Daily briefing for Monday, January 10, 2011

Here is a quick snapshot of some key overnight news, views, and data.

Sliding higher
Butter prices reached another record in US$, now up to US$4,600/tonne. Other dairy commodities are rising again too, and in NZ$ they are being helped along by a slightly softening NZ$.

The 'lost decade' myth
The idea of a Japanese-style 'lost decade' is misleading – even when applied to Japan, says Daniel Gros. We're ignoring the big key demographic trends, something that we can use to understand what is ahead.

I want some more
US Treasury Secretary Geithner asks Congress for a larger debt limit - raising it above its current US$14.29 trillion. He says not to raise it would invite default, and that would be "unthinkable, and must be avoided".

"Seven Deadly Sins -
Wealth without work
Pleasure without conscience
Science without humanity
Knowledge without character
Politics without principle
Commerce without morality
Worship without sacrifice."
Mahatma Gandhi

more below ...

     8 am       ---   52 week  --  
    Today   Friday   high low  
     --------    --------   --------- ---------   
FX rates NZ$1=US$ 0.7610   0.7574   0.7964 0.6584  
  NZ$1=AU$ 0.7641   0.7611   0.8212 0.7408  
Gold in US$ 1,367   1,372   1,421 1,058  
  in NZ$ 1,796   1,811   1,877 1,507  
Copper in US$ 9,399   9,461   9,754 6,091  
  in NZ$ 12,351   12,491   12,811 8,951  
Crude oil in US$/bl 88.44   88.44   91.45 70.15  
  in NZ$ 116.22   116.77   121.36 101.30  
US Treasuries 30 yr bond 4.48%   4.53%   4.78% 3.61%  
Dow DJIA 30 11,675   11,697   11,729 9,614  

You've got a new boss
The EU is proposing that their regulators be given the power to seize, sack, and impose haircuts on banks who they judge out-of-line. Credit default swap spreads for bank debt rose on the news.

But is it enough?
More details have been revealed of the extent of the writedowns at Yellow Pages, and the eye-watering level of losses the banks will have to take in this restructure. But even after these writedowns, almost $700 million worth of 'goodwill', 'brand' and 'customer relationship' (sic) are left on their books.

Euro weaker
The NZ dollar ended last week at a five year high against the struggling euro. It was last at this level mid December 2005 when it went as high as NZ$1 = EU0.6092 which was its all-time high.

Cat bonds
They are not for the faint-hearted - but they are a way to earn an enhanced return if an insurable catastrophe doesn't occur.  But you could be wiped out if it does. Apparently the NZ Super fund is a buyer ...

'We'll be inflexible'
European Central Bank President Jean-Claude Trichet warned eurozone governments not to rely on the ECB to get Europe out of its debt crisis and urged them to step up efforts to tighten fiscal rules. ECB policy can't be a substitute for irresponsible governments, he said.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a 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.


The Fed is causing the commodity price bubbles and they are raising the col in NZ and boosting the Kiwi$ on exports and that is going to push Bollard into hiking the ocr and that will lift the Kiwi v the US$ even more, making US exports cheaper and this is exactly what Bernanke had planned to do. Prepare to be screwed. 

Families paying more for fuel,butter, milk, meat, bread.....it's not difficult to see where this is going....add in power, gas, insurance, gst on all of it...!!!

 Bolly will be throwing the dart soon.....!

"Salaries have increased month-on-month for the past three months new data from Seek shows.

Data just released from Seek shows salaries have increased month-on-month for the past three months.

Since September last year, the average salary package has risen by over $600 to hit $69,000."




"Casual labourers are quitting $15-an-hour jobs claiming they can make almost the same on the dole.

Alpha Recruitment managing director Colin Mathieson said three staff had walked out in recent weeks, saying they would receive just $20 less each week on benefits."



$ 750 / week for doing nothing ! Bugger , why didn't someone tell me that WINZ were so generous .............. All those years of slaving for Fairfax ........... And WINZ would've given me more for doing nought ............ Geez , I am a dopey sod .

That's not all Gummy...they would have helped pay your rent and given you emergency wads of dosh to pay for....well, emergencies...like running out of beer and stuff....you silly bugger.

11 years too late   to help me now ! .......

....... This WINZ mob , they must be rich , Wolly . Got their own munny printing press ?

Growth industry Gummy.....revenue stream is guaranteed...just like the banks.

....... and the gaols ! The prison population keeps rising............ Another Kiwi growth story ........... yay !

Maybe it was a goal......!

In football parlance they'd call that an own goal .

What were you doing for Fairfax Gummy?

Hiding out in the Publishing Dept. of the Chch Press ......... The old building had plenty of nooks and crannies for me to go unnoticed ............ But when we shifted to Johns Road , I had to be seen to do something useful , so I quit , after a year there . No one warned me how frigging boring it is to actually work in a factory setting .

Even worse if your job were boring holes in things Gummy!

Oddly enough , they ripped down our part of the old building , and it had been earthquake proofed .......... The bit they kept wasn't , and the roof fell in . ........ Pity the poor journos , aha de ha ha !


I spent 10 years working at NZN Auckland Star, reporting directly to the General Manager who was named William.J.Hickey. Often wondered if there was any relationship.

You lot can do yourselves a favour...go to money morning and read about the lying scamming rorting flimflam going on...

The Pee-Wee of world stock-exchanges must be the Fijian bourse : the SPSE : South Pacific Stock Exchange .

Only 17 individual companies are listed , but one is currently suspended , and another one is only open to Melanesians ( check your skin colour at the door ) .

In 2010 a grand total of 711 transactions occurred , for a total gross turn-over of $F 2.66 million ( 2.27 million shares ) .

The market's total capitalisation fell 13.68 % to just $F 778 million .

One stock , PGI ( Pacific Green , a palmwood furniture manufacturer ) had a single trade , just one , for the entire year .

................... Mark Weldon , just when we thought that you were responsible for the most truely pathetic stock-exchange in the world ....... up pops these stats from Fiji . Dontcha just love the Fijian military  junta , about now !

 "The dangers on the water are the same as on the roads, so boaties should be licensed just like drivers."


Yes it's sad when people die in boating mishaps, especially preventable ones, which is most of them but let's stop and think this through before another bloody bureaucracy is born and left to taxpayers to fund forever and ever.




Super Cats ... without 4 legs ....


So pleased to hear our very bright sparks at NZ Super are buying the cat bonds.

These will be the ones Buffett and Ajit Jain who have spent their whole lives in Berkshire Reinsurance have passed on.

Two of the smartest investors in the world as in 20 % compound over 40 years.

Compare this with our NZ Super returns and see who you'd back.

They were probably " cheap " ... watch this space  as Forest Gump once said " Shit happens "