David Chaston details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the Government has decided to borrow to fund the Christchurch quake reconstruction and that this will add another $10 billion to our already growing public debt, and further delay when the public accounts will be back in surplus.
A universal reconstruction tax seems to be off the table.
That debt may top 30% of GDP by 2014, although it must be said that a level like this is relatively low when you make international comparisons.
Overnight, the NZ$ sank and is currently down to 71.75 USc – actually, our dollar is basically back to where it was at the low point of yesterday morning’s rout.
Currency worries are very much on the mind of the big and powerful. Japan may be about to intervene to try and stop the yen rising, and the G7 is currently in an unscheduled huddle trying to figure out a response to contain the currency crisis.
Sudden currency changes can be inflationary, and overnight India raised its official benchmark rate by 0.25% to try and hold back inflationary pressures there. Their move, in the face of the Japan quake shock, reinforces that many public policy people are in fact more worried about rising consumer prices than the fallout from Japanese disasters.
US CPI was released overnight, and apart from a spike in food and energy prices, overall inflationary pressure there was a modest 2.1% year-on-year. The food component rose markedly, although a good part of this was reversing declines earlier in the year.
There is more evidence the US economy may be in a sustainable recovery - parcel shipments by their two biggest carriers are showing solid growth.
And in Japan, there is little progress to report. The nuclear catastrophe has not yet happened, and there are reports of water finally getting into the reactor rod areas. But local and international concern remains at high levels. The US is being especially critical of Japanese management of the crisis. We still seem to be in stages of increasingly desperate measures being taken.
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