90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: Standard and Poor's warns Euro banks of Greek default; Should Charlie's have held on?; NZ$20 bln jewel find in India

5th Jul 11, 7:55am by Bernard Hickey

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news Standard and Poor's has warned French and German banks that their plan to voluntarily roll over Greek sovereign debt may constitute a 'selective default' under its rules.

This introduces new doubt into the success of the latest Greek bailout plan and increases the risk that a formal Greek default could trigger the payout of Credit Default Swaps derivatives and unleash financial contagion across Europe's banking system. See more here at BBC.

However, markets and currencies were firm overnight as European officials approved the latest tranche of Greece's first bailout package. Officials are now negotiating a second bailout plan and also hope to engineer a voluntary rollover of Greek debt by banks, but the Standard and Poor's warning may throw a spanner in that works. See more here at Bloomberg.

The New Zealand dollar was strong at 82.9 USc in early trade near its record highs as investors sought to buy riskier assets on hopes the Greek crisis may have settled for now.

Meanwhile, Charlie's major shareholders agreed yesterday to a NZ$129 million takeover bid by Japanese brewer Asahi, which they hope will allow an even bigger expansion of the juice drinks company offshore. Founders Stefan Lepionka and Marc Ellis will receive around NZ$18 million each for their shares.

They had always planned a 42-Below-style growth of an international drinks brand they could sell on to a big international firm once it surpassed the NZ$100 million mark.

But could they have held on to create an even bigger but New Zealand-owned drinks company? They argued Asahi's capital strength and distribution network gave it a bigger edge.

But there is now capital available and its strong position on the New Zealand stock market gave it an option of funding locally to expand internationally. Your views? See Tim Hunter's column at Stuff.

Meanwhile, a story from India that shapes up as a cross between Raiders of the Lost Ark and the biggest Lotto win in history.

Investigators think they have found NZ$20 billion worth of jewels and gold hidden in the vaults of the Padmanabhaswamy temple in Kerala, India. See more here at The Guardian.

No chart with that title exists.

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17 Comments

by Wolly | 5th Jul 11, 8:10am 1309810233

Alright I admit it...my name is Wolly Padmanabhaswamy....now where do I sign to receive what's mine?

by Kunst | 5th Jul 11, 8:41am 1309812091

Not only Greece (Europe)

The Minnesota government shut down on Friday after state legislators failed to agree on a budget in time for the new fiscal year.

by Sepherial | 5th Jul 11, 9:19am 1309814371

Same game here in NZ its obvious, Im surprised not many see the set up and the con?

Simple to work out...

Cue Bono?

by powerdownkiwi | 5th Jul 11, 9:35am 1309815352

Interesting discussion on Nine to Noon at the moment.

Amazing how a total collection of commentators - none of them are dummies - can ignore the elephant in the room.

A second crossing by 2030? For wnat? powered by what? For folk to go to do what??

Interesting to note that - as with 'sustainable', English has spin-hijacked the word 'resilience'. I wonder what they tack on the end - with 'sustainable, it was 'management' (meaning nothing), 'development' ( if physical, an oxymoron) and 'growth'. (Sustainable growth being a straight-out impossibility).

Resilient management? Nup. Resilient development? More interesting debate - raises the question of comparative triage of the existing. Resilient growth? Where's John Clarke?

With that word-drop from English, and the IEA dipping into savings to feed the kitty, I sense we are about to have a long-overdue debate.

Bring it on!

by Gareth Vaughan | 5th Jul 11, 11:40am 1309822815

Goldman Sachs has donated NZ$1 million through its Goldman Sachs Gives fund to the Red Cross for Christchurch. The money will be used to support staff training of emergency response teams, for a psychosocial training programme for volunteers and to buy 25,000 portable torch/radios for Christchurch families.

by scarfie | 5th Jul 11, 12:43pm 1309826625

Free portable torches so Christchurch people can see how screwed they are, radios so they can be told the same, and psychologists to make them feel better about it.

by Kunst | 5th Jul 11, 1:02pm 1309827774

Thank you John Key – great effort talking to your buddies - using your tentacles.

by Andrewj | 5th Jul 11, 12:16pm 1309824980

Barclays Releases Updated Report On Top 40 Greek Debt Holders

http://investmentwatchblog.com/barclays-releases-updated-report-on-top-…

Thats the sound of the door closing behind me as I rush to get my funds out of Rabo bank. http://www.telegraph.co.uk/finance/comment/jeremy-warner/8616747/Lesson…

jonlivesey Yesterday 11:47 PM Recommended by

11 people There is a saying among Bankers: "There is always a weakest Bank."

What that means is that when the entire Banking system comes under stress, as it did in the Thirties, then in the late eighties, and then two years ago, there will always be a weakest Bank that fails first, and then a second-weakest, and so on.

This makes the survivors look better than they really are.   You may look at the Banks that are still in business and think that they are sound, but it can be that the entire system is unsound and they simply have not failed yet.

This is what is happening with Greece, Portugal and Ireland today.    Because their problems are so public and so serious, we tend to think of the rest of the Eurozone as healthy, at least relatively.

But it's worth remembering that since the Eurozone was set up, European countries quickly went from balancing their budgets to running persistent

deficits.   The persistent deficits were funded by borrowing.   Even France and Germany went into the financial crisis with debt levels between 65% and 70%, above the so-called solidarity pact levels.

In effect, since the Euro was launched, the Euro countries have been

borrowing a standard of living they were not earning.   Not just the PIIGS - all of them.

This means that all this debt can't be reduced without *all* Eurozone citizens taking a pretty serious haircut on their standard of living, their social benefits, their pensions.

It also means that the entire Eurozone Banking system is sitting on a base of assets that may in reality be worth far less than their books claim.   Today, Barclays published a list of Greek debt holders. A full 69% of all the Greek debt, E260bn, is held by the top-30 holders, all of which are in Europe.   A UK bank doesn't show up at all until 31st place.

Given that we all know Greece is really insolvent, this is a very serious concentration of bad assets in one collection of Banking systems.    This is also the real reason that the Greek crisis has lingered on for so long.

Any resolution of the fiscal aspects of the Greek situation - you can't fix the economic aspects at all - has the fatal side-effect of exposing the situation Euro-area Banks are in.   As long as the ECB drip-feeds cash to Greece, they can go on pretending that Greek debt is an "asset" that it is safe for a Bank to own.    But the minute they try to *actually* resolve the situation, their own Banking systems are liable to blow up under them.

If the Europeans *could* resolve the Greek situation, they obviously would.    They can't.   It's as simple as that.

by Wolly | 5th Jul 11, 12:35pm 1309826158

"Local Government New Zealand said prosecution through the courts was expensive for councils and the proposed infringement provisions would be good because rental companies could charge them back to campers.

Asked whether it would be used to gather revenue by councils, chief executive Eugene Bowen said the same question could be asked of police.

It was about a balance of freedoms, he said" stuff.co

QED it would be used to harvest money from tourists.....so if you are overseas and thinking of travelling to New Zealand for a trip on a bike with a tent...don't. Go someplace else where toilet facilities are abundant and well signposted by locals who value your visit.

by Alex Tarrant | 5th Jul 11, 3:38pm 1309837133

Just felt a decent sized quake (well bigger than Auckland's one), in Wellington.

by Alex Tarrant | 5th Jul 11, 3:52pm 1309837968

Quake: mag 6.5, 150 km deep, Tue, Jul 5 2011 3:36 pm (NZST), http://geonet.org.nz/3540736g 30 km west of Taupo

by Snarlypuss | 5th Jul 11, 3:55pm 1309838131

I see Melbourne got a 4.4 as well...Now that's unusual...

by Wolly | 5th Jul 11, 4:17pm 1309839475

Yes and right beneath Mount Taupo..oops sorry Lake Taupo...I keep forgetting the volcanic cone that was the mountain blew off the face of the planet....I wonder!

by HarryM | 5th Jul 11, 3:41pm 1309837273

Yes not a bad one at all, don't really like being on level 23 though

by Gareth Vaughan | 5th Jul 11, 4:31pm 1309840306

RBA leaves rates unchanged. Here's the statement:

"At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.

The global economy is continuing its expansion, but the pace of growth slowed in the June quarter. The supply-chain disruptions from the Japanese earthquake and the dampening effects of high commodity prices on income and spending in major countries have both contributed to the slowing. The banking and sovereign debt problems in Europe have also added to uncertainty and volatility in financial markets over recent months.

A key question is whether this more moderate pace of growth will continue. Commodity prices have generally softened of late, though they remain at very high levels. Despite the challenging international environment, the central scenario for the world economy envisaged by most forecasters remains one of growth at, or above, average over the next couple of years. A number of countries have tightened monetary policy but, overall, global financial conditions remain accommodative and underlying rates of inflation have tended to move higher.

Australia's terms of trade are now at very high levels and national income has been growing strongly, though conditions vary significantly across industries. Investment in the resources sector is picking up strongly in response to high levels of commodity prices and the outlook remains very positive. A number of service sectors are also expanding at a solid pace. In other areas, cautious behaviour by households and the high level of the exchange rate are having a noticeable dampening effect. The impetus from earlier Australian Government spending programs is now also abating, as had been intended.

A gradual recovery from the floods and cyclones over the summer is taking place, though the resumption of coal production in flooded mines continues to proceed more slowly than initially expected. The recovery will boost output over the months ahead, and there will also be a mild boost to demand from the broader rebuilding efforts as they get under way, but growth through 2011 is now unlikely to be as strong as earlier forecast. Over the medium term, overall growth is still likely to be at trend or higher, if the world economy grows as expected.

Growth in employment has moderated over recent months and the unemployment rate has been little changed, near 5 per cent. Most leading indicators suggest that this slower pace of employment growth is likely to continue in the near term. Reports of skills shortages remain confined, at this point, to the resources and related sectors. After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn.

Credit growth remains modest. Signs have continued to emerge of some greater willingness to lend and business credit has expanded this year after a period of contraction. Growth in credit to households, on the other hand, has slowed. Most asset prices, including housing prices, have also softened over recent months.

Year-ended CPI inflation is likely to remain elevated in the near term due to the extreme weather events earlier in the year. However, as the temporary price shocks dissipate, CPI inflation is expected to be close to target over the next 12 months. In underlying terms, inflation has been in the bottom half of the target range, though a gradual increase is expected over time.

At today's meeting, the Board judged that the current mildly restrictive stance of monetary policy remained appropriate. In future meetings, the Board will continue to assess carefully the evolving outlook for growth and inflation."

by Wolly | 5th Jul 11, 8:04pm 1309853057

If you want to know why Greece will default and fail..you need only read this..:

http://www.economist.com/node/18897835

and that means the cancer is spreading fast through the rest of the piigs and all those in the EU.

I have yet to have it explained to me, how the German govt will convert useless euros owned by germans into new German paper and I am certain the scams and rorts are already being planned.

by Plan B | 6th Jul 11, 12:31am 1309869065

They should give the radios back, they need them in africa etc not ChCh. There is nothing we need from Goldman Sachs, tell them to clear off. This must be one of the most blatant pieces of corporate crap ever. 'Look these people are so stupid that that will think we are nice guys because we gacve them some stupid radios meanwhile re work behind the scenes to take their dams off them.

Once upon a time the people of the South ran a cut the cable campaign when Wellington was trying to do the dirty on them, I think we should do it again. Cut the cable and let them have a fine old time up there but keep your hands off our dams thank you very much.