$112 billion in Derivatives and off the books accounting. John Key can’t help himself!!!

In an astonishingly critical lecture Associate professor Dr Sue Newberry, from the University of Sydney told an Auckland audience that the NZ government has defrauded the New Zealand population. Well of course she did not speak in those terms but she might as well have because if you or I had used the accountant procedures we would be in jail for fraud .

First of all it turns out that the government has invested $ 112 BILLION in derivatives. Derivatives are basically bets and as JP Mogans $2 billion loss showed bets can go wrong. We don’t know what the underlying value is but we do know what John Key thinks about them. Here he is confessing on Breakfast TV.

But not only that she told the same audience that the way our government keeps its book is a total shambles in fact these are the words she used; The “Investment Statement” is an inappropriate description for “what is really a piece of accounting fiction”, and she expressed her worry ” about the lack of information on the state’s operations in financial and derivatives markets.

In fact here is the article as it appeared on the Sunday Star website (Comments added are mine)

An Australia-based New Zealand economist is criticising the accounting practices of the New Zealand government, saying there are glaring omissions in the figures, the finance minister has too much power and the recently released “Investment Statement” is an inappropriate description for “what is really a piece of accounting fiction”. (Also known as fraud)

Associate professor Dr Sue Newberry, from the University of Sydney, told an audience at the University of Auckland’s Business School that government accounts ignore “off-balance sheet exposures”(also known as Fraud) amounting to more than $112 billion.

Newberry expressed concern about the lack of information on the state’s operations in financial and derivatives markets. (more secrecy)

The criticisms preceded an announcement last week by state-owned generator Mighty River Power that movement in the value of derivatives (Also known as collapsing derivatives market of betting loss) cut into the company’s bottom line to the tune of $106 million.

However, Treasury responded that New Zealand’s accounts provide detailed information, including use of derivatives. and have been cited worldwide. (known as lying in my circle of friends)

Newberry said New Zealand’s Constitution Act 1986 requires parliament to approve borrowing and spending, but the Public Finance Act delegates these powers to the minister of finance, along with the power to delegate further. (So the city of London bankster scum can tell him how to bankrupt this country)

Those powers appear to be delegated without limit and are exercised outside of the parliamentary process, Newberry said. (On whose say so)

“Even a company does not delegate powers without putting a limit on it,” she said.

There has been a significant increase in the government’s activity in financial markets over the past decade, she said. However, the government’s accounts do not show that clearly. (This clearly shows we do not own our own government as labour clearly has also been “advised” to invest in the fake product that is the Derivatives market)

“What happens if you do show the extent of exposures to derivatives is really quite massive,” she said.

Derivatives are both an asset and a liability (Also known as betting. It acn go right but generally it goes very wrong) . Newberry said the way these are accounted for is by netting these off rather than showing the totals of each. However, the dangers of derivatives were revealed in the global financial crisis in that one side of a contract can collapse while the other side remains in force. “Netting off obscures that,” she said. (In other words while the underlying assets, probably more crappy mortgages or bonds of sorts collapse you are still in hock to and must pay up)

Newberry, hosted by the Business School’s Retirement Policy and Research Centre, said adopting “Generally Accepted Accounting Practice” ( More banking scamster accounting practices of which John Key know a great deal) standards is disguising the rapid growth in financial market activities and the extent of the government’s exposures.

A spokesman for Treasury said the government’s financial statements provide detailed information on the Crown’s financing, including derivatives. ( Well I didn’t know about them, did you?)

“Analyses of financial instruments, of risk management policies, of exposures to market risk, credit risk and liquidity risk, are provided and New Zealand government accounting standards have been cited for their strong levels of transparency in international studies,” Treasury said.

Derivatives with the Debt Management Office (NZDMO) mainly consist of interest rate and cross currency swaps (Isn’t that the crap John key used to deal in. The same crap which collapsed his former boss Merrill Lynch?) used to manage risks associated with either debt issuance or with fixed-income asset purchases. The office also executes derivatives with other parts of the Crown. (The city of London perhaps)

“NZDMO tends to manage risk associated with these trades by transacting with the private sector. The other Crown entities use the trades with NZDMO as hedges for their own risks,” it said. However, to get a complete picture of derivatives used would require talking to all entities involved.

Delegation to transact is subject to controls and managed by skilled professionals, Treasury said.

“These professionals act within transparent risk policies and parameters and are accountable for their efforts and must meet detailed reporting guidelines and frameworks.” (You think???)

22 thoughts on “$112 billion in Derivatives and off the books accounting. John Key can’t help himself!!!

  1. Over 900 trillion ‘invested’ in derivatives worldwide with J P Morgan the leader of this gigantic Ponzi scam. Won’t end well for us. Key must know this and has some ‘investment’ in bringing the NZ economy down. I’m sure he has positioned himself to personally benefit from this scenario somehow…..and he won’t be living in NZ afterwards.

  2. At 223 on the youtube, it say’s that the Federal reserve in 2008 gave NZ $9 Billion to New Zealand. When I read a reserve bank doc, it said the money was not needed therefore not used….you are good at digging and understand way better than me who just stumbled across a few things.

  3. When are people of this PLANET going to realize that DEBT is fiction and ALL GOVERNMENT Officials, Banks and leaders have only ONE main Financial Agenda which is to Bury the country in DEBT so that THE BANKS and Mega Corporations can swarm in for the Kill, seizing ALL resources and Enslaving the Populations! Its EVERYWHERE and the main force behind the NWO… Money is created out of thin air just because THEY have given THEMSELVES the Authority to CREATE and PRINT it with the Approval of any ‘Government’s’ Corrupt Administration! The debt does NOT actually exist… It is Just an accepted fiction that makes it a reality! Nothing more!!! see:(youtu.be/R3c-aN6Y7OU)

  4. Hello again, can you please give me some links to where you got the figures from with regard to how much of our economy is invested/ dependent on the success of Derivatives? Also any info on what derivatives would be great. Thank you.

  5. Kiora. This post caused me to drag my eyeballs thorough treasury docs related to the end of year financial statement. When looking at
    Financial Statements of the Government of New Zealand for the Year Ended 30 June 2011 (http://www.treasury.govt.nz/government/financialstatements/yearend/jun11/39.htm)

    -> Audited Financial Statements
    ->Notes to the Financial Statements
    ->Note 15: Marketable securities, deposits and derivatives in gain
    I couldn’t help but see that it looked like they were in the black. What I really want to know however, is on note 12 ( http://www.treasury.govt.nz/government/financialstatements/yearend/jun11/35.htm) how the hell do I figure out what the net gain or loss was? They are together in the one bloody box in the table! (Net gain/(loss) on derivatives). I am not a financial genius, but nor am I completely daft, any help would be really appreciated.
    I really hope our economy ( for which we have borrowed a massive amount to maintain) is not about to be gambled away in derivatives.

    Thank you.

      • This article is doing the FB rounds at the moment so I was wondering if there a follow up to this on the way? Would be good to see those points explained for us non-accounting types? thank you

        • Sorry for the delay in approving your comment, I have very high level of a particular kind of spam (including nicked monickers) and for a moment I was worried your comment might be one of them. You won’t have to wait as from now on approval won’t be necessary. Welcome to my blog and hope to find more comments from you as I enjoy the ones you leave at the Standard blog.

          • cheers travellerev, yes it is me and not an imposter. you have posted some good articles lately and although I rarely comment on blogs apart from The Standard, I am reading many, (my brain hurts). kia kaha.

  6. So what would happen if we just pulled all that money out? Can we pull it out? Can we just grab it back & put it into OPUR economy? or is it stuck…..

    • The problem with derivatives is that they are not money but “contracts”. They promise something in the future and it is basically either a gamble or a Hedge (Sort of insurance against the gamble turning bad) so that money they represent is not in existence (I’m keeping it very simple here).

      The name Derivatives indicates that the value of a product is derived from another asset of real world value and that is were it gets tricky. If the value of the underlying asset tumbles the value of the derivatives also collapses.

      There are now $ 1200 Trillion in Derivatives on top of the real world GDP. That is 20X Global GDP. That is a crazy bubble which is now slowly collapsing and causing havoc in the banking world and the same will happen here in NZ. The question you should really ask is if John Key knew about the nature of Derivatives (and he sold them to all and sunder) than why did this government increase the amount of Derivatives and not pull out of them?

  7. Wow… thanks again Evelien….when you put a fox in charge of the hen house you can’t be surprised when it behaves just like a fox!

  8. Its all just smoke and mirrors ! HTF (how the fcuk) do we get the speculators out of economy ? They are just parasites with no product !

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