General Debate 7 April 2009

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bobux

DPF

I have long suspected your daily quote from Cicero is a fake, and finally googled it.

Sure enough, there are slight variations on the wording all over the internet, but the most ancient source that I found was an editorial in the Kansas City Star in 1986. Some sources suggest Reagan attributed similar sentiments to Cicero without claiming the actual words were from the great Roman orator.

When you think about it, phrases like ‘assistance to foreign lands’ and ‘balancing the budget’ don’t exactly have a ring of classical authenticity.

[DPF: I checked it on Wikiquotes at the time]
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April 7, 2009 7:26am
jcuknz

I sincerely hope that the United States of America quickly finds some way of talking to Hamas. It is quite foolish to put up requirements such as ‘ recognise israel’ prior to discussion. The only way to solve a problem is to talk about it and Hamas for better or worse are the democratically elected government of the Gaza Strip. Use dirty words like “they are a terroist organisation’ but don’t let that stop you talking to them …. it is the old de jure /de facto argument that diplomats in the old days where happy to work to and find solutions by.
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April 7, 2009 7:35am
jcuknz

were not where 🙁 Maybe I should give Israel a captial not israel.
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April 7, 2009 7:37am
expat

Legend: Man shoots up boy racers car

http://www.stuff.co.nz/national/crime/2319111/Man-shot-up-boyracers-car
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April 7, 2009 7:45am
goodgod

jcuknz, I don’t think you fully understand exactly who Hamas are and what they stand for. Unless you are a conspiracy theorist, it’s almost inconceiveable to suggest awarding Hamas any concessions in a post 9/11 world. And if it’s inconceiveable to me, you can imagine how literally blasphemous it would be to the Americans.
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April 7, 2009 7:46am
Murray

The Kansas City Star is an “ancient source” now?

Damn I’ve been so wasting my time with Plutarch and Pliny.

Expat, we’ll call it a good start but he needs to “aim” for one less word in that headline.
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April 7, 2009 8:21am
big bruv

Is everybody looking forward to their long weekend?

I know I am, two of the three and a half days a year when we all know that we do not have to work, what a pity that some insist others should have to work because they want to be able to buy a cappuccino.

[DPF: You can still buy a cappuccino on the Easter days. And many people do work those days. Not too good on the facts today. And it is not much of a long weekend when people can be forced to work Saturday and Monday. A good law would allow staff to choose not to work the whole weekend]
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April 7, 2009 8:44am
virtualmark

jcuknz … I suspect that the Americans are talking to Hamas quite frequently. But in a “back of the bikesheds, no fingerprints” kind of way. And quite likely with a lot of the talking done via trusted intermediaries like the Saudis and/or Egyptians.

Officially the policy will be “No talks until you recognise Israel and renounce terrorism”. Unofficially the realpolitik will be that they have to talk.
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April 7, 2009 8:50am
slijmbal

Buffet did his usual letter to shareholders of Berkshire Hathaway and as always an interesting and entertaining read – I like his summary around derivatives and the Fannie and Freddie debacle in the states. Apologies for the length of the post …… an extract ………..

Derivatives are dangerous. They have dramatically increased the leverage and risks in our financial
system. They have made it almost impossible for investors to understand and analyze our largest commercial
banks and investment banks. They allowed Fannie Mae and Freddie Mac to engage in massive misstatements of
earnings for years. So indecipherable were Freddie and Fannie that their federal regulator, OFHEO, whose more
than 100 employees had no job except the oversight of these two institutions, totally missed their cooking of the
books.

Indeed, recent events demonstrate that certain big-name CEOs (or former CEOs) at major financial
institutions were simply incapable of managing a business with a huge, complex book of derivatives. Include
Charlie and me in this hapless group: When Berkshire purchased General Re in 1998, we knew we could not get
our minds around its book of 23,218 derivatives contracts, made with 884 counterparties (many of which we had
never heard of). So we decided to close up shop. Though we were under no pressure and were operating in
benign markets as we exited, it took us five years and more than $400 million in losses to largely complete the
task. Upon leaving, our feelings about the business mirrored a line in a country song: “I liked you better before I
got to know you so well.”

Improved “transparency” – a favorite remedy of politicians, commentators and financial regulators for
averting future train wrecks – won’t cure the problems that derivatives pose. I know of no reporting mechanism
that would come close to describing and measuring the risks in a huge and complex portfolio of derivatives.
Auditors can’t audit these contracts, and regulators can’t regulate them. When I read the pages of “disclosure” in
10-Ks of companies that are entangled with these instruments, all I end up knowing is that I don’t know what is
going on in their portfolios (and then I reach for some aspirin).

For a case study on regulatory effectiveness, let’s look harder at the Freddie and Fannie example.

These giant institutions were created by Congress, which retained control over them, dictating what they could
and could not do. To aid its oversight, Congress created OFHEO in 1992, admonishing it to make sure the two
behemoths were behaving themselves. With that move, Fannie and Freddie became the most intensely-regulated
companies of which I am aware, as measured by manpower assigned to the task.

On June 15, 2003, OFHEO (whose annual reports are available on the Internet) sent its 2002 report to
Congress – specifically to its four bosses in the Senate and House, among them none other than Messrs. Sarbanes
and Oxley. The report’s 127 pages included a self-congratulatory cover-line: “Celebrating 10 Years of
Excellence.” The transmittal letter and report were delivered nine days after the CEO and CFO of Freddie had
resigned in disgrace and the COO had been fired. No mention of their departures was made in the letter, even
while the report concluded, as it always did, that “Both Enterprises were financially sound and well managed.”

In truth, both enterprises had engaged in massive accounting shenanigans for some time. Finally, in
2006, OFHEO issued a 340-page scathing chronicle of the sins of Fannie that, more or less, blamed the fiasco on
every party but – you guessed it – Congress and OFHEO.

The Bear Stearns collapse highlights the counterparty problem embedded in derivatives transactions, a
time bomb I first discussed in Berkshire’s 2002 report. On April 3, 2008, Tim Geithner, then the able president of
the New York Fed, explained the need for a rescue: “The sudden discovery by Bear’s derivative counterparties
that important financial positions they had put in place to protect themselves from financial risk were no longer
operative would have triggered substantial further dislocation in markets. This would have precipitated a rush by
Bear’s counterparties to liquidate the collateral they held against those positions and to attempt to replicate those
positions in already very fragile markets.” This is Fedspeak for “We stepped in to avoid a financial chain reaction
of unpredictable magnitude.” In my opinion, the Fed was right to do so.

A normal stock or bond trade is completed in a few days with one party getting its cash, the other its
securities. Counterparty risk therefore quickly disappears, which means credit problems can’t accumulate. This
rapid settlement process is key to maintaining the integrity of markets. That, in fact, is a reason for NYSE and
NASDAQ shortening the settlement period from five days to three days in 1995.

Derivatives contracts, in contrast, often go unsettled for years, or even decades, with counterparties
building up huge claims against each other. “Paper” assets and liabilities – often hard to quantify – become
important parts of financial statements though these items will not be validated for many years. Additionally, a
frightening web of mutual dependence develops among huge financial institutions. Receivables and payables by
the billions become concentrated in the hands of a few large dealers who are apt to be highly-leveraged in other
ways as well. Participants seeking to dodge troubles face the same problem as someone seeking to avoid venereal
disease: It’s not just whom you sleep with, but also whom they are sleeping with.
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April 7, 2009 8:53am
dime

oh god, the annual bruv/dpf face off has begun!!!

im still on bruvs side. dave, you might think its not big deal to have only the friday/sunday off. BUT i was banging this 21 yr old on the weekend who works at maccas, shes hell excited to have 2 days off to spend with her friends.
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April 7, 2009 8:55am
big bruv

DPF

“[DPF: You can still buy a cappuccino on the Easter days. And many people do work those days. Not too good on the facts today. And it is not much of a long weekend when people can be forced to work Saturday and Monday. A good law would allow staff to choose not to work the whole weekend]”

Oh yes, I can just see that..

“Boss, can I work this Friday and Sunday please”

Get real DPF, I imagine you are a great guy to work for but really, is it that much of an imposition to have your staff know that they have three and half days off a year when the rest of the workforce is also off?

[DPF: I have no intention of forcing my staff to work any day they don’t want to. However they get pissed off that they lose out on earning double time and a half for not being able to work SUnday evening for three hours. I know heaps and heaps of people who work in retail and most of them curse they can’t earn some extra money.

I note you have ignored the fact that they can be forced to work Saturday and Monday which means no long weekend]
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April 7, 2009 8:57am
Grant Michael McKenna

It seems that dime isn’t counted as one of the friends of the “21 yr old”; if is, as you put it so delicately dime, “banging” you then the quote from Warren Buffet given by slijmbal may indeed by apposite: “It’s not just whom you sleep with, but also whom they are sleeping with”.
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April 7, 2009 9:03am
big bruv

Oh here we go again, the poor persecuted retail workers who so love their jobs that they are desperate to work good Friday and Easter Sunday.

I did not ignore the “fact” DPF, you know that is the law and so do I, however as I always say if a business cannot survive being closed for three and half days a year then they have no right to be in business.

The reality here DPF (and one that you steadfastly refuse to acknowledge) is that the vast majority of the workforce would have no bloody choice in the matter should you get your way, look, I am no fan of unions or those who agitate on behalf of workers against the “nasty bosses” but on this I will always side with them.

[DPF: Red Herring as usual from you. No one claims this is about business survival but you. This is about whether the state should prevent employees, employers and the public from doing what they want to do on a particular day just because it has religious significance to some people.

And you cna make claims about bosses as much as you like, but I would say you are in touch with them as much as you are in touch with retail staff. I actually advocate a law change that will protect workers more and allow them to refuse to work Easter Saturday. you just blindly defend the status quo]
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April 7, 2009 9:13am
Captain Crab

I see Richard Worth was in business with Matt Robson. Who in their right mind would do such a thing? I mean seriously, I wouldnt believe Robsons opinion on anything let alone get involved financially with him. And of course its a business the SFO just had to have a look at because of even more dodgy associations.
What appalling lack of judgement.
I hope all this dead wood gets cleaned out by the next election.
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April 7, 2009 9:13am
Grant Michael McKenna

So Dr Cullen is to be given a SOE chairmanship.

In an about to be privatised SOE, I hope.
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April 7, 2009 9:14am
gazzmaniac

Has anyone seen the latest series of Southpark? It really is super good – especially the way that the US treasury decides what to do about failing insurance companies!
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April 7, 2009 9:19am
TimG_Oz

I know I am, two of the three and a half days a year when we all know that we do not have to work, what a pity that some insist others should have to work because they want to be able to buy a cappuccino.

Well if you come to Melbourne, on Easter Sunday you can buy a bottle of “Classic” Coca Cola – that is the way it was made before they changed the recipe! Numerous outlets around Caulfield have them on sale….
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April 7, 2009 9:20am
slijmbal

It’s true they will let cullen play with someone else’s money again !!!!

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10565648 (Govt to offer cullent SOE chair)

OK can we start a petition?

and the SOE chairmanship looks like it will be in the energy sector – go to go – need to buy a generator and some candles before they sell out.
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April 7, 2009 9:44am
PhilBest

Thanks for that, Slijmbal. Buffett is basically one of an old school who has made his money by wise investment in nuts and bolts, bricks and mortar companies that pay dividends on money they made honestly. He represents the best face of “Capitalism”. Some wise man said that the finance sector should remain “handmaiden to industry”, and he was right.

That is the capitalism that I support.

I am also one of the many capitalist supporters who insist that the way the US government has involved itself in this crisis has only made things worse. The insolvent institutions should have their problems sorted out in bankruptcy. I know there are serious implications for this, but because of the “derivatives” problem that Buffett is talking about, taxpayers money pouring into the system is actually pouring out again just as fast, and there is no selectivity in who ends up with the money; a lot of out and out clever speculators are getting big chunks of it. There is no way voters would agree with this if they understood.

Even worse than that, the expectations of government money has “frozen” the whole financial sector in the USA, right down to individuals paying their mortgages. There is every incentive to simply cease to honour any financial obligations, as the government will come to the rescue anyway; furthermore, those who honour their obligations will be paying through taxes, for those who do not. The whole thing has turned into a game of “the bigger mug”.

The President should simply read the riot act. Not a cent more taxpayers money. Wall Street can hold a summit conference and work out the mergers and takeovers that are necessary to keep the system going, and just do it smartly. The honest operators, local banks and so on, do not deserve to be penalised by having big wide boy operations effectively subsidised for anti-competitive behaviour. The crucial thing is that these peoples own jobs and bonuses should be at risk, not guaranteed by government money.

If there are not laws already about management “looting” insolvent companies, there badly needs to be. But I think there are, it is just a matter of enforcement. These people have acted like top Nazis taking off to South America with a submarine full of gold, in 1945. They need to understand that the bankruptcy police will come after them.

But the shocking truth is that the “bailouts” specifically included the right to retain bonus provisions; the Democratic politicians voted for this legislation and the President signed it into law. BIIIIIG mistake. They hope the voters won’t find out, they are posturing very dramatically on this issue now.
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April 7, 2009 10:12am
slijmbal

PhilB

must agree on the bailout – it really is socialising the losses as accused by the left – it also means that the US and by implication us will take longer to recover. Luckily, it seems to me that National are really Clayton Keynesians and they’re not going bonkers (though the retail guarantee is a bit of a worry). Only the budget will tell us for sure.

Buffet also had a bit of a moan that an AAA company like one of the berkshire ones actualy had a greater cost of money than technically insolvent companies because of the US governments actions.

You should read the whole thing – here -> http://www.berkshirehathaway.com/letters/letters.html

If you’ve got a bit of spare dosh I reckon buy whatever B shares you can afford as I pick he will make a (bigger) fortune over the next 5 years.
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April 7, 2009 11:21am
Chuck Bird

I heard this item on the news a couple of times this morning on NewstalkZB. I then looked up Denise Corlett of Dating Advise.

I find it a bit strange to refer to a man as tight or stingy because he wants to go Dutch. If I take a woman out I pick up the bill. It the woman slips me about half I accept and say thanks. I think Denise’s advice works two ways. If a woman is as well off or even better off that the man and she does not offer to pay even after the second or third date it might indicate that she might not be a good prospect for a long term relationship. What would happen if the man lost his job? Suppose he was divorced and had children and hi ex died would his new lady be supportive if he worked very reduced hours?

I am not too worried about this personally but there are guys out there with obligations for children and may be considerable worse off financially than a woman they would like to date. Is it not just a little unfair to refer to them as stingy?

I would be interested to see the views of men and women of different ages on this issue.

http://www.datingadvice.co.nz/documents/SSTED1-20080911-E16.pdf

Tight-fisted dates

Q. I really hate it when guys ask me out and expect me to split the bill at the end of the night. How can I eliminate these cheapskates, or let them know it is totally lame?

A. There are two important things to consider here: first, how our society has changed over the last couple of decades and second, your own personal views towards what is and isn’t acceptable. Taking the first point, it used to be that a man would automatically take responsibility for paying. With women’s increasing independence, ability to earn and confusing messages about women paying their way, it has become more difficult for many men to take the lead and pay. Consequently we’re seeing an emerging group of men who, either through lack of confidence in knowing whether you want them to take control and pay or reluctance to spend their money, are happy enough to share the bill. Some women might be offended by this, so it’s difficult for men to know which way to go. Interestingly enough, simple things like a man taking charge of paying can be an indicator of how they will be in a relationship with regards to spending money. If for you this occurs on the first date, then it is a good litmus test of how willing he might be to spend money (and possibly time and effort) on your relationship. If it frustrates you now, then it will frustrate you a whole lot more in a relationship. You might not know enough about them and their views on paying until that first dinner date. If generosity is a key attribute you are looking for, and this is lacking at the first dinner date, use it to either continue the relationship or not.
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April 7, 2009 2:31pm
goodgod

My solution to the social etiquette issue you raise, chuck, is to consider a two basic questions:

1) Have I invited this person to lunch/whatever. If yes, I pay.
2) Do I want to see/listen to this person so much that I would pay for the activity to do so. If yes, then I pay. If no, I don’t go.

This works for anyone regardless of gender and sharpens the purpose and intent of the activity. It’s not a matter of money, earnings or future relationships – it’s a matter of manners and consistently creating a stable platform for social intercourse. I’ve often watched an apparently well heeled party discuss a restaurant bill. It is rude and very bad form – Brutte Figura as the Italians would say.
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April 7, 2009 2:54pm
KiwiGreg

“Meanwhile, Internal Affairs Minister Richard Worth announced the appointment of retiring National Party president Judy Kirk as chairwoman of the Lotteries Commission.”

Gosh
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April 7, 2009 3:53pm
big bruv

DPF

“[DPF: Red Herring as usual from you. No one claims this is about business survival but you. This is about whether the state should prevent employees, employers and the public from doing what they want to do on a particular day just because it has religious significance to some people.”

Utter rubbish again from you David, mind you this is the first time you have introduced religious bigotry into your increasingly weak argument.

I am the least religious person on the face of the planet, the significance of the day has nothing to do with it apart from the knowledge that nearly everybody has that day off.
I note that you also have selective morality when it comes to the state preventing people from doing as they wish, you are happy to propose freedom when it suits you yet you rail against it when it does not.

The whole “nobody would be forced” argument we have heard before, we heard it when we introduced seven day trading, it was a lie then and it remains a lie to this day.

You claim that I am the only one who says it is not about a business being viable, if that was the case then it must be greed, can you seriously imagine the Warehouse or Progressive enterprises giving their staff the choice to work or not?

Would you support a referendum on this?, I would wager that more than 50% of the public would want to keep Easter, ANZAC day and Christmas day as holidays, would this be enough for you to agree or would you still want to change the rules so you can get your coffee?
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April 7, 2009 4:06pm
dad4justice

Thank you Jesus for Christmas and Easter.
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April 7, 2009 4:11pm
AG

Words I thought I’d never type …

1: Australia deserved that win.
2: I enjoyed my drive into town from Auckland airport.
3: I agree with Big Bruv.

I suspect this is some sort of sign of the looming end times. Next, the beast with 7 heads and 10 horns rising out of the sea …
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April 7, 2009 4:14pm
dad4justice

“3: I agree with Big Bruv.”

Are you her twin sister?
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April 7, 2009 4:16pm
AG

d4j

WTF?
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April 7, 2009 4:17pm
PhilBest

Nice discussing with you, Sljimbal, even if no-one else gets it.

I am sufficiently gloomy to believe that I will be able to buy BH shares a lot cheaper yet, but I do agree that they will be the ones to own if and when the US economy recovers from the double whammy of stupid wide boys gambling the farm away on a property market bubble, and a massive increase in the size of government along with interference and moral hazard that freeze the finance sector and generally do much more harm than good.

You are right about NZ being advantaged if National are Clayton’s Keynesians.
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April 7, 2009 5:14pm
slijmbal

Philb – interested to see you received a -ve karma ?????

Anyway, I’m not as gloomy as you and am always willing to bet on the master – he is rock hard on sticking to his principles – lovely to behold – I’m more worried about currency issues and whether the US$ takes a dive as I see one way out of the current US problem is for the government to cause inflation and that will affect the currency. Also let’s not forget stock markets reflect the position 18 months out and it’s always better to be early than a little bit late in market rallies.

Mind you have kept the tinder dry for almost 2 years now. patience . .. . patience

Is the US b*******d – sort of – but they’re quite likely to end up more competitive out of this as real wages drop – so I think you are missing some elements in your analysis.

but we all agree Obama is a left wing idiot who combines this with handouts to failed capitalists – the worst of both worlds…. I hope we all agree?
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April 7, 2009 7:57pm

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