Receivership would trigger a payout to investors under the government guarantee of around NZ$1.7 billion. Some believe that shock to the government's finances would be enough to trigger a review of New Zealand's sovereign credit rating downgrade by Standard and Poor's and/or Moody's.The message here is that we should not have had the government guarantee in the first place. So let South Canterbury Finance go under and get rid of the government guarantee scheme so that this problem doesn't arise in the future.
Monday, 30 August 2010
Is South Canterbury Finance really is too big to fail?
This is a no brainer: No! When discussing this issue Bernard Hickey writes:
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Nothing is too big to fail. Everything does, eventually. As the Buddhists say, it's attachment to false reality which leads to suffering. The reality is that it has already failed. The false reality people cling to is that there's something to salvage other than wreckage. They'll keep on lying to themselves for as long as they can and when they finally accept reality as it is, the shock to the system will be all the worse.
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