90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: Financial market reaction to earthquake muted, but small business struggling

7th Sep 10, 9:03am by Bernard Hickey

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that the financial market reaction to the Christchurch earthquake has been relatively muted.

The New Zealand dollar dipped slightly on Monday before recovering to be around 72.2 USc in early trade. Wholesale market interest rates also rose a few pips, but nothing to suggest any great concern.

Economists see an initial dip in New Zealand's GDP growth through late 2010 before a rebound in 2011 as construction and repair spending flows through into the national accounts.

See BNZ's view here in their note "Shaken but not to the Core".

See Westpac's view here in their note "Shaky Isles".

See ASB's note here "After the Earthquake"

See ANZ-National's view here on page 5 "Canterbury Earthquake Impact"

Standard and Poor's said yesterday that New Zealand's AA+ credit rating would be unaffected by the Earthquake because the government, the Earthquake Commission and the insurers had the capacity to absorb the hit. However, it put the more indebted Christchurch City Council on Negative Watch for potential downgrade.

The NZX actually rose on Monday with Fletcher Building and Steel and Tube shares rising, while Tower shares fell.

Meanwhile, the Prime Minister John Key also reassured the bond markets that the Earthquake Commission would not need to liquidate or sell its bond holdings.

He also estimated the net cost of the finance company failures at NZ$300 million to NZ$400 million because of the NZ$500 million of fees that the big four banks have paid in.

However, the impact of the quake on small businesses looks to be substantial, with many set to suffer cashflow issues as shops and businesses remain closed.

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33 Comments

by Kunst | 7th Sep 10, 9:22am 1283808141

The way some of the bank economists are commenting shows this people are not working on the ground- floor where “things” are happening.

I maintain the view that the majority of small NZbusinesses are struggling and worse. The nation is heavily indebted and with a worsening worldwide economic prospect we see bankruptcies and mortgagee sales increasing again.

by Gummy Bear Hero | 7th Sep 10, 9:31am 1283808700

Wot makes you think that the economic world is worsening , Walter ? Chicken-Little Hickey wants to feed you a steady diet of gloom & doom , all journos do . Good news doesn't sell .

Nice little trip through Singapore yesterday , and all I see is hustle & bustle ............ Stand still ........ and you'll get knocked over !

Speaking of which , more after-shocks in Canterbury ?

by Gummy Bear Hero | 7th Sep 10, 9:42am 1283809330

When oil reaches $US 200 / barrel , alternative energies become viable . And research gets a boost too . I would have thought that that is a good thing . The sooner we break our dependence on fossil fuels the better ............ Win/Win , buddy !

by andyh | 7th Sep 10, 9:51am 1283809879

Tell us all about these alternatives then GBH! Truly I am all ears.

Don't forget they have to have the same energy content of oil (or close to) and must be able to plug into existing infrastructure as there is maybe 5 years to make a transition, so don't waste our time with the usual suspects - Hydrogen etc.

Tell us what you know!

by Philly | 7th Sep 10, 12:38pm 1283819899

"Just try banning the gas guzzlers"...

Most OECD countries have got tiered rego costs - higher costs for higher cc cars. That is why a lot of Jap cars are actually 1597 cc etc rather than 1600. But no, not in "head in the sand" Kiwiland. Here we pay exactly the same rego for a hulking SUV as for a fuel-sipping shopping basket. Crazy when u think it is the SUV that does max damage to the road, the environment, & other cars, pedestrians & cycles that get in their path.

Smacking on an extra cost of rego on them, & taking it off the 600 cc Suzuki would be rational, forward thinking behaviour, & encourage the sheeples to get into something a little more fuel-frugal. So will never happen here.

Cheerrs to all

by Elley | 7th Sep 10, 10:18am 1283811490

Yep. Big ones too late last night and middle of the night (5.2, 5.4). Aren't you there?

by Kunst | 7th Sep 10, 11:24am 1283815492

Rogie,

The interaction of events and coming from different directions, which I’m worried of. Like never before in human history monetary, economic, political, social and environmental matters are in terrible shape. It seems most politicians, economists do underestimate the correlation among them and only judge on single events/ situation – crazy enough often on a weekly base only.

Especially here in Kiwiland often people judge the economy, but do not include the rest of the world. This also create a false picture and not reality.

As an example: I have hardly read comments here about the massive costs mother nature is presenting to us, because of “Climate Changes” and the worldwide ignorance to follow strict sustainable economic guidelines.

After all, my main question is: “Who on earth is going to pay for all the mistakes we are currently creating ?” The repair costs for the next generation will be prohibitively expensive.

by IOU | 7th Sep 10, 9:35am 1283808945

I agree, with public NZ public debt to GDP being so hig am I right to assume allot of that would be held by owners of sme's... so with a disruption like the earthquake... how do they meet their commitments if they ain't trading? Do they take out more debt?!!!!!!!!!!!!!!!!!!!!!!!

The lights are all on at the banks.... but nobody's home!

by andyh | 7th Sep 10, 10:11am 1283811070

Errrr....

''Peak oil not a problem in the lifetime of anyone born so far this century''

""If you are 30 years if age or older peak oil not worth worrying about"".

If you apply the same level of rigorous logic in assessing the peakoil problem as you did in stringing those two sentences together I think the rest of us should be very worried.

by Elley | 7th Sep 10, 10:17am 1283811437

How nice to see someone who cares deeply about the future generations. Not!

by powerdownkiwi | 7th Sep 10, 10:43am 1283812993

Father X - until now, the most optimal of the optimists, was 'Peak Oil Debunked', the site of one Freddie Hutter, from memory.

Even he wasn't as optimistic as you.

Some of us have done our homework - quick questions:

What is the largest oilfield in the world?

How many mbpd (million barrels per day) does it currently output?

When was it commissioned?

When did it peak?

How is the oil driven ? (and with how much of what?)

What happens at the end-game of a water-cut?

Can the planet maintain BAU when that happens to this site?

Given that one can monitor activity at the well-heads, when did you do a google-earth and ascertain which are currently active?

I've already apologised to my kids. Proven that you can build a house so energy-efficient that NZ could get by on one Benmore penstock. Faced it.

I guess Anne Tolley was right, and I guess that a coke-advert is a fitting part of the long tail.

by powerdownkiwi | 7th Sep 10, 1:02pm 1283821336

Yes - Deffeyes was/is one of our better human beings. He called it (in 1998?) for 2005, and never wavered. And was right.

I think his phrase was something like " we will be looking out over the smouldering ruins of the global economy".

A fair description.

And I'll bet Patrick O'Mara has never heard of him!

by Wolly | 7th Sep 10, 11:45am 1283816717

You're flogging a dead horse serious stuff. The economy is stuffed and will remain so for at least a decade. The debt monster threatens bank security and so the govt will protect the monster to save the banks. The only answer is to stop borrowing and stop buying price bloated property. There is no way to avoid the fallout.

by Elley | 7th Sep 10, 2:06pm 1283825178

Actually I'm not convinced that the "car" is what you need if you really want to avoid earthquakes. If I left it'd be on a plane, headed far away from NZ.

And actually, whisking the kids away in a panic might well cause even more trauma than staying if your house is OK. It'll be good for them to go back see their friends at school/daycare tomorrow (fingers crossed) than leave their whole lives behind. Sure it's not over yet but despite all the aftershocks we're getting, I'm hoping the worst is over for the region at least for a decade or two (please don't shatter my hope).

by powerdownkiwi | 7th Sep 10, 3:04pm 1283828668

Elley - I remember a docco about the making of the 1971 film Battle of Britain. (Douglas Bader came and gave a talk at our school - I was fascinated).

In the docco, they interviewed two ladies who could have been straight out of coronation St. They were watching the re-enactment of the Blitz - bombed buildings, inadequate fire appliances, chaos everywhere.

"I don't know how we lived through it", said one. "Can't see how we could 'ov coped".

Human nature has a great way of dimming the awful and remembering the sunshine.

good luck

by Wolly | 7th Sep 10, 12:51pm 1283820661

To understand why the worst is still to come.....

http://www.marketoracle.co.uk/Article22480.html

by Christov | 7th Sep 10, 2:04pm 1283825046

Wally the upside if there is one is at least now Joe Shmuck can identify the root of his/her demise...........The following paragraph encapsulates it nicely...

Banking-industry officials and others have argued that homeowners have a moral obligation to pay their debts even when it seems to make good business sense to default (this “moral obligation” problem apparently doesn’t exist in the business world). Owners lose all of their down payment first and the lender (rescued by the owner/tax payer) loses part of their investment and is given free money by the government and Fed to mitigate the losses. Individuals who walk away from their homes also face blemishes to their credit ratings and, in some states (Nevada), creditors can sue them for the losses they suffer.

by Elley | 7th Sep 10, 1:39pm 1283823543

The Press building (110yo) has had its crown shaken loose and removed. I agree with the nights. It'd be impossible to get any proper sleep at the moment even if the kids allowed it. Tired, tired, tired.

by PhilBest | 7th Sep 10, 1:54pm 1283824452

"The Truth About Oil" by Vasko Kohlmayer

http://archive.frontpagemag.com/readArticle.aspx?ARTID=30878

Check out that author's archives while you're on that site too. There is a good one about "Coal to Oil" and a good one about Nuclear energy too.

I'm with the optimists on this. I trust the free market any day, compared to any human being who says "give me the power to plan the best outcome for humanity"......... (shudder, shudder).

by PhilBest | 7th Sep 10, 1:56pm 1283824585

Geeve us ze POWER, fools. VE KNOW vat ees goot vor you........! Ha ha ha ha ha ha haaaaaaaaaaaa................

by powerdownkiwi | 7th Sep 10, 3:10pm 1283829044

Sick.

Why not offer money to the earthquake god? He/she must have a price, according to your sad 'philosophy'.

I'm surprised your free market hasn't bought the end of earthquakes already - according to the gospel according to Simon, you'll have to.

No mining below 10 km otherwise.

Kind of limits your growth options.

by PhilBest | 7th Sep 10, 6:30pm 1283841024

Hey, it's not us Simonites who are behind the selling of carbon credit indulgences to appease the Gaia god.

But yes, earthquake risk mitigation measures have a price - and that system works far better than all the alternatives tried so far. How earthquake-proof was metropolitan Russia or China under their Commie governments? Whose philosophy is sickest?

As the great Theodore Dalrymple said, the price system of rationing scarce resources looks demeaning until you have travelled a bit and seen all the alternatives in action.

As Leszek Kolakowski, Charles Alan Kors, and David Horowitz have pointed out forcefully; all the critics of free market "capitalism" have invariably had the bad faith to compare it only with theoretical utopias, not with the ugly reality of every attempt to establish such utopias.

by Christov | 7th Sep 10, 2:07pm 1283825243

To anyone........On Mondays Top Ten at Ten.... David Hillary has posted a piece well worth the read.

If you have not already I would urge you to give it a once over...great stuff.

by Les Rudd | 7th Sep 10, 2:08pm 1283825315

@PhilBest - Phil, why did developers get consent to build new, recent subdivisions on land in ChCh that geologists had associated with liquification?

What went wrong?

Cheers, Les.

PS - am not asking out of self-interest, my place is undamaged, piled into rock, on the Port Hills, in fact on the side of a volcano!

by powerdownkiwi | 7th Sep 10, 3:12pm 1283829136

They listened to Hugh?

by PhilBest | 7th Sep 10, 6:17pm 1283840223

I know that you are not being mischeivous, Les, because I know you're one of the most sensible people on here.

2 comments. Firstly, why is "regulation" so good, when regulators end up allowing development in places that are sitters for natural disasters anyway, not just in this instance? Or allowing a whole lot of leaky homes to be built?

Secondly, isn't it a problem when hundreds of square kilometers of identifiably safe development locations are off limits to development?

I am not sure whether you have noted my argument in the past, that there is often good reason to put "no building" regulations on certain spots; and that this does not at all need to result in driving up property prices, providing that the wide open yonder IS available for development. In fact, it is far less costly to establish "no build" zones for whatever reason, when the wide open yonder IS available for development, than it is when you have massive pressures on all land within the existing developed area because of artificial limits.

This is why so many "unlimited" cities in the USA have such fabulous parks and heritage villages and large community facilities and gardens - and developers have little incentive to risk building on dodgy land. Because so much perfectly good land is available so cheaply.

by Les Rudd | 7th Sep 10, 8:17pm 1283847446

Thanks Phil, useful reply.

Nowithstanding supply influences, if developing such land is dangerous - why the hell was it consented? "Supply influences" are no excuse. If people had died in this, because of this, harder questions would get asked. Hard questions should be asked anyway. Somewhere, somehow, somebody, or somebodies have f*cked up, or have not performed - que Hugh!

As for supply influences, you make some interesting points, whether out of context in comparison to the US, or not, it matters not, the issue at hand is using land that does not appear to have been fit for purpose, and it appears that was well signalled.

How has that happened?

Anyone?

Cheers, Les.

www.mea.org.nz

by Wolly | 7th Sep 10, 8:26pm 1283848002

Les....you do realise there is bugger all of this country that isn't prone to one disaster or another...don't you? If the Taupo volcanic hot spot decides its past time to throw a wobbly, you can kiss goodbye to everything within about 100 miles. It'll be hello to Noddy's version of Ana Krakatoa!....Auckland is built on top of another hot spot. There must be as many fault lines that are unknown as there are known ones. White island has the potential to bugger the whole of the Bay of Plenty...Egmont to stuff the Taranaki...take your pick Les...

by Les Rudd | 7th Sep 10, 9:45pm 1283852749

Sure. So we have a time context issue, we usually call probability. So what's your point, in relation to my question? Explain a sensible answer to it that addresses the points implied? (I have links to questions left unanswered on past threads filed, ready and waiting to be loaded.)

Cheers, Les.

PS - like your comment earlier, elsewhere, about compulsory insurance. Stops free-loading by people flip-flopping from convenient Libertarians to convenient Socialists, in the moment, as it suits.

by PhilBest | 8th Sep 10, 2:14pm 1283912056

I too would like to know the answer to that.

I don't like to suggest that there could be any impropriety involved in the process. But when you have the sort of processes that we have had in NZ for the last few years, before anyone can get anything built or done, it is asking for trouble.

Joe average can spend years bashing his head on a brick wall and end up bankrupted by the processes, while some other smooth operator can get permission. We seem to have collectively forgotten how important "the rule of law" is in civilisational success. Most councils permission procedures are anything BUT "rule of law". "Community consultation" and the like are nice warm fuzzy concepts, but they are NOT "the rule of law".

"The rule of law" means that it should be easy and cheap to predict a legal outcome. That is what our ancestors got King John to sign the Magna Carta for.

by Les Rudd | 8th Sep 10, 10:16am 1283897812

Phil - hi again, following on, see:

http://www.stuff.co.nz/the-press/news/4106929/Quake-Major-aftershock-hits-Canterbury

and the section, 'Tough Decision Ahead'.

Can you tell me about the types of foundations used in such areas? Do they use a concrete raft type thing?

Cheers, Les.

by PhilBest | 8th Sep 10, 2:19pm 1283912356

I don't have that kind of expertise. Going by the leaky homes debacle, you get experts saying afterwards, "I warned the official experts and they wouldn't listen". It must be terribly confusing to have all that responsibility, and conflicting advice. Maybe the officials might end up too paranoid to allow anything if they keep getting stick after the event.

I am inclined to think that people with skin in the game, eg insurance companies, will be the most likely people to reach the truth.

by powerdownkiwi | 7th Sep 10, 4:20pm 1283833212

Yep, i did that somewhere here already, but:

I use coloursteel/polystyrene/coloursteel panels (coolstore panels) They come in your choice of colour, each side. Where they beat stud structures, is that there is no thermal bridging whasoever, between the inner and the outer skin.

They take your plans, shoot them on the machine, and it arrives as a kitset.

135 sq metres, every last everything (silicon, flashings, rivets, spouting) $16,000 landed 2004-5.

On a $5,000 pad, you're in a structure painted both sides, insulated, for 20 g's,

All glass on the North wall, as little on the south as you can.

It's passive solar (sun heats the concrete floor) and we use PV (solar-electric) for power. $650 worth of panel does the house.

Tried wind - not often enough.

contact me via my blog (powerdownkiwi,wordpress.com) and I'll give you a longer rave / more detail.