$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???)