Bernard Hickey details the key news over the weekend in 90 seconds at 9 am in association with ASB, including news overnight that the ruling Liberal Democrat Party in Japan has been swept aside in a landslide by the opposition Democratic Party of Japan, Bloomberg reported.
The victorious DPJ is promising to spend more on family benefits and reduce the stifling power of bureacrats. This could increase Japanese budget deficits and increase longer term interest rates there. It's early to say what it might mean for us, but Japan is our 4th largest buyer of exports and has funded much of the increase in our foreign debt. If the 'carry trade' where investors borrow cheaply in Japan and invest in New Zealand is reduced by higher interest rates there that could hit us and potentially nudge our longer term rates higher.
Meanwhile, Marac Finance and South Canterbury Finance have produced big losses and are now looking for extra capital to earn back their investment grade credit ratings. The government will be watching it closely. See more here in a video interview I did with TVNZ's Greg Boyed on Friday night about the situation.
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