I didn't want to buy a finance company

[shrub]

my biggest concern is the debt loading of the primary production centres, and the use of resources we all own (water, mainly) for private profit. socialising the losses and privatising the profits.

Ah yes, water. I have a friend who is something of an expert in this area and he is very concerned about the sustainability of the water supply in canterbury, which will leave a lot of farmers a little stressed when their irrigation runs dry.

A huge part of our financial problems are our boom/bust short term thinking. Ever since Charles Ring found gold in the Coromandel we've had gold rush after gold rush after gold rush. In my lifetime we've had Kiwifruit, the sharemarket, apples, residential property, inner city apartments, debentures in finance companies, vineyards; and probably the king of them all, dairy. The moment someone makes money, the unthinking masses dive in and dump every spare cent they can beg, borrow or steal into whatever is flavour of the moment. Then inevitably the golden goose turns out to be a chook, and they all go broke again. Only this time our loving gubbermint have saved their bacon (excuse the mixing of metaphors), and they get to keep their silly interest rates.

When I was a financial planner (another minor boom) I learned that risk equals rewards, and that all investments have a typical real rate of return. Fixed interest is 0 - 1.5% above inflation, not 6 - 7%, and I just couldn't see how it was sustainable and resisted the temptation to dive in, preferring a carefully diversified portfolio of good old equities. Something I am very glad of, as the investment that was being pushed to me was Bridgecorp.

[aprilia_RS250]

Not really, did you know that its single biggest loan was a huge $42.3 million "for a large commercial hotel refurbishment and redevelopment"? (http://www.nzherald.co.nz/business/n...ectid=10670235)

oh look out, surprise, the rich are being blamed now

http://www.stuff.co.nz/business/pers...-for-SCFs-fall

anyway, whos gota 30% return on SCF junk bonds? off to check out the S1000RR in kingsland this weekend

[Forest]

I am interested in the exposure of the management practices etc: some interesting stuff already. Hubbard is without question as honest as the day is long, but maybe a bit past it? We'll see.

Hubbard may be honest, but he's proved to be about as useless at running a business as the Crafars.

[rustyrobot]

It seems fair enough that we bail them out. After all, if all of their investments had turned out successful I'm sure they would have paid out to us... Right?

[Banditbandit]

It seems fair enough that we bail them out. After all, if all of their investments had turned out successful I'm sure they would have paid out to us... Right?

I'll bet you can't say that twice with a straight face ...

[mashman]

Hubbard may be honest, but he's proved to be about as useless at running a business as the Crafars.

there were banks falling all over the world and needing to be being bailed out left, right and centre (plenty without changing the personnel). The govt were watching... and Hubbard was useless???? small potatoes... but fuck him, he's local bit harsh forest...

[avgas]

whos gota 30% return on SCF junk bonds?

That figure is a little low for a bond return.
Using a standard deviation of 10% I can get a share return on NZSX50 for nearly that (26% last time a checked). Not taking into account dividend payments.
To take the same punt in high risk bonds, you should expect a much higher return for the risk.

[aprilia_RS250]

That figure is a little low for a bond return.
Using a standard deviation of 10% I can get a share return on NZSX50 for nearly that (26% last time a checked). Not taking into account dividend payments.
To take the same punt in high risk bonds, you should expect a much higher return for the risk.

??????????

I don't recall the NZ50 returning more than 30%, even in year, you'd have to borrow money in order to get anywhere near that return.

Maybe a couple of stocks like Restaurant Brands, but not the index.

Also 30% return in 2 weeks..... Say you annualized it would be over 900% return p.a. That's better than any stock in the 50

[Forest]

there were banks falling all over the world and needing to be being bailed out left, right and centre (plenty without changing the personnel). The govt were watching... and Hubbard was useless???? small potatoes... but fuck him, he's local bit harsh forest...

It may seem like a harsh comparison, but the failure of the Crafars and SCF both stem from a failure of governance.

If you're interested in finding out more, there's a lot of good reporting going on at interest.co.nz

Here's a soundbite from the SCF CEO:

The collapse into receivership of South Canterbury Finance (SCF) resulted from its own actions, poor choices and lax governance, with the blame ultimately going back to its beleaguered owner Allan Hubbard, CEO Sandy Maier says.

http://www.interest.co.nz/news/sandy...-allan-hubbard

[mashman]

It may seem like a harsh comparison, but the failure of the Crafars and SCF both stem from a failure of governance.

If you're interested in finding out more, there's a lot of good reporting going on at interest.co.nz

Here's a soundbite from the SCF CEO:

http://www.interest.co.nz/news/sandy...-allan-hubbard

I do agree with you, to a certain extent, in regards to the governance... but the governance isn't just 1 person, it takes a management team, and I reckon it's a overly brutal to steam roller Hubbard the way they keep doing (the guy had 45 years at the top FFS)... A global recession hit and the world's biggest and brightest failed to stave off the collapse, but made sure they go their golden $$$ million hand shake... at least Hubbard threw in a shitload of personal money, I didn't see anyone else doing that, they all stood their with their hands out...
just a tad unfair methinks... the management team have a lot to answer for and I bet they didn't chuck in their own personal wealth ...

cheers for the extra stuff, will have a quick peruse at home tonight if I get time

[shrub]

oh look out, surprise, the rich are being blamed now
:

So someone's blaming me? How did that happen?

[avgas]

??????????
I don't recall the NZ50 returning more than 30%, even in year, you'd have to borrow money in order to get anywhere near that return.
Maybe a couple of stocks like Restaurant Brands, but not the index.
Also 30% return in 2 weeks..... Say you annualized it would be over 900% return p.a. That's better than any stock in the 50

Ah sorry - mabey I didn't read the article properly. 2 weeks sounds extreme.
Was there early termination?

[avgas]

I do agree with you, to a certain extent, in regards to the governance... but the governance isn't just 1 person, it takes a management team, and I reckon it's a overly brutal to steam roller Hubbard the way they keep doing (the guy had 45 years at the top FFS)... A global recession hit and the world's biggest and brightest failed to stave off the collapse, but made sure they go their golden $$$ million hand shake... at least Hubbard threw in a shitload of personal money, I didn't see anyone else doing that, they all stood their with their hands out...
just a tad unfair methinks... the management team have a lot to answer for and I bet they didn't chuck in their own personal wealth ...
cheers for the extra stuff, will have a quick peruse at home tonight if I get time

Perhaps he poured in the money, to buy his own management.
Who dares wins and all that

[Winston001]

Instead, it goes to protect the stupid, the greedy and the devious.....

Shame on everyone associated with this scandal.

But No. Its much more prosaic. The investors in SCF were mainly retired folk, mums and dads, ordinary New Zealanders who had life's savings they had to place somewhere. SCF was throughout its 70 year history a solid unremarkable finance company.

When finance investments became popular in the late 1990s SCF stood out for not being flashy, paying good but not high interest, and making sound investments.

Weird as it now seems, SCFs success was its downfall. In 2002 it had $350 million invested but recently that stood at $2.4 billion. Too much flowed in for Alan Hubbard to manage and risky lending resulted with one or two managers.

If we had Chapter 11 bankruptcy as in the USA, SCF could have sought statutory protection and waited out the storm. Instead we have receivership which can be rapacious.

Alan Hubbard stands alone among finance company owners. He has put $3-400 million himself into SCF. Contrast that with Hotchins and Watson of Hanover Finance who extracted $90 million in the years before it fell over.

[Winston001]

Just FYI the Government Guarantee covers about 100 financial institutions. SCF is but one.

http://www.treasury.govt.nz/economy/...etail/approved