Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news of turmoil on global financial markets as Greece teetered on the brink of a sovereign debt default that could trigger a contagion of heavy losses across Europe's banking system.
Greece's government was on the verge of collapse this morning as the Prime Minister George Papandreou offered to quit to form a unity government to agree austerity measures needed for a fresh bailout. But the offer has stalled amid violent clashes involving more than 20,000 protestors and police outside the parliament. See more here from Reuters.
Meanwhile the European Central Bank is warning of chaos on financial markets if Greece is allowed to default on its debt, which ratings agencies have said it would if its debt is extended or there are any haircuts imposed on creditors. German officials are arguing for a 'soft restructuring', but are opposed by the ECB which holds much of the debt and may itself be rendered insolvent by a default. See more here at Bloomberg.
European finance ministers failed to agree overnight on a plan for a fresh Greek bailout, delaying any solution until July. Any bailout is also dependent on Greece agreeing to 28 billion euros worth of tax hikes, spending cuts and asset sales.
Moody's put French banks BNP Paribas, Societe Generale and Credit Agricole on review for downgrade because of their exposure to the Greek crisis. See more here at Reuters.
Fears about a cascading series of defaults across Europe's sovereign debt and banking system drove European bond yields sharply higher and slammed the euro and pound. The US dollar and gold rallied as investors sought safe haven in US Treasuries.
The NYMEX oil futures price fell as much as 5% to US$95 a barrel on fears about the global economic outlook and the S&P 500 fell as much as 2%. See more here from Bloomberg on the global stocks rout and the fall in the oil price and the rally on US Treasury markets and the rise in the gold price.
The New Zealand dollar fell sharply to around 80.4 USc in early trade as global investors exited currencies and commodity trades seen as 'risky'. This is described as the 'risk off' trade.
More soon with video.
No chart with that title exists.
67 Comments
.......and it's a beautiful day....
Europe turning to custard, and the States
China slowing, and Aus
these are nowhere near Black Swan events - I think most who follow this website have seen this coming and have been calling it
yet the economists and property bull dicks somehow turn a blind eye to it - "we are different"
and because we are different and our economy is going to strengthen significantly in the face of these events house prices are going to "edge higher"
yeah right!!!!
No way a black swan....too many ppl saying its probable and not jsut this website....I guess I need to re-read the black swan book but for me the argument is a black swan is an almost un-linked event and probably small event that causes huge impacts that simply could not have been predicted....so you design systems that are resilient.....which we are not as its not "efficient" I expect we will learn from this...
Most economists are neo-classical/moneterist....their models are flawed, so frankly they and Treasury are worthless. Yet we have Steve Keen and Minsky showing we can actually model it quite well...and who predicted this....
Its looking really bad, the Q is will the banking system freeze up when Greece defaults...and then how long for...ppl have to eat.....and we have a just in time system.....
regards
Anyone out there still say the mountains of debt and idiotic govt..the thieving behaviour by the big banks and the endless media garbage about recovery and growth...all of it ...you wanna tell us we can escape the consequences of such bloody awful behaviour by so many for so long....!
No I thought not....now the same ones who promised recovery and said nothing was wrong...now they are the ones yelling "run run".....which tells you heaps about them doesn't it.
Europe is a stinking pile of rotting debt that promises to trap the whole sorry political farce in a very very long recession...kiss it goodbye and the euro as well.
The USA is no better...only there the political elite has greater control over what the masses get to be told...the dumb can be kept dumb...and the rorts can carry on a while longer...enough time for the wealthy to slip the net..time to shift the loot beyond the grasping fingers of the IRS and the thieving govt..
Forget the UK...it is in so deep it wil be 50 years before they see light again.
Japan is stuffed for all money.
The Beijing geriatric bosses have all but lost control and the inflation is away and gone with the riots and unrest building apace.
But hey...we are different...we are going to become wealthy on the commodity price explosion that will go on forever...the farmers will spend us into paradise...yeah sure
All of the above and more, yep were pretty stuffed, those elite type people are really so far removed from reality.
I feel for the people in Christchurch, that are suffering in the suburbs while police and other services are looking after shops owned by the elite. It should be about the people not just the CBD
I saw three black swans on the way to work today by Te Papa - we're doomed!
Cut back on the Meths....
regards
Saw a black cat last night, shot it.
Greece
http://www.telegraph.co.uk/finance/economics/gilts/8578101/Greek-crisis…
CH Smith on China http://www.oftwominds.com/blog.html On the telly last night JKey was at the field days and said '20 years of good times ahead of us'.Andrew J
I saw that too and was stunned. If he was selling some sort of stock or security he would have been locked up by the FMA for misrepresenting the future.
Key was saying the commodity price boom could last a decade or two. Just nuts. Even MAF and Treasury don't believe that. Let alone the RBNZ.
cheers
Bernard
Bernard, he must think we are all stupid. Anyone who thinks we are not getting a CCT is going to be disappointed after the election, which ever way it goes. Ive asked a couple of Mp's about the growth figures but they didn't want to comment, perhaps you could work on that. I suspect that National is in 'Panic mode' but thats no excuse for poor leadership. Hawkes Bay is a very difficult place for business at the moment and no sign of a let up, more job losess on the way daily.
Hang on a mo' , there , big guy ....... you're saying that JK is nuts because of his rosy commodities forecast for the next decade or two ......
....... which implies that you can see more accurately than him , into the future .... and what you've seen there is gloomy , right ?
Got a really shiny crystal ball in the office of yours , Bernard ....... or are you just in advisment from Ken Ring ?
he's deluded.....20 years of Depression....maybe good times for his banking mates he meant.....decades of surfdom for us.
regards
Oh, China has a few problems too.
http://www.theaustralian.com.au/news/world/beijing-battling-protest-fir…
Mean while those in power make away like a 'robbers dog' http://thehill.com/blogs/on-the-money/801-economy/166599-pelosis-net-wo…- and the good old a-earth http://theautomaticearth.blogspot.com/I saw Gerry on tv, in a new sporting winter jacket with a CERA logo on the front...see, it's all about priorities......hahahahaha.............Matching pants Gerry...you gotta get the pants.....
I saw that CERA branded jacket as well - priorities is right .... :(
I'd like to know whether it was made in New Zealand.
Size may have been a problem Wolly.
Inflation is up in the States
http://www.telegraph.co.uk/finance/economics/8578052/US-inflation-highe…
The RBA , interesting view on Aussie
http://www.theaustralian.com.au/business/markets/overall-economy-in-pre…
Yes I hadn't allowed for that...poor sod must have an awful time finding XXXL....which means the jacket had the opportunity cost of 2 small sized ones...or several dozen tiny tot ones....Gerry you bugger...you ...you...
Fiar go! I think they must have hurriedly got one made, and take turns with it on camera ...it's a 'one size fits all'...as Bob Parker had it on the day before on TV3, and looked swamped in it!
They should employ more staff to hold the surplus jacket at the rear when the skinny ones are in it....
Wylie Coyote ran off the cliff in 2007....he just hasn't had the courage to look down yet.
"US births apparently have declined for a third year in a row, probably because of the weak economy." herald
Arnie did his bit.......!
There isn't a single country in the world that has a higher population growth rate now , than it did in 1960 .
..... Except meebee those places that Tiger Woods visited , to play a round , and golf .
Hang on a minute. There was a report that came out a little while ago that showed the people in muslim countries were breeding like rabbits. All developed nations are going backwards for population and can never catch up again because of the required ratio but the muslim nations were out breeding everyone else by a huge margin and would be dominant in a few years.
Show us that report !
check out Saudi Arabia.
regards
..... I'm not hunting all over Saudi Arabia for some simpleton's report ........ it's a bloody big country ........
Its known as Google gummy.....get with it mate....
regards
Snopes have an entry debunking the whole "Z0MG te mus1imz r gunna out breed us!!!11" myth.
There is this rather interesting and possibly useful entry on Wikipedia.
Beware people bearing percentages.
Maybe they don't have higher growth rates, but they've got bigger numbers happening, YOY.
There's lies, damn lies, and percentages.
From the mouth of JKey
Prime Minister John Key opened the Fieldays and spent most of the day at Mystery Creek. He told farmers how the outlook looked good for them. Mr Key said it could get better yet as in two weeks he travels to India to try to secure a free trade agreement.
http://www.stuff.co.nz/business/farming/5150085/Farmers-all-smiles-at-F…
well I do genuinely believe farmers are quite well placed for the coming years - Asia is going to keep needing our food
My concern lies with the balance of the NZ economy that is only indirectly tied to the health of farming
So we might have decay of the urban economy and reasonable prosperity in the rural economy
Look.... nothing to worry about.... I feel safe in the knowledge that Treasury has factored all this stuff into their rosy growth forecasts..!!!
Those econometric models...pre GFC... are still humming along blissfully.
Euro debt issues... China Bubbles and inflation.... USA deficits and QEii ending.... The model says... all with orderly predictable outcomes ... which lead to neat medium term forecasts...
SO.... NZ is safe to keep borrowing... knowing that growing GDP will .... "bring the boat in with the tide."
HA..!
Wally is quite right, above. The debt situation is irretrieveable. Kicking the can down the road, doesn't change that very much, perhaps more sovreign and less private, but that's all.
If that were the only problem, even if it were the driver, it could be solved by sovreign defaults / forgiveness.
That's a bit like rushing across the deck to save a deckchair sliding into the sea. Still leaves you with the sloping deck, and the little problem of the sinking. Any attempt to re-set the deckchair is doomed to repeat the failure.
When will they eeeeeeeeever learn.
This is a national catastrophe and need to be fixed – urgently.
The stories coming out of Christchurch are heartbreaking. How many families are financially broken, have nowhere to go, are without a job - and break under stress and misery – 500 - 5’000 – 50’000. This is a national catastrophe ?
From where and when does the money come from to make sure those people can build their future ?
Obviously the government is too slow to introduce an instant levy now.
The government should demand payment from our society – urgently.
Level payments depending on incomes – do it now.
E.g.
$ 200.- from $25’000 – $50’000.- income earners.
$ 500.- from $50’001 – $80’000.- income earners.
$ 1’000.- from $80’001 – $110’000.- income earners.
Etc.
More ideas:
Why not introduce transparency about donations ? Did our celebrities, sports stars, politicians, etc. donate money – how much ? Nobody ask – nobody knows !! Why not introduce a national donation competition for the rich ? Where are local governments to provide cheap land to rebuild businesses/ houses ? Why does the media not run public weekly donation competitions for businesses/ individuals ? Why not publish donation lists in the NZmedia ?
NZ isn’t that kind of society - isn't ? : http://www.youtube.com/v/acLW1vFO-2Q?version=3%22%3E%3Cparam
Hugh P had a revolutionary idea.... Do things in such a way that house and land packages can be done for a reasonable price... ie. remove the monopolistic practices of council that result in the constriction of the affordable supply of houses.... eg. ( Councils using the process as a primary maens of generating income, as well as the ideologies of town planning )
It is ironic that affordable housing could well be the "magnet" that attract people to CHCH in the future...??????
Like wise for commercial/industrial....
Commonsense really.... BUT with vested interests would probably be very difficult to do.
While it may on the face of it be a good idea, it won't happen under this financial system.
I have seen it demonstated through links posted on this site that a 6% drop in property prices would bankrupt the banks. So any efforts to introduce affordable land will automatically cause prices across the board to drop, and banks to have to take a hit on their loan to value ratios on those other properties that are 'across the board'.
Perversly the only thing to save CHCH will be a failure of the financial system.
RBNZ stress tests on our main banks in 2004 and recently in 2011 show that they are apparently able to withstand a 30% fall in property prices.
Okay, I wasn't aware of that.
Given our banks exposure to residential property, would it be fair to say that a default by Greece will have little immediate impact on them in the short term? We would be a year or two away from failures here, as any losses don't occur until the asset prices are put on paper.
I have to say I still think 30% is quite achievable:)
The problem is such a fall wouldn't happy independently of other things. It would come as a package with a shutdown on global financial markets and a slump in Australia.
The key vulnerability for New Zealand is that our banks (still) have to roll over around NZ$100 billion worth of foreign debt every 90 days on these global financial markets...
cheers
Bernard
Don't forget that you have to have willing sellers of vacant land at that level of "affordable" land price in order to make that ideal work.
Beware the Trojan horses.
Hugh Pavletich is a property "developer".
What Hugh Pavletich wants is the end to rules and restrictions on property development, at least for property developers, and certainly for him, so that the developers can break out the 'dozers and bus loads of dodgy cowboy backyard builders.
Property developers don't lose sleep at the thought of hardworking, underpaid Kiwis unable to afford a home. Property developers lose sleep at the thought of some property developer other than themselves hitting the slumlord bonanza.
Think USA-style "Housing Projects".
It's not about helping struggling Kiwis into a home...it's about property developers rorting and scamming and gouging their way into an orgasmic get-rich-quick property development Utopia, where there are no Councils, no inspectors or rules and regulations, and no comebacks when the poor suckers silly enough to buy into (and living in) those developments start topping themselves to end the horror.
The thing that always makes me chuckle is knowing that the people who most stridently demand an end to "Nanny-state Council monopolies" -- so that they can erect God-awful super el-cheapo apartment blocks on every beach and on every corner -- would be the first people to shriek about the unfairness of it all if another developer bunged up an even bigger and sh*ttier block three feet from their penthouse apartment windows.
Anon good nurse..... here is another perspective...
An Austrailian banker made a really good point... He said that usually if the price of something doubles ... the supply generally increases.. He observed that there is a supply "constraint" in housing.. ( this is taking into acct that housing is in a fixed location and can't shift anywhere to meet demand ).
His conclusion is that theconstraint in the supply side of the mkt is Councils and Local bodies, and the monopolistic hold they have on land use and the whole building consent process.
Commonsense really...
I don't think too many people are advocating the picture you are painting.
the law of supply and demand is pretty fundamental....
I really don't believe the next generation should have to enslave themselves with lifetime mortgages that are NEVER paid off.... just to own their own home. ( I don't know Hugh, but from what I've read... that is where I think he is coming from )
cheers Roelof
Roelof - did ye see my post the other day?
Port Hacking to the South, right? Kurnell, all that. Kur-rin-gai Chase to the North, and Barrenjoey, all that. Penrith go overrun 30 years ago - I helped build one of the first houses up the hill, back of St Marys.
You been out Macquarie Fields way ? Where's left?
It's physics, logistics and geography, is the constraint.
Limits.
Same with ports - no more natural indents being made, all adjacent flat land taken - so they pile containers ever-higher, as they have done for 100 years with skyscrapers, re scarcity of city space.
We teach elementary geometry in schools - I learned enough to write the above, in Form 2.
So I presume Hugh left in Form 1.
No.. I didn't see your post... I live in Auckland... Average price of houses is quite high , which implies that there is an underlying demand... YET... the building sector is in depression... Why can't they build houses that they can sell..?????
You talk about logistics... Look at history and how cities evolved.. Today with modern logistics and communications you can almost run a business from anywhere...
If I wanted to build a factory in the countryside, say on a farm .... how difficult and expensive would it be for me to get the green light from council...???/
The point I'm making is that councils have a throathold on land use and how a city evolves....AND thru that monopoly position they extract income.
How difficult would it be for a group of people to buy some land and build a "village" from scratch..???? My guess is that it would be impossible.
This has got nothing to do with form 1 education... scarcity....or geometry.
(I see where u are coming from... and accept that there are limits to growth, and that there has been a paradigm shift in the supply/demand dynamic of commodities and primary products.... )
Roelof
I used to lambast our local Council, in similar manner. It was great fun, ho ho ho.
Then I realised that you either have to 'put up', or 'shut up'.
So I stood.
My platform was to annihilate the local Building Inspector - very popular - I landslided in, my competitors lost their deposits.
Then I learned what the obligations of a Local Authority are - both the Govt-given ones, and the social-obligation ones. Then there's the moral ones - like 'you shouldn't allow development in vulnerable (liquefaction?) areas. It ended up with that BI and me, sitting down and coming up with a policy on alternative sewage-disposal options.
In other words, I grew up. Matured. Learned.
To hear, thirty years later, others bleating as I did, well, let's just say I gotta lesser tolerance....
Think it through - limits (physical and/or resource supply) mean lack of choice. Civic representation means confronting that, and inevitably will result in that lack of choices being reflected somehow - usually through planning restrictions.
Sometimes lobbyists convince Councils to go short (I'd love to know who pushed for the Chch Eastern Suburbs) but they have to be (should be) resisted by science (and we've just seen why).
I regret my immaturity back when I was slinging the mud - if I'd bothered to find out what I know from the experience, I wouldn't have.
So I've moved on from Form 1.
PDK... l agree with much of what u say... When I use the term "local body" or "council"... it is a somewhat generic term that describes the whole public/beaurocratic sector.
I'm not lambasting... I come to this site to share ideas and learn from others.... nothing to do with growing up... maturing... or form 1.
To articulate my philosophy.... I would say that there should be a regulatory framework that is flexible enough to allow innovation , progress and change.
Limits don't just mean lack of choice... Limits are what stimulate innovation and change.... BUT.. there needs to be an environment that nurtures and is open to that.
From my own experience , and the study of history... the beaurocratic mind is not aligned to that....
As as far as civic representation confronting limits.... I shudder to think of the "innovative" solutions they might come up with.
I'm not saying that I have the answers...BUT that innovation can come from the most unlikely places... and "biodiversity" is the best environment for that to happen. ( this is the antithisis of centralized planning )
Get back to what I said about creating a village somewhere in the countryside.... How hard do u think it would be to get approval for it...??? Think of all the wonderful possiblities one could bring to creating a "new community "....???
Cheers Roelof
"commonsense", no, in fact when ever I here that as a justification for someone's position I kinow it almost certianly isnt. He's a failed economist, he takes no account of the physical limits of production.....engineering, energy, materials etc....
Notice as per Hugh he is a vested interest, he wants to take cheap credit and turn it into a mortgage and and make a tidy profit....of course he wants more houses built....and if the over-supply causes a demand collapse and hence a price collapse, he doesnt really care as the owner/vendor is the one who is left responsible, hence I think I could love "jingle mail"
In terms of enslaved, when the in-evitable house price collapse happens what happens to the owner? they are left with worse than nothing...debt with no way to re-pay it.
Hugh, Hugh just wants to kick the can down the road a bit again....same with Olly.....its totally self-centred, the b*llocks about wanting ppl to have "affordable" housing is just that b*llocks.....
regards
What? are you living in la la land? how the hell do you expect ppl to just cough up $200/$500/$1000? you cant do an instant levy and you dont need ot....I mean just take it out of pay one week? spot the automatic payments failures....or maybe no eating....just pass the misery across all of NZ? you are bonkers. Have you considered the effects on ppls credit ratings from no fault of their own as the electricity bill isnt paid? or the fact that the power company is expecting payment and finds it gets a huge default numbers? so the on flow effects to businesses?
Sure take a levy over several years, that is manageable.....better raise taxes 1 or 2%......use the money for ChCh for a set period and then put it into the EQC as Im pretty sure we will become un-insurable shortly so the Govn will have to fund it.
regards
Walter, the problem is what people do with the payout. If my house was ruined and I got 100k and more due in from my private insurer then I would be on the first plane out of there. Why would you rebuid in CHCH if you had other options? Propably not what the government wants and probably not going to be an option,payments will be required to be spent in CHCH, lets wait and see.
It was to be a swap felt around the world - a plan privately discussed by the world's largest oil exporter and the globe's biggest consumer to take the heat out of $120-plus oil prices.
http://uk.reuters.com/article/2011/06/15/uk-saudi-us-crude-idUKTRE75E2J…http://www.marketoracle.co.uk/Article28696.html - Peak Oil - The Long & The Short.
Writer confirms peak oil, charts show demand higher than supply by 4th quarter 2011.
Unfortunately he finishes his article with this comment - " The long and the short of it is that sunshine, corn and wind will not keep Americans from paying $5 per gallon or more for gas in the near future. The financial implications are that oil and energy investments will produce solid returns over the coming years."
http://www.marketoracle.co.uk/Article28622.html - Nymex Crooks (alleged) Crude Oil Futures Fake Out Scam.
Some believe that up to 60% of oil price is pure speculation.
Im sure there is a % of speculation its how the market is setup ie if there is some limit to push against, getting in and doing so can make you money....I work on the high and low dips, the difference is the specualtors part...they run in and out depending on well, not much....if the Greek PM farts they run a mile.....if he smiles they come back.....
The fundimentals indicate that 60% is pretty much un-believable, we have too much demand and not enough supply....
"Congress has a little trouble with the concept of strategic." They also have difficulty dealing with a reality that has been staring them in the face for decades. Politicians will always disregard prudent, long-term planning for vote-generating talk and gestures."
yep sums them up.....
"The long and the short of it is that sunshine, corn and wind will not keep Americans from paying $5 per gallon or more for gas in the near future. The financial implications are that oil and energy investments will produce solid returns over the coming years" Assumes we dont have a depression....but yes before the global econmy goes belly up $5 is quite probable....$2.50 or $3NZ here, quite probable....
regards
The banks are up to it again - standing in the queue at Westpac before and noticed a 5% deposit, 5 free QV's and 5 month pre approval on new mortgages. Lets's borrow again, let's push up house prices and enslave ourselves to our foreign masters.
They have borrowed money and its hot and needs to be lent out....doing so see's their bonuses multiply.....but it looks like enough ppl have enough sense to stay away....
regards
Would it be an issue if people borrowed sensibly though? It's practically a given that if you want to own your own home you have to borrow.
If people were financially literate, borrowed what they could afford rather than what the bank says they can afford, set a maximum purchase price based on lower borrowings and actually researched true values rather than current inflated "market" values there's no reason why values should be pushed up (ignoring supply side issues of course).
they are getting desperate Ged
"About $500,000 of the $10million budget for hosting VIPs at the Rugby World Cup will go on transport, including limousines for foreign leaders and royalty. The May Budget allocated $9.9million to fund the hosting of guests of the Government." herald
Sod that..make the buggers take the bus or walk...and put them up in the empty high rise apartment shoeboxes.
There may be no hosting of anything ( RWC!) if this ash cloud hangs around. let alone gets worse, for the months they are talking about!
Oh yeah....bugger. Hey shouldn't the country where the ash is spewing from be paying for the losses...!
FYI Consumer Confidence up.
The Westpac McDermott Miller Consumer Confidence Index rose from 97.9 to 112 in the June quarter, fully unwinding March’s earthquake-related decline. Confidence is now higher than in December, though still well below last June’s 119.3 (before confidence was hit by the economic slowdown and the first, September Christchurch earthquake).
amongst many senior professionals I know in architecture, engineering and construction there are a lot of rather worried people in Akld right now
Several people are calling Auckland "dead"
but there are still a few doing alright on the gravy train
someone told me about one person who is working for CERA, return flight Auck-Chch EVERYDAY because he doesn't want to be apart from his family!
Few consultants and lawyers on the leaky building gravy train too
Government is the only game in town. Not a good look.
FYI Manufacturing stronger
The month of May saw the manufacturing sector continue its march towards stronger expansion, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).
BusinessNZ's executive director for manufacturing Catherine Beard said that the second consecutive month of improvement in activity is consistent with other positive indicators recently seen within the sector.
BNZ economists say the May PMI was further evidence of the economic recovery gathering momentum. "Within the rather diverse fortunes across the manufacturing sector at present, there are some rather strong pulses coming through. Surging commodity income is starting to filter through the economy, and appears to be one factor behind a lift in manufacturers’ new orders. There are also encouraging signs that domestic consumer demand is improving, which may amplify the inventory cycle and the economic recovery we foresee."
..great to hear. Hopefully minister Joyce (government) will support the trend and make sure billions of taxpayers money are spend on goods manufactured right here in NZ and not overseas.
Bernard
Do you see these as signals of a genuine turnaround in our economic fortunes, or of limited meaningfulness?
MIA
BNZ, In other words, grasping at straws.......buy a house!!!!!......buy a house!!!! its a great time to buy!!!!! get in before the rush!!!!! buy!!!! buy!!!
regards
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