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Comments on: Thoughts on South Canterbury Finance saga http://www.tvhe.co.nz/2010/08/31/thoughts-on-south-canterbury-finance-saga/ The Visible Hand in Economics Wed, 01 Sep 2010 13:23:11 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Kimble http://www.tvhe.co.nz/2010/08/31/thoughts-on-south-canterbury-finance-saga/#comment-27609 Wed, 01 Sep 2010 13:23:11 +0000 http://www.tvhe.co.nz/?p=5347#comment-27609 Questions: is this the death of the NZ finance company? Should it be?

I would be interested to hear what people think.

]]> By: Kimble http://www.tvhe.co.nz/2010/08/31/thoughts-on-south-canterbury-finance-saga/#comment-27607 Wed, 01 Sep 2010 13:13:48 +0000 http://www.tvhe.co.nz/?p=5347#comment-27607 @E.C: I reckon the liquidation would have occurred before the guarantee was up. There had to be continuity of guarantee for those staying in the scheme. So the new scheme would have to be announced before the previous guarantee expired. This gives some companies time to reveal the truth about their sustainability and announce their collapse, leaving us on the hook anyway.

]]> By: Eric Crampton http://www.tvhe.co.nz/2010/08/31/thoughts-on-south-canterbury-finance-saga/#comment-27588 Wed, 01 Sep 2010 08:12:07 +0000 http://www.tvhe.co.nz/?p=5347#comment-27588 @Kimble: If they liquidated because they couldn’t pay the fair premium, then we wouldn’t be liable for the costs. Seems a good thing to me.

]]> By: Greg http://www.tvhe.co.nz/2010/08/31/thoughts-on-south-canterbury-finance-saga/#comment-27568 Tue, 31 Aug 2010 23:42:36 +0000 http://www.tvhe.co.nz/?p=5347#comment-27568 What I can’t understand is why the guarantee didn’t limit investors to receiving back only the money they put in? You could possibly adjust for inflation, but the timeframes are likely short enough that this is a minimal adjustment.

]]> By: Kimble http://www.tvhe.co.nz/2010/08/31/thoughts-on-south-canterbury-finance-saga/#comment-27567 Tue, 31 Aug 2010 23:38:20 +0000 http://www.tvhe.co.nz/?p=5347#comment-27567 @ E.C: The thing should have been priced properly from the first. But once it was sold I think the solvency of the companies became very sensitive to the scheme. I think it is likely that the increase in price of the guarantee might have been enough to force liquidation of the company anyway.

]]> By: Eric Crampton http://www.tvhe.co.nz/2010/08/31/thoughts-on-south-canterbury-finance-saga/#comment-27563 Tue, 31 Aug 2010 21:11:47 +0000 http://www.tvhe.co.nz/?p=5347#comment-27563 @Kimble: The answer would have been to switch quickly to actuarily-fair rates and let companies decide whether or not they wanted to stay in.

]]> By: Kimble http://www.tvhe.co.nz/2010/08/31/thoughts-on-south-canterbury-finance-saga/#comment-27556 Tue, 31 Aug 2010 13:38:14 +0000 http://www.tvhe.co.nz/?p=5347#comment-27556 I think SCF was still BBB- before the guarantee.

People invested a lot of money because of the guarantee. Yes, it was essentially “free” money given away by the government but the governments credibility was on the line. If they cancelled the scheme, they would be screwing over the people that invested relying on the guarantee. Pretty unfair I reckon.

I would compare it to government creating a tax on the income you tell other people you make, and then back-dating it to when you first started dating shallow city chicks.

]]> By: luke http://www.tvhe.co.nz/2010/08/31/thoughts-on-south-canterbury-finance-saga/#comment-27549 Tue, 31 Aug 2010 08:23:03 +0000 http://www.tvhe.co.nz/?p=5347#comment-27549 Government’s deposit guarantee was a stupid idea to begin with.

http://mongreldog.co.nz/complaint-south_canterbury_finance_41-41.html?msg=Your%20Comment%20Has%20been%20Posted..Thank%20you%20for%20your%20Comment

]]> By: Richard http://www.tvhe.co.nz/2010/08/31/thoughts-on-south-canterbury-finance-saga/#comment-27543 Tue, 31 Aug 2010 07:50:49 +0000 http://www.tvhe.co.nz/?p=5347#comment-27543 Is it wrong of me to get a slight warm fuzzy from seeing the SCF shareholders get wiped out? Sets a good example for the next investment crisis.

]]> By: Evan Thomas http://www.tvhe.co.nz/2010/08/31/thoughts-on-south-canterbury-finance-saga/#comment-27534 Tue, 31 Aug 2010 06:30:14 +0000 http://www.tvhe.co.nz/?p=5347#comment-27534 @Eric Crampton
Hi, Why are worry about this topics.Government work on their way.They also use good economic experts too.So Don’t worry about this issue because this is not our matter.

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