Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the New Zealand dollar is up near record highs in morning trade as global financial markets rally on relief the Greek Financial crisis has stabilised for now.
The New Zealand dollar hit a record high 83.18 USc yesterday around 3pm and was around 82.8 US in morning trade.
The New Zealand dollar is seen as a commodity-linked currency that often strengthens when investors are keen to take 'riskier' bets on more volatile assets. This is described as the 'risk on' trade and the New Zealand, Australian and Canadian dollars often benefit when the risk trade is 'on' because they are linked to volatile commodity prices.
Markets rallied after the Greek parliament voted again overnight in favour of an austerity plan that ensures another tranche of the current bailout plan is paid, preventing a Greek default for a few months at least. See more on the second Greek vote here at BBC.
See more here at Bloomberg on the relief rally on global markets.
Also, German banks have agreed to a debt rollover plan that has also been agreed by French banks. See more here at NYTimes.
But the crisis is far from over. European finance ministers will meet on Sunday to discuss a second bailout plan and ratings agencies have to agree that the bank debt rollover plans do not constitute a default.
Meanwhile, today is July 1. This is the first day of the new financial regulatory regime policed by the Financial Markets Authority.
Also, new tougher capital rules kick in for rural lending that are estimated by the Reserve Bank to possibly add around 16 basis points to borrowing costs for farmers.
And today is the first day for many reinsurance programmes. AMI managed to get its reinsurance in place less than 12 hours before its old one expired, but Port of Lyttelton will struggle to get new catastrophe cover before its current cover expires at 4pm today. See more here at Stuff on the Port of Lyttelton.
Also, today is the first day without Quantitative Easing in the United States. The Federal Reserve's second programme of money printing to buy long term bonds expired yesterday. See more here at Reuters on the end of QEII.
In late breaking news, US Treasury Secretary Tim Geithner has signalled he will step down after Congress increases its debt limit. See more here at Bloomberg.
(Updated with links and Geithner news.)
No chart with that title exists.
25 Comments
What will replace Bernanke's printing...who will buy US govt IOUs....the answers can be found here....
A very good question....the only thing left proping up the remains of the US economy is QE'ing....its like kicking the last chair leg from under a man with a noose around his neck.
Gee...July, half way, more or less through the year.....so QE3 or Depression.....I wonder how many months we have to wait for QE3......2? 4?
regards
I would imagine that the process will get compressed, so we won't have to wait as long as we did for QEII. We will have to see what Greece brings though. With each person make unemployed as a result of 'austerity' means another person to joins the ranks of the protestestors/rioters. Sooner or later the numbers will build to where the Police can't control them.
Compressed, yes....Interesting that what Im seeing looks to me like an un-stable building control system......larger amplitude and faster frequency...eventually it breaks and flat lines.....and then cant be controlled at all. Its typical of not getting the D right in a PID system....it can give great control but its inherently unstable.....it just looks like the Pollies are ramping up the adjustments in desperation.....
http://www.youtube.com/watch?v=_vPWE2Ebz48
regards
The USA has a robustness due to its currency status....interesting thing, look at the PIIGS rates...they all remain pretty low until they start to go bad then they go bad pretty quickly.
What we are looking at under your belief, is a deficit rising for ever...money isnt infinite and energy certianly is not. When we see a Depression driven by a credit event the US will implode, it will have to print money and it will be in dire straights.
This isnt a today thing and not tomorrow, but it certainly isnt a "if" its a "when" IMHO.
regards
Your delusions aside, the FACT is that the USA can always meet it's debt obligations VOLUNTARILY, unlike Greece, which MUST borrow from creditors to meet it's obligations.
The only difference is that the USA can CHOOSE to default or "raise it's debt ceiling", whereas Greece has no choice.
Did anyone notice amongst the RBNZ releases yesterday the plan for gearing up to print new money.
I wasn't sure if this was meant to mean more of what we have, or a new series of notes.
Not sure if I am seeing something more to this than I should be, or is it something quite innocuous.
Come on Wolly, you must have something to say about that one:)
My thoughts tend to be directed more towards the expectancy they might have of a global meltdown, and being ready to hit the print button in order to facilitate the operations of local trade in the absence of electronic money.
Or am I being too paranoid and should put the tin foil away.
The global economy is facing ''a slow-motion train wreck'' with Greece only the first nation to be hit, Australia's Reserve Bank director Warwick McKibbin says.
http://www.stuff.co.nz/business/world/5218159/Global-train-wreck-coming
Timothy Geithner has reacted to scurrilous rumours put out by competent journalists and by Bernard Hickey , that he is set to quit his post as Treasury Secretary after the US Congress settles the debt ceiling debate , by explaining that he has no plans to leave his post in the " foreseeable future " .....
...... it is a post that he treasures , it is tanalised !
QE 2 ends today. Expect to hear a loud hissing sound as the global credit bubble begins to deflate. The next round of helicopter money is very likely to begin before the end of the year.
Helicopter Money by Richard Duncan.
http://www.richardduncaneconomics.com/2011/06/30/helicopter-money/
And now some details about the Hubbard charges are coming out...
Some investors in Allan Hubbard's Aorangi Securities believed they had seven-figure sums in the company, but these did not actually exist, the Serious Fraud Office alleges.
http://www.stuff.co.nz/business/money/5218605/Aorangi-investments-non-existent-SFO
"The global economy is facing ''a slow-motion train wreck'' with Greece only the first nation to be hit, Australia's Reserve Bank director Warwick McKibbin says.
Referring to the most recent global economic crisis as a mere ''blip'', he said the coming crisis could undo Australia's mining boom and bring on inflation of the kind not seen since the 1970s.
Professor McKibbin told the Melbourne Institute conference dozens of European countries now had gross government debts on track to exceed 60 per cent of GDP. ''Japan is forecast to be 200 per cent of GDP, the US is forecast to be over 100 per cent of GDP,'' he said.
''At zero interest rates that can be sustained, but at 5 per cent interest rates countries have to put aside 5 per cent of their GDP every year just to service the debt. That is not sustainable." stuff.co
Warwick needs to listen to Gabby....err or is it the other way round....!.
http://www.stuff.co.nz/the-press/business/5218159/Global-train-wreck-coming
Here's an update from Lyttelton Port on its insurance position:
"Lyttelton Port Company’s current insurance programme terminated at 4:00 pm on 1 July 2011.
The Company wishes to advise that it has been successful in obtaining limited insurance cover for the Port going forward. As at close of business 70% of the cover required by the Company under its Material Damage policy has been written for assets except wharves, breakwaters and pavements; however this excludes cover for natural disasters including earthquakes. The Port has been unable to secure Business Interruption cover. LPC is continuing to work with its brokers and insurers to build on this position.
All other policies have been renewed.
The Company is also in discussions with its insurers regarding its claims for the 4 September 2010, 22 February 2011 and 13 June 2011 earthquakes. The Company wishes to clarify that the total progress payments of $35.7M received to date only represent a portion of the total claim."
Hey Gummy, did ya see this...the control freaks are still at it.... http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10736081
My bet is you would find this somewhat 'intrusive'.
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