Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news of barely disguised panic on Japanese markets yesterday afternoon after the government warned of rising radiation levels from its crippled reactors at Fukushima.
The Nikkei fell as much as 16% at one point and closed down 11%, which most would regard as a crash. There was panic buying of food, petrol and medical supplies in Tokyo as officials warned of rising radiation levels, although levels aren't high enough to be a public safety concern yet. Radiation is also being blown out over the Pacific, rather than south to Tokyo.
See the latest here from Reuters on the Japanese nuclear crisis.
Global markets fell overnight on concerns the economic problems in the world's third largest economy could hold back growth.
European stock markets fell as much as 3%.
The oil price fell more than 3% and the gold price fell more than 2% as investors lowered their outlooks for growth and inflation.
Japan's component manufacturers are at the heart of the Asian high tech export machine. Japan's ports, railways and roading systems are severely compromised and the prospect of rolling power blackouts for a significant period could disrupt 'just-in-time' supply chains that spread throughout Taiwan, China and Korea.
Meanwhile, the Dow fell only 0.8% after the US Federal Reserve upgraded its economic outlook, although it pledged to continue with its second round of quantitative easing (money printing). See more here at Bloomberg.
Closer to home, milk powder prices fell 8.2% in Fonterra's auction overnight. See our full article here.
The New Zealand dollar fell to 73 US cents overnight after the global turmoil and the Fonterra auction. See Mike Jones' currency report here.
No chart with that title exists.
105 Comments
The worse case scenario is an increased possibility with people almost nowhere to go, then overseas.
So PM - why not evacuate the number of people from Japan, which we can accommodate here in New Zealand, among them 5’000, who have knowledge and skill to build Christchurch urgently back to the most wonderful “Garden City” in the world ?
Perhaps not to Kaikoura, though ?! It would all look a bit familiar...
"Submarine landslide from head of Kaikoura canyon: The moment the landslide happens would be dramatic for anyone in a boat off the coast. Water around the canyon head walls would appear to be sucked down creating a large hole with a pinnacle of water rising in the centre. Large waves radiate out, some following of the direction of the sliding mass of sediment below. However, the biggest waves radiate back towards Goose Bay and Oaro. All this happens very quickly. The tsunami’s first wave arrives at Goose Bay just one minute after the landslide starts. The wave crest is about 13 metres above sea level. A smaller wave..... reaches Kaikoura about 15 minutes after the landslide, and a sequence of waves arrive at the township for almost an hour."
http://www.niwa.co.nz/news-and-publications/news/all/2006/2006-01-31-1
Nice gesture Kunst but I think those with building/engineering skills will be needed in Japan.
The obvious source for folk with these skills would be the US, their building sector is in a huge slump after a massive overbuild plus we share a common language (sort of) and almost identical building methods. The people calling for bringing in cheap labour from third world Asian countries are missing the considerable difficulties of assimilation, Plus this would tend to undermine Kiwi wages and therefore deter:
A/ our young builders working in OZ from returning
B/ existing builders working in other jobs from taking up the tools
C/ other kiwis from learning building skills, also a lot of work on building sites is only semi skilled - thats stuff we can do with little training.
D/ Kiwi building firms from taking on apprentices.
Real dumb idea from the building industry or are they just thinking of their own bottom line?
Are we slow again - wait and see Prime Minister ?
Currently one cannot read any comments in the media still, if the government is willing or/ and has taken practical steps, evacuating people from Japan.
The severity of the radiation will force the international community not only evacuate their country folks, but also 100’000 even millions of Japanese residents.
Before it is to late and people get sick - why not do it now ? (read comment on top also)
Save power supply from nuclear plants are worldwide in question, some will be shut down and therefore have an impact on economic growth until replaced - hmm!?? The worldwide humanitarian, economic and financial implications, in case only 1/3 of Japan is inhabitable including Tokyo will be massive.
Hopefully the world is rethinking growth in respect of our environment and humanity.
You are right Walter, the implications of this are huge, but probably no suprise to some on here.
Energy has become everything in the modern world with Japan fragile in its dependency from outside sources.
What is clear is that the potential crisis in the Persian Gulf, the loss of nuclear reactors and the rising radiation levels will undermine the confidence of the Japanese. Beyond the human toll, these reactors were Japan’s hedge against an unpredictable world.
Read more: Japan, the Persian Gulf and Energy | STRATFOR
However I disagree about importing large numbers of Japanese to New Zealand. We already have a problem with dilution of the dominant culture here. Eastern cultures are so different that a shock wave of them would have significant effect, afterall look what Europeans did to Maori. 5000 would probably be okay, but not all to one location.
Please note I am not saying Eastern is better or worse, just a difference that can cause division.
Well I do agree with the humanitarian aspect of what you say. There are some major problems and risks involved though, not the least of which is the changes you frequently outline that would be required in the way we operate as a society.
Might be a bit more problematic if contamination spreads to China, or across the Pacific to the US.
Still wondering if it is a media beatup as per that link yesterday.
You have to laugh...". the US Federal Reserve upgraded its economic outlook"...and the idiot market believed them!...taking no notice of the fact Bernanke is to carry on printing QE2 and looks set to start QE3...then QE4...then.......
How bloody stupid can investors be?
I regard the US Fed as a pathological lying pack of criminals.
Who's is it then? A military flag. Your right though, it's not internationally recognised.
This was interesting reading:
Admiralty Flag the bankers flag. As your excellent link describes.
Thats why when in court it comes down to money. The judge sits on the bench latin for bank and to be simple the judge has to balance the books for the banker. Those with monetary smarts already know that its about energy - most things in our current daily life are dictated by this subtle shift in law, the rest is connecting all dots... Big topic ill leave it there...except to add...
Cuo Bono?
I bloody well told you …….When everyone was so optimistic about how markets would benefit from Japans reconstruction , etc ,etc , I warned of extreme volatility in markets , specifically the Foreign exchange market . I felt very uncomfortable about the effects on the Bond market and the Stock market .
A blogger called FX rat was particularly disparaging of my views which he called “simplistic”.
Well let me tell you right now we are heading for a global market rout in the next few weeks, which will make Lehman Brothers look like a Sunday School picnic.
Cash is the only place to be for the next few months , not stocks, bonds , currencies, commodities or property.
Japan is too big to remove from the world economy's GDP without seriuos knock-on effects all round .
Expect extreme volatility and big losses on all bourses
The drop in milk powder prices mirrors the drop in commodities overall and the sharp fall in the aus$...what does it signal for the future....if commodities continue to dive on market fear, bollard may decide he is safe to stay at 2.5% thinking inflation is not coming...foolish move given the chances of a middle east fireball of rebellion and likely oil shutdown at a time when Nuclear plants are closing for checks and oil demand is to jump higher.
The price of coal will likely rebound to new highs as demand jumps re the nuclear mess.
Gerry will push to dig the Southland lignite out while world demand is high and likely to stay high for 25 years. Solid Energy will go after Pike River and the mountain top will be cut off to expose the seam of high grade coal. lots of jobs in both areas.
Meanwhile expect heaps of delays in Chch and sharply rising materials prices.
Longer term JK should put some polish on the immigration policy because there will be a bloody large number of wealthy in the northern hemisphere wanting to have a safe hide out down here.
property in Qtown will explode in price.
Nah...BH and I are like this...:-).....when I make a fopah he just wipes the slate....
As for Qtown...you need to see the top property in that region as being on a different planet....stuff on that golfcourse is for sale....way above a million a plot...that's chump change for the wealthy.
The rule of thumb is whatever you buy needs to have the sun all year round or you freeze your &%**$ off in winter.
Wolly is right, NZ is, if it gets that rough be a bolthole / lifeboat....and Im sure JK will try and ensure his banking mates get in here.....so because they have lots of money we will get more parasites...of course if we are into lifeboat mode more parasites like these will be worthless....however I expect that as always the old top order will try and stay on top...beter to be on top of a very small pile than not on any pile.
regards
You should be more concern with your Crusaders, there Wolly.
This game in Twickenham is just the start. You watch, Hong Kong, Singapore and other mega cities que up to host Super Rugby games now and into the future. The greedy guts Rugby Union will not give a toss about grassroots.
Wait till the Crusaders is based out of London and the Highlanders are based out of Tokyo.
Hebrew University of Jerusalem Prof.Menachem Luria, an expert on air quality and poisoning, issued a stern prediction: "This is very worrying, there is no doubt that we have not seen anything like this in years, perhaps ever since nuclear experiments were conducted in the atmosphere in the 1950s. From what we can gather, the disaster is even more dangerous than Chernobyl, both from the standpoint of the populations exposure to radioactive material and the spread of radioactive contamination in the area."
Fukushima poses unique challenges, not least of which is that never before have so many nuclear reactors experienced failures at the same time. To add to the complexity of the situation, one of the afflicted reactors - number 3 - is loaded with a controversial mix of plutonium and uranium, known as pluthermal MOX (mixed oxide fuel). It is considered highly toxic, since inhaling even small amounts of plutonium can be lethal.
The analysis I have received points to an increased demand for coal and LPG and oil for power gen in Japan Justice...likely to run for some years...but overall demand countered by ongoing Chinese decision to back away from mad rate of growth..plus prospect for western pullback and another big dip...that explains the lying from the Fed overnight about growth picking up.
Europe set to remain in recession now as germany will not have the market growth seen to date on the back of the Bernanke printing scam.
Factor in the sale of assets by Japanese insurance companies etc to fund the rebuild and you have an answer to where the markets are likely to go from here....Down!
Just poping out to finish the shelter,
http://www.telegraph.co.uk/finance/economics/8384387/Twin-threats-of-Ja… Catastrophe at home prompts Japan to repatriate chunks of its vast wealth, it is pulling the rug from under stock and bond markets thousands of miles away. We are discovering once again that the country is the world's top creditor by far with nearly £2 trillion of net assets overseas.
HSBC said appetite for "Uridashi" bonds of countries such as Brazil, South Africa, and Australia has "collapsed", cutting off a key source of fresh funding. The bigger effect is liquidation of global assets built up during the "carry trade", when Japan's insurers, funds and famed housewives ("Mrs Watanabe") fled zero rates to chase yield abroad. These assets include UK equities, US municipal bonds and commodity funds.
This is why an earthquake in a region covering 6pc of Japan's economy – or less than 0.5pc of global output – has set off a global rout.
Other dangers abound. CreditSights said Japan's three top banks hold $1 trillion (£62bn) of local equities. These holdings are underwater once the Topix index falls much below 800, hence the worries over the 16pc drop to 767 over the past two days.
The Bank of Japan keeps a close eye on equities and the yen. It has intervened with 21 trillion yen (£168bn) of liquidity and doubled bond purchases to 10 trillion yen to boost confidence.
Hans Redeker from BNP Paribas said the "pressure point" is the $3.9 trillion portfolio of government bonds held by the banks. The fiscal strain of the earthquake comes at time when tax revenue already covers less than half the budget, public debt is 225pc of GDP, and pension funds are becoming net sellers of bonds to meet payouts to the elderly.
Andrewj , thanks for the link .
This outcome was obvious to me while watching TV on Friday evening.
I was astonished to hear/ read /see Kiwi's suggesting this catastrophe would somehow beneift New Zealands exports
The sheer size of this Japanese crisis is likely to cause untold damage to world markets .
Again ... you have been warned the secons GFC has now all but started .
I suspect that we could relocate a significant group of the most creative Japaneese and their industries to New Zealand and within a few years, the ecconomic managment of our country would have crushed them as it has for most of our creative exporters. We need to take responsibility ourselves as a nation for the position that we are in, and not rely on some extrnal force swooping in and majically making it all better. Grow up New Zealand!
I think that somehow we have to take responsibility ourselves. No body else can do it for us. It is salutory to reflect on how Japan moved from being a pile of charred rubble with a semi feudal culture to one of the greatest ecconomic powers in not much more than 40 years. And that was with very little natural resources and after the Americans had stripped out much of what remained of their industrial capacity as compensation for the war. They will recover from this very quickly and may well emerge even stronger. It is in their nature and they have done it before. The best thing that we can do, is learn from them.
The cost of insurance and rebuilding could cause global markets to falter – and the Japanese economy to boom
http://www.guardian.co.uk/commentisfree/2011/mar/15/japan-earthquake-global-markets
Here you go guys and gals:
Strong hydro inflows and generation from new wind and geothermal sources has resulted in the highest level ever of annual renewable electricity generation, Acting Minister for Energy and Resources Hekia Parata said today.
“Over 32,000 gigawatt hours of electricity was produced from renewable sources in 2010 which is the highest level ever. This represents over 74 percent of all electricity generated in 2010 – a level we have not seen for 12 years.
“Generating more of New Zealand’s electricity from renewable sources will help us meet demand and reduce our greenhouse gas emissions,’’ says Ms Parata.
Data on the supply of major fuels, electricity generation and greenhouse gas emissions and the prices to the end of December 2010, is available in the latest edition of the New Zealand Energy Quarterly, published by the Ministry of Economic Development today.
Other highlights include:
Lowest quarterly electricity generation emissions in seven years. The high level of renewable electricity generation this quarter led to less reliance on thermal electricity generation sources and a decrease in electricity generation emissions.
Diesel demand returns to pre-recession levels. Diesel demand bounced back this quarter to a level not seen since June 2008.
Highest annual gas production in eight years. Production from the Kupe field saw total production at its highest level since 2002.
The New Zealand Energy Quarterly is one of a number of energy publications produced by the Ministry of Economic Development.
It is free to download or subscribe to by going to www.med.govt.nz/energy/nzeq. The Ministry also provides up-to-date information via its energy data web pages at www.med.govt.nz/energy/data.
"The price of used Japanese cars will rise because of the number of vehicles lost and damaged in the earthquake, motor industry insiders say".herald
They were quick ...what they don't mention is the fact that the japanese insurance industry will be quick to export the damaged brand new stuff at reduced prices and NZ will see a wave of vehicles ...brand new....with no more than dents and dings...at greatly reduced prices.
But that's not a message to tell the sheeple is it!
Without meaning to sound crass , but from an economic perspective , the earthquake & tsunami in Japan may lead to a pressure-release of the frothy commodities markets worldwide . ..... . Even the steroid monster USA economy , hooked on Dr Bernanke's pick-me-up QE needles , would benefit from a breather .
........ And to agree with Walter , I personally would be willing to assist the Japanese people , by accepting 5000 Ginza girls into Chateau Gummy Bear .... Brilliant idea , Kunzie , cheers !
And that's just it isn't it GBH...while not wanting to sound crass or be seen as opportunists...you can bet your sweet bippy...the opportunity to make any ammount of corrections will be siezed upon in the name of that unfortunate event.
thank you for saying it first ....
Was watching this passing parade. I'm not the most socially inclined person, but, GBH are you serious or is that tongue-in-cheek. Are you willing to sponsor them? Where would you put them? Are you willing to support them? Aren't there enough massage parlours in Rangiora already?
........ massage parlours in Rangiora ? ........ oh , you mean the ram paddock !
I'll happily go tongue in cheek with a Ginza girl .... what an amazing place Ginza is , to hang about ........
..... But to Christov's point , it is not so much crass , as an observation that life , human endeavour must push on ...... And hopefully the property and commodity asset bubbles will deflate a tadge after this disaster .
Hee hee heeeeeeee ! .......... Hey , wanna buy some " do-uppers " in Bexley ? ...... Sell you the whole suburb , lock-stock-and-barrel for a million bucks ! ..........
.......... OK then , how's about $ 27.50 and a slab of Tui beer ? ......
... You do drive a hard bargain , Count .
Correct Wolly, everyone in CHC thinks it should go to Dunedin if not here, money can still be spent in SI, CHC people can go down and watch it. Plenty beds in Queenstown/Wanaka, the govt can even put that vessel down there for the beds. If AKL gets all QTR ,Semis and the Final then that would be a real shame for the rest of NZ and a waste of money if only one region was to benefit.
the actuals courtesy of NHK World...BOJ supplies additional 8 trillion yen to market
The Bank of Japan has supplied additional funds to the financial market to calm concerns over falling share prices after the massive earthquakes and tsunami.
The central bank provided 5 trillion yen, an equivalent of nearly 60 billion dollars, to the short-term money market on Tuesday morning.
In the afternoon, the bank injected another 3 trillion yen, or 37 billion dollars, to the market, bringing the total to 8 trillion yen, or just below 100 billion dollars.
The central bank also plans to supply 12 trillion yen, or nearly 150 billion dollars, through such measures as buying government bonds held by financial institutions.
The Bank of Japan pumped a record of 15 trillion yen, or more than 180 billion dollars, into the financial market on Monday.
Priceless put-down for the "broken window" crowd.
"we cannot abstain from expressing our utter contempt for the many idiots who have already begun parroting the standard Keynesian nonsense that this calamity will ultimately 'prove positive for GDP', or that the rebuilding efforts can only redound to the nation's well-being to the extent that they shake it out of its ongoing 'deflation'.
As is their wont, such imbecile Cargo Culters are once again making a fetish of a coarse-grained statistic which is supposed—however imperfectly—to offer a rough measure of material progress being made in the real economy and not the converse, leading them to lose all focus on what is actually happening to people's living standards and wealth accumulation.
Japan has been stricken with a huge loss of productive capital—as well as an appalling toll of human suffering—and this cannot do anything other than to leave the nation discernibly poorer and, by extension, to curtail its ability to make people across the world better off than they otherwise would be by offering them valuable goods and services as part of that beneficent mutual enrichment which is the international division of labour, conducted under conditions of free(ish) exchange.
Contrary to popular belief, the Japanese have not, in fact, been trapped in a deflationary slough of stagnation these past two decades as both the real and nominal supply of money have risen throughout his period (with the exception of the worst months of the GFC itself), while real per capita national income has also increased modestly, especially on a PPP, or TWI-adjusted basis. Granted, the consumer price basket has trended lower at a rate of less than 1% a year, but this is something which is presumably no more than a reflection of ongoing productivity gains—ones delivered, to boot, in a country formerly marvelled at for the extreme levels of its domestic pricing.
But, even were we to subscribe to this myth of secular slump, the idea that to eradicate a large quantum of people's possessions or to evaporate a sizeable fraction of their nest-eggs would be to contribute to their prosperity is to reckon that in futilely striving to heft his rock up the hill for all eternity, Sisyphus was the most tireless 'engine of growth' for Hades at large."
FYI Christchurch loses the World Cup
http://www.stuff.co.nz/sport/rugby/rugby-world-cup/4773298/Christchurch…
Does it matter? Did it ever really matter? It's a game - something to be done after a real weeks work; to socialise with. Perhaps part of our, the Wests, problems is summed up by its encouragement of paying a fit, grown-up working age man $1m or $50m a year, depending on it's shape, to kick a piece of dead pig around a fenced off piece of grass.
agreed. Key didn't want to come out and say it because he knew doing so would come at political cost
Brownlee is the hit man and it is less damaging if he delivers it.
any sensible person knew this was the inevitable and correct decision.
I am actually growing quite tired of Key - he really is a puppet. Nice guy, but not a true inspired and courageous leader. We need better than this
MIA: you are so correct. key will tip-toe through the tulips from now until election day smiling and waving as the media-tart that he is. all the goodies will be his. all the nasties will be "some-one else". and anyone will do. that was the message when confronted with the chch feb 22 shake. does it require a fiscal response or a monetary response. the answer to that is not difficult. it required a fiscal response. so he set bollard up, loaded the gun, cocked it, lit the fuse, and handed it to bollard. and you all got the feel-good solution.
Definitely no surprise. And quite frankly, with Chch people still not having drinkable water and many without sewerage not to mention broken houses, I think the focus should be on sorting the mess out in the city, not on fixing a stadium. (I do love sports, including(watching) rugby).
So long as the tourists do come, NZ will benefit from hosting the RWC. Maybe some of the profit from the matches that should have been held in Chch could go to Chch to help with the rebuild of the city??
confirmed
Japan abandons stricken nuke plant over radiation
There are no workers currently at the plant. Radiation levels are too high. They said that they "know" reactor containor #2 is cracked. They also said that they "think" reactor #3's reactor container may also be cracked. They say that reactor #4 building is still on fire. They showed a picture of the wall that is blown out on reactor #4.
They have to put a sarcophagus of thick concrete from the air (!) over all the reactors to somehow seal it off like in Chernobyl, but this is also not an eternal solution, Chernobyl sarcophagus is showing cracks for several years already, radiation leaking out. For about the next 20.000 years.
Human Hybris has created a monster, now is payback time.
Bernard,
Peter Schiff today :
http://www.youtube.com/watch_popup?v=4vz345JnZUo&vq=medium
Relate what he says about Japan too what Bollard claims CHCH will do for our economy:
ie claiming "rebuilding" as the new economic stimulus
Japan- with incalculable outcomes for the world.
Schiff is correct like most times. What I still don’t understand, hardly anyone is talking about, what the future is for Japan in 2 months time considering the severity of the radiation problem increasing by the day. Japan has 128 million residents, that’s one of the biggest population density of all countries = 6000 people/ per km2.
How much land is available to live, work safely, to rebuild Japan ? Maybe none - this scenario applies even for other countries nearby !
http://rt.com/news/japan-tsunami-nuclear-fears/
People, the world is experiencing the biggest changes with incalculable outcomes, which currently make talks about markets almost laughable.
Günther Oettinger, Europe's energy commissioner, said: "There is talk of an apocalypse and I think the word is particularly well chosen. Practically everything is out of control. I cannot exclude the worst in the hours and days to come."
Olly – olla – New Zealand's next property boom coming.
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