Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the Canterbury Earthquake Recovery Authority (CERA) has been warned there is a 23% chance of a 7.0 earthquake hitting Christchurch again in the next year.
See more here in Paul Gorman's story in The Press.
The report raises fresh fears about how quickly the earthquake rebuild could start, given much of New Zealand's economic recovery is dependent on an early start to the rebuild.
Meanwhile, the New Zealand dollar is this morning slightly off its record post-float high of 82.18 USc set yesterday after Stats NZ reported a record trade surplus for April. See Alex Tarrant's article here on the trade surplus.
Prime Minister John Key saw some positives in the currency's rise and argued it was largely due to US$ weakness. See Alex Tarrant's report on Key's comments at yesterday's post cabinet news conference.
The New Zealand dollar weakened after more bad news in the Greek debt crisis. European Central Bank board member Bini Smaghi warned that a Greek debt restructure would be a 'death penalty' for Greece and there was fresh talk of a second Irish bailout. See more here from Ekatherimini on Smaghi's comments.
See more here from Reuters on the Irish bailout talk.
There is even discussion about the European Union getting directly involved in Greece's tax collection system to force it to meet its fiscal targets. See more here at CNN.
An IMF report is due later this week on whether Greece has met its fiscal targets and whether a fresh tranche of funding will be granted next month.
Meanwhile, across the Tasman figures on company profits have confirmed expectations Australia is likely to report a temporary contraction in first quarter GDP tomorrow because of the Queensland floods, which shut many coal mines.
Australia, which only experienced one quarter of contraction during the Global Financial Crisis and therefore never experienced a formal recession, is expected to a report a 0.4% fall in GDP in the March quarter. See more here at SMH.com.au.
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30 Comments
Bernard, it sounds like someone is hoping for another quake so they can continue to make excuses as to why they have seriously stuffed up the rebuilding and recovery.
The reality is that most conventional buildings can easily be constructed to suffer no more than superficial damage in a magnitude 7+ quake. Land is not quite so easy to fix however.
The real question has to be why after September were houses allowed to be built in locations which were susceptible to major land damage (but no damage occured in Sept) such as the Brooker Ave subdivision in Burwood with no additional requirements for foundations?
We also learned that the bracing code is insufficient in February and that sheet braces are considerable more effective than diagonal let-in metal braces, yet nothing has occured to change the rules. We also found that current rules for 3+ storey timber framed structures do not provide anywhere near enough bracing on the lower floors, yet rules haven't changed. We also found that concrete block structures even reinforced with tie beams and columns were almost as inadequate as unreinforced masonry.
It all seems to be business as usual, without any sensible decisions being made.
If NZ is relying on a ChCh rebuild to restore growth, then the recession will be longer and harder than anyone imagines.
Simple decisions such as whether it is simple to just abandon some suburbs have not even been taken. It's been 9 months since Bexley was ravaged yet homeowners are still in the dark as to what will happen. The reality is that in low land value areas such as Bexley that there is no way roads AND land could be fixed for less than the current land value in the area. It would probably be cheaper for EQC and insurers to offer property owners 10% above market value than even think about rebuilding.
So why not just get on with it. Start discussions with property and land owners, and see what outcome they would want.
Instead we are having namby pamby discussions between "business leaders" about blue-sky ideas that will never happen to try to make it better for their in some cases hardly affected businesses.
It's all a hopeless go nowhere situation where money is being wasted by Govt and insurers on poorly considered decisions.
Consider the $50m spent on temporary relocatable houses. Firstly why spend millions to establish these houses on parks when thousands of habitable homes lie vacant and thousands more houses with minor EQC repairs also lie vacant. It is all just money being burned to establish a pretense of action being taken.
Unless something changes drastically and soon ChCh is over and out.
It's a shame that the only hopes of officials is for them to wait (and hope?) for another M7 event to make it look like they have done the right thing by sitting about..
Well, on that account, if there was any expectation that there might have been large aftershocks close to ChCh (which there was since Boxing Day when an M4.8 did so much damage in the CBD) why were buildings that had suffered considerable damage allowed to be opened to the public with out any repair or strengthening work being undertaken?
I was appalled to hear that 4 people died on the corner of Mollett and Colombo Sts. The two building both lost 2 storey side walls in September (on the Mollett side - a 5m wide service lane). The Colombo facades were intact, no major work to even stabilise the facades had been done last time I saw them yet the footpath below was open without even the verandahs being propped up last time I saw it.
Even today there are accidents waiting to happen on buildings that are in "safe" zones, and managed to have no major damage so far. These are buildings of the same construction as those that failed and without even the most temporary of strengthening work being done.
It's all so appalling that it's hardly worth thinking about. And I haven't even started on the insurance debacles....
Have you got the report that says there is a 77% chance of a m7 eq event NOT occurring?
Have you got the report that says that NZ - is - an eq zone, no matter how high or low the probability of eq events predicted by whatever means, prepare and build accordingly, as others have elsewhere?
It's not the end of the world, yet.
(C'mon Gummy, chop, chop.)
Mark Mobius ( Exec Chairman of Templeton Asset Mgts. emerging markets fund ) , at an investors meeting in Tokyo , says that another financial crisis is inevitable . He cites the derivatives market as still largely unregulated , and now nominally 10 times greater than the total of global GDP .
The causes of the previous crisis have not been addressed . The " too-big-to-fail " banks are bigger than ever .
..... but , and here is the good bit ( sorry Bernard , but Gummy isn't walking along the dark-side with you Gloomsterisers ) ..... Mobius also notes that with every crisis comes great opportunity . When markets are crashing , that's when we're going to be able to invest , and to do a good job .....(... Yipppeeeee , makes it all worthwhile ! ... )
Exactly, GBH! Buy when the market is crashing, whatever it is....As an aside the chappies at SocGen, Paris wrote a scenario to their subscribers last week with their Alert Edwards calling for the S&P to fall from 1300 to ..400. I can't recall what the catalyst is going to be ( one reads so much!) but it was probably along the lines of 'nothing has been fixed".
Nicholas, I think that the catalyst is already there: Nobody except for the FED has been buying the bonds that finance the USA's growth so actually nobody is financing the USA... the bicycle is broken and eventually it is bound to stop. When that happens look for shelter because the Chinese have been shopping around the world with those trillions in US debt that bothered them so much.
Indeed GBH.....Im not aware BH or even I say there is no opportunity....I posted yesterday on just that (James Grant)....hence you need to be liquid and that means cash...and some of the ppl ive posted about / listen to are saying this and have been for a while.....even with Peak oil this applies... ie a companies today on the stock exchange(s) is clearly over-valued even before you allow for peak oil....so once the collapse in prices start if you own their shares your toast, if you have cash you buy in very cheaply and live well.
If you look at the Great Depression those with cash could and did buy other businesses at firesale prices and thrived....its just a Q of relative.....if ppls income drops 50% but you get the business at 10% you will do very well.
regards
Fascinating deconstruction of the problems now facing the UK economy (and for that matter all economies which have followed the debt fuelled growth mania). Excellent read:
http://www.tullettprebon.com/announcements/strategyinsights/notes/2010/…
All of them are saying that....and the UK's growth has just been downgraded....so it isnt a happening thing...
All thats happening to NZ really is we are not so bad and are lagged in time, so our pollies are saying to us what the other countries pollies said to their voters 1 to 2 years ago....and it isnt working.....so will the mugs who are our voters fall for it? yes I bet they will.....mostly because there is no alternative.
regards
Robert M
As if by magic, here's the detailed story from Amanda last week. You're not far wrong.
cheers
Bernard
"A Government-ordered review has found a council business case overstated the potential economic benefits of an Auckland CBD rail link by nearly $3 billion." herald
Noooooooooooo I just can't believe it....some bugger made up the numbers....that sort of thing just doesn't happen in NZ....we're used to honest local and central govt....how did they spot it so quickly.....oh....old dogs and new tricks!
yep Key has plenty of ambition for himself but little for the country, it seems
today's front page of the herald sums him all up - he just wants to be "Mr Popular" pure and simple!
and the Nats are happy with that because the public have fallen for it and will vote him in again!!!!!
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