90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: Will QE II set sail this week?; NZ GDP figures due; Tax refunds to be blocked?

20th Sep 10, 7:57am by Bernard Hickey

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including talk that the US Federal Reserve will announce a second round of money printing to boost the US economy this week.

The Fed's Open Markets Committee meets on Wednesday morning our time to consider whether to increase its programme of US bond buying, which is often described as Quantitative Easing II (QEII) or a second round of money printing.

The gold price hit a record high last week on fears that a fresh round of competitive devaluations by America and Japan could eventually spark a new round of inflation.

Meanwhile, New Zealand is set to report its GDP figures for the June quarter on Thursday. Most economists are expecting a 0.8% rise for the quarter.

But the figures are somewhat historic as they are before the Christchurch earthquake, which is expected to temporarily reduce GDP in the September quarter.

Meanwhile, the Sunday Star Times reports the Inland Revenue Department may move to block tax refunds.

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56 Comments

by Wolly | 20th Sep 10, 8:06am 1284926818

Welcome to the United States of Austerity

http://www.marketoracle.co.uk/Article22817.html

Start your week off with a bang !

by Nicholas Arrand | 20th Sep 10, 8:19am 1284927554

"...the United States cannot afford a new stimulus. Rather than a multidecade collapse like the Japanese situation, many decision makers will be tempted by shock therapy". So true.

by Wolly | 20th Sep 10, 8:37am 1284928633

But we're different....we don't need to worry....we have Bolly and Treasury and Cabinet to guide us....see the light in the tunnel!.....there's wealth and prosperity and employment and flying pigs on the way to a street near you....now get out there and borrow heaps to splurge on price bloated property...you too can save the nation....save the bubble....be a ponzi player!

by Vera Fayed | 20th Sep 10, 8:56am 1284929764

"..we have Bolly and Treasury and Cabinet to guide us". And of course we have you. By golly, it would be a jolly folly for Bolly not to listen to Wolly.

by Number 6 | 20th Sep 10, 9:02am 1284930164

Speaking of guides: It's Full Moon on Thursday; just hours after the Equinox. I know; get the goat entrails and tea leaves out! But I shall have a weather eye open.

by Wolly | 20th Sep 10, 8:46am 1284929214

"Brownlee is to make a major announcement on government plans for improved management of the resource today."tvnz

Ho hum

by steven | 20th Sep 10, 10:58am 1284937106

what resource? the hot air he produces?

by rc | 20th Sep 10, 11:57am 1284940649

"All hydrocarbon royalties to fund further welfare programs". I can see it now. We will no doubt follow the UK's example when we should really be following the Norwegians.

by Doug | 20th Sep 10, 9:21am 1284931297

Arguably, the Fed has never stopped laundering toxic assets from the banks. As for a new round of QE, nothing will be announced until after the November mid-term elections. It is a forgone conclusion by many that the Congress will go Republican, but the jury is still out on the Senate. Obama can kiss away a second term if both houses go to the GOP.

by Donald MacRonald | 20th Sep 10, 9:40am 1284932433

trying to solve debt by flinging more debt at it, is the einstein definition of insanity."doing the same thing again and again and expecting a different outcome?"

if helicopter ben and the fed start throwing more money at the american economy then i think we can safely say goodbye and good riddance to what once was a superpower....in 5 years time china will be the worlds number one economy and be getting set to rule the world ..so crack out the opium!

even a wally like wolly can't save america.

by goldenfox | 20th Sep 10, 10:46am 1284936411

inflation is the result - American currency devalues, they become more competitive. Debt repayments to the Chinese suddenly become cheaper to bear in real terms.

The Yanks know the result of QEII, and it solves alot of the economic problems there country faces.

by steven | 20th Sep 10, 11:25am 1284938707

No it isnt (inflation),

Inflation is the result ONLY when the total money in circulation is increasing in an economy and GDP is growing, right now this isnt the case.

This is because when private and company spending collapses (and consumerism is 70% of the US economy), then Govn's spending is negligable in comparison, hence right now the USA has dis-inflation ie the inflation rate is decling and its declining at a rate that suggests the US will see deflation before the end of the year...its about 0.5%....or early next year ie before March....

I dont think the yanks know the result of QE II, at least they want it to support their economy, however I think now its too late...they abused their economy for 30 years and now its got to the stage its in intensive care and the only thing keeping the heart going is zaps and they are getting more frequent....QE II is 18months after QE I....and they are not fixing the desease....

Also it doesnt solve a thing, they have no raw materiials to exploit unlike the end of the Great Depression, they have huge debt....and they have no where to export to anyway, everyone else is buggered....

Inflation would come as we exit this depression/recession, sure almost certainly....but that could be a decade off with ease....it maybe 2...

regards

by steven | 20th Sep 10, 11:00am 1284937233

Problem is the alternative is far worse........maybe....

If QE II would stop the second great depression then yes....trouble is I think its now too late and it just wont avert it.....delay it at best with a worse collapse...

Nasty either way.

regards

by Christov | 20th Sep 10, 11:23am 1284938609

DonnyMac...your opening statement... rying to solve debt by flinging more debt at it, is the einstein definition of insanity."doing the same thing again and again and expecting a different outcome?"

Inserting the word "not' just before expecting may give you cause to think of other possibilities as I've said before if QE was a plan it was a shit plan ...was it not..?

Even those of us schooled in other fields could see that....and yet there it was.

In the light of this you have to ask "The Question" in whose interests..?the answer will always expose motive and objective.....

While I agree that in the next 5 to 10 years ...just who is the Superpower will need to be established...I do not agree with your conclusion on the matter.

Just as America are busy taking a pounding on the monetary front I believe they are back to doing what they do best......white anting...winning the hearts and minds....just as they did in post war East Europe...Japan...strategic Middle East and so on.

This has almost got beyond Global Financial Meltdown....toward the preservation of Capitalist idealism though all means and that includes the ...willingness...to sacrifice millions of lives to preserve.." it " as the...Preferred System Globally.

Watch the rhetoric as the call for revaluation of the Yuang grows to a bull-roar.....watch the Japanese position as it unfolds......

Many may see America as the tired old junk yard dog.....but I'm not climbing the fence to see how sharp it's teeth are......cause it might just be off the chain.

by Philly | 20th Sep 10, 12:58pm 1284944310

Christov: re the "winning hearts & minds". I agree, funnily enuf. I say that because most Kiwis I talk to (& coddled Europeans etc) hate the Americans, & would like to see them knocked off their perch. But (I say) think of the consequences.

China.

Most eastern Asian countries keep the US very close to themselves - naval bases etc. Think Japan, Korea, Taiwan, Philippines. Even Vietnam (Vietnam!!!) is saying to the Yanks, bring your aircraft carriers to our ports, we love America.

They are close enuf to China to understand the raw consequences of Chinese power, it terrifies them. Russia must come to the same conclusion eventually.

Cheers

by Donald MacRonald | 20th Sep 10, 9:43am 1284932614

let's fly to koh phanang for this thursdays full moon party..we could dress wally up in cool threads and cut him loose with the crazies and he could do the blenheim hip-hop bunny hop and blow the beach away?

oops..velly solly..just it's a bit dreary outside today and we need some levity to lighten da load?!

by Donald MacRonald | 20th Sep 10, 9:48am 1284932898

Billionaire Warren Buffett is one investor who sees better days ahead, and while not every bet he makes has proved profitable, or well timed, he’s hard to dismiss. Last week he declared, yet again, that he was a huge “bull” on the US economy.Ah ... the sound of money.

This week, the spotlight shifts to the US Federal Reserve, not so much in terms of what it will do but in terms of its perception of what’s happening in the US economy. And specifically how it words its perception.

While there has been chatter that the Fed may soon move to buy more assets, there’s less certainty about when, even if, it will be necessary. That uncertainty bolsters Fed Chairman Ben Bernanke’s power. Fifty-four of 63 economists say the Fed will leave unchanged a sentence saying high unemployment and low inflation warrant “exceptionally low” rates for an “extended period”, according to Bloomberg News. Perhaps a switch in language now would be wise.

The Bloomberg survey also showed that economists were divided about the need for more stimulus through asset purchases with some saying a far greater deterioration in the economy was required.

As dismal as has been the US economy’s performance at points through this year, there’s no sign of a double-dip recession. In fact, growth appears to be moderating at a slower forward rate, which is good. At this moment in time, the economic data continues to be mixed; one day positive for bulls, one day positive for bears.

There’s no doubt that significant hurdles still exist for the global economy because of the wariness of consumers. It’s hard to know how positive or negative to be. On Friday, a report showed that US consumer confidence slumped this month because of concerns about rising personal income taxes, in particular for those households pulling in more than US$75,000 a year. A reflection of the rhetoric leading to the US November elections.

If US consumers really have lost confidence in the future, then the outlook will indeed turn grim. That gave both gold and oil reasons for their respective moves on Friday. Gold surged to a record high; oil fell for a fourth day.

"Gold continues to reflect the overall level of concern. The weak consumer confidence data was certainly supportive to the rally in gold," said Frank McGhee, head of precious metals trading at Integrated Brokerage Services in Chicago.

As we know from every other asset class, gold isn’t going to move in one direction for long.

"and now it's back to the studio where Wally is waiting to comment....tell us, Wally..what's really happening?"

by Rob of the North | 20th Sep 10, 10:56am 1284936968

that's a very archaic and simplistic answer golden fox above...you're obviously still living under the old way of thinking where govt's inflate their way out of debt whereas deflation is more the issue into the future ,i would think.

get your head around the new "abnormal"..there ain't no wheels or predictable cycles anymore....financial night does not follow day and inflation is a long way off !

(thank god screamed the elderly pensioners, like Wolly?)

oh, yeees.. "the quick white rob jumps over the golden fox"

by Wolly | 20th Sep 10, 11:21am 1284938477

Who's a pensioner....! you let them old dears in that rest home have go on that pooter Rob....stop being so greedy.

by Gummy Bear Hero | 20th Sep 10, 11:12am 1284937974

America may be declining as an economic superpower ............. But it won't happen overnight . And along the way to the # 1 perch , fully expect China to have a hurdle or two , a property bubble implosion perhaps , or a failure in the noodle harvest .

QE ll ? Bring it on ! At worst , a little inflation may emerge here or there . The US has an incredible ability to take on debt .............. Luckily for NZ , we don't !

by Christov | 20th Sep 10, 11:37am 1284939459

I think their biggest hurdle...will come from within.....as a generation of ...I want it all and I want it now....begin to surface in numbers never before seen in societies of perceived wealth.

And any attempt to stomp it out will be met with condemnation and possible trade exclusion by some of its new found friends..... yes GBH the seeds are in the ground.

Of course we will continue trade with China no matter how many freedoms or civil liberties are trod on and as usual we will say "well we have pointed it out to them... and they told us to F*&K off"..... and so have discharged our responsibilities.

by Gummy Bear Hero | 20th Sep 10, 11:46am 1284939983

True , Count-of-Christov ! Already there are strikes in factorys within the PRC . Some argue that wages are uncompetitive compared to neighbours , Vietnam for instance .

And a huge middleclass of 300 million is emerging in China . That number equals the entire population of the USA !

by powerdownkiwi | 20th Sep 10, 2:57pm 1284951462

It won't and can't happen, GBH,

Limits to growth, boyo.

Some scribes are getting it - Gwynne Dyer is one of the best on the planet, he's got a piece in today's ODT (don't know if other papers subscribe).

Google ODT online, then 'opinions', then Dyer.

Bother said Poo. They haven't loaded it. Get thee to a library, look at today's ODT, or google Dyers website and wait for it there. It's a cracker.

by Christov | 20th Sep 10, 3:19pm 1284952746

The thrust of my point PowerD was aimed at pointing out the benefits of white anting while adopting a defensive posture.

The U.S. are old campaigners in this area and will be busy as we speak.

by steven | 20th Sep 10, 12:03pm 1284940994

Its getting worse...

"Portugal neared the line on Friday when Diário de Noticias cited three ex-finance ministers warning that the country might have to call in the International Monetary Fund (IMF).

One spoke of a "reckless reliance on foreign debt"; another spoke of "runaway public spending". No matter that all were complicit in euro membership, the policy that incubated this crisis and now traps Portugal in its depression."

ireland, Greece, all basket cases

by jfal013 | 20th Sep 10, 12:35pm 1284942938

Currently, we are looking at a dis-inflation to deflation picture, see pdf link on "Why Are Banks Holding So Many Excess Reserves?" by Todd Keister & James McAndrews, from the NYFR. The excess is paid an interest rate by the Fed equal to current inveestment options in the market place. The Fed has a good grasp of both money quantity and speed at which it moves (i.e. velocity) which is nowhere (while excess are paid for), but it is all dirty low quality money. The patient was always in critical condition, he has yet again been re-stablized, until ...

http://www.newyorkfed.org/research/staff_reports/sr380.pdf

by Rob of the North | 20th Sep 10, 1:10pm 1284945018

face it..the yanks are never going to go anywhere until the average joe blow starts spending again and that ain't gonna happen for quite some time yet!

Americans' long journey to regain the wealth they lost in the recession has stalled. Households failed even to run in place during the April-June quarter as sinking stock prices eroded wealth. Stocks have since rebounded. But based on last quarter's data, household net worth would have to rise 23 per cent to revisit its pre-recession peak.

Net worth - the value of assets like homes and investments, minus debts such as mortgages and credit cards - fell 2.7 per cent last quarter, or $US1.5 trillion ($1.6 trillion), the Federal Reserve said on Friday. That left net worth at $US53.5 trillion ($57.1 trillion).

That's above the bottom hit during the recession, $US48.8 trillion in the first quarter of 2009. But it's far below the pre-recession peak in wealth of $65.8 trillion. The drop from April to June was the first quarterly decline in America's wealth since early 2009. Before then, net worth had risen slowly for four straight quarters.

Their stagnating wealth is likely to keep Americans reluctant to spend freely - and the struggling economy from picking up strength. Consumers tend to spend according to how wealthy they feel. And their spending accounts for about 70 per cent of the economy.

now cut'n'paste the word " american" and insert "new zealanders" and there you have the fact that, give or take dollar or two, the song remains the same globally as led zep would say?!

by Wolly | 20th Sep 10, 1:38pm 1284946699

The Jaws of Death

http://www.marketoracle.co.uk/Article22824.html

Might be better if those with weak tickers avoid reading this one...the rest of you ought to sink a bottle of rum while you read. It sort of has NZ written all over it...in red ink!

by Christov | 20th Sep 10, 1:58pm 1284947924

Wally ...this paragraph...My point is that there is a strong possibility that the 'Jaws of Death' is an orchestrated plan to reposition America's standard of living. A plan not for the good of Americans but for the good of the banks and those that control the $630 Trillion unregulated, off shore, off balance sheet, OTC derivative market. It is no secret that America's standard of living is no longer viable, as evidenced by a continuous and chronic deterioration in the US Balance of Payments, Trade Deficit and Current Account funding. It must be addressed and this may already be happening in a stealth fashion.

well that's about as close as you'll get to my own theory save the part that I think "they through the IMF and associates are looking to pull this off Globally.....as I said in another blog they will be proactive in a unilateral economic unwellness and recovery.

by Wolly | 20th Sep 10, 1:47pm 1284947258

Yet another lesson in the sorry saga of why it isn't wise to start up a business in Noddy!

http://www.stuff.co.nz/sunday-star-times/news/4143070/Biddys-cheeses-caught-in-TV-trap

Death by Red Tape

by Gummy Bear Hero | 20th Sep 10, 2:04pm 1284948248

The Fraser Institute of Canada has just produced it's annual report , showing that NZ still ranks third highest in the wurld for economic freedom . Second only to Singapore & Hong Kong ....................Trailing the pack , way way back is Zimbabwe . No old biddies running cheese factories there , methinks !

by Wolly | 20th Sep 10, 2:28pm 1284949734

Oh how wonderful...discrimination with a pong!

http://www.stuff.co.nz/sunday-star-times/business/4140324/Banks-give-deals-to-reel-in-rich

"Select groups such as doctors, solicitors, teachers and police are being offered preferential deals by banks"

How bloody long does it take Kiwi peasant to realise how much power all the peasants would have if only they could work as one.....in an age of super communications!....it beggars belief that a consumer body has not evolved to boot banks up the bum.

by Kunst | 20th Sep 10, 2:08pm 1284948500

In the next weeks all eyes are on America and how THEY are manoeuvring it out of the crisis away from the storm into still waters.

http://www2.macleans.ca/2010/09/14/third-world-america/print/

by Wolly | 20th Sep 10, 2:22pm 1284949349

Bit like using a rowing boat as a tug to move an aircraft carrier in a storm! Aymereeka is stuffed Kunst...done to a turn on a spit roast and being served up by Chinese chefs on Chinese blue and white. One slice or would you prefer a bit of breast old boy....!

by Gummy Bear Hero | 20th Sep 10, 2:34pm 1284950059

...........as stuffed as pundits thought , during the cold war with the U.S.S.R. ....... America won that one .................as stuffed as everyone thought , during the meteoric rise of Japan . House of the rising sun gotta early sunset . America prevailed .............. but keep it up . Meebee you'll get it right , this time , and China will prevail ............ or meebee not .

by Christov | 20th Sep 10, 2:37pm 1284950247

I'll take a slice of that action....what odds you giving..?...thought Foreign Affairs..was your speciality Wally..... I see an Elephant in the Room but it ain't singing and it wont make room for the fat lady neither.

by Wolly | 20th Sep 10, 2:45pm 1284950758

Two slices of Turkey breast for Christov....."want some sauce on that?....we have a special today...comes with Greenback salad"

by Christov | 20th Sep 10, 3:03pm 1284951787

I'll be sure to save you some o that "humble pie" you pretend not to like so much and serve it up on a golden platter.

by Kunst | 20th Sep 10, 2:30pm 1284949853

Sorry, Wally I don't eat pork.

by Wolly | 20th Sep 10, 2:39pm 1284950343

Turkey Kunst......that is what they have isn't it....a bald turkey!

by Wolly | 20th Sep 10, 2:57pm 1284951426

Misery in the property market...haaaaaaaaahahaha

"The problem is if you pitch at a price and have to adjust later, you really have missed the opportunity because the buying public has ignored your property because of what you said you thought it was going to be sold for."

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10674824

by Joseph K | 20th Sep 10, 5:08pm 1284959327

Yes indeed, 2.5% commission on a reduced price is better than 0% on an inflated asking price. Of course, the REAs only have your interests at heart.

Wolly, you posted the best link of the day : http://www.marketoracle.co.uk/Article22824.html

Perhaps less a "village idiot" and more like King Lear's fool....

by Wolly | 20th Sep 10, 3:17pm 1284952638

By gum big Gerry has put the wind up the greens today....what a gas!

by ex agent | 20th Sep 10, 4:34pm 1284957297

Wolly even though I might agree with some of your views on the housing market I have to say that your smugness in some of your comments is pretty disgusting such as the glee you show in your comment at 2.57pm today. I for one wish you would comment less and at times wish you would comment in a fashion that is more sensible and logical. We all know the market is in a bad state but to actually enjoy that fact and show that joy makes you look really bad. You need to grow up and at times shut up and show more maturity and commonsense.

by alen | 20th Sep 10, 5:00pm 1284958835

"Misery in the property market...haaaaaaaaahahaha"

Man up - they had it coming. Remember the disgusting oozing smugness of the no-brains who told themselves that property only ever goes up in price, and said that any who weren't actively involved with property investment and speculation were "losers"?

They have earned our derision and scorn, and deserve to be laughed at now that they are going to the wall.

by Philly | 20th Sep 10, 7:26pm 1284967595

ex agent:

Yes, good point, Wolly should be duly chastised.

Misery in the property market = house prices become affordable for 1st home buyers; less $$ needs to be borrowed from overseas = A Very Bad Thing

Good news on the housing market, prices going up = houses unaffordable for average Kiwis, property can only be bought by rich immigrants, borrowing goes thru the roof, Bolly has to push up interest rates, Kiwis get the property bug & cease any other form of saving = A Very Good Thing Indeed.

So, yes, Wolly, show more "maturity and commonsense" and do your patriotic duty as RE agents (& apparently ex agents) do ceaselessly.

Cheers.

by ex agent | 20th Sep 10, 7:40pm 1284968451

Philly I generally agree with Wolly about the housing market but unlike him I am not going to gloat at what carnage the current downturn is causing as in that carnage are a lot of average homeowners who went out into the market which had been driven up by greedy pi's and bought a home for their families and they now find themselves struggling. Guys like The Man if he actually exists I have no sympathy for as they often berate the so called lazy unemployed tenants who do not help themselves. Funny if everyone was as stupid as the Man there would be no tenants. The market is getting worse by the day and this is going to go on for several years. The incredible debt that pushed up the market is now going to be slowly but surely deleveraged out of it and there is no stopping that train which is going to be more damaging than the train that drove the market up.

by Rob of the North | 20th Sep 10, 4:48pm 1284958124

apparently bernard says we're an online community here so i guess every village has an idiot.... and wolly is our one?!

by Wolly | 20th Sep 10, 5:37pm 1284961029

How's it going Rob...this idiot just made more dosh on a half cent kiwi fall...what did you do today?

by Gummy Bear Hero | 20th Sep 10, 6:39pm 1284964754

Good on yer , cobber !

I hate it when people accuse you of being the village idiot : Walter , St. Nick , & moi are in the running for that title too .............. we try so hard , so very very hard .....

by Wolly | 20th Sep 10, 5:34pm 1284960875

Jeez someone just shot the Kiwi$ down .5au...what was that?

by Rob of the North | 20th Sep 10, 6:45pm 1284965147

hey wally..in answer to your question..made quite a bit off my websites with new paid up members, i went to the gym , had meaningful sex with my girlfriend and sold some OZ gold stocks at 200% profit and bought some swiss kroners.

i now want you to meditate and say "Om" and then repeat the mantra"it's not just about the money" one hundred times?!

hmm, come to think of it...it probably is in your case!

stay off that pooter.

by Joseph K | 20th Sep 10, 9:33pm 1284975224

"Bought some swiss kroners" eh? This time it is just about the money...

by Rob of the North | 20th Sep 10, 6:48pm 1284965300

don't sweat the small stuff, gummy bear...you can borrow the title off wally periodically when they take him away to regulate his meds...he was in foreign affairs, you know?

unfortunately, the filipino woman living next door to him didn't agree with that concept...aaah, we luv ya wally!

by simey7 | 20th Sep 10, 9:34pm 1284975252

Hi all just catching up with the state of play!

Oh ex agent i tink yur getting u wires x over a train driving up prop priceys it wasn't that witch drove em up You Know...

but ur correct in the manner of them being driven down.

Anyway sorry thort u were stealing my Thunder because i predicted that over a year ago...remember fellars!

Amongst other things aye.

Anyway gota go nite all.

by Rob of the North | 20th Sep 10, 10:49pm 1284979742

what did all that actually mean?