Gareth Vaughan, sitting in for Bernard Hickey, details the key news overnight in 90 seconds at 9 am with Bank of New Zealand,including news that European Union and International Monetary Fund representatives will open the books of Ireland’s heavily indebted banks in Dublin ahead of a possible aid package.
Finance ministers from the 16 euro zone countries said this assessment will decide whether Ireland can fix its crippled banking system on its own or whether it needs a 750 billion euro rescue.
Britain, whose banks have the biggest exposure to the Irish financial industry, has abandoned its hands-off policy toward the euro region. Chancellor of the Exchequer George Osborne said Britain is willing to contribute to an aid package for Ireland.
A sub-index on Ireland’s stock market covering five banks gives an indication of just how bad things are for the banks who are loaded with toxic property loans. The ISEQ Financial Index of banking stocks is now worth just 2% of its peak valuation reached in February 2007.
Meanwhile, United States Federal Reserve officials say the US central bank is likely to follow through on its entire US$600 billion Quantitative Easing II, bond buying or money printing programme, because of an expected weak economic recovery. Although the so-called QEII has come under fire from critics who say the Fed is devaluing the greenback at the expense of trading partners and sowing the seeds of inflation, Fed officials say QEII should reduce the US unemployment rate by half a percentage point adding 700,000 jobs by 2012.
Elsewhere carmaker General Motors, which was bailed out with US$50 billion of taxpayers’ money in 2008 and 2009, is hoping to raise up to US$22.7 billion in an initial public offering. It could be the biggest IPO ever in the US, reducing government ownership to 33% from 61%.
Here in New Zealand Finance Minister Bill English has poured more cold water on the prospects for economic recovery, saying this morning the Canterbury earthquake, a lower than expected global growth outlook and a faster than expected adjustment by households away from consumption, will flow through into a lower growth forecast for the year to March 2011.