Natural Law and Property Rights: What we've lost

Madeleine Flannagan argues that submerging propery rights under land use regulation creates disaster like submerging water with oil

It is not commonly recognised how seriously land use legislation such as the Resource Management Act has impaired property rights. The common law tradition esteems property rights much more highly and strongly than is recognised today.

Property Development Loans Likely Big Trouble for South Canterbury Finance

Today Marac Finance's owner Pyne Gould Corporation announced its results for the second half of 2009, and the news is good:

South Canterbury Finance Nelson Trolley Derby

A good old-fashioned trolley race down 350 metres of asphalt is enough to bring out the whole family.

Reads the article on the South Canterbury Finance Nelson Trolley Derby. It is also enough to bring out a less serious post on South Canterbury Finance, in the spirit of The Onion newspaper.

South Canterbury Finance CEO Sandy Maier said he was taking a break from dealing with the troubles of the company and said he would enter the derby with a trolley repossessed from one of the company's troubled small business borrowers. The trolley had failed to sell at auction. He also confirmed that the company's down-hill liquidity situation would provide the basis for his entry to go out with a bang.

Sound Money Essay Winner

The Atlas Sound Money Project has announced the winners of its 2010 Atlas Sound Money Essay Contest.

The 1st place wining essay by Nicolas Cachanosky argues that banking crises are exogenous under free banking, i.e. they are the result of external conditions and limitations, and not endogenous (internally generated) to the free banking system.

The essay is well argued, and delivers a strong argument for its key thesis of free banking stability.

Click here to read the essay.

Kiwibank Grumpy About Liquidity Regulation

While I'm preparing my submission on the RBNZ's consultation document on non-bank deposit takers (NBDTs) liquidity regulation, Kiwibank has started to complain about the recently introduced quantative liquidity regulations imposed on banks:

South Canterbury Finance Mystery

Has South Canterbury Finance got:
a) So much cash inflows from its portfolio of loans and advances that it has large amounts of cash to re-invest in more loans, or
b) So little cash inflows from its portfolio of loans and advances that it is trying to sell loans?

Regulation of Liquidity of Financial Institutions

The Reserve Bank of New Zealand has recently and unfortunately been empowered to regulate 'Non-bank deposit takers' (NBDTs) such as building societies, credit unions and finance companies. NBDTs will still be supervised by security trustees under the Securities Act, and will still be able to determine most of their own financial policies, however some financial policies such as capital adequacy and related party transactions are now regulated. The new legislation also enables the RBNZ to regulate liquidity policies, and the RBNZ has issued a consultation document to gather views on the issues, to be used to develop proposed regulations.

Sandy Maier: "Unintended consequences" of Deposit guarantee scheme

Sandy Maier, CEO of South Canterbury Finance, has confirmed that the company is absolutely reliant on the Crown Deposit Guarantee Scheme, and upon being accepted into its extension through to the end of 2011:

Cash Flows Show South Canterbury Finance Not Shrinking Loan Book

While waiting for the financial statements for the 6 months to 31 December 2009, I have analysed the company's known cash flows between 30 Sept. 2009 and 10 Feb 2010, based on the information released on 10 Feb 2010. This information shows that the company has not generated significant cash inflows from its other assets and liabilities.

Liquidity Options All Tapped Out at South Canterbury Finance

The new Investment Statement and Memorandum of Amendment to the prospectus of South Canterbury Finance show that its liquidity position and options have continued to deteriorate during the period from 30 June 2009, to 20 Oct 2009 to 10 Feb 2010. The company's liquidity position is graphed below:

Rubbing the Gloss of South Canterbury Finance Recapitalisation

A surprise from South Canterbury Finance's Memorandum of Amendment to its prospectus:

Is the Gold Standard Still the Gold Standard among Monetary Systems?

Critics have raised a number of theoretical and historical objections to the gold standard. Some have called the gold standard a “crazy” idea.
The gold standard is not a flawless monetary system. Neither is the fiat money alternative. In light of historical evidence about the comparative magnitude of these flaws, however, the gold standard is a policy option that deserves serious consideration.

Banking expert confirms: 'Bank customers were never concerned'

Today's news article 'Deposit scheme 'useless' ' confirms what I've been saying since the Crown Deposit Guarantee Scheme was introduced: The big banks didn't need it, even at the height of the crisis, and sure don't need it now, and its only function was to prop up risky finance companies that should have failed.

South Canterbury Finance Update

South Canterbury Finance is in the news again with some further losses to be reported and some adverse changes to last year's accounts to 30 June 2009. More plans for recapitalisation, again lacking details.

Any surprises? No. I don't think anyone was expecting them to report profits. I still don't expect South Canterbury Finance to be floated, and I still expect the group to decide to spin off Scales Corporation and Helicopters NZ and use the cash to help SCF going.

The essence of the plan should be to raise enough money to a) make the spun off company well capitalised and b) able to pay off loans from SCF and/or refinance them with other lenders and c) provide cash to recapitalise SCF itself.

a) is necessary and good because it makes the spun off company a more profitable and safer investment. Helicopters NZ needs more capital to expand and exploit its opportunities.

b) is necessary to comply with new regulations on related party funding and to clean up SCF's balance sheet of such loans.

c) is necessary to enable SCF to dispose of ill-fitting assets (such as Dairy farm equity interests), to write off bad loans, and to maintain its credit rating and investor confidence in the company.

See here for more posts on SCF.