In my last blog post I wrote about the importance of agriculture to our economy. Then I started hearing stories that farm sales were down, especially dairy. Apparently of over 4,000 farms on the market, only around 200 sold last month.
Good news for some of the farmers who want out, because there are foreign investors who want to buy them. One company wants to spend $1.5 Billion dollars buying NZ farms. You would have to wonder if we can’t make a good living out of farming how can other countries do it? If we do sell them, where will the earnings from those farms go? Not into our pockets I would suggest.
China has a problem. They have a large dry land mass and not enough water to grow the crops they need and a huge and growing population. What are they doing about it? They and other countries such as Middle East are buying good arable land wherever they can get it for a good price. For example China is buying farming land in Mozambique, Angola, Malawi, Nigeria and even Zimbabwe. It’s not all bad, they are teaching local farmers better techniques in animal husbandry, improving crop yields etc.
I ask myself therefore, again, why can’t we produce high yield crops on our fertile soils and sell it to the countries that need it. Once those countries have bought our land, we won’t be getting it back and I wouldn’t expect us to gain much in GDP from the crops they grow.
As I said in my last blog, the ‘good old days’ were when we were largely an agrarian economy, we had plenty and we also had plenty to export. Now we have fantastic biotechnology and the ability to increase yields, quality and in many cases without using GM technologies.
I would hate to look into our future and see a country that can’t feed itself, that grows crops on farms owned by other countries, go straight offshore to feed them with minimal economic benefit to us. I would welcome someone to explain the logic of this.
We have expertise, maybe we should be assisting some of those countries who are unable to maximise the return on their land, help them thrive and clip the ticket. That would be a win win. While we do that, we also continue to research and improve product, the grasses and other food sources for animal feed etc. We do have some successes such as Fonterra, Livestock Improvements and many other thriving areas of research and results in biotechnology. We should stick with what we are good at and rather than give our farms to the Chinese, Arabs and others who want them, let the Government buy them. They could be run by unemployed people, who would get training on the job and perhaps even interest free loans to purchase some of those plots and use the skills they have obtained to build themselves a healthy asset and income, while increaseing our balance of payments. Is that silly? What’s wrong with my thinking?
In February this year there were around 168,000 people unemployed. Lets put them to work on those farms, teach them a trade, help them make something of themselves and help them earn the money to buy there way in with low interest loans and subsidies. What could we produce with 168,000 people working instead of paying them to do nothing. The single person benefit is around $160. That works out to a wasted loss of around $26,880,000 per annum. I say lets buy those farms and keep them in New Zealand hands.
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.
Within days of a black president being elected as president of America, and a life of protesting against racism, Miriam Makeba has passed away. I pinch myself to check that I’m really living with these experiences and am so grateful to be alive in this era of exciting times, great times and troubled times. I hope that Obama goes on and becomes one of the great presidents, which is a big ask, but it is very necessary.
Meanwhile downunder, Helen Clark has resigned her leadership of the Labour Party having lost the New Zealand election to probably one of the youngest Prime Ministers in our history. To me amongst other things, she represents the Politically Correct which is ironic, because I know she lost many staunch Labour voters in her campaign by trying to make the National Party and John Key in particular look untrustworthy. The TV advertisements at the end of their campaign were all trying to smear John Key instead of focussing on their successes and their future plans, and in my humble opinion, it backfired badly. When you throw mud, some of it stays on your hands and she should have known better. Several people told me that they decided against voting for labour because they didn’t like smear campaigns.
Now we are heading into the biggest recession / depression in living memory. The 30’s and the 80’s will pale in comparison. The depression is a bad thing, but there are different ways of thinking about it and smart people will do well, or at least survive.
Something that has amazed me for some time is how business has teased people, who should know better, to spend money they don’t have on things they don’t need and keep doing it over and over. Retailers and finance companies ought to take some responsibility for what they have done, but many will because their business will dry up. The finance companies will go broke because they loaned money to people that they couldn’t secure and most of the goods had dropped way below their value, the minute they left the showroom.
Banks forgot about their commitment after the 1987 crash. For a while they started looking at people’s ability to pay their mortgages and required that they have at least 20% deposit. Then as property values increased they suddenly decided to finance people with 100% of the loan, figuring that the property values would keep going up and it wouldn’t make any difference. Of course while the mortgages were being paid they were making a tidy profit.
The retailers (including car companies) figured they weren’t taking any risks because it was the finance companies that were lending the money, not them.
Funny really because we often say that instead of employing politicians, who have a short term focus and often little experience in running a business, we should pay a premium and get successful business people to run the biggest business of all, our country. The rational was that in business anyone that went to the board and said, “Whoops I miscalculated and we have half a billion dollars less than we thought”, would be quickly helped into a new career, but it seems business has been doing the same thing and thinking that they can get away with it.
By saturating the market with things they can’t afford (and this hasn’t stopped) with 18 months deferred payment and interest free for another year or so, all they are doing is compounding the crisis. Who wouldn’t be teased into buying a new 42″ LCD widescreen HDTV with freeview built in, especially when the Jones’ have one next door and you don’t have to pay anything for over a year.
So we aren’t just heading into an economic crisis, we are adding fuel to the fire to make the mess even worse and if our government’s are broke, we are walking straight into the arms of the waiting Chinese Government who would be delighted to buy our failing banks and finance companies.
Has everyone taken leave of their senses? Have you taken advantage of a 100% mortgage? Have you bought products on special deals that you wanted but didn’t need? Come on, be honest.
There is potentially an exciting side to this as well. If you were smart and saved money, or invested in assets or property that you could afford and that made sound business sense, you could be looking forward to exciting times. Many of today’s wealthy families made their fortunes in the great depression of the 1930’s. If you were prudent during the boom, you could find yourself on top when the crunch comes, ready to buy into a business or buy some real estate at rock bottom prices and benefit from this situation. Even now it isn’t too late. What are you going to do now?
Christmas is coming. Don’t take that overseas vacation, pay half of the money into your mortgage and have a local holiday. The domestic tourism industry is hurting and you should be able to have a great time enjoying your own back yard. Reduce your debt as quickly as possible and only have debt in things that will increase in value when things come right. I think it’s called delayed gratification.
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.
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.
I sit here in the comfort of my living room with a coffee and having read the newspaper and being grateful for the good fortune to have been born in a peaceful country and to be living comfortably in another. I read the morning paper online to the news that Mugabe receives welcomes and hugs at an African Summit after the sham of the latest election.
I have met several people from Zimbabwe who have come to New Zealand having lost pretty much everything, who constantly live in fear for friends and family that didn’t have the wherewithall to leave or refused to leave their homes that they spent their lives building. It is impossible to imagine what it is like in Zim right now. Mugabe has engineered another election and is of course the victor. South Africa which fought for the rights of coloured and black people seems to be torn with the fact that Mugabe kicked out white people and that he is now having people beaten, tortured and killed for trying to use their free will.
President Bush and others including our Prime Minister Helen Clark are calling for sanctions. The problem is that weapons supplied to Mugabe’s regime come from China and other countries such as South Africa and they are unlikely to cease this lucratuive trade, although how he manages to pay for them in a country that is essentially bankrupt, beats me. The people of Zimbabwe are worried that they will now be tomorrow’s news and will be forgotten. China has also refused to deny Zimbabwe’s attendance at the Olympic Games, which is understandable having been the subject of boycotts and ‘political intereference’ themselves in the past and they don’t have a great track record when it comes to human rights.
Many people painted their fingers red or deliberately invalidated their votes to avoid voting for Mugabe. There are stories that the Zanu PF were out in force with a project they called ‘Show Me Your Thumb‘ and beating those who hadn’t voted. There are now rumours that voting lists have been obtained by the Zanu PF thugs which will be used to punish those who did not vote for Mugabe.
So what happens next? In my humble opinion, the result of boycotts and sanctions will simply make the situation in ZImbabwe more desperate. More people will die and the country will be washed in rivers of blood followed by disease and starvation while Mugabe languishes in his oppulence. There won’t be much to save before long.
I’ve asked the question before, why do people rush into Iraq to ‘save the people’ and not into Zimbabwe. I know the answer is oil. Come on world, lets not sit back and watch this continue. I challenge the people of the United States, the most powerful country in the world. You, who managed to leave your countries for a better world, who said, “we must not forget” after World War ll. New Zealand, as always will play our part, but we don’t have the might to do more than condemn and send in a few supporting Peace Keepers. We are after all a country smaller than many of your cities. We played our part to bring down Apartheid but this needs worldwide support. This sort of despot should not continue to play his games with the lives of human beings.
Final question. How does he manage to travel the world with impunity? Why is it that an ‘accident’ doesn’t happen to him? Is there a reason that his presence is tolerated? Am I missing something?
The Warehouse managed to get loads of publicity about the story of getting a request from the Chinese Embassy, recalling their tent stock from the branches and selling them to the Chinese at a substantial discount.
This sort of fits in to my previous story about getting great mileage from a PR opportunity. The NZ Herald gave them a nice story and they even got coverage with TVNZ.
I don’t want to pick on The Warehouse, (note there is no mention on their website, an opportunity missed) they did a nice thing, but lets look at the opportunity from a business and marketing perspective.
First it is autumn and the likelihood of selling more than a handful of the 1200 odd tents before spring is negligable, so they become aged stock, take up valuable room in their stores or their warehouses which costs money.
There are only 1200 of them and they probably paid next to nothing for them. The heavily subsidised price would probably be similar to their FOB and holding cost and the Chinese Embassy probably did them a huge favour.
Wouldn’t it have been better to do a big song and dance about their benevolence and GIVE THEM to China. They can write it off as charitable donations and win huge favour from the Chinese community. The additional business and goodwill they would have generated would far outway the small cost of these items. Now that would be newsworthy!
Bottom line, nice story but could have been far better for them. Also a thought for the people of the Sichuan Province in China. I can’t comprehend the devastation those poor people have suffered. Speaking of PR, what a difference between the way the Chinese Government handled this situation and the disgusting situation in Myanmar.
So here we are, it’s 2008 and New Zealand has a Free Trade Agreement with China. Lots of people are complaining that it will be one sided and that there are still tarriffs which will keep the balance fairly one sided. But the thing is we need export partners and we need tourism and our ‘friends’ in the USA won’t sign an agreement with us.
A couple of years ago I wrote a song called Mr Bush Why Can’t We Be Friends which was about this issue. New Zealand has always felt a kinship with the USA and yet they won’t give us a Free Trade Agreement. Last year I performed this song in the US and I also sent copies to various people including President Bush and Hilary Clinton. Of course they didn’t reply, but other people have commented both from my live performances and from sites like Music Forte and the general comment was ‘Don’t judge the country by the politicians’.
But the end result is that we now have friendlier relations with China than we do with America and in my book that is wrong, very wrong. You can hear the song on my Music Forte page. The lyrics are:
Kiwi’s are proud to play their part in the world and in my opinion fight way above their weight. It’s about time that good things happen to good people and the US stops treating us like naughty little children. We always felt an affinity with the US and still do, but instead of enjoying free trade, we are going to be getting closer to China. I suppose next thing they will call us disloyal!
I have said it before, all the stories I read about in Science Fiction are coming true, some of them even more advanced than the fiction. Think Robocop and other stories where police, soldiers and others can have access to their computer through a device attached to their eyes. I was half-watching the new series of The Bionic Woman last night and while some of the things she was doing, like using her bionic eye as a set of binoculars with the ability to lock onto faces and use facial identification, may be a little far fetched (so far) we are on the way there. The first concepts were something along the lines of a display attached to a helmet that you look at, in effect a sort of projector. That is old technology in that it has already been piloted by police in the UK and forces around the world. Now we are talking about a contact lens that incorporates a display, wiring and even a wireless receiver all built into a silicon lens that is placed on your eye just like your normal contact lens. Much of this research is being undertaken in the Unversity of Washington.
Animal lovers read no further, but apparently these lenses have already been tested on rabbits who reported that they felt no discomfort. I understand they have not yet determined how to display something that the eye can recognise because typically the eye needs to focus on something that is at least a very short distance from it. One research group is looking at having a seperate LED or similar device per pixel, which matches the eye receptors. This concept is also not unprecedented. My late grandfather went snowblind when climbing in the Swiss Alps in his early 80’s. He was the recipient of experimental eyes which looked like huge fly eyes. Not a fashion accessory, but he was able to faintly discern and identify shapes such as a human body.
Other researchers are using this technology to help determine health status and followers of iridology will tell you that you can tell a huge amount about a person’s health through an eye examination. I could imagine this sort of data being used in military and space research, allowing information to be gathered without having lots of additional hardware being attached to the body. Hey, we could require that everyone has one of these fitted, then anytime someone has a rush of blood to the head with the hormones associated with rage or excessive endorphins, it could send a message to the authorities. Imagine what would happen if they used that technology at the next Olympic Games, they would probably arrest the competitors and leave the terrorists to roam free, but I’m getting silly now, so perhaps I better head off to my Monday night poker tournament, where I could use my bionic contact lens to tell me the value of my starting hands and the play history of each of the tournament players from their Pokerstars records.
Now here’s a question I am struggling with. When you watch movies or TV programmes like 24 (which I must admit to enjoying, albeit on DVD with 4 episodes at a time) they have the technology to grab a security camera image and within seconds, not only enhance it to a high image quality, but instantly identify the person and download their life history. I’ve seen footage from companies like Arthur Anderson monitoring and analysing eye movement in a retail store, where they are studying the science of retail shelf product placement.
So why is it that when someone commits a crime which is captured on a security camera and they show us the picture or video on TV or in the newspaper, it is such a blur? On the one hand we are seeing unbelieveably exciting research, and on the other hand we can’t catch a thief in a petrol station using highly specialised camera technology.
Anyway, I’m putting an order in for my bionic lens. Maybe I can have it installed together with my eyePod implant. I’m told I have a few terrabytes free in my brain, so perhaps I could just download the entire EMI/Warner music list straight into my brain. My car has an invisible antenna for my car stereo, perhaps I could have one mounted on my scalp so I can download the latest podcasts from any WiFi Hotspot after using the RFID tag in my contact lens for identification.
I said I was going so now I am stopping for real. Hey, if you are reading this, how about leaving me a comment, or if you know someone who might be interested in my rantings, send them a link.
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.
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