New Zealand Banks told not to reduce fixed mortgage break fees, I say think again


On Page 5 of this morning’s New Zealand Herald I read a story with the headline Stick to guns on fee, banks told. Now I’m the first to stand up and say I don’t understand the banking economy as well as the bankers and the politicians, the educators and maybe even Liam Dann, who says we are all behaving like whingers. No I have bumped into Liam many times over the years and the experiences have all been good, but in my mind something isn’t gelling for me. Maybe he or some others can explain where my thinking is going wrong.

First, we are in a global economic crisis and times are tough all over. I totally agree with Liam’s assertion that when I signed for a fixed rate, I signed a contract which is a legal document saying that I would pay the rate for the period on the contract and it would cost me to break it. The banks are saying that they can’t afford to subsidise the cost, but they quickly gobbled up the guarantees provided by the government to help move the economy.

Now I said at the start, that I don’t understand exactly how the banks work. I know that when I borrowed my $165,000 the National Bank didn’t rush out and borrow that sum, they would have signed contracts for millions at really good rates and my loan would have been part of a bundle which allowed them to hedge for a profit. Now I understand that the Official Cash Rate is a major influencer in mortgage and deposit rates, but a large part of the borrowing by the banks is in other countries where the rates are much lower than ours.

As to becoming whingers, I’d like to ask Liam if he thought (irrespective of the contract that was signed) we were also whingers when we saw the gap increasing between lowering oil prices and the retail price of petrol. It was public pressure that almost overnight reduced the retail price of petrol, people whinging that they thought the profits weren’t fair.

When I took out a new fixed loan of $165,000 I based my decision on the advice of bank staff, even though they were careful to say that I shouldn’t take their information as an official position by the bank, the decision had to be totally mine. But the thing is they did give me advice, and I do accept that no one saw the crash coming. On the other hand the banks also said after the problems in 1987 that they would tighten up their lending criteria, which they have obviously loosened as time went on.

So here’s the thing. While we were all struggling with how to afford our petrol, New York Times International Tribune told us that Shell Oil increase their profit by 33%! They said their profit rose to US$11.56 BILLION! Around the same time The Guardian reported that BP Oil increased their profit to 6.7 billion POUNDS. Liam did you whinge about the oil price?

Businesses have clout. In my world of business, contracts get broken when companies have the power to break them. They sign legal contracts all the time, but if they decide that their supplier is making too much profit, the implied threats come out, saying that they have a choice and even though they have a contract, often it is only as good as the money that a business wants to throw at it to defend it. This is something I do know about it. When you try to defend your contract, you use meet and discuss the situation explaining both parties points of view and try to find a common ground because you need that business relationship. This is called negotiation in my book, although some people might call it whinging.

Now I’m all for businesses making profit, it is essential for their survival and I want my bank to survive, but I want them to be fair too. The NZ Herald themselves reported that while ANZ – NATIONAL took a huge drop in profit, they still made almost $1 billion after tax. That means after all expenses were paid. The NZ Herald also reported TODAY that BNZ’s profit is up 15% on last year, so forgive me if I don’t stop and give them a minute’s silence in respect of their tough times.

So I’m trying to figure out why Liam has this perspective. Here are some things I have heard about or personally experienced about contracts in the last several years: before they

  • A company agrees to buy products manufactured in New Zealand at an agreed fee for a contracted period of time and a contracted price and volume. The buyer then discovers they can buy equivalent product from a Chinese manufacturer and despite the contract and the money the Kiwi manufacturer has invested in staff and plant, breaks the contract and says I can’t continue this deal because the prices were too dear. Never mind that they were already making an extremely healthy retail profit prior to breaking the contrct.
  • An overseas company buys a NZ company complete with its staff and operations and agrees to maintain all the contracts. They then go through the payroll on a spreadsheet and decree that all staff earning more than $X will be made redundant, but can reapply for new positions where the specification might be modified by 5% at a 3rd of what they used to do, irresepctive of their contribution. The good news for me is that they kept the people who weren’t contributing and areas where they made staff redundant and replaced them with people who were prepared to work for way less, reduced profit and revenue by in one case almost 80%. I think that strategy was illegal, but who wants to burn bridges or be seen as a trouble maker or a whinger.
  • I’m sure if you are reading this you know of similar situations where businesses break contracts with other businesses all the time. They get away with it because one business has more power than the other and the losing party either can’t afford the cost or the consequences of fighting for what is right. If you know of cases like this, or indeed if you think I am wrong, please comment on this blog. As long as it isn’t spam or blatant advertising, I will publish your comment.

So here’s the thing. Banks used to be community organisations. You used to be able to walk into the bank and talk to the Bank Manager. They would know you buy name. They would give you advice and show an interest in you. They introduced technology that people said would turn them into machines, and in many cases it did, but the machines were of benefit to the consumer and business, such as EFTPOS (which I helped in a tiny way to introduce), ATM’s, Internet Banking and more. These investments saved them and their customers in time and money, but particularly made the banks more profitable by reducing overheads and staff.

When I first wanted to borrow my current fixed loan from my bank, with whom I had banked for almost 25 years, I actually got a better deal through Mike Pero Mortgages than I could from the bank directly. How’s that for 25 years of loyalty? I had to get a broker to get me a reasonable deal from my own bank!

So I’ve had my whinge Liam. It seems it ‘s ok for businesses to break contracts with each other and to fight for them, but it’s whinging if a consumer, a customer for many years of a bank that is making big fat profits out of their dealings with them, and gets a helping hand from the government which in many cases is as a consequence of imprudent lending, which after 1987 they said they wouldn’t do to expect a little help as well, well I’ll accept the title of whinger.

Just as a footnote, my local grocer is going back to India to look after his elderly parents after running his store here for 24 years. For all of that time, he has shown a real personal interest in every customer, he knows most of them by name. He has helped many of them out if they needed something and didn’t have the cash on them. I won’t go through all the little things he did for local people, but here’s the thing. The supermarket is much cheaper and for many people closer, but they still buy from him and he is selling a highly profitable business. Profitable not because it is a Four Square, or because of his location, but because he cares, because he is a person doing business with people and we as his customers want to do business with him.

If the National Bank doesn’t look after me, perhaps go halves on the contract difference or something that shows that they care about my business, my family and my future business (because I intend not only to be around for a long while, if the creek don’t rise, I won’t be whinging, I will be moving with my feet.

Now I am not wealthy, I live in a very average neighbourhood, far from affluent. Having been made redundant twice and suffered badly as a consequence and having little faith in the government to give me any sort of lifestyle when I retire I am being prudent. I have a small savings account (which has helped my kids from time to time with studies, with medical costs, holidays and other interests), I have a modest term deposit, suffient to cover 2-3 months of income should I be so unfortunate as to be made redundant again as is happening to many people right now. I have a mortgage on my home and a mortgage on my rental property which breaks even without paying a cent off the capital (and of course in recent times means that it is worth less than the loan (but this is for the long haul and it will come right.

Sorry, if I’m rambling, but this post is personal. If the National Bank doesn’t come to the party, I will go back to Mike Pero Mortgages who have looked after me so well in past. I will ask them to find me a new bank that will take over my term deposit, my checking accounts, my 2 mortgages, my Internet Banking, my EFTPOS account, my credit cards and will tell everyone who will listen. Liam, mate, I’m not being a whinger in my book, I believe that people do business with people. We have a choice and I will be looking very closely to see if one of the banks realises that a short term sacrifice will amply pay great dividends in the long run. I suspect that the bank that does this and continues to recognise that their profit comes from their customers will grow and thrive while the others wonder what happened.

Liam, this is starting to sound like I am having a go at you. Frankly I was annoyed to read your column in the Herald today. Factually you are on solid ground, a contract is a legal and binding document. But consumers do have power and if they don’t use it, the corporates or anyone that can will walk right over them. Over recent years Kiwis became so PC (politically correct) that they let everyone walk over them. They thought  people like Americans and Australians were rude if they complained about a dirty coffee cup in a cafe. The contract was for coffee, there was never discussion over the cleanliness of the cup.That made them whingers. Now more and more people are realising that it not just about the contract, it is about standing up for what is fair, ethical, moral and just. The laws of economics are changing and people have a choice.

If anyone is still reading this soap box and agree or don’t with me, please leave a comment and tell me what you think. I would also appreciate you telling other people about this blog if you think it is worthy. Let’s remind the banks and everyone else that those who recognise and respect their customers will in future grow and thrive, those that don’t might be sitting at home reading reading the situations vacant and wondering what happened and thinking how unfair life is.

While this blog is starting to get a good following, I would love to get more readers and encouraging me to keep writing. If you feel that my blog is interesting I would be very grateful if you would vote for me in the category of best blog at the NetGuide Web Awards. Note that the form starts each site with www whereas my blog doesn’t and is of course https://luigicappel.wordpress.com.

Thanks so much for your support:)

WiMax and the end of TV as we knew it


A TV aerial on the roof is something most of us have grown up with. For holiday homes, flats or when on holiday rabbits ears created loads of frustration when they detuned one station as they gave you access to another, but they did mean that you could easily have TV in temporary situations from the batch to the hospital ward. VHF and then UHF aerials are still on most roofs in site, but that is going to become a thing of the past.

The first step is that VHF TV which has been the most common frequency range around the world is going to be switched off as governments in many countries reallocate those frequencies to WiMAX. This will be happening next year in many parts of the US a week or so after the Super Bowl.

Downunder in New Zealand we continue to lag some of the new advances and the VHF frequencies will be available to the TV stations until 2015. It will be interesting to see whether they are still needed for that long given that Satellite TV in the form of Freeview and Sky are already used by 55% percent of the population.

How can they do that? Don’t we need free to air TV? We aren’t necessarily losing it. In New Zealand the free to air TV stations are moving to Freeview, which is pretty much satellite TV with less channels and the only cost is the set top box and the satellite dish. This overcomes most of the issues about poor reception and providing reception to remote areas. But of course it bodes the end of little portable TV’s, but then you can now watch Sky TV on your phone with 8 channels for $2.50 a week, so maybe it is just a change of medium.

So what’s so special about WiMax? Nothing really except that it provides much geater range (up to 50 km for fixed stations and 5-15 for mobile) than the traditional 802.11 wireless networks, can povide much greater speed and when networks are built you can use it in your car. This sounds crazy but it’s really just a follow on from the systems used in large warehouses and buildings first created by Symbol, which pioneered many of the features still used today including frequency shifting for security and handover from one access point to the next as people moved around a building complex. In fact it is not only coming head on in potential competition to mobile cellular but telecommunications networks such as Sprint and Nortel are racing to get frequencies ad become the preferred supplier of 4G networks.

According to Computerworld’s Juha Saarinen, Telco’s in New Zealand are ‘squatting’ on some of the frequencies to prevent 3rd parties to spoil their fun in the 3G networks as they roll out new technologies to increase the speed of the cellular mobile network which is much easier to control and to derive plenty of ARPU (telco’s main measure of success Average Revenue Per User). If WiMax offers higher uploandand download speeds and efficient handover when required, then many people in urban areas might be less interested in WCDMA?

What could they be afraid of? Free access, and they should be afraid. Nottingham Trent University is trialling a network which will give free access to everyone in the city. There are free WiFi hotspots all over Europe, 154 free sites just in the Netherlands. Then there are free Mesh Networks, but that’s yet another story.

While this blog is starting to get a good following, I would love to get more readers and encouraging me to keep writing. If you feel that my blog is interesting I would be very grateful if you would vote for me in the category of best blog at the NetGuide Web Awards. Note that the form starts each site with www whereas my blog doesn’t and is of course https://luigicappel.wordpress.com.

Thanks so much for your support:)

They said it would never happen, a Black President


I find myself feeling deeply moved. I am not an American, I am caucasion born in Holland and a New Zealand citizen. This is a day that noone dared believe could ever happen, definitely not in my life. I am watching people on TV with tears in their eyes talking about their lives. Talking about going to places that had 3 toilets, 1 each for men, women and blacks. Talking about how the White House was built by slaves.

I am seeing people of all races and colors crying tears of pride and joy. This is a great day for America and a great day for the world. Barack Obama is President of the United States of America, possibly the most powerful man on the planet.

John McCain really impressed me with his gracious speech, saying that while he was dissapointed that he lost, that this is a victory for America, a victory and demonstration that in America anyone who aspires to, can be anything they want, even President. In the past when people said that, in their hearts they didn’t really dare to believe it was possible. There were several people amongst his supporters who were angry and frustrated. I hope his speech helps diffuse a situation that in some parts of the US, could lead to a backlash.

What is also amazing is that I am sitting in my living room watching Obama as he walks out with his wife and daughters at Grant Park waving to an adoring emotional crowd. I am seeing history as it happens. “They put their hands on the arc of history and bent it the other way a little.”

The blogs are already up and Twitter has been going nuts with people tweeting of their joy and hope for a better America and a better world.

What comes next. Will the McCain States turn their support to Obama and unite America as the most infleuntial democracy in the world? I sure hope so. This is bigger than man on the moon.

If ever there was an example that anyone, anyone can be anything they want to be, this is it. It is a grand salute to those who protested, marched, sang We Shall Overcome, they now have.

And through today’s technolgy, I saw it happen when it happened.

While this blog is starting to get a good following, I would love to get more readers and encouraging me to keep writing. If you feel that my blog is interesting I would be very grateful if you would vote for me in the category of best blog at the NetGuide Web Awards. Note that the form starts each site with www whereas my blog doesn’t and is of course https://luigicappel.wordpress.com.

Thanks so much for your support:)

The collapsing world economy


I recently blogged about what happens when consumers can’t buy anymore and predicted trouble for the retail industry and retail finance, specifically mentioning GE Money. At the end of this week, announcements have been made about GE Money laying off staff in several countries around the world including Ireland, Australia, and New Zealand.

Honda’s Musical Road


This afternoon I was driving back to the office after presenting at the Intergraph Forum in Auckland and listening to the Car Tech Podcast from CNET, which was excellent by the way.

They had some really interesting stories including Nissan signing up to a system where your mobile phone is your key to get into the car and even start it, but that’s another story.

One that tickled my fancy was that Honda, as part of a promotion for their new Honda Civic in the US, cut grooves in the road, not dissimilar to the grooves on a vinyl record. The grooves are similar to the ones you sometimes find on a freeway to let you know that you are easing out of your lane. These grooves were cut in such a way as to play The William Tell Overture, optimised for a Honda Civic Driving at 55 Miles Per Hour.

Honda has long been known for its innovation including their internal competiton for making novel cars. One of my favourites years ago was the one that had a spa pool in it. Not sure how it handled on corners though.

Anyway, if you are in Lancaster Calif, don’t bother looking for it as they have painted over them. As you can see in the video, could be a bit dangerous if you had someone coming the other way wanting to play it in reverse.

This is great ingenuity from someone in Honda.

I wonder if they could do something like that to warn people that they are going to fast. Perhaps a Beethoven’s fifth with the last not flattened.

What sort of radio do you want in your car, HD or Satellite?


In the US, the debate is on as to whether the new in car entertainment systems should include both HD and Satellite radio. The main thing that HD Radio will bring is greater quality in the signal and potentially more information about what you are listening to. Of course the quality does require that you have a good signal and in a country made up of volcanic rock in many places, the signal may not be great, so it may be that dropout still occurs in places.

I’m all for quality and given that you are sitting between the speakers, track separation and stereo effects are often more enjoyable than listening to the stereo at home. On the other side we already have RDS and certainly in New Zealand until recently most stations have only broadcast their station ID on RDS. ZM is one of the few that have given us some service. On the odd occassion that I do listen to the radio, it is my favourite so I can find out what the track or band is that I am listening to. With distraction laws coming, it could be that the driver will not be permitted to see more than that anyway.

They mention being able to view Real Time Traffic information on HD Radio. This is really just hype. You can already get LED displays for RDS TMC, but the reality is that the messages about traffic come from 1590 different categories and the sheer volume, without it being disseminated for car navigation relevance would make it just one more distraction. You don’t need to know that there are 63 sets of road works on the other side of the city do you?

They have been testing HD radio in New Zealand for quite some time, so I guess it will be here commercially before to long, and just like HD TV which is being pushed aggressively right now, it will generate more business for appliance stores. Of course many cars these days come with custom dash setups and there are no DIN Slots (the traditional cavity in your dash where you can mount the car stereo of your choice, rather than the cheap and nasty one the car manufacturer installed to keep costs down. So for many of us there is really no choice.

I hardly ever listen to the radio at all any more. I use my car stereo to receive podcasts from my iPod so that I can choose what to listen to, rather than 47 versions of the same stations of Classic Hits, Talk-back and Hip Hop / R&B.

Satellite Radio is a different story entirely and I would expect local stations to be very worried about this, because it really gives people serious choice as to what they want to listen to. When I was in Florida last year, the shelves in the appliance stores where full of digital radio receivers.

Satellite gives you choice and in fact some of the podcasts I listen to are US shows that I have downloaded. Channels such as Sirius and XM offer listeners the ability to listen to what they want to, when they want to. These 2 stations on their own offer 300 channels to choose from. Want to listen to some BeBop, go for it, now you want some Lounge, there it is on your dial. Just like with podcasts, very soon you will be able to catch up with your lectures or pretty much anything you can think of. This will be a serious threat to local stations who will have to come up with some great ideas to keep people tuning in so that the advertisers will keep paying.

Just like cable TV, many people will be very happy to pay a subscription for advertising free radio. If ever there was a threat to the music store, this is the next one. But it is radio and royalties will be paid to the artists, so ultimately it is only the radio stations that have in many cases taken us for granted that will suffer.

If consumers have their way, once they understand the options, your new car entertainment system will feature both HD and Satellite. It will be interesting to see what the radio stations will do to keep you listening to them. Maybe they will listen to what you want instead of resting on their laurels. Now that would be interesting wouldn’t it.

What happens when the water rises in Auckland


After writing my blog on New Orleans yesterday, I reflected on our own position. I live on Auckland’s North Shore and when I drive the motorway to the Auckland Harbour Bridge and there is a king tide, the water almost laps onto the verge of the motorway. If the sea rises a metre, the water would frequently run accross the motorway itself. If that rise becomes permanent, Auckland, we have a problem.

Auckland is a problem to me because I live there, but the same applies to areas such as the main entrance into Wellington where a whole stretch of road runs along a coast which frequently has heavy seas. Only recently State Highway One was closed because of waves crashing on the shore near Paekakariki in one of the storms which have now become commonplace in New Zealand.

New Zealand is an island nation, surrounded by sea. Much of it is well above sea level, but many areas are not that high at all. In fact, with our passion for the sea, a large percentage of our population lives close to the sea.

We watch with interest as the Pacific Island nations start to consider the possibility of having to leave their ancestral homes. We have even started planning to take on refugees from the Islands when some of them are forced to evacuate, most likely forever, but I see very little evidence of preparations for the seemingly inevitable, when the sea encroaches on our roads and homes. How is it that we seem to have so little forsight? What are the government, Transit and the councils doing to make sure that we are able to continue life as usual when the ice shelfs drop and the polar ice is gone?

While this blog is starting to get a good following, I would love to get more readers and encouraging me to keep writing. If you feel that my blog is interesting I would be very grateful if you would vote for me in the category of best blog at the NetGuide Web Awards. Note that the form starts each site with www whereas my blog doesn’t and is of course https://luigicappel.wordpress.com.

Thanks so much for your support:)

Will New Orleans be the first major city to be abandoned because of Global Warming?


Climate change is occuring at a faster pace than anyone anticipated and the evacuation of New Orleans for the 2nd time as a consequence of Cyclone Gustav could portend the first city that is changed or even abandoned as a consequence of global warming.

We have known for some time that some of the Pacific Atolls could end up under water (what about parts of Hawai), but I don’t think anyone predicted that they would be telling 2 million people to leave their homes again. Many of these won’t go back to try to establish their lives yet again and if they hadn’t lost many of their valuable posessions, especially the heirlooms, family photos and other things that can’t be replaced by insurance, you could understand why they would not want to go back, even if they have their roots there.

What happens when you have a city that noone wants to live in? When the insurance companies no longer want to cover property in the area, homes or contents.

We have known for a few years that some of the Pacific Islands and atolls could disappear as the sea level rises, but we didn’t anticipate something this bad so soon especially on the US Mainland.

Climate change is happening fast and in my humble opinion, now is a good time to start thinking about where you live and whether your home is at risk. I don’t think the real estate values in New Orleans will hold in future. I suspect that if you find a house you want and are prepared to put a roof on it, or clean the mud, silt and top soil off the carpet, that you can have it.

So now have a think about your own home. Is it safe from weather extremes? If the sea rises a couple of metres, will you still be above the water level? Will you be able to get supplies, fresh water and food? What about electricity or gas? All the things you take for granted.

In New Zealand there have been lots of stories about what to do in an emergancy, the yellow pages have guides as to what to stock up on, but if we took a poll today and asked how many households in the cities could last a week or more without the utilities, it would be very few.

What about all those people who have bought nice waterfront properties. Even by normal extremes some of them have had water on their doorstep. I know because in a couple of storms I wave skied into their backyards. So what will happen to the property values of waterfront homes? Would you buy one right now?

The USA has many areas that are prone to severe weather conditions. In fact if they are everywhere. The likelihood is that if they are bad now, they will become significantly worse over the next few years. Something to think about if you are moving to another town or state. Other parts of the world are feeling it too. In New Zealand we are having floods on top of floods and now roads are getting buried under slips and landslides are forcing people to evacuate their houses. Africa and Australia are experienceing drought while India and parts of Europe get flooded. The European government is trying to shore up plans to help water regugees.

Through all of this, unless you are in an emergency zone, or supporting refugees, chances are that you have been thinking, I’m glad I don’t live there, or this will never happen to me. Think again, very soon.

While this blog is starting to get a good following, I would love to get more readers and encouraging me to keep writing. If you feel that my blog is interesting I would be very grateful if you would vote for me in the category of best blog at the NetGuide Web Awards. Note that the form starts each site with www whereas my blog doesn’t and is of course https://luigicappel.wordpress.com.

Thanks so much for your support:)