Stealing money from savers in Cyprus

Anti-bailout protesters raise their open palms showing the word "No" after Cyprus's parliament rejected a proposed levy on bank deposits in NicosiaYou will have noticed the banking crisis in Cyprus. It has absorbed my twittertime for 24 hours. I understand Iceland activist  Hordur Torfason, currently on a speaking tour of NZ, is going to Cyprus after New Zealand. It should be interesting. As a condition for a massive loan from the ECB, their government is required to tax ordinary savers from 7-10%. This is ground breaking policy. ‘What is different this time is the nakedness of the Cypress heist’, writes Adita Chakrabortty in the Guardian. His article explains how the European powers pushed Cyprus into a politically suicidal pact. They demanded an impossible deal and it is no surprise when the politicians see how unpopular this measure is, they delay doing it. As I write this, the banks are closed in Cyprus for another two days and heaven knows what will happen when they open. See Guardian article, for example Senior bondholders (and it looks as though there aren’t many) will be exempt. This is not true in New Zealand, where Open Bank Resolution only touches deposit holders. As Geoff Bertram and David Tripe pointed out in their Victoria University article, there are at least six classes of creditors who are ahead of us in the queue to be reimbursed. They include holders of Covered Bonds held mostly by pension funds. These are illegal in South Africa and were so in Australia until recently. All this makes it doubly important for us to get behind our petition asking for a Parliamentary Enquiry into the best ways of making banks stable. We want a lasting durable banking system not one which gets into such crises.  So why not write to your MP, the Minister of Finance and the Prime Minister about this? Jill Abigail has led the way in having her letter on the subject lead the Dominion Post letters today.  Here it is: As a superannuitant dependent on interest from term deposits to top up my pension to a livable level, I am horrified to learn that the Reserve Bank is planning to set in place a process (called “Open Bank Resolution”) where ordinary bank depositors will – without notification and without our consent – have our savings used to bail out a bank in financial distress.  If a banking crisis arises, your bank will be able to freeze your bank account overnight and release it the next day. But the account will have been “shaved”, and you will have less money than you had yesterday. A nameless amount will remain frozen while liquidators examine the financial state of the bank and then some or all of it will be used to bail out the bank. This process, which readers can check out on the Reserve Bank website, will all be in place by June 30. There has been no public warning of this undemocratic proposition.  Is it legal?  Isn’t it theft? Those of us who suffered loss of retirement savings in the finance institutions’ crashes in 2008 thought we would be safe by keeping the remainder in our banks, especially the Kiwi-owned bank.  What a shock now for us to learn that our money is not safe after all. This is a terrifying prospect for those of us who have no means of replacing any losses because our days of being able to earn are long behind us. Jill Abigail      

Do you know how the Trans-Pacific Partnership Agreement (TPPA) will affect business in New Zealand?

The TPPA, a so-called ‘free trade agreement’, is being negotiated secretly by 11 countries round the Pacific rim and is likely to lead to:
  • Loss of sovereignty and ability for the NZ Government to legislate for the well-being of its people. Corporations will be able to overturn our decisions.
  • Decreased ability for New Zealand to protect itself from a collapsing global economy. With capital controls it would be impossible to impose a financial transaction tax, demand a minimum stay of capital etc. New Zealand is very vulnerable because the NZD is the 10th most traded currency and our current account deficit is large.
  • Loss of New Zealand SME’s ability to genuinely compete for central and local Government tenders. Greater competition for local businesses.
  • Increased sale of land and assets to overseas owners
  • Further deregulation of the already weakly regulated and increasingly powerful financial industry. Lessened ability to regulate against toxic financial products.
  • Possibility for Government being sued if legislation reduces corporate profits e.g. climate change, environmental protection, public health (tobacco, alcohol, food, gambling), financial re-regulation.
  • Restricting or requiring payment for access to internet information, thus reducing the ability of SMEs to compete.
  • More overseas ownership of banks, telecommunications, insurance companies, media, supermarkets, elderly care facilities and transport firms.
  • More unemployment and a lower tax take
  • Fewer opportunities for democratic participation by citizens
The 15th (and final?) round of negotiations takes place in Auckland from 3-12 December.  Time is really short. Please
  1. Go to www.itsourfuture.org.nz or www.fairdeal.net.nz to learn more.
  2. Write to the Minister of Trade, the Prime Minister and ask the negotiators to insert an opt-out clause for future governments.
  3. Organise your sector to oppose the secrecy and the trend to give increasing rights to Trans National Corporations.
This brochure prepared by the New Economics Party http://neweconomics.net.nz Contact: deirdre.kent@gmail.com

Trade, trade agreements like the TPPA and the role of trade

Trade has played a major part in our country's economy for centuries. What we can't grow or make in this country can be imported and what we can produce here can be exported. The growth of international trade has been enabled by cheap oil, cheap transport, including shipping and air freight costs. Last year New Zealand spent over $7 billion importing oil, up 22% on the previous year. Our balance of payments or the difference between what we earn from our exports and what we pay for our imports is a matter of great concern. If we could replace at least some of our imports with goods manufactured in New Zealand it would greatly improve our balance of payments situation. Facing the reality that we have reached the end of cheap easy to extract oil and that life after peak oil is actually going to be more localised, we must plan policies to match. The Trans Pacific Partership Agreement (TPPA) The best description of this deal being secretly negotiated is at http://itsourfuture.org.nz. Do read this carefully. Jane Kelsey, editor of No Ordinary Deal - unmasking the Trans-Pacific Partnership Free Trade Agreement is a leading world authority on it. Watch for her talking in your town. Round 15 is to be negotiated in Auckland New Zealand in early December. Who knows, this may be the last round and it may be signed. So let's get working to oppose it in whatever way we can. The New Economics Party will be working over the next few weeks, that is for sure. Will you join us?

Party decides to campaign against Transpacific Partnership Agreement (TPPA)

At our meeting yesterday the party decided to focus for the next few weeks on fighting the TPPA. This is a secret agreement being negotiated by 11 Pacific rim nations. Our negotiators are in Foreign Affairs and Trade and our Minister of Trade Tim Groser has stated that the negotiations will remain secret and he has not seen the text of the agreement. Pharmac is under threat, genetic modification may come in, you won't be able to harm banks or they will sue our government for millions. There now appears to be just one main website informing us about this secret agreement, http://itsourfuture.org.nz. It has a wealth of materials  on their sites. The reason we decided to focus on TPPA was that if this agreement was signed, almost all the measures we want to take to protect New Zealand from financial contagion would be illegal. Our government would be sued by multinationals for millions. We urge our members to inform themselves through this site. Our first action will be to attend the panel to be held in Wellington at Downstage Theatre 1-4.30pm. Seems it is booked out when I booked! Hope they get a bigger venue. Why not join the Facebook group fighting TPPA and help? I found this excellent little video there.  

NZ borrowing to lend to IMF, the latest absurdity

It’s a strange world this world of money. In the melee of the Greek elections and the frantic ramming through of the asset sales legislation came a strange announcement, but it was lost. It wasn’t even reported in the Dominion Post. The Government would be lending $1.26 billion to the IMF’s new bailout fund for the debt-wrecked Eurozone, but it would have to borrow this first. In addition to earlier billions for the stabiility fund, the total cost to NZ would now be over $4 billion, according to Bill English. Ponder on that one! We borrow in order to lend in order to save Europe. Whew. The child in us will ask how money is created in the first place. Can only banks create money? Of course not. We the people can create our own money without the burden of interest. But we stupidly use banks. These days we don’t even use our own banks. So to add insult to injury, when we want to borrow, we go to overseas banks for loans because their rates are cheaper. So let’s get this again. We borrow $1.26 billion at interest and then lend it to the IMF. What? At interest? They don’t say. And they will give it back, the part they don't use apparently. The Minister of Finance says it is our insurance policy. And it is the banks who are in trouble.  So we pay interest to the overseas banks so we can protect them from future bad debts. This is Alice in Blunderland stuff.  Where is the cartoonist? Reuters has just reported “Ireland's High Court began hearing a challenge to the European Union's new bailout fund on Tuesday, launched by a politician who said the European Stability Mechanism (ESM) was not compatible with the Irish constitution.” The Guardian reports: “This, for certain, is a high stakes game. Part of Europe's fighting fund has already been spent on bailing out Greece, Portugal and Ireland. Spain has also pledged funds to the EFSF and ESM, and these clearly cannot be spent buying up the country's own debt…. If the gamble fails, Spain will still need a bailout and Europe will have nothing left in the kitty for Italy.” So let's go back to the Pre-election Fiscal Update and see what it assumed about Europe. I seem to remember ...yes here it is: The PREFU's main forecasts critically assume the reasonably orderly resolution of sovereign debt problems in the euro area. Wow they were so wrong. And these our best economists and financial experts? An ordinary person listening to the news can do better. They could see that if you are solving debt by lending ever more money to a country, the problem won't be solved. And here is another thought. If Greece is too big to fail, and Spain is too big to fail and Europe is too big to fail, then it is going to apply to UK, US and China too.  Who knows where it will stop? The size of the global economy is about $63 trillion. According to Bernard Lietaer et al in Money and Sustainability, the Missing Link, "one day's currency speculation represents more than the annual economic output of Germany or China changing hands. The notional amount of currency derivatives are now more than $700 trillion today. Currency derivatives by themselves represent therefore almost nine times the entire global annual GDP". And that is only one type of derivative. No, the IMF's bailout fund is going to fail and it must fail because it can never match the power of the investment banks.    

Europeans should consult permaculturists not bankers

Every educated and concerned individual on the planet appears to be puzzling over the web of debt problem in Europe.  Many instinctively know that because of our interconectedness the austerity package in Greece and the riots in Rome will be coming to a city near them soon unless this dilemma is solved. The grotesque web of debt graphic published on the BBC News website at http://www.bbc.co.uk/news/business-15748696 is authoritative and clear. It shows that Greece owes to France, US, UK, Germany, Portugal and Italy and does this for each country.

We first need to understand that bailout packages aren’t bailouts really  – they are just further loans. But anyone will know you can’t solve debt with more debt.  Sooner or later the crisis is going to come back and each round it gets worse. And it is rather like the poor having to borrow from loan sharks to pay their interest on their complicated hire-purchase obligations – the further they get into debt the more interest they pay.

How come so many owe so much to so many? Companies, governments and individuals have been borrowing across borders for years. Why couldn’t they rely on their own country instead?  Are there no boundaries between countries any more? Is capital to roam free across the globe in search of the best returns? Oh yes, in the current system it is. Borders mean little these days when it comes to capital flow.

So what to do? Put bankers and economists in to run Italy and Greece?

Einstein said you won’t solve the problem with the same thinking that created it. I have just read an article by a permaculture teacher on energy flows between living organisms. Instead of inviting bankers to their conference to solve the Eurozone debt dilemma, European leaders should have invited permaculturists. They would have learnt that all living systems have semi-permeable borders to control the material and energy flowing in and out. If too much energy (money) flows in the system expands and implodes. If too much energy flows out the system winds down and collapses. This is the principle of reciprocity.

There are other principles but the only one I will touch on here is the idea of holarchies. This, in contrast to hierarchies, means that in Nature there are wholes within wholes within wholes. Each whole-part has its integrity and each is constantly in negotiation with other whole-parts in a dynamic dance to maintain system balance. You can read more about holarchies at http://www.jaredbhobbs.com/holarchy-the-nested-hierarchy-of-holons/  and about the principles of living systems  at http://www.lindaboothsweeney.net/thinking/principles

We will put aside the issue of the gigantic derivatives market for the moment.  Suffice to say Merkel and Sarkosy in their proposal for a financial transaction tax are on the right path.

Now if we apply the holarchical organisational structure to currencies, we need currencies for small areas, currencies for larger areas and currencies for the whole globe. In an ideal system (and private corporations are still I am afraid still in charge of the issuing and controlling a country’s money supply), to ensure there is always the right amount of money the public body issuing each currency will be in a constant state of negotiation with the others. It brings complexity and resilience to a system.

So all this talk of “leaving the Euro” or “joining the Euro” might have to be replaced by other thinking. If we were to imitate Nature we would have a holarchical system. We would have currencies within currencies within currencies. So the Euro would co-exist with the drachma and the mark and the franc. Now, that will take some thinking out, but it is Nature’s model and we are part of Nature aren’t we?

There are many other critical questions like the ridiculous and unfair system where the global currency is effectively still the US dollar and the as yet unquestioned usurious money creation system that allowed all this compounding interest to take place. But let’s leave that for another time.  Just get in the permaculturists!

The Sky is really Falling, says candidate

Media Statement 11 November 11 The Sky is Really Falling, says candidate The sky is falling and nobody is planning for what New Zealand would do in the case of a full economic meltdown, said Laurence Boomert, Wellington Central candidate for the New Economics Party. “Here we have Italy now in deep trouble, and the New Zealand politicians are blithely promising bright and happy days”, he said. “There isn’t a country in the world that will be untouched by this debt crisis. Next it will be Spain, France and USA. Because we are all tightly linked, what happens overseas is very much our election issue,” he said. “It is time to think outside the square and work to invent an economic system not dependent on  growth. If it wants to create jobs, Government needs to focus on supporting small and medium sized businesses that want to introduce healthy innovations. Small and medium sized businesses create most of the jobs not the Telecoms of the world”, he said. Boomert said it is time to work on alternative complementary currencies that work at all levels including at a national level. When small businesses join barter networks, Government should allow their GST and income tax to be paid in their currency. He said government should be actively involved to support our business sector in designing and implementing business-to-business currencies such as ones operating in Uruguay, Switzerland and Austria. For further comment phone Laurence Boomert 027 258 8807