Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that Ireland's Finance Minister Brian Lenihan has announced that Ireland will seek a bailout for its banks.
Ireland had resisted calls for a bailout, raising fears of a financial contagion in European Financial Markets as investors feared Ireland's problems would spread to Portugal, Spain and Greece, forcing banks to take massive losses. Financial markets celebrated the news that Ireland had caved in to the demands for a bailout from the EU and the IMF.
The Dow was up 1.6% in late trade. The New Zealand dollar was also stronger at around 77.7 USc, up from 77 USc yesterday, as it often rises along with more bullish sentiment on global markets.
American investors were also celebrating the US$20 billion float back onto the market of General Motors, which went bankrupt last year and was bailed out by US taxpayers. Its shares were up as much as 9% in its first day back on the market.
Meanwhile back in New Zealand, the Securities Commission has charged Hujjich Wealth Management and former MD Peter Huljich with criminal charges of misleading investors. This is a welcome move to retain investor confidence in KiwiSaver.
Meanwhile the Allied Farmers saga drags on with its former Hanover asset at Matarangi Estates being put into receivership and news emerging that Mark Hotchin has returned with Kerry Finnigan to try to buy Matarangi back from Allied at a bargain price. See more here.
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8 Comments
re matarangi i'm confused......so hotchin used to own it, then his empire collapsed, he duped hanover into buying all his crap, including matarangi, and now that hanover has realised that they can't keep it going either, hotchin is going to swoop in and buy it at a super-low price?
is that right? if so, then i'm speechless. he must be true sociopath to act like that.
Bill Bonner,
"It's the economy, stupid."
When an economy is de-leveraging you get a phenomenon that John Maynard Keynes described as "pushing on a string." You can push money into the system. But the other end of the string...where you find consumer prices...doesn't move.
And now, it looks like Keynes was right. The Fed is pushing in $600 billion. Consumer price increases are still going down.
So we might be tempted to think that the feds can push on the string all they want; they'll never get consumer prices to rise.
But it's not that simple. It may be true that you can't increase consumer prices simply by putting money into the banking system. But the Fed is now going one step further. It's funding the US budget deficit - practically the whole thing. That frees all the money that would have gone into US Treasuries to go elsewhere. Where? Darned if we know.
But just look at cotton prices. And gold. And farmland in Iowa and Indiana. Farmland yields (not crop yields...financial yields, from renting out the land) are at an extreme low. Prices have been bid up - thanks to record low interest rates and record high agricultural output prices.
And look at prices of Indian stocks. They're selling near record levels too.
All over the world, prices are going up - especially in emerging markets, where economies are growing fast.
But in America, consumer prices - when you take out food and energy - are going nowhere.
Just what you'd expect in this strange correction
In a nutshell - which is where these things belong - the feds spend about one out of every four GDP dollars in the US. They collect, however, only about one in every five or six dollars worth of GDP. That is a pretty big gap - nearly 10% of total GDP.
If you're going to cut that kind of a deficit you're going to need more than a bi-partisan commission. You're going to need a catastrophe.
Heck, we could cut the budget in half an hour. We'd just get rid of everything that was not part of the original plan - that is, everything that was not necessary for the defense of the country or the maintenance of law and order. We'd have a huge surplus overnight...and lynch mob by daybreak.
speaking of selling one's soul, i see john key has tailored his message for FedFarmers:
http://www.stuff.co.nz/national/politics/4356722/PM-slams-Save-the-Farms-lobby-group
"I don't think any country I've seen actually has that level of prohibition on it – maybe North Korea." Key said. Or maybe China John, you know, the ones we have the FTA with...... No mention of the way the farmers screwed themselves by asking (and paying) ever more ridiculous land prices......
Ireland:
http://www.businessinsider.com/one-fifth-of-irelands-economy-could-now-…
In 2010 the budget deficit will be at least 32% of GDP and the public debt is almost 100% of GDP.
With the bailout only the bondholders are saved.
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