Tag Archives: Netherlands

October 1, 2013 · 16:46

Biased Journalism on USA shutdown?

We have seen reports of all forms. We see information management in what I have called bad news managing. This has happened in the Netherlands. Is it Biased Journalism, or is this journalism based upon the information handed to them?

The second part would be fair enough, because the journalist is dealing with what is handed to them. However, when we look at the canons of Journalism and their codes of ethics some questions come to the front of the lines. Truthfulness, accuracy, objectivity are three of the elements and there are more than just these three. I am not willing to attack truthfulness. It is in my view an empty gesture to do so. This is all based upon information that the Journalist gets handed. Accuracy might be an issue. They might have passed on the exact information they were handed, yet how accurate was it? Was the information tested in any way? Then there is objectivity. I am not sure if that is a valid point. Let us face the fact that objectivity is in the eyes of the beholder and as such there is more than one viewpoint. In all honesty, any article would need to be viewed from more than one side and the news as we usually watch it on TV is actually not that equipped to do just that. Newspapers are!

I have illustrated in earlier blogs that some of the mentioned information seemed inaccurate to me. This happens, I do not claim to be correct, but it seemed too upbeat to me and as such I questioned it. I was not alone, but not too many public contributors were, and in more than one occasion my view was the correct one. So when I saw the NOS news today, more questions rose in my mind and it is time to ask a few more and some other questions.

The most questionable part was the news on the US Shutdown as that danger approaches within the next 24 hours. What I saw as an issue was the way some parties were illustrated. First of all, it is important to know that I am leaning strongly towards the republican view. Not stating so beforehand would be wrong in my mind. The issue I had was with the NOS newscast of the US shutdown. It was not incorrect, but there were issues that have not been mentioned, which were at the centre of it all.

I see this all as the republican move to stop the abundant of irresponsible spending by a democratic party run government. Yes, we know that this is not about the fiscal cliff this time, but the government budget is directly linked to this. The democrats have taken the debt out of acceptable proportions.

Let us not forget that the US has a 17,000 BILLION dollar debt, this comes down to 340 billion dollars per state. In addition, if we look back to the Californian change in 2003, when Arnold Schwarzenegger became governor, former governor Gray Davis was confronted with a recall because the state shortfall was only 10% of the 340 Billion. That was directly due to the dot com boom collapse and a large group of companies were suddenly in a position no longer able to pay taxation, which meant that California, one of the richest states was suddenly without cash. Now the simple logic that follows, if one of the richest states cannot pay 10% of the outstanding debt, how can the others pay at all? This is the big cake that gets layers after layer of icing. With each layer it is presented as something that can be dealt with, but both democrat and republicans have no real solution. This is at the core of it all. So it is not just about the government budget, it is the issue that the budget is not realistic and that it is only adding to the debt. So when I see the part where Democrat Nita Lowey is talking about a compromise, then I end up splitting my guts with laughter. For two administrations there has not been any decent level of compromise. The republican view is that spending MUST go down by a lot. We could view the state by state comparison, especially against the Netherlands. Most states are larger than the Netherlands and none have a realistic approach to dealing with a 340 billion dollar debt. Now compare that to the Netherlands having to cut 6 billion and the view is almost complete. We all have to tighten the belt and within the USA this would last for no less three generations. The view I am proclaiming to be correct does have issues as well. It is however the view I behold. After Detroit, which already has gone bust, almost two dozen cities are facing the same problem in the US. Fresno, Compton and Oakland are three of them and they are all in California (one of the three rich states). If we would take a deeper look at the 50+ largest cities, then we see healthcare and retirement cost issues that make Detroit look like a joke. It is the healthcare part that is at the centre of it all. The Republicans are utterly convinced that Obama Care will not solve it at all. It will just add to the massive debts. What has been propagated as a solution to all, is in the realistic view of many a non-solution that will push forward debts and invoices that cannot be paid for in the end and as such people will face even more hardship down the line. Not to mention the fact that healthcare professionals might end up seeking greener pastures outside of the US.

The budget shortage is not new. This has been going on since 1995 (at least), however, in those days former president Clinton had two advantages. The first was that the government coffers had a cash surplus. Second was that the dot com boom was going nice. Consultancy firms were going strong, the incomes were really nice and consultants were making loads of cash by selling concepts. So, people were buying ideas and not an existing product. No matter what the reason was (like 9/11), it was the spending that the Bush administration started which gave the treasury such a negative jolt. It was nowhere near the spending that President Obama did, but he did not start this, so let us be fair about it. Against the current administration it must be stated that the no true legislation has been passed stopping Wall street the way it should, so there is no evidence that this will not happen again. And we are all aware that the economic thrashing started all with the Wall Street Clam bake ‘lets go hedge funds’ that was a huge part of the predicament we have now.

The question from the NOS ‘Is there no talking with the Republicans?‘ is not the only question and the one sided part of it is not correct. The linked question is ‘Can US overspending not be contained?‘ is the side the Republicans are dealing with. That part does not seem to be addressed by anyone. We see that side when we look at all the other places, including the Netherlands, the UK and Australia. They all have their own budget ghosts to deal with.

The Dutch government has its own cross to bear trying to find solutions to a 6 billion cutting spree. Too much talking and for too long no results. If we take all these sides (in all the talked about nations), then perhaps another method should be found. The first part is to cut ALL political incomes by 20% and no overtime payment at all (not sure if they get that to begin with). That should make a decent cut in the cost to the national treasuries and might make for quicker decisions. In my view I see no solution in any way to lower taxation. I think that this approach is an unrealistic one. What might be a solution is to change it all to a two tiered tax system with only 27% and 39%. That might work, but only if ALL tax deductibility’s are removed. This has two benefits. The system becomes simpler, and over all, with no deductibility’s left it becomes a clear approach. In addition there is a need to make all commerce taxable at the point of sale (the location of the purchaser’s keyboard). This must be where the buyer physically is. This is to take a stance on that Google, Amazon, et al approach, where on-line companies seem to be selling it all from an empty office in Ireland at taxation levels which should be regarded as a joke.

The system has to be changed. We have heard so many voices that a solution can be made, whilst ZERO results have been achieved for close to a decade. When we see administrations of entire cities go bust, it is time to just end whining about a solution that remains no more than a concept.

By the way, when we look at spending it all, what has been the end result? The fact that the US, the bulk of the Commonwealth and the Netherlands are spending way too much (compared to what is coming in though taxation) is out of proportions. That is why the republicans are putting their foot down and so far there is no evidence that they are holding the wrong position.

What is the right position? That is the question and I do not know whether the Republican position will be the correct one either. Yet, staying with the Democratic view whilst we have almost a decade of evidence that it is not working seems to be a flawed point of view. That view is reinforced by the Heritage foundation where it was quoted “While federal revenues are recovering from the recent recession, spending is growing sharply, resulting in four consecutive years of deficits exceeding $1 trillion.”

So the US government has been spending more than a trillion more then it received. Consider that in 2011 the total revenue was set at 2.3 trillion, spending 43% more then you get each year is not a good idea. Consider that the recession is not done by a long-shot; overspending 40% annually will have long term consequences.

If we accept that a government is not a profit based organisation then we could consider that a government would collect taxation at 105%-110% of what it needs. When you spend money and then only collect 71% you are going to need guarantees that things will go wrong. So when I stated that it will take 3 generations to get rid of the debt I was not kidding. In addition, the 17 trillion was just the national debt. The total debt is set at 60 trillion (roughly). This means that every state in the US would have to come up with 1.2 trillion dollars to deal with it. (I know it is not fair, but I need to show an example).

If we consider the three richest states and considering the 2012 numbers (from http://www.census.gov/govs/statetax) we see the following:

The collected taxation from California was 112.3, New York 71.5 and Texas 48.5, all in billions of dollars. So whether we use either the 340 billion or the larger 1.2 trillion, only 3 of the 50 states have any chance of paying it to any effect. Viewing these numbers, do the math and we see that things must change (by a lot). The Heritage foundation is also showing that current entitlements are double the defence budget. How does this relate to Obama care? Will the info they state gives us that the additional costs by 2019 which was set at 100 billion, which is a little over 12% of all collected annual taxes. So, another 100 billion needed whilst there is no income against that. The slide states “Obama care imposes numerous tax hikes which total more than $500 billion over 10 years. Obama care’s higher tax rates on income and investment will slow economic growth, leaving hardworking American families and businesses worse off.”

These are the issues that the republicans are fighting. We have seen enough ‘evidence’ to know that most economic recovery for Europe will not commence until 2015. So, as the GOP (Republican Party) is watching these developments, whilst they are watching the additional entitlement costs go up even further, costs, which are pushing their sense of humour all the way to the basement of Congress. This means that there are additional issues stopping the America from regaining its status of ‘economic superpower’. So these are some of the elements that are not too ‘illuminated’ as the US government squabble goes on. The only bonus I see at present, is that when the government shuts down, they should consider not paying any of the elected Democrats and Republicans for these days either. It might at least save the treasury a few dollars.

 

Leave a comment

Filed under Finance, Media, Politics

Tagged as , , , , , , , , , , , , , , , ,

August 16, 2013 · 13:16

Political ego and their costs

I recently wrote a little about the Dutch Fyra train, a high speed billion Euro train that is still not functioning. There have been several pointing fingers, yet why is this such a complicated project?

You see, a project is basically a simple thing. It has a goal, it has requirements, it has noted milestones and if the project manager is a clear communicator, then that person has the easiest and best paid job of them all. That is the theory!

The reality is less clear. It becomes an increasing mess, when those in charge make oral promises and not follow them up, or even better, in some commercial corporations where sales executives make so many changes on the fly to wear the project manager down, so when things are asked, those sales executives respond with “where is it written down?” and the problem of it all remains in the clear. This latter example happens in several situations where the Sales department and not the project manager is in charge.

With Fyra there is a third tier, namely the politicians. The NOS reported last night that this group had been putting pressure on the Fyra project. Even though the testers reported massive amounts of events, flaws and even clear malfunctions and design flaws, they seem to have been ignored. These issues add up to a system that should not have been implemented. The political pressure that required ‘high speed train revenues’, in the light of spending was getting louder and louder. So over the heads of those people in charge stating that there are issues, the Fyra was implemented against the technical proven flaws.

I discussed the fyra in a previous blog called ‘Multi billion train ride’ on June 5th.

Now they have a situation where a train was accepted in this light of events and in that same light must be paid for. The Dutch rail roads do not want to pay and AnselmoBreda is telling them to pay. Even though it was never completely a fault by AnselmoBreda, there are more and more clear indicators that political interfering by approving something that was not ready seems to have been a clear interfering factor. So apart from the 7 billion in rails, they are looking at an additional half a billion for 19 additional trains that do not do what they are supposed to do. Basically, they would end up being regarded as VERY expensive non hi-speed trains. Then there are the annual interest and maintenance costs on 7 billion of rails, the list grows on and on. Consider these costs whilst the government needs to push 6 billion in cut-backs. Are you having fun yet?

So basically, a multi-billion Euro push, by politicians, who were guided by ego and a misguided sense of profit, the second factor was never a reality to begin with. If we consider this and see that under current conditions the Hi-Speed trains are not an option, then an additional 7 billion has been wasted. I personally wonder how many people will become non-accountable and in addition will be reason for a massive bill to the tax payer. Considering these events, the upcoming parliamentary committee might take a lot longer than many bargained for, which additional costs to boot.

So why are incompetent politicians getting in the way of sound business?

This claim is in this instance not about the present group, it was the previous groups interfering with this process, yet overall when we read some of the current statements on capping banking incomes, and then when it is decided that the new head of Robeco must get 30 million a year, nothing can apparently be done. Ah, the joy of claim versus reality!

There are several indicators that the UK’s version the HS2 is on similar tracks. As reported by the Guardian in July, there have been voices that the high speed North-South line, which will cost to the scope of 40 billion Euro is going in a not dissimilar direction. Even though the UK government is claiming a 20% nett return, the additional factors might have not been weighted enough. Consider that the current issues involving price hikes for train rides are growing between 4% and 9%, the group that can no longer afford these kinds of prices is growing fast. More important, these price hikes are now pushing people away from rail and towards buses for the sheer cost of it. This is an entirely opposing reaction to what the UK government needs it to be.

Those in favour of HS2 claim in the quote “This is a massively misleading oversimplification because it doesn’t take into account the significant financial returns that will be generated from an investment in high-speed rail.”

Even though it is given that unlike the Netherlands, the distances in the UK make for a much more viable need, we should not negate that this is about connecting London to Birmingham. I agree that it is too simple to state that this line is for all those Ashton Villa fans in London, yet the same flaw is shown, when we consider the actual issue. If the distance is 119 miles, then a normal train at 125Mph does it in just under an hour, then why add 40 billion to install a train doing 155 Mph? Getting there 10-15 minutes faster does not warrant such expenses, more important, considering the economic charges, the group willing to pay such an extra amount to get so little extra time would be dwindling a lot faster than some might think, which beckons the question “What significant financial returns?” it is not until the train goes beyond 200Mph that this all becomes a more interesting issue, which means a 20-25 minute saving on that part alone. Here I agree that some (not all) will consider it. The question becomes how much extra will people have to pay until the 50 billion returns is begotten? In my mind that requires a commuting population a lot higher then it seems to have, or the tickets will become extremely pricey to say the least. In my mind, the wisdom is in the middle, it takes a massive amount of traveller, all paying top pound a day. Considering that the economy is nowhere near that strong in the UK until past 2016, the costs involved might be way too high. This all in the end gives weight to the statement made by the Institute of Economic Affairs calling it a “political vanity project“.

So which cheques are underwritten by a political ego and can people afford the consequences of such amounts?

2 Comments

Filed under Finance, Politics

Tagged as , , , , , , , , , ,

July 11, 2013 · 22:24

Boosting Pensions

Would you like to lose your pension? This is more than just a simple question. If you live anywhere in Europe, then the danger to your pension is a lot more realistic and will have a larger impact then you thought there would be.

Let’s take a look at a few countries.

Netherlands.
This was already under review, however, at present there are discussions going on to get a handle on accessing pensions for all kinds of reasons. The image in part is that the Dutch government needs this treasure vault to deal with more immediate issues as well as well as the application of spending to start an economy. As reported yesterday by the NOS, the issue at present is that the government thinks it is getting access to billions a year extra. The ABP comes to the conclusion that the changes will in the end cost billions, not save them. This comes as the government is presently trying to cut almost 3 billion Euro in retirement funding. The cut back was based on the fact that businesses and employees will save-up less per year, which might save 1000 euro, which would suit the government, as this gives them a taxation windfall of 2.3 billion. In the new system it is stated that not only do people lose the 1000 euro advantage, they will have to pay more. So there would be zero advantage, even worse, considering the amount of government jobs the treasury would be down a billion, so in the end no savings at all for the poor poor coffer, only additional losses to deal with. At a time when 6 billion in cut-backs are needed, this is not the bad news they want to hear. All this has a few more hooks. Especially when we consider the questions by Hachchi (D66) in regards pension premium raises that the ABP added in January 2012. The costs were raised by 300 million euro, as documented in  2012Z01310 (source: http://www.rijksoverheid.nl/bestanden/documenten-en-publicaties/kamerstukken/2012/03/06/antwoorden-inzake-de-verhoging-van-de-pensioenpremie-door-het-abp/antwoorden-inzake-de-verhoging-van-de-pensioenpremie-door-het-abp.pdf)

It is interesting that a similar issue is now appearing only one year later. There is more!

In one view we read that the ABP in 2010 was set at 105% coverage (which means that if 100% pension is paid out, 5% remains for growth). It is however interesting to read from the NRC (at: http://www.nrc.nl/nieuws/2011/12/01/abp-verhoogt-pensioenen-niet/) we read that in December 2011 the coverage was only 94%, so in one year they went down to some degree. The same can be read at http://www.pensioenbelangen.nl/label/abp/ , more interesting, the numbers state that per September 2012 is was only at 101%. So if we recall the blog I wrote a week ago “The Age of ‘no retirement left’ is coming“, it is interesting that in that case the government is stating so much wealth. As the ABP is considered to be the largest one, we should wonder whether the Dutch politicians have any clue on what they are doing. More important, is this about short sighted cutting avoidance, or is it about more. Do not worry, they are not alone, we will have some fun looking at the UK situation next.

Is there actual evidence to support my theories? Well, the sources above clearly show that the ABP is only marginally above 100%, yet they had remained below 98% for a decent amount of time, so there is a valid amount of concern. In addition, when we consider the questions as stated in

2012Z01310, then certain issues in the recovery measures of pensions were not known, yet the initial billing would have been there, so this again is a piece of evidence that reflects 11th hour budgeting. The fact that this was never completely properly addressed remains a worry and not a reflective concern considering that in part the same issues are now again in the news.

The issues are only part of the entire picture. The fact that the Dutch pension administrator PGGM, has stated that there are issues with Walmart, could have some serious repercussions. Reuters quotes that “PGGM held 2.76 million shares of Wal-Mart as of March 31” (at: http://finance.yahoo.com/news/dutch-pension-group-halts-wal-211416613.html) this was only last week. Should the PGGM pull out then there would be concerns on both isles of the Atlantic river. Those shares represent well over 200 million, which means that Wal-mart might get some renewed problems down the line. Whether this would be due to PGGM is not a given, the fact that questions from a shareholder holding almost 3 million shares are not answered is certainly matter for concern. If we consider the economic downturn the Dutch have faced over the last 2 years, considering the issues the IMF reported in 2011 on Dutch pension funds. In that time, people entering their retirement saw their funds cut and a support capital of 50 billion was needed. So when we read less than 2 years later that those finds are so rich and that they should be opened for additional means, whilst a week later we read on some of the alleged dangers, it seems to me that playing politics with pensions is a very bad and not too bright idea. The 2011 article can be found at http://www.europeanpensions.net/ep/imf-team-recommends-adjustments-to-dutch-second-pillar-system.php

United Kingdom.

So, let’s take a look at Australia’s baby brother UK (as UK is only 3% of the size of Australia). The UK is in dangers no less immediate. The Guardian reported last November that issues would impact greatest on savers and pensioners. Yet, the story behind several issues is not brought here. For that we should look at what is happening now. Part of that is set here as http://www.guardian.co.uk/sustainable-business/capital-markets-climate-change-pension-funds. Is that even a fair assessment? If we read the quote “The way pension funds invest will determine the future, which means that to thrive they’ll need to wake up to climate change” I will wonder whether this is wishful thinking of whichever politician or investor whispered to the author. When we looked at the Netherlands and other places, these nations are all looking at sustainability solutions. Yet at present the ROI of these options are not up to scrap, so WHY use pensions there. These are fields that have been ignored be several administrations. If it is SO lucrative, then why not invest in it yourself (me asking governments)? Yes, it will be the future, but at present too expensive, so getting articles out there for pension funds to invest in the future might read nice, but as ROI reports falter it will not hold a candle up to the coming rage. This view is shared by James Cameron, chairman of cleantech investor Climate Change Capital. I know that the next part sounds dodgy as hell, but when we consider the quote “Future pensioners are going to have to bear more of the investment risk themselves“. In that case Pension funds are much better of owning parts of Raytheon and Northrop-Grumman. It seems that governments all over the world are seemingly ready at the drop of any hat to buy missile technologies, and as such the ROI for pension funds are much better off going to those places. I agree that the statement is less appealing to read, but why should pensions now be put under more and more pressure whilst, those behind the scenes refused to budge when they should have done so. The investment risk reads like a joke considering the article published in May at http://www.guardian.co.uk/money/2013/may/22/one-five-poverty-line-state-pension where it states that  20% of those retiring this year will fall below the poverty line. This is in my mind the consequence of a housing issue never properly dealt with for over 27 years, whilst pensions were left alone. Taking both in the balance, then pensions might cover 80%-100% of the rent for this year, and those will come up short 2014 and later. So that is in the most positive case where people do not need to eat or drink ever. This is only for those not living in London, living there would almost amount to instant suicide. At least the Dutch can claim that their retirement issue had never been THAT bad. So, as there is a collective boost to raise the value of the RBS, that former bastion might be used to actually boost and increase value and strength of British pensions as they focus on getting back on the horse of profit (or at least try to get on that horse). Pensions are being cut in other ways too. That part can be read at: http://www.independent.co.uk/money/pensions/expats-call-for-fairer-pension-payouts-8659717.html. Some of these pensioners (almost 10%), saw the unaffordable future they saw coming their way and as such they moved to other areas. Some saw the light in time and bought a small place on Crete, some left for alternative Mediterranean locations and some went to the warmer regions of South Africa. These people saw the light, saw the non-linear growing costs and chose a better solution. It goes even further. What is less than possible in the UK becomes very affordable in India, where a week’s pension gets you a 2 bedroom secured apartment for a month, considering that rent is the most expensive part, three weeks of pension should keep a person well fed. So why not consider this? Instead of going on an exotic vacation, live in an exotic place, and of course, the Indians are all on average Cricket nut, so not the worst place to be during Cricket season. If these people are forced back because of pension issues, would the British government have the means to suddenly appoint housing to these people? They might not get an option in this as they froze pensions. In that regard, I do hope that the Exchequer George Osborne considered the consequence of even part of those 1.2 million pensioners returning to England and his 2 billion pound winter fuel allowance. That is only one post. On the other side, there is a genuine and acceptable concern of the people who are abusing that system. There had been earlier mention of the situation where UK men marrying Thai brides is a reason for the foreign pensions increase. If we voice the scenario where a pensioner marries a woman under 25 and she then gets the allowance after he is gone, then this would indeed be an unfair use of the system. We could argue that a marriage, not validated in the UK would not be seen as a marriage (I know, the legal nightmare behind this is so not nice). However, that those who never added to the British system, not being eligible for those funds would be slightly better phrased, yet the consequences for consulates to keep track of these people would be almost disastrous. Even though this would be spread over several countries, the fact that they could be required to deal with over 700,000 additional requests a year, is not likely to become a ‘relief’ to the system. Yet I must agree that something must be done. The dangers of cutting the transferred pension, if there was a marriage, could mean that these people might have a claim on humanitarian grounds to receive full Visa and transfers into the UK, which in the end might add up to be a lot more expensive. The only solution could be legislative, yet which of the ‘evils’ to choose from is not really for now. In my mind the options grows to make the pension only transferable if the marriage was longer then a certain period (5 years) or the spouse must have been a UK resident or lived, worked and paid taxes in the UK for no less than 10 years. I am just grasping the 5 years out of thin air, yet this would limit the dangers of UK pension abuse, it would also give a clear message to the valid pensioners that THEY are protected, yet that there are limits on passing over a basic state pension. In regards to those who are valid recipients of the basic state pension and their foreign setbacks there is more information at http://pensionjustice.org/.

 

Germany.

We should consider the German system, even though it is thought to be strong, secure and to some extent safe. They share the dangers those in the UK currently have. As reported by The Spiegel at http://www.spiegel.de/international/germany/germans-fear-poverty-in-retirement-even-after-life-of-work-a-855352.html, even though their economy is in a strong state, the lost investments, the futures of retirement are almost none existing. In fact, their pensions are a lot worse of then the UK ones. A person there would end up getting a mere 32% of their income. If we consider the Dutch system where 70% does not even foot the bill, the desperation of 32% is a lot less appealing. The question becomes important when we consider the required pension buffers these pension funds need to have. The interesting addition is that a report in 2012 from the labour ministry stated that “the Labour Ministry itself, which indicates about a third of current full-time employees could end up receiving social welfare unless the pension system is changed. Those who have spent 35 years working full time but earn less than 2,500 euros a month would also end up depending on welfare.”

So this is the third country playing politics for non-visible short gain and massive shortages in the long term. This gives serious concern for the bill the Germans adopted that as of January 2013 “for a reduction in the statutory pension contribution rates”. And that helps your citizens…..how?

So this is not just a national issue, this is a European issue on several levels. Unless some strong actions are taken, a large part of Europe will enter living conditions worse than that of several 3rd world countries, whilst comfortable living would be found for those moving to places like India and Argentina.

Go figure!

Leave a comment

Filed under Finance, Politics

Tagged as , , , , , , , , , , , , , , , , , , , , , , , ,

June 28, 2013 · 13:02

Exploitation fears for tax-payers

The Dutch NOS reported another go with banks in the view of business. Bernhard Wientjes has been voicing the opinion that some of the banks (ABN/AMRO and SNS Reaal) should be sold. It was brought in the air of ‘when you have no more money you start selling the silver cutlery’ would be the next step. As the Dutch government needs to cut 6 billion, the cutting spree could be a lot less. Well, in this matter I personally stand with Finance minister Jeroen Dijsselbloem who is not that eager to do that. There is logic for not doing this, as this relief would be for one year only and after that the cuttings would still need to be found next year. I am worried that certain business men are now in a state to strong hand certain political decisions. I leave it up to the reader whether those decisions are purely for the need of greed.

If business is linked to greed (often called ‘enterprising solutions’) then that would clearly fit in the views of Bernhard Wientjes. As chairman of the VNO-NCW it would be an enterprising solution that is right up his alley. The VNO-NCW is a fusion of the VNO (League of Dutch Commercial Enterprises) and the NCW (Dutch Christian Business Society). Their mission is to support and further the needs of Dutch corporations both on a National and international level. In this he is doing exactly what he is expected to do.

Yet, in this light, at a point where two banks would be sold far below value and at the expense of the tax-payers, one should clearly ask and look at the possible windfall for Bernhard Wientjes and his friends should this work out in that way.

There is a clear valid question whether the Dutch Silver cutlery is currently in a safe position. The reality of 6 billion of cutbacks will start to show a strangling result, yet, this was the danger all along when previous political alliances (2006-2010) were clearly pushing the outstanding invoice forward. Now that there are no more options, the consequences are likely to be dire, and as such in his position Bernhard Wientjes is clearly trying to look forward for Dutch corporations. I see this specific step as a dangerous one and until Dutch banks are clearly on a minimum set standard nothing should change. In addition, I am all in favour at present to keep these institutions nationalised to prevent their boards to just seek additional high risk gains at anyone’s expense to meet personal commission goals, whilst ignoring local needs (mortgages and such).

Even seeing these banks as possible training steps for younger jobseekers on the dole, to give them short term jobs whilst staying on the dole, would give them additional food for job experience. The answers that some view that this is not how it is supposed to be, I would counter, with ‘what solutions do you have?’. We need to change the way we think and operate. Instead of trying to balance which pocket the money is coming from, we should accept that the money is coming from the suit the government wears and see how far we can walk with this suit. Instead of staying on principle of keeping tabs what pocket it comes from, use the principle of it comes from us anyway and focus on instilling knowledge and experience. That will strengthen the young to get a good shot in getting something better with a decent chance. If you have any doubt, then consider that the Netherlands is only one of 3 countries where youth unemployment rates are below 10%. Many of the Southern European countries are way over 40%. If the future of youth employment is about experience, then make sure that the youth are getting a running start now is going to be important down the line. If their future could be a decent job in Germany, then giving them an edge as they compete with desperate youthful jobseekers from Spain, Italy or Greece is essential. Do not think that those kids are any less. Those who graduated from Universidad Complutense de Madrid are more than top Notch. 7 of their graduates ended up with a Nobel price and graduates from there ended up with 2 dozen of other internationally acclaimed awards. So, if we are looking at future events, getting the youth ready NOW will be an essential step.

Yet, this week has even more issues involving banks. A report that is due to be released tomorrow on advised banking changes. The ‘advice’ is to change the mortgage market. In the Netherlands it is currently possible to get a 105% mortgage so that the house and the notary costs and change of owner registration can all be covered. The commission chaired by Herman Wijfels is now advocating that the mortgage cannot be any higher than 80%. This is to prevent that the debt of selling a house at loss would end up hitting the banks. It seems that the banks are all over their need for ‘securing’ for the little man (read the average consumer). Taking into account that the average house in the Netherlands is around $350,000 the question, especially in this era of lack of funds is where on earth will a person get $70,000 in savings when the Dutch taxation system makes it almost impossible to get that kind of money saved up. They also mentioned that this should not be done until the housing market is stronger and prices are on the rise. Like that will help people to get the money. It is interesting that there is no mention of the much more reliable and fair Swedish system. Perhaps the report due out tomorrow will mention it, but I have not been privy to the full report. In the Swedish system a house often has a two tiered mortgage. You have the bottom part which envisions the gross off it (let’s say 80% for argument sake) at a low base percentage. The rest goes into the top part. Now that part (in my case) was almost 2.5% interest higher, but the mortgage was 105% covered. So instead of the unaffordable savings needs, we have a slightly higher mortgage. So, even if we have to accept a slightly cheaper house, we at least can get a house and not be looking at houses, never being able to afford any of it. The question becomes on what it was about. The fact that a report leaks is no news, but that the report leaks just around the same time Bernhard Wientjes is making a play to sell banks is a rather convenient coincidence.

These events are important to consider. This is because the same issues are playing in the UK. Consider that Lloyds is in need of an extension as they are selling 631 branches. This and the issues around the Royal Bank of Scotland do have links, as the UK government needs to cut cost by a lot more than 6 billion (having a Trillion in deficit makes that an awkward necessity). So will we see the same play as some are now seeing if they can sell banking interests at no more than tuppence on the pound? There is absolutely no known plans at present (in case you got scared or overly enthusiastic), but the issues remain, and the solution as such would be there in equal measure. To allow the young unemployed to become part of the bank on internships and training places, so that we can offer a solution where those seeking jobs will have actual work experience in their CV. These measures might seem small, yet the confidence boost that the younger jobseekers gain, could be the winning factor. In addition, extra hands, helping to boost the value of these banks would mean that when sold, they will go for a much better and more realistic value then they are currently set at. All this in a combined effort to strengthen commonwealth economy and their assets, for the simple reason that the European Economic outlook remains grim at best and relying on overly confident reports of economic prospects, that get downgraded quarter after quarter is not doing anyone any good.

 

Leave a comment

Filed under Finance, Politics

Tagged as , , , , , , , , , , , , , , , , , , , , , , , , ,

June 18, 2013 · 17:04

G8 on a bicycle ride

Today, like most days, it is good to get this little jolt of inspiration by Dutch news bringer NOS (www.nos.nl). They illustrated a specific situation where the banks are failing. Whether it is intentional, short sighted or lack of whatever they claim. Banks are not doing their jobs. They have turned into commercial enterprises at the expense of everyone.

We all know that money is tight. We do not have anything to spend, and when I see something interestingly innovative that it could better both consumer and economy then it becomes a matter of public scrutiny, whether some should be allowed to continue the way they are and the way they are clearly not properly doing ‘their’ business.

Of course, the reality is that the Spanish banks are pretty much utterly bankrupt. So if a bank is described as “the connection between customers that have capital deficits and customers with capital surpluses.” So what should we think when the bank itself has come to severe deficit.

When a bank is subject to regulations, guidelines and requirements, I wonder if some should be allowed to call themselves banks. In addition, I am starting to have a few serious concerns in regards to these regulations and guidelines at present. If banks are supposed to have a decent foundation of reserves, the notion that a good idea failing moving towards to a profitable niche should raise questions.

A step requiring no more than 3 million Euro! This bounced as banks seemed to have ‘other’ priorities. When banks that seem to have billions vested in something and according to Basel III are required certain reserves. What on earth is going on?

Consider that a bank has EVERY cent levied in one way or another in a nation with over 25% unemployment rate; I would say that something seems to be wrong in my book. It should be considered that these banks are serving a population group by letting them skate on dangerous thin ice, which is how I see it. Of course the opposing view might be very true. It might be an idea that the banks see as a not so profitable one. Yet, the fact that this design is getting international interest seems to give weight to the designers view, not the banks view.

So what caused all this?

I grew up in the Netherlands, a nation that used to have a massive national monopoly on bicycles. Bicycles were almost 1:1 for every person living in that country. Cars were still a rarity. Today, places like Amsterdam, Leiden and Rotterdam rely on bicycle (especially the student population). I remember having to go 9 kilometres every day to school. So that was a daily 18 Km ride! Those were the days! So, even though I’ve resided in places like London and Sydney, where the rider of a bicycle has less of a chance then Bambi in a deer hunt, I remain optimistic towards the needs of bicycles on a global scale.

In addition, we could consider places like France, Belgium, Italy, Sweden, Germany, Denmark and several other places to realise that finding an investment like a novel version of the bicycle into a new era is a massive thing. The chance for an investor of getting a possible corner in the market with 3 million Euro should wake up those who have cash. Seeing it could also infuse the economy of Spain, then that investment seems a lot less like a gamble. I would like to add, that if I had the money I would run to that opportunity.

So, here we are!

A Spaniard called Eduard Sentis has come up with something so innovative it is hard to grasp that no one came up with it. He calls it the Urbike. When we think of bicycles, then we should consider the downsides. For me over history that has been two parts. The first is the danger of flat tires. Eduard gave an old idea new breath with a solid tyre, so no punctures ever. The second is that the chain of the bike can get dislodged. No problems, Eduard added a bicycle version of a shaft drive. So the two downsides I lived with are gone. It even comes with a navigator that is seriously rain and shockproof. (http://www.designboom.com/design/urbikes-by-eduard-sentis/)

This is innovation where no one had looked to for some time, or perhaps they did and the timing was off.

Why would people buy a bicycle? Consider that cars become more and more expensive, fuel prices go up and when you live against a wave of mounting costs then the old way could be the best way to get anywhere. Many will come up with excuses not to consider the car, but then, be honest! Do you really need a car to get bread and milk from the grocer? Do you really need to get to friends nearby in cars?

All that waste of money and then consider all those online options you get from those insurers after answering a ‘few’ questions. For the most you do not ever ask that much detail from the person you have intimate sex with, question after question! NOT ONE gave me a simple answer. They will claim that answers are not that simple. A bicycle is simple. You sit on it and drive. You should get some insurance, but it should be nowhere near the cost of a car insurance.

We seem to ignore in many places the fact that we all could use the workout a bicycle gives us. If all these governments are so into healthy living, the impossibility of Eduard Sentis not getting any funding is becoming more and more of a puzzle, one that might yield massive earnings down the line. I agree that this is always a gamble, but timing is presently on his side.

So is this about the bicycle or the bank? I think both need to be looked at. I think financial groups are now moving into margins where almost none are left. If the Royal Banks of Scotland had close to 40 Billion Euros revenue in 2012 (not all of that profit mind you), and they are in ‘decent serious financial predicaments’ then other banks should doing reasonably well. 3 million should hardly show up with the possible future revenues in store. You see, that is part of the question. What do we know about those margins they should have?

So an amazing innovation gives visibility to failing banks seem to be in question. The fact that the bicycle was offered to the Danes as they were not able to get funding in Spain only intensifies the outstanding question. The banks with the reserves they should have; the transparency in banking that should be and their status at present. Who is minding the store and are we getting the whole picture or are they too managing bad news over a long period of time?

So here we are, the G8 has started and their message is trade and transparency (well these two mattered here to me).  Considering that India and China are also attending that summit, then the question should be, how did a project like Urbike not get any funding for bringing transparent international trade. It’s not like the 200 billion in bad debts in Spain will go anywhere. If Santander can pledge 840 million towards bad banks, in a place where the toxic assets have swallowed 38 billion (Sareb), spending 3 million (less than 0.0001%) towards something that could propel trade and economy seems to be a good thing.  I wonder if that will come up during the G8, or will it in the end be another vessel to move into a Syrian discussion. Perhaps weapons trade has a better return on investment? (It seems to work for Russia)

As we move into the latter half of another year, too many eyes are averted to a growing amount of toxic bank moves. A cost that is very likely to get left with taxpayers in the end.

It seems that we are all taken on a bicycle ride, a bicycle that got never any funding to begin with.

Leave a comment

Filed under Finance, Politics

Tagged as , , , , , , , , , , , , , , , , , , , , ,

February 27, 2013 · 13:49

The ugly unspoken truth

It is nice to get your thoughts confirmed. So, my ego was taking a nice leap forward when I saw how ministers all over Europe agree with my views on blogs I had written in the last few months. Foreign ministers Margallo from Spain and Westerwelle from Germany as well as French Minister Moscovici from France voiced pretty much literally the issues I had on several finance issues plaguing debt driven Europe. The Italian election is not as much a solution as it has now become an issue of less trust and security then before the elections.

So, it is nice that they agree however, the issue I have is that the Italian population seems to ignore that THEIR predicament comes from massive irresponsible spending. The other part is that Germany, when needed did tighten the belt and therefore they are now in such a strong state. Other nations are still fighting with issue they have (like the Netherlands). This is not because they are not doing anything, but because, from my humble opinion, they started too late, and as such they are now in this ‘mess’. They still have more issues to come. As they reflected that 2014 would bring a 1.1% increase, my thoughts are nowhere near that optimistic. I cannot vow on the issue that they are wrong, yet, over positive thinking is a hampering Anvil for them. I would think that if they could pull of a 0.3% positive growth in 2014, then that might be nothing less than a decent miracle.

Whether they get this through ‘clever’ bookkeeping is to be seen. Even in the most optimistic events. This means that the Trade ministry would need to get their International options like in Qatar and Bahrain. This would definitely help towards the 0.3% growth but not the 1.1%. In addition, the issues currently plaguing the gas winnings in the state of Groningen could hamper income for the Dutch government. They reported over 11 billion euro revenue from gas. However, as areas in Groningen were disturbed by Quake’s that seem to grow in intensity due to the method of extracting, could have two effects. First it is not inconceivable that revenue from Gas might fall below 10 billion, as well as the fact that damages from these quakes mean that payments well into the millions would be added as costs. In addition, there have been newscasts that current events are NOT events the current industry buildings are protected against, so not limiting gas extractions could have far fetching consequences. Not just to the revenue, but also to an area with culture and architecture that is quite unique to that nation.

The final straw is the involvement of the RABO bank in the LIBOR scandal. They have been given a penitent company donation of 330 million Euro. Even though they are not state owned like the SNS, there will be consequences. The first one would be whether Moody will adjust the bank even further. It was downgraded in June 2012 from AAA to AA2. Will the fine as well as the implication of lessened revenue and profit (as resulted from the LIBOR effect) mean this bank is downgraded even further? That part I do not, and do not claim to know, but it stands to reason that additional drops in government donations (read paid taxes) will dwindle a little. All these facts mean that the target of 3% budget deficit is not likely to be achievable. This links of course to the issues in Italy. As they miss their targets we are now with 2 players who become a question mark and Italy being number 3 on the ranking list of Europe, THAT impact will be a prominent one.

This European cart which is in definition pulled by the current two champion stags (France and Germany) will only slow them down too, meaning that a strong European economy (or at least less debt driven) is not likely to become a reality before 2016. If I had any faith in my predictions (remember, I am not an economist), then I would speculate that 2014 will be Europe’s hardest year. Not because of the economy as it gets through 2013, but because the drag from 2011 through to 2014 will have exhausted both people and companies to the brink of collapse (of financial exhaustion). For those thinking that I am so far of the mark, consider the greying population and the issues they are already in a group that cannot make ends meet in January 2013. The issue here is that this is not limited to places like the Netherlands and Spain. A fear of clear shortage is also hitting France, Italy and Germany. It will be hit on both sides of the equation. On one side, there is a clear danger that less money can be paid towards pensioners and stronger on the other side is the ever increasing cost of living. Whether it is because of food, Electricity and/or gas/fuel prices. Retiring before 2018 does not seem to be a healthy option, and NO guarantees are forthcoming any day soon.

Leave a comment

Filed under Finance

Tagged as , , , , , , , , , ,

January 12, 2013 · 09:32

Greed and the lack of common sense

We have seen the adverse effect of greed for some time now. Going back to 2004, we saw the moves that financial institutions made, and during those days, and in the aftermath of 2008, we saw how a chosen few walked away with hundreds of millions of dollars, whilst at the same time, leaving flocks of people beyond destitute.

The fact that this is still happening in 2013, gives way to a collection of requirements that seems to be non-considered by too many people who should be in charge of protecting the population. Why do governments remain in a state of enabling this level of unacceptable transgressions?

Let’s take a look at the events that are making my blood pressure dangerously rise (again).

On the 10th January a non-formal claim was made by Dutch businessman, Ronald Ras, related to the “Mosa Trajectum” golf resort near Murcia in southeast Spain. The claim is OVER half a billion dollar. Should this pass through then this bank will require serious levels and financial amounts of support. The bank claims that Mr. Ras owes the bank in excess of 165 million dollars. So this could be all ignored as a simple situation (he states versus they state, you know the legal drill).

The issue that makes this event escalating is that this bank received a billion dollars of aid in 2008 during the height of the financial crisis. This bank is also due to announce its restructuring plan which would scrap a massive amount of jobs (a mention of 750 scrapped jobs was mentioned by UK Reuters). In addition to this, the Dutch bank and insurance group SNS Reaal is considering a so-called “bad bank” option so they can push their bad ‘property idea’s’ into a different bank and bookkeep it out of existence. Shouldn’t people go to jail for ideas like that?

Actually, that is not what this is about, but the background is relevant to all of this.

What is interesting and what is the issue, are the amounts just this one bank requires. If we add only these two issues together, then we get to 1.5 billion dollars (2 out of how many issues?). Compared to the population of the Netherlands, the required assistance comes down to $1000 per citizen. So this one bank needs more funding than the entire population can afford. This is the 4th bank in size and their needs have become a fair size of the national debt. How can this even be allowed? Take into consideration that almost a third of the nation makes less than 20,000 euro’s a year, so their share of $1000, will be more than 20% of the taxes they pay. If you look at those parts, then it is clear that the Netherlands is growing deeper and deeper into a hole that no budget can close.

On the other side you should consider the luxury property issue that someone is trying to get done in another nation. It took me almost a year to get one mortgage deal for $50000 within that country, and then it was only possible with almost impossible conditions and guarantees. This ‘person’ gets hundreds of millions and no one installed a proper legal engine to make sure the bank does not get hurt by some of their decision makers?

How does allowing this even compute? In all fairness, the bank did make the statement that this claim has no foundation. Still, how does it get this far? Perhaps we should take another look at the bank too?

So let’s take a clearer look at the issues one part at a time.

1. Someone has an idea for a real estate project worth gold course and as such he gets the financing arranged.
So this first point means that the bank has drawn up agreements, contracts and set up clear lines of credit, as well as the rights and duties of the person who they are lending the money to.

So if this first point is clear, then there is a clear path, and all what happened today on the news is just hot air, with no foundation (the Bank stated January 10th that there is no foundation for the claim).

2. The people behind all this are setting up a good quality sales team (or they should be), all with clear targets. I need to mention here that these targets should be achievable. Under these conditions there is no excuse for sudden financial breakdowns. As we all know, these breakdowns did not affect many in the financial institutions as they walked away with a golden handshake worth mega millions.

Now here is the first issue. I did some digging into their visibility.

–          Their web presence is extremely low, and if there is any that is valid, it is not that visible. THEIR FIRST BIG MISTAKE! I was going over 3 sites, they all showed a lack of professionalism, it is limited in languages (Spanish and English only) and the places they offer are between 1.2 and 1.5 million euro’s. It is interesting that the group who could afford anything like this is less than 0.01% of the Dutch population. So this is an exclusive project that over 99% cannot afford. Now, even if you consider this in European terms. This is a place only less than a handful can afford, and those people rarely all want to live together.

–          If we consider this as a pure resort for vacations, renting/leasing a time shared, or just on a hotel based foundation, then this plan calls in even more questions, as there was little or no infrastructure. This reminds me of the tourist approaches we saw during the 90’s. There were loads of what they would call a time share option, most of them went sour and plenty of people got left holding a bag without value.

So if these two points did not call in questions, then look at the next:

I looked at:

–          http://mosatrajectum.com/venta/
–          http://www.mosatrajectumproperty.com/

These places are all about that project, and I personally find them not that professional (considering the price of the houses), not well conceived, error prone when it comes to the languages and lacking in other ways too. If a faltering sales system is the cause of a failed project then these two links could be regarded as strong indicators that this all failed for many more reasons, not just the economy.

Several of them should be considered as failings of project managers. 1.3 million Euro houses are not realistic. Even before the economic crash it would be unrealistic for many people. It becomes even less interesting when this is all build in a place where there is nothing. I personally see this as the idea of someone seeing their pupils change to euro signs and greed took over (really quickly). Even after the failings of the world economy, this project could have survived if this would have been properly aligned to any kind of realistic market. Yet, even though over the last 2 years the group of Spanish unemployed was OVER 20%, overall spending was down a lot more (not just in Spain), nothing seems to have been done, and now there is a claim? This I deduce from these sites, and searching through several other sites, not making decent mention of this real estate location.

From the data I have now, I would side with the bank, but questions should be asked on all levels. Especially considering America had their Freddie Mac and Fanny Mae issues in 2008, and this plan seems a lot less stable then the huhu idea’s Mac and Mae were having.

So how did the bank fail?

Not sure if call it a fail, but if we look at several of their projects, some that are unaffordable, questions on how these projects are such losses. It is even more important to look at how the numbers are accepted into starting some of these projects to begin with. If some of these places are more decently priced (even considering a minor loss) then it could have drawn prospective buyers and even at a loss, a nation of taxpayers would not be called to pay the bill of over greedy individuals not setting a realistic goal. Consider the Spanish resort example. As the information of the village, even when English is selected most of its information comes in Spanish, I would think the bank, or better its account holder should have kept a better eye on this. This is 100 million plus at the start, so keeping an eye on your investment is always a good idea. If we consider a current projected cost amount of 250,000,000, and divide this by 3100 houses/apartments currently projected, then each house would be less than 100.000. If we consider the costs involved then this solution is a whole new idea.

Should the developers complain? Of course not! They failed, pure and simple. The bank moves in, confiscates the lot and sells as needed. Is that what the developer wants? No! He wants his profit, his ego. It seems to me that for such a reward he should have succeeded. This is not the only project that bares scrutiny. If we consider some of the other building scandals that the Netherlands have faced, then I wonder why these levels of over pricings and overinflated values are not better investigated.

We are looking at a new approach of banks to write of overpricing and bad ideas. Why push this to the taxpayers? These groups are getting too much protection all over the place. The Netherlands are just one example. The US example of Freddie Mac and Fannie May are even more unacceptable.

Leave a comment

Filed under Law

Tagged as , ,