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90 seconds at 9 am: Spain and Italy ban short selling as stocks crunched again; Spanish yields hit record highs; German yields at record lows; NZ$ down to 78.9 USc; Oil slumps 3.3%

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Spain and Italy ban short selling as stocks crunched again; Spanish yields hit record highs; German yields at record lows; NZ$ down to 78.9 USc; Oil slumps 3.3%

Here's my summary of the key news overnight in 90 seconds at 9 am, including news of barely disguised panic on Spanish and Italian financial markets overnight as fears that Spain may need a full bailout sparked wholesale capital flight out of Southern Europe and into Northern Europe.

Investors worried about the possible breakup of the eurozone believe their euros will be safer in Northern European countries in the event of a breakup. Investors in Italian and Spanish banks are worried they will be the first to have to take losses if any government debt restructuring is triggered, given banks are now major holders of these government bonds.

That saw Italian bank stocks slump sharply overnight, forcing regulators there to put in place a ban on short-selling of financial stocks. This refers to the practice of hedge funds borrowing shares from pension funds and then selling them, aiming to make a profit when they buy them back at a lower price. Italy's stock market eventually closed down 2.8%, having earlier fallen 5%. See more here at Bloomberg.

Spain also imposed a short-selling ban across all its stocks after its market slumped another 5.5% in the first hours of trade, taking a 2 day slump in its stock market to more than 10%. Eventually Spain's stock market closed down 1.1%. The Eurostoxx 50, a broad measure of the biggest stocks in Europe, fell 2.6%. See more here at Bloomberg.

Short-selling bans were a tactic used on stock exchanges in America, Europe and Australia in the depths of the Lehman Brothers crisis of September and October 2008.

The Dow fell more than 100 points or 0.9% on fears the turmoil in Europe would hit global economic growth and US company profits. See more here at Bloomberg. Chinese stocks fell to 3 year lows after a senior central bank official said he was pessimistic about growth, Bloomberg reported.

All this aversion to risk saw investors rush for safe haven bond investments in Northern Europe and the United States. US Treasury yields fell to record lows, with the key 10 year yield dropping to 1.44% and the 30 year yield down to 2.47%. The German 2 year bund yield dropped to minus 0.08%, indicative of the fear about a potential Euro zone breakup. See more here at Bloomberg.

Spanish 10 year bond yields spiked into record and unsustainable territory over 7.5%, while Italian 10 year yields rose to over 6.3%. The move follows fresh calls for bailouts from Spanish regional governments. See more here at Bloomberg.

Oil prices fell more than 3% and the most this year on concerns the synchronised slowdown of European, Chinese and US economies would depress demand for oil. See more here at Bloomberg. 

All this aversion to commodity-linked and 'riskier' currencies such as the New Zealand dollar saw it fall more than 1 USc overnight to 78.9 USc in morning trade. It even fell against the euro to 65.0 euro cents from as high as 65.9 euro cents late on Friday.

All this turmoil on international financial markets suggests lower economic growth and interest rates for longer, and eventually pressure higher on unemployment in Australia and New Zealand, particularly given the slowdown in the Chinese economy.

On a personal note, it's very sad to hear of the passing of childrens' author Margaret Mahy. I spent many an evening reading her books to my children. My favourite was the Man whose mother was a pirate.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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42 Comments

The big news of the day is Mr

The big news of the day is Mr and Mrs Andrewj got their California drivrs licenses.
 
 on the 4th I go for my CC.

how hard is it to

how hard is it to get?
regards
 

Its $120 and a two week

Its $120 and a two week course. The Sherrif up here wants more people Concealed Carrying. The guns sales are at an all time high, altough I can do the course I may not get the permit on my Visa, thought id give it ago anyway.  Traning looks good and its run by a local Marshall.  Crime is way up, there is so much early release from prison in California now.
 I dont know about being in a confined place if these so called 'good guys','let rip' some of the shooting is awful. I mean miss the barn door stuff, in fact miss the whole barn.

The Sherrif up here wants

The Sherrif up here wants more people Concealed Carrying.
 
Why?  What's the logic behind that?
 
I hate to ask .. but ....
 
Do you get cheaper car insurance if you are carrying a concealed handgun?
 
 
 

I'll give it a try, I think

I'll give it a try, I think its just the whole Red neck thing, also the economy is bad with %28 unemployment.
 I think they should have open carry like Arizona, at least you can see who's got the gun, and you can carry a decent gun on your hip, none of these womens guns they CC carry .Id carry at night when we walk down by the river but I hear wasp spray is as effective as anything and reachs 25ft. Crime is way up, I think he said %128 in the last two years.
 
http://www.youtube.com/watch?v=zmTvAZvJ5Mc

Capitalism at it’s

Capitalism at it’s best.
 
Andrew - when crime is up, manufacturing of guns are up too – means employment – a good outcome isn’t ?
Wars………

Cute commercial - love the

Cute commercial - love the punch line!
 
Interesting insight - that "Red neck" thing.  I've got some relatives there who view NZ as being highly undemocratic given handguns and assault weapons are illegal.  

The media peddals fear. Its

The media peddals fear. Its amazing they are fearful.
 A pregnant girl was attacked down on the river trail, a week later it appears to be the father of her baby, a Marine. The attack got a lot of publicity but not so much when the full story came out.  
 As I've said a lot of scarred people -will I get my pension? can I afford my heath care? are we going broke? are we already broke?is my job safe? am I safe? will we get robbed?
All a bit sad as it's safer here than home, as Walter said ,great for gun sales.

Andrew – we are all shocked

Andrew – we are all shocked by the shooting in the cinema. On the other hand, how on earth are children allowed to watch such a violent film 1:30 in the morning – what a bloody culture ???
 

I agree Walter, children as

I agree Walter, children as young as 6 watching a violent movie.  Its making the attitudes harden and gun sales go ballistic
 
http://news.investors.com/article/606041/201203291440/sturm-ruger-stock-...

…and I’m sure powerful lobby

…and I’m sure powerful lobby group like always, whatever activity (occupation) involved, argue - it is good for employment to keep jobs.

Next up Andrewj you will have

Next up Andrewj you will have to forfeit your NZ citizenship and sign up to US allegiance. It will be a case of are you with us or against us.

I dont think so, Nz looks

I dont think so, Nz looks pretty good from here.  Had to get the license for my insurance.  I think the USA is going to ask NZ that question sooner than we think.

  Who will hold the Troika

 

Who will hold the Troika to account for asphyxiating Greece?
 
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100019006/wh...
 
 

moraymint
Today 06:20 PM

 

It's absolutely astonishing isn't it?
What really gets me is that even now the proverbial man on the street in countries across Europe and in the UK remains largely oblivious to the true scale of the socio-economic horror that is being systematically engineered by the European Union's political and bureaucratic elites.
There are days when I think I'm going mad as I consider that there is a minority of informed citizens here in the UK (and presumably in continental European countries) who know exactly where all this is heading, but are clearly powerless to influence still less change the course of events.  We're staring a hurricane in the face here and yet analyses like those prepared by AEP and others would seem to count for nothing; zilch; diddleysquat. A free press and alternative views hold no sway in the dictatorship that is the European Commission and its politico puppets.
The European Union juggernaut just thunders forward smashing and sweeping aside all before it, horns blaring, lights flashing with the blokes in the cab leaning out of the windows screaming, "Fcuk off, fcuk off, we know what we're doing!"
I really am looking forward now to seeing the Euro Monetary Union collapse in utter disarray - forced that way by bond and currency traders - possibly characterised by bank runs across Europe, extremely angry citizens on the streets and the whole edifice that is the European Union named on a death warrant.  What the hell use is it if we're now looking at the systematic destruction of economies and societies across Europe?  What is the Union for if all it can do is bring a continent to its knees?
Or has that been the intention all along?

 

I would re-word it

I would re-word it slightly,   I prefer to think of this as a black hole and we spent the last 30 years getting to the event horizon in the name of profit and consumerism. The only thing we dont know is, where is the event horizon and have we crossed it.  One thing for sure is once over it there is no escape and you fall faster and faster until "pop" your gone....99% sure we are past it...2 or 3 years past...if not 10.
not "knees" but a face plant right into doggy doo doo....it cant or couldnt be worse IMHO, well except maybe a world war aka the result/outcome of the 1st Great Depression.
When BE says a generation he's right, but really if he's saying that then its even longer.....longer than 2 decades anyway.
regards
 

Oil price seems to be

Oil price seems to be recovering despite this.....wish I knew how much of the price is specualtion and how much is real traders in the commodity. If right now its just the wholsealers then that suggests we are stung for a 15% margin by speculators.
regards

NB Italy looks no

NB Italy looks no better,
http://www.telegraph.co.uk/finance/financialcrisis/9421599/Ten-Italian-c...
all that hot Mediteranean blood = riots
regards

Who is going to stop

Who is going to stop megalomaniac ambitions by governments ?
 
Considering accumulating and accelerating negative events all over the world with severe consequences for all of us, one has to ask the question how far our government is from reality, in selling off our most valuable assets ? The same question applies for local councils – spending, spending, spending.
Politicians and policymakers in this country are dreaming along good times.

Sore loser Ha. Yes. I'm tall

Sore loser
Ha. Yes. I'm tall and can't be sold short...
We didn't spend that much in France. We used frequent fliers and did home exchanges. Although I did have to gently steer my good wife away from the childrens' clothes shops and avoid nice bottles of red wine.
cheers
Bernard

Soreloser Heh. Purely

Soreloser
Heh. Purely personal holiday. No tax deductions. I'm a salary earner and PAYE taxpayer.
Those shoes sound frightening.
La Belle France is great. Hoping the new tax rules will slam the prices low enough for me to afford somethin' in me old age.
cheers
Bernard

Spot on SL, I spent the last

Spot on SL, I spent the last couple of years living in rural France, now in Ireland and the same picture here, the Celtic Tiger is now a sick pussy, licking it's wounds, just too much debt all down to greed.

Having been here in rural

Having been here in rural County Clare for the last month I must say there is not a lot to write home about. It's mid summer, in 30 days we haven't had one day I could put my shorts on, in fact 27 days rain, so a little hard to get excited. As regards buying opportunities, from what I have seen so far real estate values have dropped by as much as 40- 50% from the peak but comparing house for house, here and in rural France, France wins hands down. When you add the weather advantage to France there is no contest. So to answer your question provided you do your homework I would buy in France compared to Ireland.
All that said, the way things are going over here (Europe in general) I would be sitting on my hands and waiting for things to bottom out, and from what I can make of it, that bottom may well be determined by the disintegration of the Euro, timing, sometime over the next 12-18 months?

A little aside, I went to a live stock sale today in Ennis, prices as follows, 41kg live weight ewe lambs €89,
5 day old charolais cross bull calf €190, yearling weaners steers €495 . To my mind these values were well above what we might see in NZ. I had lunch with some farmers and found that from what I can understand, 50% of their income comes from EU subsidies ! I asked the question do they believe these subsides are justified and sustainable long term, most agreed they were not, though, they said with out them they could not stay farming?

Having been here in rural

Having been here in rural County Clare for the last month I must say there is not a lot to write home about. It's mid summer, in 30 days we haven't had one day I could put my shorts on, in fact 27 days rain, so a little hard to get excited. As regards buying opportunities, from what I have seen so far real estate values have dropped by as much as 40- 50% from the peak but comparing house for house, here and in rural France, France wins hands down. When you add the weather advantage to France there is no contest. So to answer your question provided you do your homework I would buy in France compared to Ireland.
All that said, the way things are going over here (Europe in general) I would be sitting on my hands and waiting for things to bottom out, and from what I can make of it, that bottom may well be determined by the disintegration of the Euro, timing, sometime over the next 12-18 months?

A little aside, I went to a live stock sale today in Ennis, prices as follows, 41kg live weight ewe lambs €89,
5 day old charolais cross bull calf €190, yearling weaners steers €495 . To my mind these values were well above what we might see in NZ. I had lunch with some farmers and found that from what I can understand, 50% of their income comes from EU subsidies ! I asked the question do they believe these subsides are justified and sustainable long term, most agreed they were not, though, they said with out them they could not stay farming?

RIF, Id say they are

RIF, Id say they are comparable, we have been getting great money for our lambs the last few years but way back now.  The 5 day old calves are not that much more than here. Yearling have been right up there.
  The Irish have a sweetheart deal with France for lamb. They sell their lambs to France the UK sells its lamb to France and we sell Lamb to fill the hole in the UK. Now the UK exports 8000 more tonnes than it imports.  Hows the GAP deadline in 2013 working out? i suspect its been over shadowed by more pressing problems.  At least someone is getting the rain. Then there is the dairy problem :-)

OBR on the UK...its going to

OBR on the UK...its going to have to raise the taxes,
"the Office for Budget Responsibility (OBR) said at least £17bn of extra tax rises or spending cuts will be needed in 2017 to get Britain's debt back to pre-crisis levels by 2061."
http://www.telegraph.co.uk/finance/financevideo/9395282/OBR-Britain-is-b...
by 2061? oh bugger....
regards
 

IMF to abandon

IMF to abandon Greece?
"Greece could go bankrupt as early as September. Spiegel has obtained information that the IMF told the Brussels leadership it would not make more money available for help to Greece. [..]"
http://theautomaticearth.org/Finance/the-imf-plans-to-dump-greece.html
 

I know it's from 1981 but is

I know it's from 1981 but is this intro looking more like real life day by day?
http://www.youtube.com/watch?v=IW-RmVY2OkA
Must get a Z1000 and a cross-bow?

This is a fun little fable on

This is a fun little fable on the European Financial Crisis. HT Chris from a listener to Radio NZ National.
Alexis is the proprietor of a bar in southern Europe.  She realizes that virtually all of her customers are unemployed and, as such, can no longer afford to drink.  To solve this problem she comes up with a new marketing plan that allows her customers to drink now, but pay later.

Alexis keeps track of the drinks consumed on a ledger. The total grows.

Word gets around about this "drink now, pay later" marketing strategy,and increasing numbers of customers flood into the bar. Soon she has the largest sales volume in town.

Alexis gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer - the most consumed beverages.

Consequently, gross sales volumes and paper profits increase massively.  A young and dynamic vice-president at the local bank recognises that these customer debts constitute valuable future assets and increases her borrowing limit.  He sees no reason for concern - he has the debts of unemployed drinkers as collateral.

He's rewarded with a six figure bonus.

At the bank's European headquarters, expert traders transform these customer loans into DRINKBONDS. These "securities"  are then bundled and traded on international securities markets.

The bond prices continuously climb and the securities soon become the hottest-selling items for some of Europe's leading brokerage houses.

The traders all receive a six figure bonus.

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at the bar. Alexis then demands payment from her patrons but, being unemployed, they cannot pay her. Alexis is forced into bankruptcy. The bar closes and 11 employees lose their jobs.

Overnight, DRINKBOND prices drop by 90%. The collapsed bond asset value destroys the bank's liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

Sadly many companies had invested their pension funds in the BOND securities.  Her wine supplier claims bankruptcy, closing the doors on a family business that had endured for three generations; her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multibillion dollar no-strings attached cash infusion from the government.

They all receive six a figure bonus.

The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who've never been in Alexis' bar.

Now do you understand?

Brilliant illustration of how

Brilliant illustration of how frightening the crisis is.

i like it. For Aus, the only

i like it. For Aus, the only change I would make is that when the credit started to dry up, the govt extended loans to allow patrons to purchase speed and coke stimulus which they snorted to offset the hangover  - this enabled them to keep drinking into the next day   ...... its now coming home to roost for Aus.

ppl are focused on Europe but

ppl are focused on Europe but is the US that far away from default?
"Some of the more notorious bankruptcy filings by cities/counties in recent times have been San Bernardino and Stockton in California over the past few weeks, which were the second and first largest bankruptcies in U.S. history respectively, as well as Jefferson County, Alabama and Harrisburg, PA late last year. Leading the way in bankrupted government entities, though, is the state of Nebraska, as reported by Steven Church of Bloomberg:
Nebraska, Not California, is King of Municipal Collapse"
http://theautomaticearth.org/Finance/the-dreaded-defaults-are-coming.html
or,
"OH CRAP: A Whole Bunch Of Cities And Counties Are Now Seeing Their Finances Collapse"
http://www.businessinsider.com/cities-in-financial-trouble-2012-7?op=1#ixzz21UqDPK75
regards
 

I think your not far from the

I think your not far from the truth there Steven......But and here's the big but....if that eventuated in reality you would see the grounds for a debt jubilee go from a whisper to a scream.
In fact  the U.S. economically speaking have been the masters of the stall, kicking the can  to hell and back in an unrelenting effort to get everybody at the table all in before kicking the pot........up the ante...? ...no I believe call .
Every bankers dog drags out the iou's , pops the conac, and the jubilee is on.
 Think of the IMF as the dealer sleighting cards to the biggest roller at the table.
The ground zero theory gathers momentum.......

I dont know how it will go

I dont know how it will go myself, one complete farce.  The right seem to think voodoo economics is Ok and the USA can just carry on, shut down social services at some point and all will be well.....they must live in la la land.
On the other side we have Paul Krugman who thinks the USA can borrow at amazingly low rates so should. The only reason I can fathom rates are so low is fear of it being worse elsewhere to have your $.  Personally I think the wise money is sitting on it waiting for a depression and the firesales that will result.....at that point that $ wil rush out of US Treasuries and safe havens into "cheap" assets, then I think the USA Govn will be stuffed very fast......
Dont know about a jubilee, thats a default, but I think its the only sane way out myself. The money in pensions etc "invested" in this sort of thing will go bye bye....there will be huge losers whatever, maybe simply it will be everytone.
Bankers popping, dont see how as they lose.....
IMF, well I think its obvious that now this is global, its un-stoppable and un-fixable, hence the IMF will simply be over-welmed.  Frankly I'd be saying about now, good bye IMF, NZ cant keep passing over billions....
Ground zero? context pls?
regards
 

Interest rates lower for

Interest rates lower for longer? Quick, LET'S ALL BUY HOUSES!!

  Germany's prized AAA

 

Germany's prized AAA credit rating was put under threat on Monday night after a day of turmoil across the global markets.
 
http://www.telegraph.co.uk/finance/financialcrisis/9422206/Germanys-AAA-...