Archive

Archive for 23 September 2011

The “Free Market” is a fair-weather friend.

23 September 2011 3 comments

Ir seems quite likely that New Zealand will soon be joining the ranks of Japan and San Francisco, where earthquake insurance is either highly expensive, or unavailable to home owners,

.

Full Story

.

Earthquake Recovery Minister Gerry Brownlee may chest-thump and bellow till the cows come home, but if insurance companies – as Chris Ryan is suggesting – no longer consider New Zealand property a safe risk to insure against earthquakes, then he had better start taking notice.

Internationally, the insurance industry has been hard-hit after the severe floods in Queensland; two major quakes in Christchurch; and a triple-whammy in Japan; earthquake, tsunami, and atomic reactor disaster.  Insurance companies have been hard hit, as Reuters reported in March,

“Some analysts said the disaster, combined with heavy losses already suffered this year from floods in Australia and last month’s New Zealand earthquake, could push up global insurance prices, boosting insurers’ shares.

“In our view the loss will be so large that it will probably provide the trigger to ensure a re-rating of the non-life sector,” Panmure Gordon analyst Barrie Cornes wrote in a note.” Source

Climate-related disasters were also impacting on the insurance industry,

“Climate change is largely to blame for Australasia putting in almost a quarter of the world’s natural disaster insurance claims last year.

Data from major reinsurance provider Munich Re, shows that from 1980 to 2009, Australasia was responsible for 3% of natural disaster insurance claims in dollar terms. But after the Christchurch earthquake, floods in Queensland, and enormous hailstones in Melbourne and Perth, that skyrocketed to 22% last year.

Munich Re, in its own report on the deluge of natural disasters, said climate change “is real and continuing” and cited floods in Pakistan and wildfires caused by a heatwave in Russia. The Christchurch quake was not climate-change related.

Munich Re said 2010 was one of the warmest years since 1850 and featured the second-highest number of loss-related weather catastrophes since 1980, when it started keeping data.

Niwa principal climate scientist Dr James Renwick agreed that weather events like heavy rain were linked to global warming. “It’s possible part of the change since the 1980s is natural variation, but I’m sure there’s a climate change component. We know the globe has warmed and it’s well-documented that the occurrence of extreme rainfalls around the world has increased in a way that’s consistent with the climate models,” he says.

“It’s just what you’d expect – you warm things up, more moisture, more energy, more rain falls. There’s definitely a climate change component in extreme rainfalls around the world.” ” Source

So it seems a little strange that Gerry Brownlee is (a) attempting to dismiss Chris Ryan’s warnings as “scaremongering” and (b) is in denial that re-insuring properties in this country will not be a major problem in future. Of course it will be a problem! How can it not?

Insurance companies and their re-insurers have suffered billions of dollars worth of claims over the last year – $34 billion estimated for the Japanese ‘quake and tsunami, alone, according to a Bloomberg report.

Mr Brownlee should know how the free market works. After all, his party – National – espouses the doctrine of the free market as part of it’s core-philosophy.

Even as we face the prospect of the insurance industry abandoning  New Zealand households – we may be  left  to our own devices when it comes to insurance. Which may be the EQC.

Whilst the EQC is not a full-insurance company in the sense of Tower, AMI, AMP, etc, it has provided a level of protection to New Zealanders since it’s inception in 1945.

The only thing is – it’s broke. Two calamitous earthquakes in Christchurch have effectively emptied the Commission’s ‘war-chest’. Source. As John Key said in February of this year,

“”The good news part of the story is that EQC had about $6 billion before that (quake), that’s going to be exhausted, but we pay in on a continuous basis and we had significant re-insurance in the order of $5b, that will be exhausted.””  Source

Irrespective of Mr Brownlee’s futile rantings against the Insurance Council, it should be abundantly clear that in the near future we will not have the insurance cover that we once enjoyed. Those days are over.

We will have to rely on our own resources and our own ingenuity, whether we like it or not. (Most likely ‘not’, going by past experiences of Baby Boomers who like to Spend Now, Pay Later (or Never, preferably – let the kids pay). To that end, the Greens – as usual – have once again realised what must be done,

“So, it seems, the Greens were right all along – a special levy to fund the costs involved with the Christchurch earthquake still makes good sense, if only (this time around) to replenish the funds available to the Earthquake Commission. Yesterday, it became apparent that the likely cost of the Christchurch rebuild had risen by a massive $4 billion.

This blowout means the EQC couldn’t cope with an additional major disaster (ie anything costing over $2.5 billion) and the government would have to pick up the tab, directly. There are three options on the table : (a) a special levy on all taxpayers (b) a further additional charge attached to insurance premiums already expected to rise significantly, or (c) a rise in income taxes.”  – Gordon Campbell,  Source

However, in the light of Chris Ryan’s warnings, we may have to reconsider the role of the EQC to adopt a more wide-ranging, pragmatic role in earthquake and flood insurance. The EQC may have to step in where private insurers once provided a service – or else face the prospect of uninsured properties.  That would have serious consequences for current and prospective building owners.  (Banks currently insist on full insurance cover before they will consider extending a mortgage over a property.)

Once upon a time, we owned an insurance company called – quite simply – State Insurance.   State Insurance was sold in June 1990 by the Bolger-led, National  government of the day.

It now seems that may have been a mistake (as most asset sales were). The people of this country may yet discover that the Free Market is a Fair Weather friend and when times are tough, we will  have to step up and put in place our own, Very Kiwi Solution(s).

The time for a new State-owned insurance company – “EQC-Plus” –  has come.

.

.

Advertisements

How to lose $5.3 billion dollars without any effort at all.

23 September 2011 27 comments

The latest in the on-going saga of our land alienation to overseas interests…

.

Full Story

.

The eight farms mentioned in the above story are located here,

.

.

Meanwhile, Monaco and Israeli investors have increased their shareholding in the Walter Peak Station Trust,

.

Source

.

By September of this year, the Aquila Group had increassed their holdings from eight to eleven South Island farms, with stated intentions to buy more,

.

Full Story

.

Since the start of 2006, the Overseas Investment Office (OIO) has approved the sale to foreign buyers of 300,400ha of freehold land and 239,600ha of other interests in land, such as leases.

Those figures are for land passing from New Zealand to overseas ownership, and does not include the  sale of land already in foreign hands.

Which brings us to this latest news,

.

Source

.

A record payout – $10.6 billion – going to New Zealand farmers.

Or… will it?

As more and more dairy farms are sold into foreign ownership, more and more of Fonterra payouts will also end up in the bank accounts of offshore investors. Not only will we be faced with higher prices for milk, cheese and other items containing dairy products – but the profits from the sale of those products will not come to New Zealand.

We will have lost income as well as dairy products.

Imagine if, eventually, half our dairy farms end up in foreign ownership; German, Chinese, American, etc. Then imagine half of Fonterra’s payouts ending up in offshore bank accounts.

Imagine – losing $5.6 billion.

We have already solds many former State assets to overseas investors. The profits from those assets now flow overseas, which will continue to impact negatively on our Balance of Payments account – pushing us further into deficit.

Quite simply put; we are importing more than we are exporting. That makes it more expensive to borrow capital from overseas markets (eg; for our home mortgages), and will eventually affects the interest we pay on those borrowings.

End result; triple whammy;

1. Higher dairy prices

2. Lost earnings

3. Higher interest rates

Now can anyone remind me – what, precisely, is the long-term benefit to New Zealanders to sell our productive land to overseas interests?

Something else to bear in mind when voting this year. The only ones who can stop the further alienation of our own land is us – the citizens of New Zealand. Because, my fellow Kiwis, no one else will do it for us.

.

***

.

Email sent to the Prime Minister of New Zealand, John Key,

.

————————————————————————–
from:    [email]
to:    john.key@parliament.govt.nz
date:    Sun, Sep 11, 2011 at 12:32 AM
subject:Purchase of farmland

Sir,

At a recent public meeting in the Hutt Valley, in answer to a question from
the audience, you responded that purchases of farmland, by overseas buyers,  
would be restricted to ten farms per purchaser.

Can you confirm that this restriction is in place, and when the regulation was
enacted?

Regards,

– Frank Macskasy
————————————————————————–

As of the publication of this piece, no response has been received from the Prime Ministers office.

.

***

.

+++ Updates +++

.

Full Story

.

Full Story

.

The Fay-led bid for the Crafar farms has failed because it is lower than the Chinese bid. This raises two issues,

  1. If a multi-millionaire such as Sir Michael cannot outbid overseas investors who are hell-bent on buying our farms – then what hope is there for ordinary kiwis, who do not have Sir Michael’s deep pockets, on competing against foreign investors? The answer is obvious; we cannot compdete. We would be outbid every time.
  2. If, as Sir Michael suggests, that over a certain price these farms are not economical, then why are the Chinese willing to pay more ($40 million?) than the farms are worth, from a viability-prospect? Could it be that the Chinese are not interested in profitability as much as securing food-production sources over the next few decades?

This is the clearest example yet as to why only New Zealanders should be permitted to own New Zealand farmland. As the world’s population passes the $7 billion mark, and is heading toward 9 billion by 2050, farmland will be the most important, strategic asset on this planet. Perhaps that is why the Chinese are willing to pay over-and-above what the Crafar farms are worth: they are buying into the future.

.

Further Information

Save The Farms

.

.

Someone phone Ken Ring on this!

23 September 2011 10 comments

Full story

.

I think someone needs to remind our Italian cuzzies that Terrestrial science is not yet capable of predicting earthquakes. That kind of technology won’t be around for a few decades more.

But if those crazy Italians want to ‘spook’ their scientists into heading overseas – they’re going the right way about it.

In a way, this case – along with ‘junk science’ and alternative ‘remedies’ – shows up one simple fact; that when people don’t have a firm understanding of science,   they revert to simplistic notions.

Like those individuals who believe that the moon landings were a hoax. They point to the supposedly “fluttering flag” planted by US astronaut, Neil Armstrong. They insist that, because the Moon has a near vacuum instead of an atmosphere, that it would be impossible for the flag to “flutter”.

Well, in a way, they are right. There is no appreciable atmosphere on the Moon. So flags don’t “flutter”.

But, being made of a fabric with  a wire mesh sewn into it, the material still moves with a motion imparted from the rod that it is attached to, as the astronaut is handling it, and trying to bury it into the lunar soil. More here .

Even in a vacuum, objects will move, once energy is applied. (“Energy” in this case being momentum.) Otherwise, of course, rockets wouldn’t work in the vacuum of space, would they?

But back to the case of the trial in Italy. One hopes that the presiding judge will see this as the lunatic situation that it truly is, and dismiss it within about ten seconds. Otherwise every scientist in Italy will  probably consider packing their suitcases and buying a one-way ticket out of the country.

I’ve heard of anti-intellectualism (eg; the Scopes Monkey Trial) – but this is one firmly out of the “Strange & Stupid” Files…

.

See Also: Moon Landing Hoax Conspiracy

.

.