Here's my Top 10 links from around the Internet at 10 am today.
As always, we welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz.
See all previous Top 10s here.
My must read today is #6 on the changing economics and science of solar power and how the US military is leading the way, just as it did with semi-conductors in the 1960s.
1. They're coming home - Australia's economic slowdown affects us in all sorts of ways. Firstly there's the weakness in demand for our manufactured exports.
Then there's the weakness in the Australian dollar relative to the New Zealand dollar.
But mostly there's a major turnaround in migration figures as fewer New Zealanders go to Australia to find jobs, given they are drying up.
Also, there's lots of people who are coming home because their own job has dried up.
Treasury has a useful discussion in its most recent monthly economic indicators about the turnaround.
Here's the chat and the chart below showing how most of the returnees are in the 20-29 brackets:
By the way, this is not a hint for Quade Cooper to come home, even though we seem to be down to our fourth choice first five. Next on the list after Colin Slade is Stephen Donald. That's how much we want you to stay in Australia Quade...
While net flows for several age groups have turned more positive very quickly, 20-24 year olds have seen the sharpest change. This has come through both a fall in departures and an increase in arrivals. In keeping with overall trends, a significant proportion of the increase is arrivals from Australia, with a high proportion of these arrivals NZ citizens (ie, returning Kiwis).
A similar pattern is evident for the 25-29 and 30-34 age groups, although their net flows have been positive for a while. The recent acceleration has also been caused by both a fall in departures and an increase in arrivals, including from Australia.
2. What a Chinese hard landing would mean - Treasury has also looked at what a slump in China's economic growth rate to 3% would mean for New Zealand. We'd fare better than the Australians, but there would still be an impact.
This would be similar to the downside scenario in Budget 2012 in which lower growth in emerging Asia, especially China, led to real GDP growth in New Zealand being 2.1 percentage points lower over the forecast period, the terms of trade falling 9% in the first year, the current account deficit increasing by nearly 1.5% of GDP after two years and nominal GDP being around $25 billion lower over the 5- year forecast period as a whole (approximately 2.5%), with a commensurate impact on tax revenue.
We do not expect such a scenario to occur, but if it did it would have a significant negative impact on the economy and the government’s finances. Automatic macroeconomic stabilisers, coupled with room for further monetary and fiscal stimulus, could provide some offset to this.
3. Bigger than we think - SCMP reports the bad debts in China's banking system may be at least twice that given in official figures.
"We did see sharp growth in overdue loans in recent months," said a senior manager with the Bank of Shanghai. "It's a very bad sign and it's obvious that all banks are facing the problem."
The banker added that he had never before seen such a large increase in overdue loans.
Loans made to steel traders and solar-panel makers were likely to turn sour now that a large number of such businesses were near collapse, bankers said.
"The risk of a bad-debt crisis is in the making," said Jonathan Cornish of Fitch Ratings. "China's GDP growth is lower and asset quality is deteriorating, which means higher risks on NPLs."
4. Bike lanes could boost retail sales - I'm a mad cyclist so forgive my enthusiasm for this ThinkProgress blog on research out of America showing that removing parking spaces in retail districts to replace them with bike lanes actually increased retail sales in one example. It didn't hurt them in other examples.
5. Counterfeit lion - We all know about the amazing copies many Chinese bag, watch, CD and DVD manufacturers make of Western products.
Here's a great Buzzfeed story about a Chinese zoo that tried to convince visitors this animal below was a lion.
The “lion” was really a Tibetan mastiff. Visitors reportedly called the zoo’s bluff when they heard the animal bark.
"The US Defence Department is racing ahead. This could be like the semiconductor industry in 1980s where the military changed the game," said Jeremy Leggett, chairman of Solarcentury.
Nor is the Pentagon alone. Grant lists from the "SunShot Initiative" of the US Energy Department show that America's top research institutes are grappling with each of the key issues that have bedevilled solar energy for so long.
Los Alamos - home of the Manhattan Project - is working on smart grids and better ways to capture excess electricity produced in peak sunlight hours. The Argonne labs are working on thermal energy storage to overcome "intermittency", the curse of solar and wind.
7. Gross Metropolitan Product - Here's an AtlanticCities piece looking at the economic benefits of 'agglomeration', whereby more public transport boosts the economic growth of a city and the wages of its workers. HT Auckland Transport Blog.
With so many variables in play — from job density to population growth to transit development — studying agglomeration has been extremely difficult. So Chatman and Noland ran a number of statistical models that took into account all these factors, as well as economic productivity measures like average wage, for more than 300 metropolitan areas across the United States. ("It really is a new kind of thing we did here," says Chatman.) The numbers were so complex that many of the models failed to pass statistical muster.
Those that did revealed a pretty clear line from transit expansion to economic growth via agglomeration.
Every time a metro area added about 4 seats to rails and buses per 1,000 residents, the central city ended up with 320 more employees per square mile — an increase of 19 percent. Adding 85 rail miles delivered a 7 percent increase. A 10 percent expansion in transit service (by adding either rail and bus seats or rail miles) produced a wage increase between $53 and $194 per worker per year in the city center. The gross metropolitan product rose between 1 and 2 percent, too.
8. Inflation is dead - But the king is long lived. Paul Krugman points out, rightly, that inflation is dead and all the doomsayers and warners about Zimbabwean-style hyperinflation are just plain wrong.
He cites these US inflation expectations figures.
I know that there are economists for whom it’s always 1978, who are constantly fearing — or, I suspect, in their innermost selves, hoping — for a return of the good old days when inflation was a constant threat. But in the world we’ve been living in this past quarter-century or more, inflation expectations haven’t moved much, and nominal interest rates have, in practice, been a pretty good guide to the stance of monetary policy.
9. Full speed backwards - Rod Oram seemed to strike a nerve in this wide-ranging Sunday Star Times critique of the Government's policy moves of the last month or so.
Our driverless Government is taking us for a ride. Guided by damage control, it is running amok over good governance, democracy and even its own policies and principles.
In the past 10 days alone, it has let rip with expedient decisions harmful to seven of its top priorities: housing, KiwiSaver, state-owned enterprise sales, revitalising the stock market, broadband, the Resource Management Act and trade with China.
Prime Minister John Key prides himself on pragmatism. But his quick fixes, shortcuts and deals are piling up in a mass of contradictory and counter-productive actions.
10. Totally John Oliver on the end of his reign as John Stewart's replacement. It's not pretty.
52 Comments
Bernie , you're back to doing Monday's Top 10 , again ?
... didya see the video of Howard Davidowitz on Yahoo finance , ranting that the world's facing imminent economic collapse because Walmart missed analysts' profit projections by a penny ...
I always think of you , big guy , when someone is having a " Captain Calamity " moment ...
The last recovery in the USA was really all about building and over-building...it popped, maybe having un-restrained building here really is a bad idea....as you say not very clever.
Walmart missed with an actual $1.24 v a market analysts guess of $1.25, 1 cent and its a disaster? strikes me of more noise. Is the US in a poor way, yes....but thats to be expected with petrol at $4US+? and an economy thats grossly energy dependant and in-efficient.
regards
It's already there and well past that if you keep in mind the govt rigs the way unemployment is measured.
And throw in under employment, casualisation, low and stagnant wages, toxic work cultures like the Hamilton Council:
#8 Inflation is dead?
Tell that to kiwis paying power bills, groceries, buying a house, running a car, getting insurance etc etc.
Max Keiser has a good show on inflation vs deflation this week: "The Creepy Cult of Mark Carney":
Inflation is tamed claims Mark Carney in Britain.
But in the headlines: Train fares 4%+, rising house prices 7%+, energy and food prices "outstripping inflation"
If prices are "outstripping inflation" of 2.7% in Britian then isn't that what inflation is actually suppose to be a measure of - rising prices?
Some are goldbugs, inflationistas and Austrians to the end it seems.
Interesting thing though, I do see huge deflation in assets, ppl have bought them based on a return on their investment from a BAU scenario...that return wont be there...and energy wont drop in price...
I think a lot of ppl face huge financial misery....
regards
Yes in effect it does measure the averages and not specific items. The problem is you and many see somethings going up in cost but dont see the things dropping in cost. The lack of understanding is um interesting. Reading and reasearch would explain.
Anyway, somethings go up 4%, and with an average of 2.7% somethings must only be going up 0.7% (in very simple terms) to get 2.7% average. This means that some sectors are deflating, ie suffering...say its 50% of the economy. Send 50% in a recession or depression (deflation) and the entire country gets dragged into one, which is the real danger, then house prices collapse, hello 1930s.
Groceries are seasonal, capsicums are now $18 a kilo up from $4/5 or so. Tomatoes $8 up from $3, cucumbers now $5 v $2..its winter...what do you expect? Look at communications, I just swapped plans from a $40 vodafone offering 60mins and 250meg of data a month to a 2 degrees for $29 offering 160mins and 500meg and unlimited texts, a 25%+ saving.
A house is a capital item and an investment so in effect you dont measure that as its not consumed. The thing to measure would be the change in re-payments as the interest rate changes. Or rent or a rental equiv which I think is what they do.
here is a great example on that. Houses are a x2 bubble, what would you measure when they collapse say 60%? People who have paid that full 100% (or say 95%) still have the debt to service and so still pay as much back to the bank.
"Look at communications:"
Yeah I just changed from 50GB to 200GB plan and paying only 16% more. So if they can QUADRUPLE the amount and charge only 16% more, the question is how much of a killing was the provider making to start with! Plus if you ran out and had to buy some extra data to make it through the month it starts at $5 per GB!!!
Reggie Middleton reveals how US medical equipment makers have a way better margin than NY City cocaine dealers.
"Anyway, somethings go up 4%, and with an average of 2.7% somethings must only be going up 0.7% (in very simple terms) to get 2.7% average."
Well it just begs the question what is getting measured:
"Just as our structures and elites prefer corporate manipulation to real production, so financial manipulation comes more naturally to them than the creation of new capital...
The result has been the gradual conversion of our economies into myriad new forms of inflation, most of which are not measured by our many measuring institutes...
Much of current econonmic argument turns on levels of measured inflation which reflect the small potatoes of national economies. They do not reflect what is really happening ...
And so to all apperances, we don't inflate"
- John Ralston Saul, The Miracle of the Loaves
Same with UFB V cable for my $200 a month and 150gb, UFB would do 1TB or for $120ish 200gb...that is some drop once we see competition.
US medical manufacturers are indeed getting away with anything they want...7%+ per annum, what they are doing is pricing themselves out of the market, athst one mess in themaking IMHO.
"Well it just begs the question what is getting measured" It doesnt really beg whats measured, ie you dont waqnt to keep changing what you measure to cherry pick the worst costs. What you want to see the same things over the years so you can compare say 1998 with 2002 with 2008 and 2013 etc and see. So sure you could take seasonal peaks for some goods and get very high inflation when overall that is not the case.
The thing is here CPI and core inflation measurements are a management tool to judge policy action on.
"And so to all apperances, we don't inflate" or we choose to cherry pick and not look at what is really happening.
The key metric for me is, do real ppl in main street have more money to chase goods? the answer is an in-equivable no IMHO. So to explain, if the person is earning $100 and they get no pay increase then sure say power goes up 4% then that $ cost means something else does not get bought its really simple. Now the maker of that something not bought has three hard choices at this point, go out of business, or drop their price to sell or decrease production (which usually puts up unit costs). Part of the unit costs is interest, raise that and the choice the business faces comes down to 1, go out of business.
John Ralston Saul, an essayist.
The Miracle of the Loaves,
http://idealstate.tumblr.com/post/11217362888
Indeed as suggested by Steve Keen and will I suspect be probable, ie a debt jubilee.
Interesting reply, thanks....I dont recall this comment on Athens...
regards
Yes, DARPA has a Lot to answer for:
- Computing (remember the first such were shell trajectory calculators and encryption crackers)
- Interwebs (DARPANet)
- Carbon-zero electricity (nuclear)
- Drone-delivered pizza
- And who knows what else is skimming under the oceans, under the radar (oh, There's another one)?
It's also worth recalling that, under the Vote-Labour-Get-yer-Greens-for-free set-up, there wouldn't Be a military capable of DARPA'ising.
But we Would have plenty of Ploughshares if not Swords. All the better to Plough stuff with, for crops and sheep and cows....
Oh, wait.
Ploughshares are made of Steel, which needs Coal to smelt it and Mines to dig up the ore and the coal. Scratch metals, then.
But we Would have plenty of Flax Sandals and Wooden Ploughs to lead our export-dependent economy.
Wouldn't we?
8. Inflation dead? Well we might not have the general inflation of the 1980s but we certain have mad inflation in house prices due to irresponsible Bank lending. And mad inflation in stock market due to US QE. Saying there is inflation only when it is general misses the point completely.
I often wonder about the untold story of Alexander the Great, that of the massive supply chain he left behind as he conquered his way across the world. Logistics is everything and in the modern military it is all about fuel. Just look at the advantage Britain had when it switched its navy from coal to oil.
So while I have read some very convincing argument for "free" enegy devices over the years and how these inventions are always suppressed, my call is that if they were such a immense advantage then the military would be using them.
The military going solar tells a very big story. Kind of perverse really that the technolog gets advanced by the military, but that has often been the way. WWII brought us rockets, jets aircraft, sonar, radar, electric arc welding and even modern air traffic control. Lots more on that list as well. But all that R&D and complexity takes a surplus of energy.
#6. Solar. New Zealand is very well suited to grid attached solar on a national basis, as it has a large capacity in hydro. Hydro is well suited to winding up and down quite quickly to match the variability of wind and solar. Such would require an adaption of the grid. But why not.
Day on day Wind/solar is quite variable. But year on year very reliable. Water as we know is variable year on year. In the right proportion one can work that all together quite well.
Problem though is the current setup with monopoly electricity companies pretending to compete, but who really overcharge us by 250% (IMHO). And who would fight like wildcats any such proposal.
So really to achieve all those neat things the current electricity industry ownership structure would need to be dismantled, (and why not). It would be like pulling teeth from the financial services. (again why not). And then structuring the whole thing in the interests of citizens. (again why not).
Totally and utterly agree. Nationalising will come, it simply has to we will have no other options.
I also expect that Rio Tinto will be sent packing as we'll need that capacity just to stay functional.
The great thing about the SOE's is the model, the bad thing is the Govn takes the dividend. Because of that, they wont change the model, their a vested interest, it will take a voting change, but I think that will happen. Interesting thing is its a regressive tax ie it hits the poor the hardest, yet Labour did nothing about that and dont look to now...
Future governments could be radical to say the least.
regards
well said steven....
Yeah... I think SOE power dividends should be looked at as a regressive tax.. I heard the Labour put pressure on the SOEs' to grow dividends when they were in power ... ( Helen Clark).
I would be wonderful if Technology and innovation force a complete rethink about the SOEs' in regards to power generation and supply.
My guess is that they will initially try to protect these companies... just like they are with chorus.
Nationalisation is your idea Steven. Not mine. Mind you the radical surgery required will bring the same yelps of pain.
I recall however the Waipori Hydo scheme outside Dunedin. Owned by the local citizens who were forced to sell it (legislation) by Max Bradford. Such can happen again and given the history, the cry of property rights won't hold water (pun intended).
Its not my idea, its what I think will happen, as is much of what I say. ie I dont want to see a Great[er] Depression the scale of the 1930s, but its what I think we are certain now to see....the rock and a hard place the Fed is in and trying to get out of is going to knee cap us.
"yelps" no, screams...
"hold water" yep...
"the long emergency" cometh
regards
right nght now, you'd buy 1mw of panel for $650,000. Installation is extra - but can always be voluntary; it's not rocket science.
The big problem is storage, if you don't adapt to a 'using it when it's available' mindset. I presume they used batteries? Ouch. Big cost and big losses in and out. But we are past the need to subsidise - and past grid-parity. That'll be a two-way thing, of course; grid had to get 'more costly' in relative terms.
Im not sure on this as an example you think. As in fact it cost $7.5millionNZD to install but saves 900k a year in deisel they had to import. They also now run on coconut product which they have an abundance of, so biofuel.
Simple payback 7.5M x 0.9 = 6.75years. Life expectancy of the plant probably 20 years. Add in that the bases for the panels will be re-usable as the panels are replaced...
That looks like a good result in my book.
regards
#2 So a drop in the OCR looks rather likely. I do so expect....might be next year or 3 years off, got to wonder just how long the thoughts that the OCR will rise will last.
"We do not expect such a scenario to occur, but if it did it would have a significant negative impact on the economy and the government’s finances. Automatic macroeconomic stabilisers, coupled with room for further monetary and fiscal stimulus, could provide some offset to this."
regards
This is a real installion (One of my 5KW's)...
http://www.brugs.co.nz/5kwSolar.png
Yes, its hit and miss on some days, but pretty steady overall.
The advances in storage will make solar more and more viable.
Get in quick as in some parts of Oz they will not allow more connections from Domestics as the "infastructure" can't handle too much power being produced at the "leaves" of the system!!! its not designed to handle energy going back up too well!
The trick is to on-site use most of what you produce.
Lowest hanging fruit is PV water-heating, dual element. You're just displacing the grid, and your cylinder acts as a capacitor in the big picture.
Paying hydro to be 'on call' (they bid for various time-delay entries) is just a silly cost to consumers, when ther cylinders can ease the fluctuations so much.
Solar (all renewables are solar of secondary solar) was always the eventual default source; we had to go there as fast as possible. Good to see that the intelligent end are doing just that.
The message is to shun static - dare I say Luddite - assumptions about the limits of solar power. "Human ingenuity should not be underestimated," it said
Pity GS aren't quite as intelligent; like so many, they note 'human ingenuity' being applied to an efficiency (that's all it is) then fail to understand that no efficiency can better 100%. Must be economists.
You can buy the panels by the container or the pallet-load, yourself. Get 'first tier' - there can be quality issues further down.
Down here (Dn) we're looking at 3kw of panel, and expect it to do all our summer, most of our shoulder, and half of our winter HW.
Ecoinnovation supply dual elements for the standard cylinder fitting, and I assume there are others too. There is no schematic to draw, really. You don't have to use inverters or batteries - any voltage can heat an element, and the cylinder is the battery (you're storing excited electrons rather than packed-in ones - it's all energy).
Yep, if you haqve excess, why not? Just a 44gal drum in the glasshouse with an element would do it.
A typical HWS cyclinder element is 2kw.
The dis-advantage is the PV cells are complex, to heat a greenhouse storage mass a direct solar hot water heater could be a better bet. The problem you may meet is control - over heating.
I like KISS keep it simple and stupid. To heat a greenhouse a http://en.wikipedia.org/wiki/Trombe_wall would be my suggestion, nothing to wear out and concrete and black paint is cheap and will last forever.
regards
Another question PDK. Can one just switch off the feed from the PV panel. Or have it switched off by thermostat at HWC. And if switched 'off' does that cause a problem at the panel. Like it gets too hot. Or something ?
Yes. I did understand about the 44 gal drum as well etc.
Sure, and I can't see why it would damage the panel - we are further down the scale (200 watts/12 volts) but the (jaycar) controller certainly stops the charging without diversion and the panels appear to handle it (the 50-watter did 5 years as the only house-feed, 5 more exposed but only intermittently used; still produces the 3 amps you'd expect. The 2x100 watters have done 5 years, no drop-off. Our batteries are are always full within an hour of sun-up, and usually we have no 'dump load'.
You'd need to ask someone about a switch capable of handling big arrays - certainly controllers exist (expensive) which do it. You can just cover one panel, and it 'throws' a series, but that's manual.
Classic Fin de siècle piece from Spengler over at Asia Times. He's not as convinced by Chinese low-growth 'data' but the real kicker is in the middle:
"..the reins have slipped out of Washington's hands. Americans will hear about important developments in the future if and when other countries choose to make them public. Readers should be warned that those of us with reasonably good track records won't do as well in the future."
Mayhem opening up.
So maybe a spike, maybe. I think the Fed must be looking on with horror....this should indicate that unless its very slow and quiet its going to cause the next Financial crisis and Great[er] Depression.
Given the hawks and "past successes" I dont rate our chances.
regards
Thanks Hugh,
One article linked to this
http://www.theguardian.com/politics/audio/2013/aug/15/politics-weekly-podcast-anat-admati
This is Admati on a Guardian podcast – very interesting. She also makes the point that the banks insist that the businesses they lend to must have 20 – 30 % capitalisation. So there is one set of rules for the banks and another for any other business.
RBNZ and RBA hav totally failed us.
This is everything Stephen Hulme has been going on about.... With regards to the OBR and the understated risk the Deposit holders carry.
Name any other business that has such low capitalization... or that even wants to be that vulnerable..?????
Why can't they be made to hold greater Capital..??
The only cushion left is that the Reserve Banks in NZ and Austrailia has 2.5% left to play with before the OCR goes to zero.
Banks should be made to pay a big price for Reserve Bank liquidity.... if they should ever need it.... ( and they will need it at some point )
Hi,
However the OBR a known risk, so you can choose to keep your money there, or not.
Personally the ppl complaining about the OBR seem to be the ones with [substantial] deposits who expect I the tax payer to take their loss, frankly thats wrong IMHO, their profit, they wear the loss.
Really though the OBR is about keeping banks open. Have you considered how you will buy food and how the retailers will buy wholesale if there is no banking system? Even with cash the shelves would be empty in days. With the OBR they open the next day and our economy has a chance to carry on.
Banks have said that even if the OCR drops lower, say 1% their wholesale rates wont, so I wouldnt expect a mortgage rate under 4%....even if the OCR is 0.25%.
PS Why should they hold greater capital? if you think its too low dont invest there, simple.
regards
Well Steven, if all the depositors yank their money out lets see how you get on paying your mortgage, could be a slight problem for you at the new rate of %20.
That also would collapse the value of your house and that wouldn't help your so called savings in bricks and mortar.
a) Foreign money isnt at 18% ergo no 20% mortgage, more would be borrowed from overseas, if need be. Even then I can pay that no issues...ppl with 95%, yes they are screwed....a lot of blood on the floor......
b) The banks have said they have more deposits than they really need, so sure, make them tremble, 10% of depositors pull out. May not be a bad thing actually.
My house value as such I dont care about, its an un-earned gain so if I "lose" 50% even 60% frankly I dont care, it keeps me warm and dry, cheaply. My "savings" isnt in bricks and mortar, Im not that silly to invest in an illiquid asset thats x2 over-valued by any sane calculation.
A bank run btw is exactly why the OBR will be there.
regards
OBR would exacerbate a bank run on all the other banks.
My deposits are not an investment in the banks, if I wanted that I would have bought shares in them.
My deposits represent years of hard work and I expect banks to operate in a manner that safe guards them and I expect the RBNZ to back me up.
If depositors flee then the whole banking system becomes a giant ponzi scheme. with zero loan to deposit ratio.
If housing goes our banks will go, and after reading the above housing does not have to go down very far at all.
Imagine if you had %3 equity in your house or I had it on my farm, Id be out in weeks.
Banks are effectively the closest thing you get to a risk free rate of return, but they are not risk free, nothing in this world is.
I have bad news for you, I consider the banking system is already a ponzi scheme.
As you say "as above" with LVRs of 95% a small drop in value technically sends a bank insolvent fro my limited undersatnding. This I think was the real thing behind the scenes in the USA, instead they hid it. Now I dont think NZ is as bad as the leverage isnt as high....but its still too high I suspect...LVRs shouldnt be above 80%. Hence I think its one huge ponzi scheme and its goona blow.
regards
Banks are effectively the closest thing you get to a risk free rate of return, but they are not risk free, nothing in this world is.
Yes indeed - well it's about time depositor's interest rate returns reflected the credit risk implied in your assessment and those borrowing from the banks' source of funding pay more for the privilege. Apparently there is a free lunch as it stands but we all know otherwise and it's predicated on the lender's capital being sacrificed for the greater good, when, as you note the banking system inevitably implodes into insolvency.
Interesting point. Well it seems no one, or very few think this could be a very big event and hence no risk / impact and hence no premium. Certainly if I was a re-insurer I wouldnt offer cover, but htem Im a gloomster.
I suppose the Q is whats fair? 10%?, 20%? per annum? Personally probably, of course a 22% mortgage rate becomes a self-fullfilling melt down.
As a depositor of course you have the option of leaving if you dont like the risk, I simply cashed up everything and paid off debt except for an emergency sum. When all is said and done the debt will relain.
regards
Why should they hold greater Capital..?
Commonsense in my view.... If they have 4% bad loans they are wiped out.
Throw on top of that the fact that they borrow short term and lend long term.
Throw on top of that ... the fact that the OBR could motivate people to withdraw funds as soon as they smell danger.
It is not so much why they should.... but why it is not demanded of them from the Reserve Bank.
Andrews link shows that the Aussie bank have 4.8% capital... which is sweet F all.
( Consider what the LVR is all about .... Banks should have that applied to themselves )
However 4% loans shouldnt be that bad, bear in mind the NZ and OZ banks are not so badly leveraged as the US ones. But yes such an event is a real worry...but if its of the scale I think is coming even if the banks had 20% and not 4% Im not convinced it would make a huge difference ie the US banks and if not them the UK / EU banks will fry the financial system anyway.
4.8%, actually the banks lend to 95% so its similar, which of course is the leverage that will make them insolvent very fast, which brings us back to "wiped out".
regards
However the OBR a known risk,
Known to whom? - where were the newspaper advertisements welcoming OBR's introduction? - what is there to hide that is not respectable enough to advertise and hail as a failsafe bank recapitilisation scheme when insolvency visits our banks after extended bouts of over borrowing in the foreign wholesale markets?
Banks engaged in such borrowing must be forced to set aside much greater capital cover than is presently demanded by the RBNZ - and that would be the case if OBR was not a dirty secret not fit for public consumption - the RBNZ Governor has completely failed to exercise in his duty to the citizens of NZ and should be dismissed..
Exactly correct SH. Nobody much knows except the odd Interest.co common tater etc. Quite a minority in fact.
1. The banks should be compelled to trumpet this info.
2. They should offer an option for deposits which makes the depositor first in the queue over all those overseas borrowings.
Yes, I agree, but we need more information than the paltry three pages put out by the RBA a few years back - depositors and their advisors cannot operate in a vacuum.
Where is the due diligence of an investor? Is the risk and cost any bigger after than before? Who's advertising that the tax payer is or was going to be the patsy?
You are a switched on cookie...so where is your money? Any "excess" cash I had I used to pay off debt just leaving an emergency fund...that might survive or not.
Im sorry but as the saying goes ignorance of the law is no defence.
I find it amazing how vitriolic some are when their gains from milking the system for 40 years now come under threat.
regards
I find it amazing how vitriolic some are when their gains from milking the system for 40 years now come under threat
Let's not confuse the rentier class with the bulk of society, they have their own hell to deal with.
My comments refer to the innocent - the many that work every single week of their lives to save a small nest egg for retirement - I am the exception and can fully look after myself in all financial situations -every disaster just presents another opportunity - but that is not how it is for the elderly, the infirm and those bringing up children.
He has a great way with words,
"Like poor President Hoover, he gets to hang around the pilot house half a year after he runs the garbage barge of US finance aground on the shoals of wishful thinking and accounting fraud."
8><---
"In the background, of course, is the energy melodrama. How can anybody with half a brain suppose that the late turbo-industrial economy could “recover” with oil priced at $107 a barrel? "
Lots in lala land it seems...
I like this especially,
"Japan is the most interesting corpse in the pathology lab. It shot its wad twenty years ago and has been self-cannibalizing ever since. It has no oil or gas of its own, and now it has a runaway nuclear meltdown that is getting only slightly less attention than its financial meltdown. I used to think that Japan had no choice except to go medieval. Now I wonder if there will be anything there in ten years but a depopulated archipelago of steaming radioactive kelp. "
Got to wonder where they will go of course....
regards
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