Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the Dominion Post is reporting from an unnamed source that AMI Insurance has run out of capital and has come to an arrangement with the government to continue operating.
A spokesman for Bill English's office told Interest.co.nz the Treasury and the Reserve Bank of New Zealand was watching the situation closely, but would not confirm that a bailout was immiment. See Alex Tarrant's article here.
Regular readers will know Interest .co.nz have been following the AMI story closely.
Here's Amanda Morrall's March 11 article questioning AMI's capital strength
And here's our March 24 article reporting AM Best's credit rating downgrade
See all our AMI coverage here.
Meanwhile, Portugal has formally asked its partners in the eurozone for a bailout, potentially worsening the European Sovereign Debt crisis. See more here at Bloomberg.
Further turmoil in the financial markets makes it more difficult and expensive for the New Zealand government and its banks to roll over and raise debt on international credit markets.
Meanwhile, the gold price hit a record high of US$1,463/ounce overnight on fresh talk of recovery and inflation pressures. See more here at Bloomberg.
The New Zealand dollar rose to a pre-earthquake high of 78 USc as inflows from government borrowing and quake reinsurance threaten to hit NZ$35 billion over the next year.
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24 Comments
One needs to wonder when interest rates will increase here as borrowing starts to get harder. The under 6% rates we are enjoying may go sooner than we think. Glad I have a small mortgage now, but my co worker has a $315000 mortgage with another baby on the way...........
I am already paying for home insurance through State. Why must I also pay for AMI insurance holders? It makes no sense. If the company was not properly capitalized, and this was reflected in the credit worthiness of the company, and people in Canterbury ( folks who had better reason than most to ensure they purchased creditable home insurance) still bought it anyway, well too damn bad.
Caveat Emptor. If AMI goes bust and strands a bunch of people then let it serve to "encourage les outres". Why should other insurance firms who were due diligent continue to be so? Where is the moral hazard?
I cant see how the premuims will remain low.....they have to go up to get cover via re-insurers...if they can get cover....if they have no capital and cant get re-insurance they have to wind up and go out of business...they cant trade.
In this situation you have to move insurance companies which will cost more....10% would seem probable.
regards
Great decision by Kate Wilkinson to end the protected status of Canada geese. There are approx 32,000 of these in the South Island (according to fish and game). They live and crap in waterways. These 32,000 geese have the same effect on the waterways as 1200 dairy cows crapping in them. Farmers have been wanting to cull them for years. 10 out of 10 for this decision Kate!
Casual Observer - learn some maths quickly, or you'll end up being a Finance Minister or summat.
Last figures I have for the South Island dairy herd, is 2.1 million, and those are nearly a year old.
Lets take 2 mill.
2,000,000 divided by 1200 = 0.06%.
Excellent, that'll make a difference.
You disingenuous, delusional, or a National voter? They're not mutually exclusive, of course...
Finance Minister? Nah, the pay is lousy. ;-) We aren't talking about the annihilation pdk, just the right to shoot them at any timeof the year.
This is a good decision -it is commonsense winning out over emotion. Canada geese are more concentrated in some areas than others. In those areas of heavy concentration it has the potential to make a difference to both the environment and farmers. Small differences all add up PDK.
Ah, fresh goose could be on the menu for Christmas now. :-)
Just a couple of snippets I have got second hand that would be worth following up on.
Bloomberg reports the New York Fed sold $1.3 billion of its Maiden Lane II toxic debt holdings. Offered $1.5 bln in bonds tied to AIG rescue. Pushing the toxic debt that threatened US financial market stability just a few years ago, that's a shift in Fed approach in my book.
China will start to increase gas, diesel, jet fuel prices today due to higher energy prices.
Bernard some questions for you to ask
My grape rep told me today that the local contractor ordered 5000 liters of diesel but was only given 2000 as the oil company informed him they had to ration supply ! I asked my WPGG rep he said he is advising his clients to stock up on diesel today.
Then a hail storm went through Hastings on Tuesday the hail was so heavy that it was still on the ground on Wednesday morning. The remaining apple crop has been written off. The grape harvest has been wrecked by the weather its a mess out there.
Cheers Andrew
Who here is onto councils that dabbled in property investment?
http://www.stuff.co.nz/auckland/local-news/rodney-times/4848395/Site-gone-for-a-song
Gosh you don't think the scientists...they wouldn't would they....I mean funds have to run out sometime!
"Data from a major US atom smasher lab may have revealed a new elementary particle, or potentially a new force of nature, one of the physicists involved in the discovery said yesterday.
The US machine began its work in the mid 1980s, and is scheduled for shutdown later this year when its funding runs dry."...herald
Hey Bill.....you're good for another billion or ten ...oh... no votes to be had there!
An item for those who want to see the blow coming!
http://www.marketoracle.co.uk/Article27402.html
The rest should keep their heads in the sand.
So it begins....
"The European Central Bank is set to raise interest rates for the first time since July 2008 as concern over inflation trumps fears of collateral damage to weaker eurozone economies."
Notice how the media reporting on the Nuclear melt down has been "put out" almost...first goal in any crisis of this nature is to control the flow of information...anyway I was wondering how the "experts" intended to inform the fishy wishys not to enter the contaminated seawater and not to eat little fishy wishys if they had any of that ploootonium in them....!...and that if they did would they please not go thwimming off across the Pacific...as they normally do.
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