Here's my summary of the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news Greek political leaders failed overnight to meet a deadline to agree to a new austerity plan demanded by their bailout donors at the European Central Bank, the European Union and the International Monetary Fund.
Greek leaders asked for another day's delay despite warnings from Germany and others that it faces national bankruptcy unless it agrees to fresh cuts in the minimum wage, new public sector job cuts and new moves to crack down on tax evasion.
However, Greek political leaders are opposed to many of the new austerity measures. They face elections as soon as April and Greek voters are tired of austerity after four years of financial crisis, bailouts, job cuts, tax increases, economic contraction and civil unrest. See more here at Reuters.
Their donors in Germany and France are increasingly distrustful. They called overnight for a segregated account to be set up by the Greek government that cordoned off tax revenues so they could be dedicated for bond repayments and interest coupons rather than public services.
The risks inherent in an uncontrolled Greek default and possible exit from the Europe are substantial for the global economy, and indirectly, New Zealand. The IMF warned overnight that a slump in Europe would carve 4 percentage points off China's expected growth rate of around 8.2%.
That would constitute a hard landing that would flow through to the Australian and New Zealand economies, which now depend on growth in North Asia to avoid the fallout from recessions in Europe and the United States. See more here at Bloomberg. The European financial crisis is also increasing the cost of foreign borrowing by New Zealand banks, some of whom are beginning to warn they may pass on these costs in the form of floating mortgage rate hikes that are out of step with any changes in the Official Cash Rate.
Worries about the Greek crisis drove US and European stocks down around 0.3% in late trade. These concerns about the potential drag on global growth saw riskier currencies such as the New Zealand and Australian dollars fall.
The New Zealand dollar fell to 83.2 USc this morning from as high as 83.8 USc late on Friday night in the wake of surprisingly strong jobs growth in America. See more here on strong US jobs on our site here.
Meanwhile, the Reserve Bank of Australia is expected to cut the official cash rate there from 4.25% to 4% later this afternoon as Australia grapples with a slowdown of its domestic economy at the same time as a boom in its mining sector.
See BNZ's currencies report on our site here.
A high Australian dollar and heavy debts weighing on Australian household balance sheets has created a two speed economy where mining is going gangbusters, but retailing and manufacturing is struggling.
Retails sales in Australia fell in December. See more here at ABC.
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Following the endless collapse in the Baltic Dry, it was only a matter of time before the shipping industry one-upped the Chairsatan, and was the first to introduce, dum dum dum, negative rates. That's right: you are now paid to hire a ship. Via Bloomberg:
- GLENCORE HIRES SHIP AT MINUS $2,000 A DAY, GMI SAYS
- GMI TO CONTRIBUTE $2,000 A DAY TO GLENCORE'S FUEL COSTS
- GLOBAL MARITIME'S U.K. MD STEVE RODLEY CONFIRMS DEAL BY PHONE
Why is this happening? Perhaps because ships have to be kept seaworthy and in motion or else they become scrappage in as little time as 3 months. Think sharks. Needless to say, this will play havoc with shipping company (and affiliated entities') liquidity, as the biggest default wave in the history of the industry is about to be unleashed and tens if not hundreds of billions of European secured loans are about to be "impaired."
"The New Zealand dollar fell to 83.2 USc this morning from as high as 83.8 USc late on Friday night in the wake of surprisingly strong jobs growth in America"
Bernard are you also starting to beleive the US Govt's propoganda? See the link below for the truth behind the latest US unemployment report. You won't read this in the MSM.
http://lewrockwell.com/rep3/fraudulent-employment-statistics.html
NZ-born billionaire Richard Chandler to take 25-40% stake in Tasmanian timber company Gunns as white knight, the AFR reports. The Singapore-based Chandler is already the biggest shareholder in Canadian forestry group Sino-Forests and is apparently worth about US$4 billion.
Gunns last week got an extension to its A$340 million bank loan facility from 10 banks including the ANZ. Will need to hold an extraordinary general meeting for vote on having 20% shareholder cap lifted.
"I want to give a clear signal there is a time for thrift and restraint." Mayor Alistair Sowman
http://www.stuff.co.nz/marlborough-express/news/6374917/Council-to-take-hard-line-on-costs
.................Yeah right...
US jobs dead cat bounce!
"Our estimate of a slowly growing economy is based primarily upon daily income tax collections. Either there is something massively changed in the income tax collection world, or there is something very suspicious about today’s Bureau of Labor Statistics hugely positive number. We continue to check and recheck our analysis of income tax collections. We are aware that another service believes that incomes are growing faster than we do. So far we have not found any errors or discrepancies in our work, but if we do, we will let you know.
I keep repeating that the BLS refuses to use the data embedded in income tax collections to be able to report real time jobs and wages. Why does it refuse? Could the reason it refuses to use real time data on jobs and incomes be because perhaps this jobs number is politically motivated? The entire world is looking at US job creation as a proxy on how well Obama is doing? Could the Obama administration be pressuring its economist employees to create the best possible new jobs number?"
Bill English..."we have inflation beaten"...arrrrrrrrrrrrrrrrrrrhahahahaaaaaaaaaa
"Electricity consumers are being warned their bills will rise by up to 10% this year as power retailers bear the brunt of upgrades to the national grid."
http://www.radionz.co.nz/news/national/97722/electricity-prices-rise-to-by-up-to-10-percent
Everyfly wants to live in Auckland....
"Fly infestations are causing major problems in Auckland, with one fast food restaurant having to close."
http://tvnz.co.nz/national-news/infestation-flies-plagues-auckland-4713246
The shiney arses got up to 20% more in a recession!...imagine what the sold SOE directors will be wallowing in...keep the snouts in the trough you lot..you deserve it...right John?
"Director base pay last year rose more than five times the rate of the average worker but according to a survey boardrooms are showing restraint in light of an uncertain economic environment and public sensitivity.
The survey by Moyle Remuneration Consulting found that for those who got a rise the median increase in base fees last year was 11.1 per cent for non-executive directors, which between 2004 and 2009 consistently ran between 15 per cent and 20 per cent. The median increase for chairmen was 12 per cent." herald
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