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90 seconds at 9 am: G20 delays bank capital reforms; US consumers saving extra income; Hubbard anger grows

90 seconds at 9 am: G20 delays bank capital reforms; US consumers saving extra income; Hubbard anger grows

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with the BNZ, including news the New Zealand dollar fell slightly overnight to under 71 USc after news business confidence slipped in June.

Meanwhile, the world's 20 largest economists economies agreed in Toronto to delay for at least a year plans to toughen up capital requirements for banks. Reforms that were due to be completed until 2012 will now not start until 2012, Reuters reported. This boosted European stocks slightly.

This shows how fragile many believe the global economy and financial systems are. The world's leaders are essentially saying these reforms, which are bound to slow lending growth and put pressure on bank shareholders, are too difficult right now.

However US stocks were flat on news that US incomes rose 0.4% in May, but spending was up only 0.2% as consumers chose to save instead. The US savings rate of 8% was the highest in 8 months and took savings to US$454 billion, Bloomberg reported.

This is all about deleveraging. US consumers will spend the coming years saving rather than spending, which will restrain growth in the world's largest economy, and by implication, the rest of the global economy.

Meanwhile in Asia, China's newly flexible Yuan was pegged overnight (it is re-pegged every day) at a 5 year high vs the US dollar of 6.789, BBC reported. This is good news for New Zealand's exporters because it effectively means our currency is a touch weaker vs the Yuan and Chinese consumers of our importers are just that teeny bit wealthier and more inclined to import rather than export.

Back in the United States, there are concerns that just agreed banking reforms could be derailed in the Congress at the final hurdle after the death of reform supporter Senator Robert Bird and new rumblings from former supporter Senator Scott Brown about not voting for the reforms, CNN reported. Just when many US voters thought they had wrung some concessions out of the banks, the lobbyists will get another chance to neuter the legislation.

Finally, back in Timaru, National's MP for the region Jo Goodhew told the Timaru Herald that her car had been damaged in an apparent act of vandalism linked to anger in the town over Allan Hubbard's treatment by the Serious Fraud Office and the government's decision to put him into Statutory Management.

Meanwhile, after I recorded the video, Guinness Peat Group announced the sacking of New Zealand executive director Tony Gibbs after he openly criticised the board's plan to demerge. Also, GPG founder Ron Brierley pledged to appoint three new independent directors to the board of GPG to review the demerger proposal. Here is the full statement here.

Following careful consideration of these matters, the Board has today resolved, in accordance with Article 97(e), to terminate the appointment of Mr Gibbs as an Executive Director and has further resolved, that his office as a Director of Guinness Peat Group plc be vacated. Consequently, Mr Gibbs has ceased to be a Director of the company.

GPG’s Chairman Sir Ron Brierley commented that “This action has been taken with much sadness but was unavoidable. Tony was a great achiever for GPG in earlier times and we worked together, closely and effectively, for nearly 20 years. More recently, however, there have been increasing difficulties, culminating in last week’s serious breach of boardroom protocol. In the circumstances, there was no alternative to the action taken”.

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2 Comments

Sigh. Such a waste of so many capital letters...

Hmmm

Bernard

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Philly

Heh. Well spotted. My fault. I've corrected it now.
cheers
Bernard

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