90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: Bernanke may increase QE II as 5 years of high unemployment beckons; European turmoil deepens; Hungary cut

7th Dec 10, 9:00am by Bernard Hickey

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that US Federal Reserve Chairman Ben Bernanke has spoken in a CBS 60 minutes television interview about the outlook for the world's largest economy and what he might do to get it going again.

Bernanke said it was possible the Fed might increase its current US$600 billion second round of Quantitative Easing (QE II) if it didn't work.

He also said it may take 5 years for the US economy to return unemployment (currently 9.8%) to more normal levels.

Bernanke's comments pushed long term bond yields down slightly, but failed to reassure investors much.

The Dow was basically flat.

Meanwhile, the turmoil continues in European financial markets.

There is division between those countries that want European authorities to increase the size of its 750 billion euros bailout fund and Germany.

Belgium and Spain want a bigger fund, but Germany is opposed. There is also division over where to create a special type of European bond that would be issued with a single interest rate, unlike the current bonds issued by individual governments.

Germany is also opposed to this, fearing its strong economy will be used to subsidise the weak.

Only the ECB is united. It bought almost 2 billion euros worth of bonds last week.

Meanwhile, Hungary's credit rating was downgraded to one notch above junk.

No chart with that title exists.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

31 Comments

by Muppet King | 7th Dec 10, 9:10am 1291666243

And I'm pretty sure this is where the world starts dipping into the new Great Depression.

by powerdownkiwi | 7th Dec 10, 9:22am 1291666935

times change, though - It'll be a BBQsided twitter this time around.

this is interesting - wonder what the unlimited urban cowboy makes of it:

http://www.odt.co.nz/news/dunedin/139569/peak-oil-drive-changes-dunedin

and there was some interesting comment on Morning Report....

by David George | 7th Dec 10, 9:33am 1291667591

The peak oil issue is getting some serious attention right now PDK.

Here's Richard Branson:

Branson Says World Faces ‘Unbelievably Painful’ Recession

By Kim Chipman

Dec. 5 (Bloomberg) -- British billionaire Richard Branson predicted an “unbelievably painful” recession if the world doesn’t move more quickly to a clean-energy economy.

“We are going to have the mother of all recessions if we don’t sort out our energy policy fast,” Branson said today at a conference in Cancun, Mexico, where United Nations-led negotiations for a new climate change treaty are taking place.

Oil prices as high as $200 a barrel and lack of government measures to encourage low-emissions energy sources, unemployment in the U.S. could reach 15 percent in five years “without any difficulty,” he said.

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aQafoDc6u8Zc

by Longpockets | 7th Dec 10, 11:14am 1291673679

Is this the same Richard Branson that is trying to make money by firing people into space. That's a good use of our depleting resources!

"Everyone needs to save energy, except me of course"

by David George | 7th Dec 10, 1:38pm 1291682299

The very same Longpockets. The rich are different, shortages and austerity are for "the little people"

by Sunny Nelson | 7th Dec 10, 3:11pm 1291687896

I think it's about 99% sure bet that US and other governments won't sort out energy policy in the next few years, which makes Branson's predicted $200 oil prices and "unbelievably painful" recession very likely.

Assuming this occurs I think the only decent investments over the next few years will be energy companies. Seems like NZOG could be a good option as it should benefit from rocketing oil prices + drop in NZD due our massive debt levels.

by oildepletionz | 7th Dec 10, 4:58pm 1291694295

In a first for NZ, Dunedin City Council has commissioned a Peak Oil Vulnerability Analysis Report, which included surveys on travel habits, private fuel consumption and vehicle dependence and the effect of petrol prices and shortages. Appendices to the Report here

more at ...

http://oilshockhorrorprobe.blogspot.com/2010/12/dunedin-city-leads-on-p…

Go Dunedin !

Now ...time for a Government plan on Peak oil ....or are those pigs I just saw flying by

by Wolly | 7th Dec 10, 9:21am 1291666899

All eyes should be on English right now and through to the budget decisions....how can the govt spin its way to being relected on hope!.....not much milage in the export recovery fluff is there.....the revenue stream now looks like a creekbed west of the Alice...peasants have pulled their heads from the beach of debt and they see shitty times a coming ...so spending is out...surviving is in....emigrating is for real.

S&P are preparing to lower the boom on Noddyland....oh bugger mr Market will discover we are an Ireland of the South Pacific.

Rates can go only one way from here....what will that do for the fiscal hole....for the ponzi economy.....for the mortgage backed securities called "covered bonds".......

Meanwhile we have Goofy telling the media he has faith in his spokesperson on economic matters...a David Caygill...!!!and Labour will never again be just the same as Labour was...no more imprudent financial behaviour...just more promises to increase state spending by cutting back state spending..blah blah blah.......

by powerdownkiwi | 7th Dec 10, 9:24am 1291667073

Render unto Caesar... :)

by Hamish | 7th Dec 10, 10:25am 1291670702

Ireland of the South Pacific....Rates can go only one way from here...

Where? Up or down?

http://www.moneyguideireland.com/mortgages

by Wolly | 7th Dec 10, 10:37am 1291671463

Tell you what hamish...just cos I think you have a big fat mortgage debt to the bank...rates will fall quickly to see the floating at about 3% where it will remain stable for about 5 years at least...how's that for a xmas present Hamish?

by Hamish | 7th Dec 10, 10:56am 1291672563

Well, you guessed wrong there. Thanks for the offer though.

p.s. I hate Christmas.

by Wolly | 7th Dec 10, 11:02am 1291672956

Now don't you go hating xmas Hamish....it's a time for giving..a time to smell the pine trees and enjoy the twinkling lights...oh sorry I'm having another migraine.....hope you have a bonza time.

by Vera Fayed | 7th Dec 10, 10:46am 1291671994

What is it with this nauseatingly bashworthy "Noddyland" thing Wallace? And your apparent need to apply derogatory appellations to anyone or anything you discuss.

Is it because you poppa left home when you were two, not leaving much to your momma and you, just an old guitar and an empty bottle 'o Bolly: and you don't blame him 'cause he run and hid, but the meanest thing he ever did, was before he left he went and named you Wally. I tells ya, life ain't easy for a boy named Wally.

Be careful Wallace or you may end up living by yourself out in the sticks and spending your days talking to all your imaginary friends on the computer.....oops, too late.

by Tim | 7th Dec 10, 10:56am 1291672613

Good call Vera. I never read Wolly's comments any more. He designs his comment for maximum offence so I just don't go there.

by rc | 7th Dec 10, 10:47am 1291672064

http://www.cbsnews.com/video/watch/?id=7120553n&tag=contentMain;cbsCarousel

by Bernard Hickey | 7th Dec 10, 11:26am 1291674372

Thanks for the link RC

cheers

Bernard

by Chris_J | 7th Dec 10, 11:46am 1291675584

Changing the topic slightly, a nice EQC man visited one of our rentals this morning and in 15 seconds flat a $115,000 cheque was in the mail. He suggested that our insurer will probably write off the 300m2 2 storey house - personally I doubt that - as we are insured for full replacement (perhaps $500,000) and I would think that even a troop of overpaid monkeys could repair it for less than that.

This has got me thinking about how much stimulus the maybe $5billion in insurance money will create. It is certainly going to be interesting times as some suburbs get razed and cash pours into pockets.

Of course its all unknown territory but pouring $5b (that averages as $12,500 per person) into one city will surely lead to some excitement?

In all we have 28 eqc claims, maybe three perhaps five houses will get written off, the remainder will be be of the order $10k to $40k. Total payouts just for us will be potentially into millions. That's a lot more than the $200k damage I was thinking on the 6th of September.

Take a global recession, then throw in some localised stimulus - indeed a good recipe for interesting times.

by Muppet King | 7th Dec 10, 12:22pm 1291677734

The tone of your post is abhorrent.

by Chris_J | 7th Dec 10, 1:48pm 1291682913

Abhorrent, Why? I am in a jovial mood after waiting over 3 months for EQC to make a decision on a building with a makeshift leaky roof and a jigsaw puzzle for walls.

At least now we know the EQC is going to be realistic and not force us to wait 2 years for Fletchers to do the work.

All of that $5b will be spent either as debt reduction or adding to peoples savings/other spending (if buildings are not rebuilt) or on wages and materials (if they are rebuilt). It is a massive stimulus either way, the impact will be interesting at least.

Over 10,000 houses may well get full replacement payouts, however perhaps fewer than a thousand are probably totally uninhabitable, the owners/occupiers must have all found alternate accomodation as there is still no shortage of property available for rent in the city.

Once payouts are finalised only a relative few uninsured will be worse off financially. Many of those will find assistance through government schemes and in fact many may not actually be worse off as land values are relatively high and in many older areas of Christchurch land value is around the same as the total value of the property.

by Malarkey | 9th Dec 10, 9:10am 1291839040

Wow, even now you still cling desperately to dreams of a revival of the property bubble!

Good luck with that! Let us know how it turns out. LOL!

by Wolly | 7th Dec 10, 3:35pm 1291689352

Breaking news in Parliament...govt this week to move on changing laws re WFF benefits.....

Something to do with ending the LAQC rort of WFF...seems the filthy rich have been double dipping.....

by Wolly | 7th Dec 10, 3:32pm 1291689176

The retirement commissioner is taking the heat off John.....now all he needs to do is point to her comments...this will please all those who want to put the boot into the boomers backsides...cut back their pensions....should kick in from 2020 and push the age to 67 and trim the adjustments...something for the gen X and Y to look forward to...working longer!

by muzza | 7th Dec 10, 4:16pm 1291691772

Government needs to cut pensions sooner than later, especially to silly old sods who wax lyrical about things but conveniently (for them) ignore the biggest gravy train in town. But you are right, unless younger guys get their act together and build up a passive income stream for when they no longer will be actively working, then they are oblivious to what is in store. Or may be the sense of personal entitlement is so ingrained in the psyche of people, they can't believe it will happen. Also, human nature seems to have the children and elderly at the most self-centredness stages of life. I'm not a psychologist but the wife is. Realistically pushing the national super out to 67 by 2020 gives the thumbs up to most baby boomers so they will do 'nicely' but at the great expense of their children.

by muzza | 7th Dec 10, 4:22pm 1291692174

Have just read the Retirement Commissioner's comment, it's worse than imagined. Pushing retirement out to 67 not by 2020, but 2033, what a joke, certainly takes care of all baby boomers and the oldies before them big time!

by Wolly | 7th Dec 10, 4:27pm 1291692444

Did you bother to find out when the retirement commissioner reaches 65 Muzza!...hehe

2033 a joke and maybe you're right but gosh why make it just 2 years.....we copped a 5 year delay....I reckon 67 is not nearly enough....move it out to 70 and have it kick in at a faster rate to be all aboard by 2025.

That should make Muzza happy.

by Kakapo | 7th Dec 10, 4:28pm 1291692520

So it'll kick in just in time for Gen X? Oh, what a surprise.

by muzza | 7th Dec 10, 8:25pm 1291706730

Wolly, assume you are referring to the Muldoon madness when he gave such a huge handout at 60yrs, this was never sustainable and when extended to 65 yrs that was still a good wicket. Actually I would be happy to see the whole national super dropped, wouldn't worry me too much, but that is not a political starter due to the sense of entitlement people have, so long as younger ones pay for it of course. I initially thought it made a little bit of sense if she was saying raise the age by 2 years at 2020, but the recommendation is so innocuous it probably will be accepted by the politicians. Good lord, even I would qualify by 2033, if I'm around, guess you mightn't be.

by Wolly | 8th Dec 10, 7:30am 1291746650

The thing is Muzza, all us old farts were once young fools and we believed the promises from the liars in wgtn...in time we learned what bastards govts are...we will vote out any lying pack of swine who try to steal from us the promised pension that was a tradeoff for paying stonking high friggin taxes for so long into a system that you were born into or that your parents decided to migrate to....The 'young' today have already benefitted from the high taxes we paid....think of the infrastructure all over the country, both tangible and otherwise. We paid for that...not you.

Key knows dam well he will be biffed out if he starts to mess with the pension....that is a certainty.

So the best you can expect is the sort of change suggested by the person paid heaps to say stuff....Or would you rather go back to when pension law was a political football.

You cannot change the fact we paid a fortune in taxes in our working lives. You can plan to improve your own situation because you have time on your side. We don't. The taxes rates you pay today are a fraction of those we paid. Check it out.

by Wolly | 8th Dec 10, 7:16am 1291745787

Here chook chook chook!

"The Reserve Bank of Australia played its own games of chicken, letting property bubbles get sky high in order to prevent a recession in 2008. Now, in spite of still rising commodity prices, Australia is on the brink of recession, with 3rd quarter GDP falling to .2%.

Those plowing into Australian dollars in belief it is a safe haven just may have another thing coming when the Reserve Bank is forced to cut rates to combat a recession it refused to allow the last go around.

Australia is finally poised to crash with massively rising housing inventory and multiple failed property auctions. The Australian economy will be in shambles when housing collapses. Imagine what happens when China slows and commodity prices sink as well. The Australian stock market could be in for one nasty spill"

http://www.marketoracle.co.uk/Article24818.html

by Wolly | 8th Dec 10, 8:36am 1291750576

"Statistics Canada , the federal government’s data agency, provided market-moving economic indicators to distributors ahead of their release to the public. Officials stopped the practice on Nov. 25 to ensure all users have access to information at the same time." bloomberg

Anyone know if stats NZ sell data early ??