Here's my summary of the key news overnight to keep you up-to-date over these holidays.
The Greek situation is again hitting the headlines. Greece is now heading to a snap election after a Presidential vote failed in their Parliament. The result paves the way for elections in which a party that opposes the terms of the country’s international bailouts is expected to win.
In Australia there are reports of fraudsters are using a phone service for people with hearing or speech impairments as part of a scam in which customers’ money is stolen by hacking into ANZ bank accounts.
In the oil markets, prices are still falling. The benchmark US price is back up down to US$53/barrel and the Brent benchmark is just under US$58/barrel.
Gold is also falling and is now at US$1,181/oz.
The price of copper is now at a four year low on concerns over the China slowdown.
UST benchmark 10yr bond yields fell back in New York today and are now at 2.20%.
The NZ dollar starts today at 77.8 USc, we are at 95.6 AUc, and the TWI is at 79.2. The Aussies are noticing that parity may be close.
The easiest place to stay up with event risk over the holiday period is by following our Economic Calendar here »
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14 Comments
seems alot more moving parts
While banks are reluctant to release figures, there's growing concern that Australia is in the grip of a rural financial crisis as hundreds of farms fall at the hands of banks. For some producers in parts of the country, property prices have slumped so dramatically that their debt is higher than the value of their farms.
http://www.abc.net.au/7.30/content/2014/s4155509.htm
who would have thought...
Today, Rodney Culleton and his sons are just visitors.
Their 15-year, interest-only mortgage was with specialist rural lender Landmark, which was owned by the Australian Wheat Board. At the height of the GFC, Landmark's banking future was looking shaky, and its loan book, valued at a billion dollars, was bought out cheaply by its big city competitor, ANZ Bank.
Little do people realise the savage impact higher present values of future debt principal (bullet) and interest rates payments exact , when yields fall as precipitately as they have in Australia.
The proceeds of the Yen carry trade only bless the anointed few - examples here, here, and here.
Not to mention the dual income families servicing their 900k mortgages on their 1.3 million (quite ordinary) house in a nice suburb in Sydney. Jumbo mortgages by Australians are their only match to the foreign purchasers/owners.
The other popular alternative in Aus cities is to rent in suburb of choice, while buying more affordable property elsewhere to get/stay in the market.
RE: Landmark & ANZ the loan book situation is so self-inflated in the market (similar to the way Southern Finance brought shares in it's parent company) that I wonder how much _real_ competition there is, and how much is just a sock puppet on each hand of a string puller, pumping up the market between "opponents"...like a weapons trader selling to both sides.
Well if it's a scam based on the old land for railway seizures in the US,
the next step is for some corporates, themselves heavily indebted and with weak share positions, to start offering equity pools (as done by the stock and seed companies in the now illegal US model ). Also suppliers with cheap entry costs, but solid looking returns will be offering solid contracts for the farms produce - some of these will involve large property owners or interest parties (this was the actual starting model for NZ's own co-op system) but these places will suddenly be brought out by the older and larger companies....normally they offer larger share holding packets to those large property holders and influential experts who had their names behind the assurrance of the bait - often the experts get promised a support contract and funding for their own company working on their specialisation. (not to different to our LIC ). However because the contract owning company is gone, the contracts are worthless . Future Shorts make a fortune once the deal is done. Farmers are left with excess stock they can't carry, a mortgage they can't pay and the perfect buyers market.
This is exactly why NZ moved to a co-op system, and why it was absolutely imperative that suppliers and process owners were alligned with the collective.
FYI, this market competition is also how the spice trade works in the coasts of Africa.
places were the farmers are so poor that an entire days wage wouldn't buy a single novelty bar made with their commodity (eg is for the Cocoa farmers).
As long as commodity prices can be forced below price of production, labour, and rent that's the financial maths of the situation. This is because the risk is being forced onto the producers, not passed on to the consumers choice. This is because a failed efficient farmer WON'T be replaced in the market by "someone who can do the job" - because of the forced model, its acting as a "poisoned pill" with all the extras coming to rest at production, not at market. In the classic "fisherman" or "baker" model used to illustrate basic economic forces ... just what do you think will happen if the business owner is forced to "gold plate and sell only the perfect fish" and the customer is the price setter? If a new shop opens it does not create new money, it only operates while it's owners have deep enough pockets (eg it's home country has enough savers, or it can print currency) until it can gain effective monopoly and force market control back at the customer - if not it will just suck money from the business owners.
For the personal angle: the mechanic stuffed my tractor so I'm the only one who can use it, New rules for ACC, who pays for the NEW tractor? As was told when Fonterra first announced a >7.50 price tag, Fonterra is borrowing from next years profits - because the way the commodity system works there can be no "great years" because that would imply a _premium sale price_ which is nonsense for commodity trading due to the very nature of the commodity trading system - which you all damn well know.
So with price wars at the supermarket coming home to roost.
Who is supposed to pay for the labour cost? or the constant certification of physical machinery used in all weather and their expert operators (most barely paid more than minimum wage)? who is paying for the new MPI equipment, or the extra equipment demanded by ACC new safety regulations? let alone the increase in insurance costs.
And why can the government not see this, if I can; and why are the government spending all the profits...when the farmers can't even make the rent.
Well at least that soil moisture map has a bit of realism for us this year. 2013 one has a tiny piece of yellow on Opotiki, that's our place, this year it has a big blue bit. Couldn't have happened three years in a row.... could it?
That Aussie farming article was good, but it is the some old some old, pact with a devil and all that.
re: latest Greek Crisis.
A few weeks ago, it was reported by auditors and experts that everything was stable.
A couple months before that, it was going to crumble.
3 weeks before that the experts and observes were patting everyone on the back for a job done well if saving the Euro and stablising the banks once and for all.
A month before that everything was going to fly apart.
Two weeks before that "swift action" had fleeced all the savers and saved the economy of Europe.
how far back do I have to go - perhaps someone who tracks the Euro fundamentals might have a handydandy timeline.
Now it's all going to blow apart (again).
Wolf much?
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