Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news gold hit a fresh record of US$1,309 an ounce overnight as concerns ratchet up about central banks staging money printathons in a 'race to the bottom' set of competitve devaluations.
The Wall Street Journal reported overnight on how the US Federal Reserve might stage a second round of quantitative easing.
It reported one Federal Reserve Governor saying that fresh bond purchases could be drip fed out in lots of US$100 billion a month rather than a March 2009 style 'shock and awe' announcement of over US$1 trillion worth of bond purchases.
This further weakened the US dollar against a variety of currencies, including the Yen, the Australian dollar and the New Zealand dollar. The Japanese are struggling to hold down their currency, having staged two interventions in as many weeks. Brazil is also intervening to force down the Real.
The Australian dollar appears headed for parity as it nudged up to 97 US cents and the New Zealand dollar rose towards 74 US cents again.
Also, a former Peoples Bank of China advisor Yu Yongding warned that the US dollar was one step closer to crisis and a devaluation of the world's reserve currency was possible.
Meanwhile, the European financial crisis is getting worse.
Standard and Poor's warned overnight that the Irish bailout costs for Anglo Irish Bank could top US$47 billion, sending Irish bond yields to record highs and forcing the European Central Bank to buy more Irish bonds. European stocks fell.
There was also fresh talk that Spain's sovereign credit rating could be downgraded again by Moody's.
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41 Comments
Bernard , about your article on controls yesterday , you may want to look at what happened between the 1929 stockmarket crash and the Great Depression of the 1930's . Countries resorted to controls of all sorts during this period , ( controls such as you suggested yesterday ) , trade wars , protectionist policies and currency manipulation to overcome their problems . Now we see the US Congress is sabre- rattling with China over its mercantalist polices. Yesterday the Brazilian Premier accused countries of a 'currency war' to force their currency to devalue to mask thier problems . Nationalistic policies and protectionism may be all well and good as a solution when you are angry , but somehow I dont think it will work to sort out the problems , especially if everyone retaliates .
You are right in your assertion that we are on the edge of an economic abyss , its what to do about it that has got everyone divided
I guess its the degree of controls...quite clearly there will I think be a rush for real assets...in our case we have highly productive land that is cheap by International standards and and this is the critcal part that land can be bought with useless/worthless USD....if we allow it.
ie there is no point in holding a currency that will de-value greatly, better to use it to buy a productive something that will not devalue by as much....two nasty choices.....
Protectionalism takes several forms, for instance if Americans are broke they wont be buying our soon to be excessively over-valued goods.....there is no need of a law but there is an effect...
Also foreign ownership of NZ companies....if the going gets tough and the US (say) has devalued the NZ owned or NZ subsideries could be sold to generate NZD which is then converted into USD and taken home....what will that do to our un-employment? share market? etc..........
Economic abyss, yes I think so and have for months.....ever seen a comedy sketch were some idiot is on a treadmill and goes haywire? its gets faster and faster until eventually the idiot face plants the controls, or ends up in a pile on the treadmill and gets ejected out the back....this is what it looks like to me.
regards
See the Wall Street Journal last night ' How currency wars end" for a good perspective
Of course when the current worldwide economic situation worsens there is an increase risk/ chance of Mercantilism having a renaissance.
.If this is bad or not considering all aspects - certainly worth a debate. The link:
http://www.interest.co.nz/opinion/opinion-why-we-must-abandon-economic-orthodoxy-and-embrace-capital-trade-and-exchange-rate-controls#new certainly a good starting point.
TOKYO — China's ban on shipments to Japan of rare-earth metals that are crucial for advanced manufacturing threatens to undermine the Japanese economy, a top finance official said Tuesday amid a territorial row between the rival Asian powers………………
Buy Lynas Corporation - It will just keep going!!
IF you like the REE's check out CMY over the last couple of days - good money being made here :) RSL next to go in a couple of weeks time ..
interest.co.nz - NZ's New Stock forum ; )
WW3 thats how this will end......when all else fails (and it will) pull on the gloves and go for it...unlike the spilt ends song this time ..history does repeat
because of this global fallout being largely bought about by the connectivity engendered over the last twenty years of the "global economic village"...is it not fair to assume that all countries will endeavour to obey their inner financial instincts in the long run whereby the trade walls go up, the sovereign debt defaults kick in and we go back over a century to each country protecting it's borders and doing it's own trading with other worthwhile nations who can pay?
the downside is that we now have smart weapons so if my posited scenario was to occur over the coming decade ...can we look to the outbreak of savage wars and attempts to annex high-yied/low defence economies such as New Zealand for sovereign survival.?
I don't see Mel Gibson coming over the hill yet...but when the "race to the bottom" is over the strongest and best tooled up with weaponry will sharpen up their metaphoric fangs and start looking for domination....winner takes all etc...whats to stop that occurring when the global policeman" america, is on it's knees and sinking in a sea of debt and incompetence?
at the end of the day, money is only a concept and the implications of a set of "zeros" but human behaviour, survival and greed is inherent and instinctive.
a chain is only as strong as it's weakest link and if the worls gone bankrupt..i know what i'd be doing if i was a mandarin speaking Premier or Euro- oligarch?
cucumber sandwich,anyone?
or is it time to " chase the dragon"
wouldn't Mel Gibson come over the hill chasing the Jews, not the Dragon?
he'd probably be chasing anything with a tail on it and his alimony suits...no, only the orientals truly know how to chase the dragon...i'll pipe some into you, Vlux the Inhaler?
oh look people around me were doing it at uni but i never inhaled....i swear.....
o.k Mr Pesident but what's that mark on the front of that girls' blue dress...and don't tell me she was your lecturer?
You know Clinton told her "sack my cook".
It was all a misunderstanding.
Some very astute observations there DonnyMac....a thinking beyond the numbers...good for you.
As philosopher and artist I can say that again and again and it becomes more valid by the month:
Well, the world is struggling, fast moving and changing for ever- time for New Zealand to find visionary solutions.
In the current situation it is probably wiser to listen to philosophers, environmentalists, ecologists and humanists (I’m not religious - sorry) and find the right answers to solve our upcoming challenges.
Greed & Megalomania
The people of New Zealand are not only suffering under too much consumption but Greed, Megalomania of a minority – including corruption and a bloated government without a clear economic direction for years.
How much longer is the younger generation waiting for a revolt in “Beautiful New Zealand” ? The “Powerfools” in this and other countries are not only destroying theirs, the public’s natural environment, the land, the waterways and the air, but also their future, our souls and pride. The BB generation is currently causing enormous damage in our society not investing, but for them selves– costing this, but especially the next generation Billions to clean up the mess in may sectors/ levels. Not to mention our bubbly Property Industry – making our NZkids renting flats on Rook Creek Rd or worse, while foreigners living in flash houses on Orchid Park Drive – HA this is all crazy!
Ethics- Philosophy- Economy
More and more country are losing the battle against a clean and green environment, healthy food supply/ production, fresh water and air – quality of life. As a remote and rather under-populated country we have an exceptional chance to be different. The key is branding New Zealand - the introduction of a “GREEN & CLEAN” economic philosophy – why ?
For years our economy is so unbalanced, unstructured and unorganised- badly managed, when serious philosophical questions have to be asked. What is New Zealand way of life in the 21st century ?
The large and increasing national account deficit seems to force the government into stupid actions of desperation. Obviously falling into a trap by considering revenues form:
- natural resources damaging our environment/ nature and eco- tourism -
- opening more land for intensive (dairy) farming destroying our environment, undermining animal welfare standards and in disregard of the influence of climate changes –
- doggy immigration policies leading to social, employment and housing problems etc.-
- it doesn’t create skilful jobs (see below) -
I’m proposing a clear, consistent, long term strategy for our economy to be the world leader:
-New Zealand’s Green Sustainable Economy Model of the World”
Such a model would make us unique in the world, inspires, lift ethics, spirit, pride among the population and feed into many sectors of our economy and society. But it also supports strong and already existing sectors. It would make Billions in revenue, the country would prosper.
Industry and Ecology
Today and in the future “Green Industries” offer new, good opportunities for NZ’s economy. Manufacturing Research & Development in sectors like Power, Transport and Telecommunication, in fields where we relay on foreign dependency most, even to a degree that our national security is at risk is essential. Building sustainable niche markets, producing and branding quality goods for us and to cover export demand will be successful.
Energy, Public Transport, Telecommunication
Two examples of how we should proceed with infrastructure questions in Energy and other such as Public Transport. Financially and economically it doesn’t make sense to import or to produce heavy and expensive machinery/ equipment like turbines/ generators, nuclear power plants or heavy trains.
Such imports are mostly under overseas contracts, managed and installed by overseas technicians and workers, without hardy any local workforce especially skilled ones.
In stead we should research, develop and produce –SMALLER UNITS- manufactured and installed by Kiwis in our own country. A step, when supported by government with enormous, but positive implication for our country:
- increase employment opportunity -
- better education after school –
- technical skill and knowledge improvements -
- higher wages/ imports of brainpower –
- positive influence to other sectors/ fields such as Science and Research -
- less quality imports / reduction of account deficit -
- control and sovereignty –
- quality infrastructure services –
- national security improvement –
- almost no affects because of natural events -
Sustainable Public Transport - developing a sector of industry to cover public mobility within a 100- 150km radius. Innovative businesses producing SMALL QUALITY UNITS starting from bikes, scoters, light rail systems and the interaction within, hardly seen in other countries. All planned, developed, installed, maintained and ran by Kiwis.
Sustainable Power supply/ savers SMALLER QUALITY UNITS developed, produced, locally/ regional installed and ran/ maintained by Kiwis.
A clear strategy to master the international dependency on fossil fuel, gas and power consumption.
Please, read and understand this in context to my many other articles.
I think that the next decade or three will be a splendid time in world history . Globalisation will reduce the threats of trade protectionism and of war . The emerging market economies will produce a new middle-class , demanding goods and services . And olde western economies will have to pare down their bloated government bureaucracies to keep up , or fall permanently behind . The western style welfare state will have to be cut to size , as these economies cannot go on living beyond their means . And that will be a good thing for them , as the private sector fills the void of government agencies , far better , more innovatively , and cheaper .
Yes , my friends , it is all good ! Follow the Chicken-Little Hickey depression scenario if you will , your free choice ........ Me , I'm gonna step into the warm glow , the soothing balm , of the capitalist market-place .
".. SocGen’s (Albert Edwards argues) that all of the ingredients are now available for ... global chaos." The hollowed out middle class and the globally unempolyed youth may have more to say about the next decade than you or I.
St. Nick : Did that guy , Bertie Edwards , get an education at Rangiora High School ? I think not ! Ignore him , man's a blithering fool .
Nearly!
He’s a graduate of Bristol University and Birkbeck College
Albert studied economics and Bristol before going on to study an MSc in economics at Birkbeck College London in 1981-1982. Upon graduation, Albert took a job working for the London Electricity Board as an economist.
His second job was at the Bank of England
Albert’s defining career move was to Dresdner Kleinwort in 1988. He proceeded to hang around for an unprecedented 19 years and three months, making a name for himself with doom laden predictions which (eventually) came to pass.
In 2006, the FT pointed out that Edwards...saw the Japanese market as a template for US developments.
He then ( went to) Dresdner (Bank)
In a moment of great foresight, Albert exited Dresdner for SocGen in late 2007, shortly before the poop ( At Dresdner and the market) truly hit the fan.
http://news.en.efinancialcareers.be/News_ITEM/newsItemId-27596
Thankyou , St. Nick , proved my point exactly ! Fellow went to Bristol , and then got depressed for 19 years and 3 months . And rightly so , as you say .
Hey GBH, those blinkers you've got on, did you get them on the plane over there, or did you have them made especially?
Locally made from natural fibres , 100 % bamboo blinkers .
i admire your tandua soaked optimism there GBH. The last 30 years has worked for a small minority of people and you are obviously one of them, so good on you. There are a huge number of others who the market has failed though and i tend to be on their side with this, but it's nice to have you around anyway keeping things balanced.
Is the sun past the yardarm yet?
Actually , I'm off the booze , Tanduay Rum & so ! It is quarter past 8 here . Had my run , and swim . A yarn with my American neighbour .
The thing is , in an asylum , many of the inmates appear depressed . Some though , wear sloppy foolish grins . The grinners may be just as deluded as the depressives ., yet they grin . .............. . Guess I'm in the smiling lunatic group .
Gummy the one thing that does not fit is that the Big Western world will be reluctant to give up their style in favor of small emerging markets and they will try a few more tricks before it is all said and done. I don't see a big war coming because there is much more to loose there for all those involved in the nuke game. I have not lived through a devaluation war so I will learn as it happens and try to stay in the sunny side of the mkt while the sharks take bites of each other.
Agreed . Westerners will be forced to reduce the level of government provided " services " because of ballooning costs ( i.e. healthcare / superannuation ) , and because of unsustainable government debt .
No doubt those in power will hang onto the status quo , grimly , until a financial crisis forces them to act . ............. Less pain if they act sooner , but they won't .
just got this in from one of my daily email strings...i think the two headlines are oxymoronic nearly, but clearly indicate what a "lucky dip" this whole crap financial thing is...."blind leading the blind etc"..
Breaking News US consumer confidence falls to fresh 7-month low
July home prices dip, business outlook weakens. 4:06 AM read more
Wall St climbs higher on optimismUS stocks rise on earnings expectations, deals. 6:11 AM read more
..and all on one page and in one breathe?
If it all fails ...was it Charlton Heston who said something like..."back the man with the biggest gun"
;)
it wasn't Cam....I connected that to him by saying ....and although I don't like Charlton Heston (head of the Gun lobby USA) ...in the long run...it is always wise....to back the man ....with the biggest gun.......
Heston said ...from my cold dead hand... when discussing gun reform.
James Cagney never actually said...OK you dirty rats...etc.
"We continue to look for the RBA to raise rates twice, by 25 basis points a piece, before end-2010," said ANZ's head of macro-economics, Katie Dean.(the age)
Kiwi will slide toward 75au...may fall to 73 now with the current GDP likely negative.
The Kiwi will hit 0.75 but I don't know if the hikes are priced in at the moment or if there will be a spike after the RBA... Maybe Bernard's asociates can give us some more clues.
I wonder how long Tweak and Fiddle will carry on playing BS the public that recovery is coming! Can they really last past the election....or will Mr Market turn up to take their toys away. Clearly the cheap and easy credit formula has turned out to be a big fat ballzup. Noddy is stuffed with debt and like the fat 'Monty Python' German..is set to explode.
You just don't want to be here when the German explodes! The borrowing bonanza by the buffoons in wgtn will come to an abrupt HALT. The fiscal hole will open up and down will go Tweak Fiddle and all.
que?
Me pregunto cuánto tiempo Tweak y violín será seguir jugando BS al público que la recuperación está llegando! ¿Pueden realmente más allá de la última elección .... o que el señor Mercado a su vez para tomar sus juguetes. Es evidente que la fórmula de crédito fácil y barato ha resultado ser un ballzup grande y gordo. Noddy se rellena con la deuda y al igual que la grasa .. alemán 'Monty Python' está destinado a explotar.
Simplemente no quiero estar aquí cuando explote la alemana! La bonanza de endeudamiento de los bufones en Wellington llegará a un abrupto fin. El agujero fiscal abierto arriba y hacia abajo irán pellizco violín y todo.
any better...?
Aahhhhh, are you ready for the "Viva the revolution" senior ?
why didn't you say so earlier...my sentiments entirely!
Well let's see they are gambling that the sh*t storm does not hit until after the election. Let's see if an All Black win in the Rugby World Cup can bring the Nat's threw?
or..
The average duration on mortgages is 9 months. In 9 months time will the banks have re-financed halve of the mum and dad's over-valued mansions, holiday homes, european cars, poor performing sme's and farms. I bet alot of discussions are occuring between the aussie banks and the government at present in respect to rolling the nations grossly over leverage domestic debt over. Will the banks pull the trigger or roll it over?
Interesting isnt it....if you are floating the bank can put up the rate until you default or move, if you are fixed they cant do a thing until the end of the term, then they dont re-new it and demand it all back....at least thats my understanding....
After the election would be great for the Nats, they should cruise in this time.....if then they really are right retards a nice crisis gives them the excuse to swing to the right and do anything their hearts desire....for 3 years....the Q is have they learned from 9 years of labour who were masters at sitting on the centre....the backlash would seem them out in 2014 for another 3 maybe 4 terms....
interesting times
regards
Bit of an overstated headline in the China warns....Yu Longdong's been banging that drum for a while now.....and his motive and agenda is painfully obvious....it's early days in the currency chess game....got to sacrifice a few prawns to get the big Won Ton.
Great news..Kiwi smashed down through .75au......keep going little bird.
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