Here's my summary of the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that Auckland furniture manufacturer and exporter Criterion Furniture has been put into receivership.
About 70% of Criterion's home and office furniture is exported from its factory at East Tamaki in Auckland, Criterion's website says, which includes the announcement that KordaMentha put the firm into receivership on Tuesday.
Radio NZ reported Criterion owed banks NZ$11 million and had been up for sale for several months, but there had been a serious decline in trading in recent months.
The New Zealand dollar was elevated around 5 month highs of 83.5 USc in morning trading. It is near record highs of 63.5 euro cents and 52.7 British pence. See BNZ's currencies report here on our site.
Meanwhile, Chinese Premier Wen Jiabao reassured German Chancellor Angela Merkel that China wanted to help Europe solve its sovereign debt crisis and would look to invest in its rescue funds. See more here at BBC.
Also, US Federal Reserve Chairman Ben Bernanke testified before Congress overnight, saying there were some encouraging signs of economic growth emerging in America, but the world's largest economy remains vulnerable to shocks. See more here at Bloomberg.
However, Federal Reserve Chicago President Charles Evans called for a third round of Quantitative Easing (QE) or money printing to fire up the US economy. He suggests more than US$1 trillion more of QE should be added to the US$2.3 trillion already printed. See more here at Bloomberg.
Meanwhile, the European Central Bank is set to lend a further €1 trillion to European banks on February 29 for three years at 1%, much of which will then be invested in higher yielding bonds elsewhere, including New Zealand and Australia, in 'carry trades' that boost the currencies of economies that choose not to cut their interest rates and print money and devalue the currencies of the printers.
Europe, the United States, China and Britain have all suppressed interest rates and printed money in the last four years in an attempt to fire up their economies and dig themselves out from under huge debt mountains. However, it raises the risk of 'currency wars' where countries are forced to erect capital controls, intervene in currency markets and print their own currencies in a 'beggar thy neighbour' race to the bottom.
New Zealand's Official Cash Rate is on hold at 2.5% and the Reserve Bank has down-played talk of any currency intervention to stop exporters such as Criterion being driven out of business by a high currency caused by carry trading beggar-thy-neighbour policies.
Prime Minister John Key and Finance Minister Bill English have taken a hands off approach to the currency and expressed support for New Zealand's inflation-targeting regime and a free-trading currency. See more here from English on how monetary policy doesn't matter any more and why exporters should get used to a currency over 80 USc.
See John Key here saying a high New Zealand dollar is not all bad.
(Updated with more detail, links)
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42 Comments
PM – important questions - considering……
More money- billions - for valuable infrastructure – mostly ordered overseas and manufactured from overseas skilful workforces.
Kaikoura South - has currently a stretch of 300m high way under maintenance/ construction – senseless !!. It already has taken 14 days ! with heavy machinery and about 10- 12 workers. Execution – poor.
Where does the billions of money wasting end minister ?
180 jobs gone from the private sector again – increasing. Government revenue is deceasing fast.
PM- how much longer can New Zealand afford the mismanagement of our economy and where are the decent jobs for the wider NZpopulation ? Our economy is badly imbalanced.
We do need radical changes PM or you will be out of office by end of 2012.
Steven – I think jobs disappearing from the public sector isn’t a problem - they are too many anyway. How can we extend our job opportunities in the private sector is the question. Not only would a government looking after skilful employment, decent NZjobs, make more revenue, but also encourage innovation, R&D and entrepreneurship – new businesses starting up in various sectors of industries.
..and how many times I said, the government should short term deal in gold in order to reduce the account deficit and invest and revitalize our economy.
In the short term I strongly do not agree....when the consumer market is the economy, losing a noticable % of any jobs is bad news......
Yes, sure the tradable v no-tradable is a big issue.....medium and longer term, but right now putting a % of earners into WINZ hits tax take, spending and WINZ outgoings....we already totter on the edge of a recession/depression.....
There is things our NZ Govn can do and should do, ie set policy.....things like specifying a % deisel fuel to be sold must be bio....that will cause plants to be built now....not after we finally realise oops we have a shortage....
regards
In the short term I strongly do not agree....when the consumer market is the economy, losing a noticable % of any jobs is bad news......
Yes, sure the tradable v no-tradable is a big issue.....medium and longer term, but right now putting a % of earners into WINZ hits tax take, spending and WINZ outgoings....we already totter on the edge of a recession/depression.....
There is things our NZ Govn can do and should do, ie set policy.....things like specifying a % deisel fuel to be sold must be bio....that will cause plants to be built now....not after we finally realise oops we have a shortage....
regards
"How can we extend our job opportunities in the private sector is the question. "
Quite right, but I think we are beyond high tech jobs and will be moving back to more skilled labour to replace China as global trade slows down. More low skilled labour, because what else can you do with 30% unemployed apart from liquidate them in a war.
I did the exercise a couple of days ago of drawing a flow chart to illustrate the structural problems in getting lower emissions from wood burners. I could identify six layers with the investor at the bottom and the MP's at the top. The problem is political not technical and designers have too many layers to fight through. Forget the encourage, all they need to do that is get out of the way.
Given the kiwi dollar is traded on a daily basis massively more than the value of the countries economic activity would require it would be good for someone to pin the PM down on how the huge speculative difference helps establish a true value for the currency. Without the carry trade and our status as a tradeable risk currency I suspect the fundemental value of the NZD would be significantly lower ie in market panics the kiwi often collapses 20-30% in a couple of weeks
It seems that Charles Hugh Smith can also see the criminals, perhaps he has been reading my comments on here.
http://www.oftwominds.com/blogfeb12/counterfeit-debt02-12.html
I can't see that the behaviour is explains is any different to property investors, just a step further down the food chain. Using leverage to buy property dilutes the value of currency already in circulation, thereby stealing from those holding that currency.
just as I lament the MSM, a decent article in the Herald! Shock horror!
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10782885&ref=rss
Kiwi's aren't alone in being anti intellectual.
There is a plethora of excellent academic work on the direction NZ and the rest of the western world has taken over the last 30 years but it is largely ignored by the media because it doesn't conform to the new orthodoxy and is now regarded as "fringe".
Jane Kelsey, Brian Easton and Bruce Jesson all recognised in the 1980's and 90's that the NZ economy needed to change but they warned where the reforms of Rogernomics and the Washington Concensus would end up. They were ignored or labelled backward socialists and their arguments dismissed out of hand. Their criticisms didn't fit the new script. Marx's solution may have been wrong but that didn't mean his critique of capitalism was.
Any good propagandist or political PR person knows if you repeat the same line over and over, even if its untrue, eventually a large percentage of the population will accept it as fact. "There is NO alternative" Our democracies allow free public debate but only within tight "frames" set by the political, business and media elites. Maintenance of the staus quo is paramount.
meat prices hit the fan, from Silver fern Farms
>>>>>>>>
Hello
It’s been a challenging start to the New Year, with grass growth coupled with global economic conditions delivering a “perfect storm”
· NZ$/Euro - USD- STG on average has appreciated 11% on same time last year (remember this % movement is on what we sell the product for in market which is a higher amount than the farm gate value)
· That has eroded revenues by
o Lamb 93cpk
o Mutton 57cpk
o Beef 53cpk
o Venison 152cpk
· Appears European consumers are adopting personal austerity measures and have decreased food spend
· Supply channels have tightened with most customers buying “just in time”
· Result, lamb is very slow to sell , and when sold is at reduced levels (before above currency impact)
· Mutton is in plentiful supply from other countries and many markets have stock from last year, very difficult to stimulate demand
· Beef remains positive in market
· Venison is a high value product generally sold in Europe, some price pressure but product still being sold
· Farms gate values will continue to track down as impact of above market and currency conditions are fully reflected
· Crystal ball:
o Lamb 600/625cpk
o Mutton 300/325cpk
o Steer/Bull around 360cpk
o M Cow circa 260cpk
o P Cow circa 300cpk
o Venison slight above 700cpk
Whilst not all positive and nor what you would want to hear, these are clear market signals that we believe you need to get, to plan and make your business decisions.
Regards
Keith
More meaninglless data from the BLS. A quote from the comments.
Stuff like this makes you seriously question the intelligence of those around you. People eat up the propaganda that the unemployment rate is dropping, but try explaining the above facts to them. They will stare at you like the famous doe in the headlights picture Tyler shares with us from time to time. The average person is so freakin' ignorant about how these numbers are generated, and trying to explain it to them is a waste of your time. It's maddening!
for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that's not a typo: 1.2 million people dropped out of the labor force in one month!
Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation.
Please tell me the truth...."Quick Notes About the "Falling" Unemployment Rate usa
•In the last year, the civilian population rose by 3,565,000. Yet the labor force only rose by 1,145,000. Those not in the labor force rose by 2,420,000.
•In January, the Civilian Labor Force rose by 508,000.
•In January, those "Not in Labor Force" rose by an amazing 1,177,000. If you are not in the labor force, you are not counted as unemployed.
•Participation Rate fell .3 to 63.7%, taking out a 1984 low
•Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.
Some of those labor force numbers are due to annual revisions. However, the point remains: People are dropping out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low"
http://globaleconomicanalysis.blogspot.co.nz/
AND NOW FOR THE BLOODY LIES IN BLOOMBERG:
"The U.S. jobless rate unexpectedly fell in January to the lowest in three years as payrolls climbed more than forecast, casting doubt on the Federal Reserve’s plan to keep interest rates low until late 2014.
The unemployment rate dropped to 8.3 percent, the lowest since February 2009, Labor Department figures showed today in Washington. The 243,000 increase in jobs was the biggest in nine months and exceeded the most optimistic forecast in a Bloomberg News survey. Service industries grew by the most in a year, according to a separate report.
“We’ve reached an important threshold here,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “The recovery is for real.”
Sad – Wolly - not to be informed there is cliff ahead, but an ice-cream factory and the morons run straight ahead into the sea.
There is more propaganda and lies in today’s journalism – because there are far more sheep.
Good news from China/ USA – manufacturing is up – wow , great - yeah - why, and in what sectors - no more questions – please !
Ha, ha - I just came across these stories - next questions ????????
....interesting also:
http://www.newstatesman.com/international-politics/2012/02/pilger-assange-australian
The EU 25 of 27 have solved the problems with an agreement to be frugal and follow new rules...not.
"Please laugh along with Spain poses six-pack rules challenge
Spain’s deteriorating economy poses the first challenge to Brussels’ commitment to enforce tough new budget rules intended to repair credibility with financial markets and ease the debt crisis.
Olli Rehn, the economics commissioner, threatened to “fully use this powerful set of new tools from day one”. arrrrrrrhahaaaaaaa
......., the European Commission president, suggested that a debate was now under way on whether to make some accommodation for Madrid.
It also risks drawing the ire of fellow member states, which have already been exposed to tough consequences because of the six pack.
Belgium, for example, earlier this month cut more than €1bn from this year’s budget in a frantic weekend exercise in order to avoid fines – an experience that led a top minister to lash out at Mr Rehn. Meanwhile, Hungary was threatened last week with a freeze on its EU development funds for next year if it does not comply with the rules.
But such considerations may be overwhelmed by the severity of Spain’s situation. Even local business leaders who favour harsh curbs on public spending now say that sticking to the original 2012 deficit target of 4.4 per cent of gross domestic product is almost impossible and risks plunging the economy into depression."
http://globaleconomicanalysis.blogspot.co.nz/2012/02/eu-says-strict-application-of-budget.html
WHAT A BLOODY FARCE. RULES AGREED ONE DAY BENT AND BROKEN THE NEXT.
They are zombie nations skudiv...the ECB is a fake cash cow...the EU is a farce....meanwhile the utter BS in the media(bloomberg) is about recovery and jobs growth in the US.....but Mish has exposed it as mispeading rubbish...China heads for hard landing(read crisis)....aussie housing tumbles....the UK into a permanent recession with no escape route...
Here's what Plato thinks about the media BS on us employment...
"Only an idiot would believe these numbers and that is what this admin is counting on. After dumbing the public school system down for decades, the Dems think we are idiots and treat us like idiots. The Bureau of Labor Statistics says we lost 2.5 million jobs between Dec and Jan , but the Seasonally Adjusted Unemployment improves. Tell that to the folks that lost their jobs."
Expect Bernanke to pump the market with fresh loot in time to influence the election...his job depends on it!
What's really going on?...the media BS is becoming a threat to the new normal,,,how funny.
"“The bond bulls are shaking in their boots,” said George Goncalves, head of interest-rate strategy at Nomura Holdings Inc., one of 21 primary dealers that trade directly with the Fed. “The rates market is not just driven by the Fed. It’s driven by the path of the economy. Investors won’t take these low rates for longer if the economic numbers continue to post as well as they have. Investors get fearful of inflation.” http://www.bloomberg.com/news/2012-02-04/treasuries-fall-as-employment-gains-cast-doubt-on-fed-s-low-rate-policy.html
Now for the truth about those 'well' numbers!
People are dropping out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low.http://globaleconomicanalysis.blogspot.co.nz/2012/02/nonfarm-payroll-24…
So there you have it...the govt spews out the BS via the media, all cooked up to look like recovery growth etc.( it's election year you see) and the markets swallow it whole driving up the rates on Treasuries....which threatens Bernanke's zero rate policies....see the farce?
Can the lying and BS continue long enough for Barry to win another 4 years running the farce?
Or will the lying and BS be exposed ...and ditto Obama...exposed as a fraud along with Bernanke and the Keynesian splurgers.
They are scurrying around, like rats in a house on fire. The longer they extend and pretend, the more viscious the snapback will be, it also gives more time to get into physical assets.
The historical price for silver in todays money, 10 days labour at the minimum wage $960.
The belief that because someone, somewhere, somewhen was paid 2.8gms of silver per day can be an indication its current true value is ludicrous in the extreme. There are recorded instances of Roman soldiers being paid with salt. (Hence salary. ) Are you thus predicting an imminent bull market for sodium chloride?
It might be a silly question but can anyone tell me why dropping our OCR to 1% or lower and printing some NZ dollars to offset what the rest of the world is doing is a bad idea? Surely an exchange rate exceeding 80 cents long term is as much of risk to our economy as anything currently is?
I read the scum have been at it again...
"Two Frenchwomen on a working holiday are left broke and with only the clothes they stand in after their camper van was stolen outside an Auckland supermarket" herald
I wonder how many times Key has to read of the scum at large before he doubles the penalties with minimum 10 year sentences for any crime on a tourist...
Perhaps John thinks the word is not reaching those overseas..
The judges sure seem to think a good telling off is ok...
Every overseas visitor should get a written booklet with full warnings:
Do not park your car/van unattended with anything more than a pillow anywhere in NZ - the thieves are ready to pounce. Do not park anywhere north of Auckland, do not park anywhere in a bush/natural reserve - you will risk bodily harm as well as theft of everything.
In fact outside of certain suburbs,and safe public areas you may be in areas approaching Bogota, Zimbabwe etc ...
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