90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: NZ$ and wholesale rates fall after RBNZ holds OCR; May Wang's Crafar bid set to be blocked

17th Sep 10, 8:53am 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 the New Zealand dollar is down almost 1 USc in the last 24 hours after the Reserve Bank held the Official Cash Rate at 3% and moderated its outlook for interest rates.

Wholesale interest rates fell around 10 basis points after the Reserve Bank cut its forecast peak for the 90 day bill rate to 4.7% from the 6.1% it forecast three months ago.

Floating mortgage rates are expected to stay around 6.1% while fixed mortgage rates could nudge lower after the move on wholesale markets.

Two year mortgage rates are currently around 6.7%. See our interactive chart on wholesale swap rates below.

See all mortgage rates here.

The Reserve Bank said consumers and businesses appeared more cautious about taking on more debt and spending. See more detail here.

This meant the record low Official Cash Rate (OCR) was not having the same stimulatory effects as the Reserve Bank had expected.

Meanwhile, the New Zealand Herald has reported that the May Wang/UBNZ bid for 20 Crafar Farms is expected to be rejected by the Overseas Investment Office.

This meant Landcorp was back in the running to buy the farms, but that any sale price was likely to drop from over NZ$200 million to NZ$130 million, meaning the banks (Westpac/Rabobank and PGG Wrightson Finance) owed over NZ$200 million face losses.

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14 Comments

by Wolly | 17th Sep 10, 9:00am 1284670843

200 down to 130...hmmmmm that's some drop...... Residential property next up please...bend over!

by Number 6 | 17th Sep 10, 9:04am 1284671045

The evloving face of protectionism? "..This ( the Yen selling by the BOJ) is a deeply disturbing development....(said) a Republican US congressman who on Wednesday introduced legislation aimed at punishing China for manipulating its currency, speculated that Japan was thinking that “if China can intervene, ‘Why can’t we?’”. If this is a situation where every country is looking out for itself, that is a problem,”

http://www.ft.com/cms/s/0/497c7548-c157-11df-8e03-00144feab49a.html

by Christov | 17th Sep 10, 9:39am 1284673160

Yup....it's going that way.

raising the ghost of protectionism the U.S. had hoped China would behave and value up the Yuan ....this is shaping like a backfire.

it is a prisoner trade position that has turned currency chess....as I said 6 it's game on... and whooohoo the s$#t gonna fly

by Learn to Socia… | 17th Sep 10, 9:44am 1284673490

It is called "capitalism". The west is being hoisted on its own pitard. The Chinese government is looking out for its own economy and its own people. I wish to God that the NZ government would take a few notes from the Chinese playbook. This is not a "friendly" game, this is a test. And there is a big shiny trophy up for grabs.

by Christov | 17th Sep 10, 10:16am 1284675362

Learn to Soc.. ..the events that are taking place will require us precisely...... not to be taking notes from the Chinese position.

While this is an unfortunate outcome for the U.S. it would be foolish to think it is not an outcome they have not considered nor catered for.....if the prisoner position fails prepare for a trade war.

Like it or not Australia will align accordingly and we will behave as I think we should.

I said on a post the other day...In the long run....it is always best... to back the man...with the biggest gun.

by Christov | 17th Sep 10, 10:21am 1284675691

Oh P.S. there LTS.... I too believe the Yuan is seriously undervalued so have no problems seeing China as the provocateur and the U.S. as the spoilt child who realised he didn't like others playing with his toys.

by Learn to Socia… | 17th Sep 10, 11:19am 1284679147

The problem is that the USA has no foreign reserves to speak of as opposed to the Chines who have Trillions of US dollars, Euros and Yen uyp their sleaves. If the US decides to start a currency war, they will have to borrow the money to wage it from the Chinese. "Could you lend us a trillion dollars so we can start a trade war with you? YEah right" It is crazy to become indebted to your main rival, but that is exactly what the USA has done.

It is a bit like Alan Hubbard. He was the KING of Timaru as long as people believed in him and funneled millions of spare dollars his way for him to "spend wisely". Within months of people generally realizing that he was running a ponzi scheme, he became the objects of jokes and derision. Oh how the mighty fall. And quickly. The USA owes money. If people decide to stop lending- or even start selling US dollars there will be a huge, overnight change in perception.

by Christov | 17th Sep 10, 11:31am 1284679872

You keep that thought in mind LTS.... but try not to avoid the elephant in the room......an examine the possible outcomes of the position you see the U.S. in.

While the U.S. has been the dominant power of the last century they have promoted capitalism in the guise of democracy and been very successful at it to boot.......... do.......not .....underestimate..... their willingness...to protect their interests......at all cost.

And if China were to become the new alpha do you seriously think your life as you know it will be the same....?

get some smelling salts LTS and I mean no disrespect to you by that......

The Elephant .........is ..........in........the....Room.....talk about it.

by goldenfox | 17th Sep 10, 9:31am 1284672714

mmm, another wite-down for the value of SCF asset - Dairy Holdings.

Double-Dip is about as good was the public's money as Cullen with his trainset.

Does anyone know, what that values the dairy farms on a per/kgms basis??

by philthy | 17th Sep 10, 9:48am 1284673717

If you were Westpac or Rabobank, wouldn't you be going back to the (Australian owned) receivers KordaMentha and saying how disappointed you were with their pathetic performance?

Firstly this absolutely arrogant insistence that such a massive block of farms be sold as one, which is contrary to how they were purchased, and immediately ruled out a massive proportion of possible buyers.

Also the way they told other companies like Landcorp that had perfectly good bids on the table to go away because they weren't required, business arrogance in a nutshell.

Maybe getting some NZ receivers that actually knew the NZ market might have been a better move from the banks?

by David George | 17th Sep 10, 9:44am 1284673476

"sale price was likely to drop from over NZ$200 million to NZ$130 million, meaning the banks (Westpac/Rabobank and PGG Wrightson Finance) owed over NZ$200 million face losses".

Dumb, dumb,dumb, no sympathy whatsoever.

When I first heard about the US subprime lending I was surprised at the stupidity of those lenders. Turns out our bunch are worse. You can't get much more subprime than Alan Crafar - $200m at risk there, and a couple of billion to yellow pages, both businesses needing peak pricing and/or market share to meet their massive interest payments.

Westpac, Rabobank, PGG Wrightson Finance et al - Unbelievable stupidity.

by steven | 17th Sep 10, 11:09am 1284678561

and think of the writedowns for other over-valued farm property....if we see that then how can the banks avoid writing down other assets? "creative accounting" comes to mind....

Yes, I have no sympathy either, it comes down to greed....greedy speculators buying farms at crazy prices thinking they can only go up and greedy banks thinking they will get their cut from lending....

Then of course those speculators who have to service those insane debt levels are wanting to pass on those make believe costs via increased farm output prices, in effect they were expecting us the NZ consumer to pay for their crazy antics via higher food prices....

I dont think they were stupid, I think they were being "clever" known as a "wide boy" at home...so yes indeed I'd be pleased to see some hefty hair cuts....only through losses to the bottom line will the banks etc learn....

And once at sane prices (ie 50%+ lower) hopefully we will see real farmers who want to make a livelyhood at farming with a fair nest egg at retirement step in.....

regards

by Vanderlei Luxemburgo | 17th Sep 10, 1:00pm 1284685253

i've heard that when lachie mcleod came to SthCantyFinance he brought a lot of his mates from westpac with him and their lending practices changed accordingly. that seems to make sense doesn't it?

by Wolly | 17th Sep 10, 12:17pm 1284682639

"US home seizures reached a record for the third time in five months in August as lenders completed the foreclosure process for thousands of delinquent owners, according to RealtyTrac Inc.

"We're on track for a record year for homes in foreclosure and repossessions," Rick Sharga, RealtyTrac's senior vice president, said in a telephone interview. "There is no improvement in the underlying economic conditions."

http://www.theage.com.au/business/world-business/us-home-seizures-reach-third-record-in-five-months-20100917-15ezb.html