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90 seconds at 9 am: Barclays CEO Diamond admits was 'physically ill' when reading emails revealing LIBOR scandal; Easing seen imminent as Euro-zone contracts in June qtr; NZ$ hits record 64 euro cents
Here's my summary of the key news overnight in 90 seconds at 9 am, including news outgoing Barclays CEO Bob Diamond testified at a British parliamentary inquiry overnight that he felt 'physically ill' upon reading the emails detailing how Barclays rigged the rates it submitted in the LIBOR (London Interbank Offer Rate) setting process.
Diamond, who resigned on Tuesday night over the scandal, said the LIBOR rigging by Barclays' bankers was 'reprehensible and he was 'sorry, disappointed and angry'.
However, he also repeated comments that he thought a Bank of England official had indicated 'Whitehall' wanted Barclays' rates submitted to the LIBOR committe to be lower to make Barclays look 'safer' during the worst of the post-Lehman collapse crisis. Diamond said he did not order his traders to lower Barclays' rates, but that his Chief Operating Officer Jerry del Missier had mistakenly assumed that he had wanted the rates lowered and had ordered traders to lower the rates. Del Missier has also resigned. See more here at BBC.
Bank of England official Paul Tucker has requested an appearance before the committee to put his side of the story, which is now convulsing the City of London and British politics.
Meanwhile, Euro-zone economic output appears to have contracted in the second quarter. Factory activity surveys show significant falls in activity across the Euro-zone. Even German services activity figures out overnight were weaker than expected. See more at Reuters.
All this weakness in the Euro-zone and British economies is increasing expectations of easings of monetary policy when the European Central Bank (ECB) and the Bank of England (BoE) announce their latest monetary policy decisions later tonight.
The ECB is expected to cut its key rate to 0.75% from 1% and potentially announce other measures, including more cheap long term loans for struggling banks. The BoE is widely expected to increase its money printing and bond buying programme known as Quantitative Easing by a further 50 billion pounds to 375 billion pounds.
All this Northern Hemisphere money printing and develuations of currencies make our currency look relatively attractive, given our interest rates are higher and New Zealand is not printing money.
The New Zealand dollar was solid around 80.4 US cents in morning trade and up at fresh record highs of 64 euro cents as talk of further easings in the Northern Hemisphere widened the interest rate advantage for investors in New Zealand bonds.
All eyes will be on the US economy on Friday night when jobs figures are released. They could prove the trigger for a third round of money printing in the United States.