Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that Ireland has announced a new austerity budget aimed at satisfying bond investors, the International Monetary Fund and the European Union after its bailout.
The Irish government aims to cut spending 20% and introduce new taxes to raise 1.9 billion euros as it tries to reduce its budget deficit from 12% of GDP to 3% of GDP within 4 years.
However, it wasn't enough to stop Standard and Poor's from downgrading Ireland's sovereign credit rating by two notches to a single A and warning that more cuts may follow if Ireland's plans falter or its deficit does not improve as forecast.
Meanwhile, the European financial crisis rumbled on to Spain, where an auction of government-backed bonds had to be delayed because turmoil in bond markets.
The spread between Spanish government bonds and German bonds widened to a record high as nervousness grows about the potential for contagion and threats to the euro more generally.
Meanwhile, the Dow rose overnight after jobless claims fell 34,000 to 407,000 in the last week, which was better than expected, suggesting the world's largest economy may be recovering.
Finally, our thoughts at Interest.co.nz go out to the families, friends and colleagues of the 29 miners who died in the Pike River Coal Mine.
We also pay tribute to CEO Peter Whittall, who fronted throughout the last week to talk to the families and the media with great dignity and detail under great pressure.
No chart with that title exists.
23 Comments
The Irish government aims to cut spending 20%
I can't wait to see that here.
suggesting the world's largest economy may be recovering.
They keep coming up with Tui adds don't they.
I just think on what that 20% cut would do to my income and project that onto the ppl in Ireland and teh US etc. While I have some disposable right now a cut like that would wipe out my ability to save and cause a severe belt tighening I would probably have to re-do and extend my mortgage back out to 25 years to get any and all costs down, various insurances would have to be cancelled, Internet broadband, bye bye, retail spending, if it isnt food, well forget it....death to retail/consumerism....bye bye VAT/GST receipts...bye bye Govn income....and Im fairly lucky I have a small mortgage....for many ppl that would I assume cause them to default....many workers in Ireland etc must be in dire street right now....and its looking worse....better the Greece? yeah right........
USA isnt recovering....its just staggering along waiting for the next nail in the coffin....The Republicans to rip it apart at the first opportunity.....they are fanatics really ie quite prepared to destroy what they cannot control...that is how I define a fanatic....and yet they have 50% of the vote and not <1%.....that is truly concerning.
regards
NZers are fleeing to Australia and we dont have a great difference in incomes. I'd guess the severe austerity measures for Ireland will mean that everyone who can, will leave and work elsewhere in the Eurozone. Going to be fairly difficult to increase taxes when they're making it a far less attractive place to live and routing out the countries work force.
How long before the bond market turns to look at Noddy....not a pretty sight....a naked little pink pig hopeful of an incoming tide to hide under...we've had the S&P comment,,,and the fluff from Bolly..followed by a Treasury blast (they have to look busy) ...then the bnz blurb, so what's left in this game.........oh it'll be the fiscal update blather in early Dec.....expect to be told the recovery is on track...the surplus is on its way...it's just a matter of time...and the commodities prices flying high...oh for about ten to twenty years.....Somewhere in the fine print will be the falling govt revenue and expanding fiscal burden....that's the bit YOU will end up paying for.
Again the message has to go out...get out of debt and stay away from bank bait...rates must rise regardless of Bollard's ocr games and when they arrive you will see the final story in the property ponzi bubble left by Clark and Cullen. From then on the banks will be screaming to hold the bubble intact and hide the potential losses.
The questions English will not answer...."which is more important to the govt....the profits at the banks or families having affordable property to live in?"......"How can families increase savings when property and rents are seriously unaffordable?"....."When will you stop expanding the govt debt burden by borrowing to pay the bills?"......"Why won't the govt lead from the front with across the board salary cuts for mps and all other state employees?"....."What black swan events will make you move more quickly to balance the fiscal account?"
See, Darth ...you do have a heart after all !!
Good karma...
Thoughts and prayers are with the miners and their families. RIP
Property is not unaffordable when you realise the reality is that for some time people operate on dual incomes when buying property. The days, rightly or wrongly, of the man being the sole provider is long gone. Nostagic yes, reality no
And where do we stop that extrapolation? When we have the kids working to pay off the mortgage as well! Besides, two incomes are ok, if that's what's needed. But forget about 'those kids'; and we'd better hope that one of us doesn't lose our job. One income gave a buffer, the untapped 'other' income in time of need. Today, not only is there no buffer; no family, but an endless path of full time work, for two...to pay off the bank. Doesn't sound like much of a life to me...
Good reply Nick. Funny how it works, the harder you (or two instead of one) work, the more the bank is willing to lend so that you can bid up the price of your housing. What a great scheme, everyone's a winner, ...well the banks certainly are,.......' till all the debt can't be paid then it's hands out for the taxpayer to make them whole again.
As the level of debt increases the population ages. You cant afford to have kids if you both have to work full time to buy a house.
What a great society our debt based economy has given us. As time passes everything gets more expensive instead of cheaper. Its the exact opposite of whats meant to happen. The retirement age is rising across the western world because we can no longer afford to pay the elderly their pensions.
Soon retirement age will exceed life expectancy and you'll have to work another 2 years after you're dead just to balance the books.
I thought this type of mortgage had already been invented in the U.K.? Take out such a mortgage that your kids will inherit the house, along with the mortgage still on it.
Next piig on the chopping block please
"Portugal's first mass general strike in more than two decades brought the country to a halt on Wednesday to protest spending cuts the government says are vital to avoid financial disaster".
It finally dawned on me...!....the media are the bankers sheep dogs in this game...."get in behind you %#@#! little *^&%$...".....gotta keep the mob moving you know....jeez this farming families game is fun....just ask Brock!
And here Wolly is the exact description of the solution I describe and you call "bollocks"
http://www.zerohedge.com/article/my-eu-solution#comment-749806
It is the only solution that will work. It has zero chance of being implemented when people like yourself remain blind to it.
I'm not the only one saying this. The central bank model has been "captured" by the elite and the "economists" who ridicule this solution and people like you who "buy in" into the ridicule and join in to keep the charade alive.
I can only ask that you give it more thought to see if you can see the "bankers scam".
Have you read the naked short? You understand how they use securitisation. The scam didn't stop in 2008, it's carryin on around us, it's all buried in the balance sheet of the Federal reserve, and our own central bank is a party to it (maybe unwittingly).
"These are daunting numbers. Coming up with this much money is essential to the transaction. This will prove to be the thorniest part of the “fix”."....oh and it sounded so easy until this little matter came along!
What sounds simple is not and what is not known are the multiple unintended consequences of this trickery.
No, oops wasn't clear enough, not Bruce Krastings solution but the solution described in comment 749806
Here it is;
"Here's a better idea - let the banks fail. Keep the sovereigns separate from the banks. Let the sovereigns issue non-debt denominated currency, like the greenback was, and capitalize a few banks. Let debt implode; have a jubilee. Max pain for a year or two, then we all start living within our means. We don't need financial overlords like the IMF and their debt-slave ways. Let them fail too, right alongside every central bank. Ah, heaven. Therefore, I don't expect we'll ever see it."
The Krasting solution would work but it still only kicks the can down the road addressing only Ireland. Because in the end.
http://www.zerohedge.com/article/its-official-there-not-enough-money-ba…
When deleveraging starts the maths dictates; there simply isn't enough money to pay the debt, those behind the banks know and understand this.
I suspect you can see the turd now Fred...there's not enough capital to cover the losses and refi the loans....the can gets larger and heavier the further down the road it is kicked...until one day very soon, those with the capital realise they are being set up to be robbed...and they take their dosh somewhere else...not willing to lend at any promised rate when the promise is worthless!
Many bond holders are having the screaming sh*ts right now...as it dawns on them they are not going to get their capital back....would you lend money to the piigs...?
Then at the same time the US turd will hit the bond market wall and splatter so far and wide...not a single person or fund will want to go anywhere near US Treasuries.
QED the cost of credit is set to explode higher and Noddy owes 180 billion today....expected to be 250 billion by 2014......go figure!
So here's how the solution would work.
It would probably only take one central bank to "break ranks" for it to be implemented. All central banks stand in the market for their own Govt debt, and sell everything else to the originating central bank. They still need "reserves" right? well that's gold. They stand in the market for gold at the "freegold price" - not a fixed price - that way they will never run out of reserves and a "run" is always going to be controllable.
Bondholders get a haircut, they get printed currency which settles to a price determined by the market, or they can hang on to them.
No such thing as sovereign debt only printed currency (zero coupon fiat notes) which becomes toilet paper if it is actually toilet paper and this is what keeps the pollies honest.
Still hogwash? No. Ever going to happen? Of course not, but there's a chance if enough people push it along.
Media = Sheepdogs alright.
I was on TV3 news last week and the very senior and experience reported turned up with a list of questions he had been supplied by his producer. He had done no homework on the issue and had no questions outside that he had been provided with.
On a previous occasion I was actually given a very strong suggestion as to what to say. They had already written the story and just needed my face to make it good TV.
Certainly interesting to see in action. We don't have reporters, only presenters.
The media have got onto this way of little throw away lines in recent years, trying to entertain rather than inform. Better to go to the BBC, or even better still read or listen to the radio for it.
Talking about soup and why Obama's in the poop.... http://www.bloomberg.com/news/2010-11-24/bernanke-goal-of-optimal-employment-elusive-with-profits-bringing-no-jobs.html
Please can we retire the old chestnut about the rise of two-income households explaining or justifying the increase in the price of houses.
1. Women entered the workforce long before prices began to shoot up in 2002. "By 1986 that [the % of the workforce that were women] had grown to 41%; by 2006 it was 47%." (Source - Te Ara)
2. The standard measure of the ratio between the median dwelling price and the median household income already includes any increase in income due to two-income households.
What's up doc...who pulled the plug on the Kiwi$ and why....something has happened!
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