moving too quickly to effect the bailout seems like a VERY odd way to respond to a financial crisis.
The Republicans have no problems with taxpayers funding the bailout, they just don't want taxpayers to benefit by it - apparently on ideological grounds.
Apparently private property is sacrosanct to Republicans unless it's money that belongs to taxpayers. The markets can crash in a heap before they will let taxpayers see value for money.
Meanwhile, today saw the largest bank failure in US history. Washington Mutual, worth over US$309 billion, was taken over by the US government, wiping out shareholder equity and many bond holders. Alongside the big picture, this historic event barely rated a sidebar.
Giant US investment bank, Lehman Brothers, has filed for Chapter 11 bankruptcy under US law after the US Treasury refused to bail it out and no buyers came forward to provide additional capital.
At the same time, fellow giant investment bank, Merrill Lynch, has been bought by the Bank of America, itself a very large investment bank.
Events are moving rapidly and the details are changing by the hour as financial markets scramble to deal with the fallout. Suffice to say, there is going to be a lot of turmoil in the weeks and months ahead as other institutions caught short by the failure of Lehman Brothers find themselves tottering on the edge of the abyss.
I don't profess to be an expert in these matters, but it has been apparent for some time losses from the sub-prime market collapse and the string of dominoes that set tumbling over have been aggregating toward the remaining centres of financial strength. Lehman was one of them and Merill Lynch another, but both have been overwhelmed.
The US Federal Reserve, the US's privately-run, heavily regulated collection of central banks, has moved to over funds for equity to firms who need cash. In effect, they are a buyer of last resort for financial firms who would otherwise fall over for lack of capital from any other source.
We live in interesting times....and with elections in New Zealand, Canada and the US only weeks away, the calculations will be furiously worked and re-worked in the days and weeks ahead.
How interest rates can avoid going up is hard to see. With risk now arguably greater than for a very long time, reducing interest rates would look like walking naked in a blizzard.
Kiwibank is going from strength to strength having announced a $36.m profit for the past year. That's up 19% on last year and Kiwibank says that is actually an 82% increase due to changed rules requiring last year's profit to be restated.
I moved my accounts to Kiwibank a few days after the ANZ, who I have dealt with for 23 years, announced they were sending 500 back office jobs to India.
Bad enough we are now scorched earth for manufacturing, but to loose clerical jobs to India in large numbers would ultimately gut our economy.
One of the interesting things I learned while working at IBM a few years back was that banks make 80% of their profits from the top 20% of their clients. In those days, they made mothing at all from the bottom 20%. Hence the move to much higher bank fees. For a huge chunk of relatively low-income banking customers, those fees are the only profit the bank makes from dealing with them.
This triggered the move toward setting up Kiwibank. It was essentially intended to offer banking services to that botttom 20% (and anyone else) who want banking with lower fees. It was also intended to exert downward pressure on the fees other banks could charge without losing customers.
Having spent 6 months in Canada last year "enjoying" the much higher banking fees they pay to their large banks, the value of Kiwibank to every NZ banking customer - whether they deal with Kiwibank or not - is very obvious to me.
Jim Anderton is challenging political parties to take the pledge not to sell Kiwibank. Good on him. Kiwibank is one of Anderton's best ideas ever, in my humble opinion. I'm now a Kiwibank customer and glad to be a part owner through the Crown.
National's Finance spokesman, Bill English, was recorded saying the National Party would sell off Kiwibank eventually.
It's one more sign that the National Party voters loved to hate in 1999 hasn't gone away, it's gone undercover.
Kiwibank has been hugely supported by Kiwi since it was founded. It has served to keep the hugely profitable Australian banks operating in New Zealand from raising their banking fees - saving us all, collectively, hundreds of millions of dollars. Kiwibank also has a higher ratio of deposits to loans and is therefore arguably more stable. From every perspective, Kiwibank has been a roaring success.
It says a lot about how ideology counts for more than reality in the National party that they see no good in these things and would prefer to sell Kiwibank off - mostly likely to a foreign owner.
You begin to wonder whether the National Party is misnamed. Perhaps they should be called the "Foreign Bank and Insurance Company Party".
The Telegraph reports the Bank of international Settlements (BIS), "the world's most prestigious financial body", is warning of a global depression caused by the credit bubble of recent years.
Individuals and businesses are borrowing far too much money and taking too much risk. A system already at risk of further major default is thus close to a situation where the last straw, a "tail event", might break the camel's back.
Of particular concern is what has been going on in China. I have to admit that I have not followed financial events there closely. The BIS says:
"The Chinese economy seems to be demonstrating very similar, disquieting symptoms," it said, citing ballooning credit, an asset boom, and "massive investments" in heavy industry.
Some 40pc of China's state-owned enterprises are loss-making, exposing the banking system to likely stress in a downturn.
It said China's growth was "unstable, unbalanced, uncoordinated and unsustainable", borrowing a line from Chinese premier Wen Jiabao
That doesn't sound too good at all. Clearly the situation as described is not sustainable should it remain that way.
The US Federal Reserve, (the US central banker), in particular, gets a whack:
In a thinly-veiled rebuke to the US Federal Reserve, the BIS said central banks were starting to doubt the wisdom of letting asset bubbles build up on the assumption that they could safely be "cleaned up" afterwards - which was more or less the strategy pursued by former Fed chief Alan Greenspan after the dotcom bust.
It said this approach had failed in the US in 1930 and in Japan in 1991 because excess debt and investment built up in the boom years had suffocating effects.
While cutting interest rates in such a crisis may help, it has the effect of transferring wealth from creditors to debtors and "sowing the seeds for more serious problems further ahead."
The BIS says the trading position of the United States is also perilous with a huge current account deficit equivalent to 6.5% of GDP
a rise in US external liabilities by over $4 trillion from 2001 to 2005, and an unpredented drop in the savings rate. "The dollar clearly remains vulnerable to a sudden loss of private sector confidence," it said.
Is money hard to get? Apparently not. Bankers have found new ways to get around credit risk by passing it off to third parties who may or may not realise the level of risk involved:
The BIS said last year's record issuance of $470bn in collateralized debt obligations (CDO), and a further $524bn in "synthetic" CDOs had effectively opened the lending taps even further. "Mortgage credit has become more available and on easier terms to borrowers almost everywhere. Only in recent months has the downside become more apparent," it said.
That last comment must mean one of the monkeys removed the hands from their eyes long enough to accidentally see some evil.
With that in mind, where is it all heading? The BIS looks at how sustainable many of the private equity transactions / mergers are given they levels of debt taken on assumed credit would remain cheap.
Mergers and takeovers reached $4.1 trillion worldwide last year.
Leveraged buy-outs touched $753bn, with an average debt/cash flow ratio hitting a record 5:4.
"Sooner or later the credit cycle will turn and default rates will begin to rise," said the bank.
"The levels of leverage employed in private equity transactions have raised questions about their longer-term sustainability. The strategy depends on the availability of cheap funding," it said.
That may not last much longer.
That's the bad news......and there is nothing any political party in New Zealand can do about it, whatever way it goes. Increasingly, this looks like a dumb time for tax cuts.
I should have known when I read Poneke's tale about the cafe at Karori Park that I would not escape my own brand of torture.
We discovered that since we paid off our mortgage with the ANZ Bank, they have been charging fees like a wounded bull.
$1 per cheque. That's $4 for four cheques. 60 cents for each eft-pos transaction. That's $41.40 for 69 of them.
There were over $50 in bank charges for a 3 week period beginning April 22nd.
To put this in context, we have not paid bank fees for most of 20 years. When our home loan was paid off last month, we were not asked what account we might like or communicated with in any as to any change of status with respect to our account. What has happened has been a change without any advice or notification. Maybe the Terms & Conditions allow for this sort of thing, but you would think at least one customer service brain cell might realise this wasn't a good way to treat a longtime customer.
The fees we are currently being charged do not conform with ANY ANZ account fee schedule I have been able to locate on their web site. All the transactions we are being charged for should be free or cheaper. So on Sunday I sent a "SecureMail" via the ANZ Internet banking web site asking why this was the case. I have reservations about e-mail for this as I know how it works: someone sees the first two words, bangs you into a some slot that isn't appropriate, then chalks it up on the daily stats as "Job done!" and off to lunch they go.
I got a reply today. As I suspected would happen, whoever read it, saw "mortgage" and fired back directing me to the Home Loans department about my home loan. They hadn't actually read my note.
I responded saying "I DON'T HAVE A HOME LOAN" and asking them to answer the question I had put. I felt bad using caps, but they had completely ignored this when I said it in my first note. I should have just phoned. Silly me. I'll phone them tomorrow anyway. I knew better and made the mistake of trusting.
We're moving everything to Kiwibank anyway. The savings are already there, just a few automatic payments to migrate and we can ditch the ANZ for all transactions. But I want my $50 back.
I've been using ATM banking machines since roughly 1977/8. That's 30 years worth. I've used them every place I've been since then, including Canada, Australia, the US, Singapore, Malaysia, Taiwan, Hong Kong and more.
In the Canadian province of Ontario, the banks have allowed 3rd-party ATMs operated by no-idea-who. Presumably the mafia. Probably the mafia! One fine day last year, while working in Toronto for several months, I found my (Canadian) bank account frozen. A message had been left for me to come to the branch with two pieces of ID if I ever wanted to access my money ever again. Being Canada, where bureaucracy REALLY is out of control (NZ is a paradise by comparison) the provincial health card photo-ID I carried wasn't valid ID for banking, but the photo-free federal SIN card is. Never mind the photo on the health card matched the photo on my Ontario drivers license.
Why did they freeze my account? "I don't know, sir. There may have been security concerns." Oh.
They don't explain why they do these things because they would then have to tell you that some criminals got hold of your banking details from the 3rd-party ATM records when you got that $40 cash out of the ATM in the pub the other night. Why do they have these Mafia-driven, non-bank ATMs all over the place? Because EFT-POS services ("Interac") in Canada are still at a quite primitive level of implementation as compared to New Zealand. New Zealand is 2nd to no one in the banking area from my experience.
You know how we can deposit money easily and simply into each other's accounts to pay for stuff? Not in Canada. If the other person isn't an account holder at your bank, you have to use "e-mail Interac" at C$1.50 a throw.....and it's ugly. There is NO way to perform an overnight transaction between banks. They want your money for 5 working days. Don't get me started on Canadian banks. Hmm. too late.
Despite ALL that, I've never ever had an ATM actually rip me off. If I asked for $40, they gave me $40.
Until now.
The "Quikcash" machine on level 4 of Glenfield Mall gave me $20 when I had asked for $40 and gave me a receipt for $40 and debited my account balance by $40. Whoa! My ATM rip-off "cherry" had been popped loud and clear for all to hear.
I looked closer at the machine. It was a "Diebold". The same Diebold that has been at the centre of great concern in American elections. The "Two votes for George, one vote for his opponent" Diebold.
Looking at my sole $20 note....it was clear to me they can't count money either.
For the record: I went down to the Kiwibank branch, filled in a form, gave them the receipt, and 2 days later they credited my account with $20. So NO BIG DEAL......but still a crossroads of sorts had been reached. My life will never be the same.
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