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90 seconds at 9 am: Obama rejects Republican plan to fix fiscal cliff, saying it must include higher taxes for the top 2%; NZ$ solid ahead of RBNZ decision; Milk powder price drops

Posted in News
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Here's my summary of the key news overnight in 90 seconds at 9 am, including news US President Barack Obama has rejected a Republican proposal to carve US$2.2 trillion off the US fiscal deficit that doesn't include higher taxes for the top 2%.

Obama told Bloomberg the Democrats would not accept a deal that didn't include a higher marginal tax rate on household incomes over US$250,000.

The Fiscal Cliff remains a serious risk for the global economy as the countdown to January 1 gets nearer, although US stocks were relatively flat overnight. Meanwhile, Reuters reports Republicans have started turning on each other as the talks intensify and the pressure goes on many Republicans who pledged never, ever to raise taxes.

Meanwhile, closer to home, the Reserve Bank of Australia cut its official rate by 25 basis points to a record equalling 30 year low of 3% and kept an easing bias.

It is struggling to cushion the economy over the Tasman  as it cools under the weight of a slower Chinese economy and the pressures on the domestic sector from a high Australian dollar, which actually firmed last night to over US$1.04 because some traders had expected a bigger cut. See more here at Sydney Morning Herald.

Economists expect Australia to cut its official rate to 2.5% over the year ahead.

None of the big Australian banks have yet to pass on the 25 basis point cut. The Bank of Queensland, however, last night cut its standard variable mortgage rate by 20 basis points to 6.51%.

The Australian government has argued the banks should pass on all of the Reserve Bank's cut. ANZ is not due to decide on its mortgage rates in Australia until December 14.

Back in New Zealand, the Reserve Bank is expected to leave its Official Cash Rate on hold at 2.5% tomorrow morning. The focus will be on any bias upwards or downwards in the Monetary Policy Statement, any talk on New Zealand's high dollar and more debate around bank profitability.

Elsewhere, milk powder prices fell 2% in the fortnightly auction overnight on Fonterra's GlobalDairyTrade platform. See the full results here.

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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9 Comments

As I said yesterday, a vain

As I said yesterday, a vain attempt by the RBA at some kind of dampening effect on the currency and despite the bollocks that has been trotted out  by various Bank analysts on the currency surge upwards.....oh dear me...!
 The position takers move to strengthen their positions...oh crikey,  is the game now much bigger than the regulators ability to control.......?
 The most appropriate response from the RBA following the market response to the cut should have been..................quite simply.....................um ?

      "We find ourselves more

 
 
 
"We find ourselves more amazed than ever at the ability of those in power to lie, misinform and obfuscate the truth, while millions of Americans( and NZ'ers) willfully choose to be ignorant of the truth and yearn to be misled. It’s a match made in heaven.
Acknowledging the truth of our society’s descent from a country of hard working, self-reliant, charitable, civic minded citizens into the abyss of entitled, dependent, greedy, materialistic consumers is unacceptable to the slave owners and the slaves. We can’t handle the truth because that would require critical thought, hard choices, sacrifice, and dealing with the reality of an unsustainable economic and societal model. It’s much easier to believe the big lies that allow us to sleep at night."
Thanks prosperopink for posting this yesterday from ZH.

So true unfortunately we are

So true unfortunately we are now so far from reality that it is impossible for political leadership anywhere to comprehend let along acknowledge so just keep doing more of the same until ……………………….

For some reason names like

For some reason names like Key, Joyce, TSY, Fonterra, Federated Dairy Farmers, MPI, etc enter my stream of conciousness.

well said. regards

well said.
regards

Interesting Torygraph article

Interesting Torygraph article about 'scum villages'.  In Amsterdam, no less - that bastion of the hippy life. 
 
Seems that 'tolerance of intolerance' does, actually, have a limit.
 
Applied to our own situation - that's if we don't already have such villages in all but name - this concept - essentially warehousing the uncivilised/feral at lowest unit cost and under surveillance - this might give some legs to a Housing Unaffordability solution.
 
Because clearing the State stock of the racaille, sending in the D9's and rebuilding at greater density etc, might even be a path to KiwiBuild.  But y'can bet the farm that Labour and the Greenish will just choke on the notion that some citoyen are essentially unfit for purpose....just imagine Len Brown's reaction!

They tried eliminating

They tried eliminating poverty by flattening slums, a wee while ago. Tried exporting the inmates to Australia too.
 
Didn't work.
 
Get with the programme Waymad.
 
Don't equate 'the hippy life' with what needs to be done from here on. Sure, some 'got it' and realised the way forward included less conspicuous consumption, Others lost the plot, but no worse that the bar-proppers-up of the prior plethora - just used a different poison.
 
Structurally, cramming-in makes no post-peak sense, it relies on large amounts of energy feeding/supplying from external sources - something HughP seadfastly chooses to ignore.
Structurally, a cap on population is needed, or all other moves are in vain.
Structurally, you need hubs big enough to be cohesive socially and skill-diversity-wise (villages with blacksmith each would be the historical example) but local enough to the food source, and sparse enough that depletion/degradation isn't an issue. Auckland doesn't have an answer to that, so it's future-stuffed. Maybe not as future-stuffed as Singapore, but I don't know if degree of stuffedness is going to matter..........
The land will be there, going begging post BigAg collapse - the 64 thousand calorie question is: will there be the grunt left to effect the transition?

"will there be the grunt left

"will there be the grunt left to effect the transition?"
well thats 1 of the million dollar Qs....the other is, transitioning to what....we have to get it right and first time I suspect...
Chances of doing that I rate close to zero now, the saving grace for NZ is its only 4million in this much land area...no one else I can think of has that "advantage".
 
regards
 

Peagsus town receiver sells

Peagsus town receiver sells to Todd Property Group for well below the $142m Pegasus owes (to Royal Bank of Scotland and others apparently).
 
http://www.stuff.co.nz/the-press/business/your-property/8034498/Troubled...
 
In 2010 Bob Robertson bought out Multiplexes share:
 
http://www.stuff.co.nz/business/industries/3959534/Australian-stake-in-P...
 
At that time under Robertson states there is under $100m of debt - that is now $142m in two years with little new physical works done and dozens if not hundreds of sections sold?
 
What is hard to understand is that with 800 sections sold (at least $100m excl GST) and $142m in debt, that means that somewhere around a quarter billion plus GST has been spent.  That's $290m ish to develop 950 sections, a golf course a couple of small buildings, a few hectares of unbuilt on commercial land, a fake lake, and some vacant paddocks (which might be liquifaction prone http://www.stuff.co.nz/the-press/news/christchurch-earthquake-2011/66411... but could possibly be developed into another 800 sections).
 
Let's add up the value here (probably wishful thinking prices) :
800 future residential sites (TC2 maybe TC3 land) worth $30m max as undeveloped land. (Probably $15m would be generous in reality!)
Say 6ha commercial land (not sure it's that big) at an average $300/m2 but let's be generous because of the lake and say $20m.  (Again $10m is probably generous in reality!)
One modest commercial building $2.5m would be generous.
One first class golf course and (relatively compact) facilities .  I have no idea, but say $30m.  Again probably wishful thinking given what they are selling for in the US at present.
 
Perhaps something like $80m of value in those assets on a very good day with a fair wind.  ($30m on a bad day? Or less?).
 
So that means that they've spent $210m to develop 950 sections - over $220,000 each to develop - many of which have sold in the low $100s.
 
(NB that even on the 'good day' valuation, the remaining 150 unsold but developed sites needed to be worth over $400k to just cover the debt - oh dear!)
 
That tells us two things:
1.  It is bloody expense to develop land.
2.  As Bob Jones says, all developers go broke eventually.
 
It will be interesting to see if Bob Robertson (of Infinity) loses his shirt over this or not.  This is a pretty huge failure which and with a $142m of bank debt someone took a huge hit...