Here's my summary of the key news overnight in 90 seconds at 9 am, including news the European Central Bank (ECB) appears set to decide tonight to unveil it's 'Big Bazooka' plan to buy unlimited amounts of bonds from those countries in the Euro-zone that ask for a bailout.
Bloomberg reported the ECB is likely to reveal the blueprint called 'Monetary Outright Transactions' at its meeting later on Thursday night New Zealand time.
Under the plan, the ECB would buy unlimited amounts of shorter term bonds from the likes of Italy and Spain to reduce their unsustainably high bond yields and therefore reduce much of the financial stress inside the Euro-zone's banking system and economy.
However, the ECB is also likely to say it will 'sterilise' the money printed to buy these bonds. That means that after it has bought the bonds it would then issue short term bills to banks to mop up the cash injected into the monetary system.
The risk is that much of the money injected into the economy by the European Central Bank will simply be recycled back into its coffers, meaning the bond buying succeeds only in pushing down interest rates for troubled governments and helping boost the profits and balance sheets of the banks involved. Similar bouts of sterilised bond buying in America has had only limited success in boosting economic activity and employment, although these rounds of 'Quantitative Easings' did stabilise the financial system and bank profits.
Eurostoxx were broadly flat ahead of the big announcement, while US stocks were also mostly flat. See more here at Reuters.
Meanwhile, GDP figures released yesterday showed Australia's economic growth slowed in the June quarter to 0.6% from 1.4% the previous quarter as China's hard economic landing starts to flow through into lower iron ore and coal prices, and the subsequent slowdown in mining investment.
Economists now expect the Reserve Bank of Australia will have to cut its Official Cash Rate from 3.5% in coming months. See more here at Bloomberg.
This would happen at the same time the Reserve Bank of New Zealand has its Official Cash Rate on hold at 2.5%, making our currency relatively more attractive. ANZ Economist Cameron Bagrie yesterday shifted his view on when the next OCR hike would come to 2014 from 2013, arguing an Australian slowdown and a likely appreciation of the New Zealand dollar vs the Australian dollar were factors. See more here in our article.
The New Zealand dollar strengthened to a two month high of over 78 Australian cents overnight. It was steady around 79.5 US cents.
28 Comments
Sorry Bernard, your Big Bazooka is going to turn out to be a small firecracker....(made in China). It will go BANG for a day and then fizzle out like all the previous ECB action.
Perhaps so , but isn't it interesting to watch the balance of power tilt away from Angela Merkel , and towards Mario Monti .....who's got the ear of Draghi now ! ....
..... the Mafia ...... and I hope they post it back in an envelope soon .........
Does anyone know about printing machine suppliers for private use ? Please write to: imintrouble@ xtra.co.nz – thank you for your help.
GESTETNER ! ........ pardon me , Walter ...... got the hay fever again . Sorry .....
Gesteiner – do they print in foreign currencies too ?
It's the Plates you gotta have first Walter,I'll clip on this handy guide to get you started, but I really think your making a lot of work for yourself here.......http://www.bombshock.com/fraud_scams/counterfeiting_money.html
Look just set up your very own ponzi, (plenty of info out there) lose all your scruples (as in conscience) before undertaking this lucrative form of earning.
Be prepared to have your Winz account closed and do some community service as an exit strategy once you have achieved the desired level of wealth mastery...
Or you could just sell the gold ........
I think I stick to my original plan seeking a printing machine supplier for private use only, but not before I change my name to Ben Bernanke jr. New Zealand..
I think “the people” have the same rights like authorities and print money, when they are short of it.
OK then Walter , let's know how you get on.....you certainly have the background in the artwork...
Hey ,how about a dry run of tenner's with Mickey Mouse as the feature,,,?
John Key....Mickey Mouse....same thing....
Christov – as an artist I have the right connection doing the plates – don’t worry. We do probably 50.- and 100.- notes first.
I was well aware Walter...of your background..
And Walter , please go have a look at my Bazooka links below....they'll cheer you up no end.
Obviously Bernard has no time for the odd giggle., number two on the first post is actual live footage of Mario test firing the injection.
...... might I suggest you do a trial run of $ 15 notes ...... to make it easier for folk to pay their GST ...
Bloody Brilliant...GBH...and $21 notes in anticipation....nothing quite like getting the jump on the Market.
...... Count , I was thinking of an intermediary hike to $ 17.50 for the GST , before we ramp it up to the full $ 21 ........
The plebs - ooooooops , silly me ....... I mean " the voters " - never arc up too much if you deliver the death-by-a-thousand-cuts to them ......
...... should be a Knighthood in this for you & Walter , play yer cards right .....
Fraid Walter's not bringing me in on it...GBH....no skills you see..... but I will be excited to see the first run.... Maybe Bolly on the 21's as Clint Eastwood holding a bannana.
...... I was also thinking of a Christchurch commemorative note too , with Gerry Brownlee's picture on one side , and the fallen Cathedral depicted on the other .......
The world's first $ 13 banknote !
I like your ambition...GBH ..just fitting Gerry on one side is a huge ask though, maybe just a torso shot pie in hand ..... add Alfred Newmans byline .."what me worry ?"
Got the makings of a great board game too...shssshh! just quietly.
Wide angle lens ........ a super wide angle ........ feck it , an 8 mm fish-eye lens should get all of Gerry in the frame .......
....... the man is circular , anyway .......
The world's first fully circular $ 13 banknote !
As John Clarke and Brian Dawe say...Please ensure the printier is facing the window...u should'nt try this upwind:
The risk is that much of the money injected into the economy by the European Central Bank will simply be recycled back into its coffers....?
Risk...? I would have thought the Fed proved that a certainty......deary me
It would have been appropriate for you Bernard to load the Bazooka clip from YouTube , where the operator fires it and it knocks him square on his ass.......Let up pray it's German made, if not certified.
Ah what the hell here it is......http://www.youtube.com/watch?v=sNA1ccP45KI&feature=related
or this more probable outcome
AW gees ya gotta see this......how would you like to be in a pit with this dude.
Of particular concern is the high NZ$ v Aus$, when the Aus dollar is looking vulnerable .
If the 25% drop in Iron ore prices stays there or goes lower , it is to Australia almost what Lehman was to the US.
I read that many Oz open cast mining operations will be in loss making territory at under US$85 PER TON
China is slowing and If Australain mines start closing we are going to have thousands of Kiwis returning home
The Au$ has to weaken or be weakened as this is the only way out of this hole (excuse the pun)
Boatman ....I refer to my comment to Bernard at the bottom of yesterdays 90 at 9....pretty much sums up where the RBA's at.
There mere fact they feel the need to talk up the bazooka means it is not big enough.
Course it is Ralphie...you go see link two on my Bazooka post above , it's a live test fire and Mario will be looking to get more distance this time.
I'm amazed there is anyone left in the world who actually thinks Draghi has a Big Bazooka. It's just a small gun that fires hot air to inflate the markets briefly so everyone can quickly take their profits before someone gets a chance to read the fine print (or interview Frau Merkel) and realise old Mario has gypped them again.
There are only two solutions to the Euro crisis - full-blown fiscal and political union across Europe with financial transfers to the less productive South (never going to happen) or the breakup of the Euro (definately going to happen).
Until the political will to keep kicking the can down the road eventually crumbles, Draghi can say what he likes but nothing he can do will fix the giant productivity gulf between North and South.
I've lost count but this must be plan #20-something by now. I lost interest after about the first 10 plans or so...
Thoroughly Agree..StanleyG...but I do think Bernard likes saying Big Bazooka, as it kind of gives the byline some sense of drama in anticipation ,..........I'm thinking also, he probably giggles himself off to sleep picturing the firing of such a cannon resulting in , an abysmal failure to shine any light whatsoever into the gloom that he takes such comfort in......Vader chortles, then drifts off.
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