Monday, March 2, 2009

Investors strike it lucky in South Canterbury

It's hard to know how to feel about the taxpayer bail out of a failed South Canterbury finance company.
Almost certainly last year's hastily put together Government guarantee scheme was not designed to fix the woes of small finance lending institutions but this is indeed what it is being called upon to do.
Suddenly there is a very real possibility that this scheme could be relied upon more and more in the coming year by other such groups instead of the banks it was supposed to lend confidence too.
All this might be good news for Ma and Pa investor in the likes of South Canterbury but it raises serious and important questions about just how much thinking the Government did last October when it rushed to stop the panic enveloping New Zealand's banking sector.
It is all very well to try to secure such institutions but it is plain to see that the Government did not think of the longer term consequences and how much this could all end up paying the taxpayer.
Funny how we've all got used to shoring up big business in this country - think Air New Zealand and Tranz Rail - but we sure as hell are not used to dishing out the dosh to small time finance companies with 2000 or less investors.
A stitch in time doesn't just save nine it seems, a stitch in time will save the smallest financial lending institution regardless of its role in its own demise.
And that has to be a dangerously expensive mistake for every New Zealand taxpayer.

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