Bernard Hickey details the key news overnight in 90 seconds at 9 am with Bank of New Zealand, including news Gold hit a record high over US$1,600/oz as investors hunted around for safe havens amid renewed concerns about sovereign debt crises in Europe and America.
Demand for Swiss franc was also strong as investors tried to avoid euros and US dollar assets.
Concerns continue to mount about the stability of Europe's financial system ahead of a crisis meeting of European Finance Ministers on Thursday to decide on the details of a second Greek bailout plan to try and avoid a sovereign default of Greece.
Greece simply has too much debt and will at some stage need a restructure. European officials are trying to force private banks to take voluntary haircuts or losses on their Greek bonds, but this would be deemed a default. The European Central Bank has warned it will not accept Greek bonds as collateral from banks if it does default, which would paralyse large parts of the European banking system.
Bank stocks sold off in Europe overnight. London's FTSE 100 fell 1.5% and Europe's Stoxx index fell 2% with banks the biggest losers.
The Dow fell 0.8%.
Concerns are also mounting about whether America will raise its debt ceiling before August 2. It Republicans and Democrats can't agree on budget deficit cuts to allow a debt ceiling increase then America will default on its debt. Politicians and central bankers alike have described a US default as an "Armageddon" or "Catastrophe" for financial markets.
US President Barack Obama has begun talking about a Plan B situation for a more limited deficit reduction plan, but even then ratings agencies may downgrade America's AAA credit rating regardless of whether the ceiling is lifted.
The New Zealand dollar was solid overnight against both the US dollar and the Australian dollar. It also hit a record high vs the Pound.
No chart with that title exists.
21 Comments
I would like to know what is happening to the cost of credit...no news here!....when is the NZ govt next into the market to flog IOUs...which country is flogging IOUs right now and what are the prices on credit for them...how much are banks having to pay for their IOUs....
These are the important bits of info...that we are not seeing....why not?
In the States, Barry has reverted to secret meetings contrary to his promises of being an open President. Somebody...I wonder whom...is pouring money into the equities markets to put a gloss on the turd.
Meanwhile down here at the bottom of the planet the socialists are 'backs to the wall'...the knives are out...it's become a case of all for one and one for one...haha
On the domestic inflation front...Bollard is soon to discover that returning the ocr to where it was before he got all zirpy..will in itself boost inflation...paradox yes. The building sector to mention but one, will face higher cost of debt as the ocr game is wound off...and in the usual Kiwi move they will raise prices to compensate! Oh and that bloke Bernanke...he hasn't finished printing yet...count on it.
"The president of the Otago University Student Association will lock himself in a cage to protest a new Parliamentary bill that proposes to strip the body of compulsory payments from students".3 news
Compulsory payments...every socialists dream come true!
They had him on News Talk this morning.. what an incoherent idiot.. she had to cut the interview short it was so embarrassing… not a good advert for compulsory fees.. Problem is he’ll be a tax burden for the rest of his life anyway…
Not a good advert for student unions either.
Latest from Ron Paul;
We are headed for rough economic times either way, but the longer we put it off, the greater the pain will be when the system implodes. We need to stop adding more programs and entitlements to the problem. We need to stop expensive bombing campaigns against people on the other side of the globe and bring our troops home. We need to stop allowing secretive banking cartels to endlessly enslave us through monetary policy trickery. And we need to drastically rethink government's role in our lives so we can get it out of the way and get back to work.
Seriously, if I was in America I would vote for this guy, he is so on to it its not even funny.
Muppet King - no he isn't.
Those wars are for the oil under the ground - without which work doesn't happen.
Therefore if they withdraw, they won't be 'getting back' to anything.
Economics is flawed.
Fatally.
Powerdownkiwi - Yes he is :)
He thinks that America should get rid of the fed as well, to be honest I think thats a great idea. We shouldn't have phoney economics we should have real economics, why I say that is because when the fed buys the treasuries they are just printing money to use. You know as well as well as I do that money doesn't grow on trees, but to these people it does! You just have to use the right paper. What we need is a currency that is scarce, and stays that way, so that it has an inherent value. We need to start running the world properly ay.
Hopefully Key will get Obama to divert some of them to defend NZ before China comes and helps itself to our huge Peak Oil resources
http://www.nbr.co.nz/article/pohokura-oil-and-gas-reserves-lifted-33788
"Total remaining oil reserves in New Zealand increased 12 percent to 217 million barrels from 193 million barrels".
I think that's 'proven' - I've seen 'potential' as high as 2 billion. The latter would power the planet - at present rates of consumption - for 22 days. However, given that it's deep/offshore, let's say that 30% is a good recovery rate. A nice round week's worth, then.
Stunning - what a game-changer. I suspect they'll be eating their bigger fish unfried, first. Unless fishstock depletion outpaces fuelstock ditto.
"huge"? 217million barrels powers the world for............2.5 days.....assuming no use increase...
Or on NZ's consumption at about 132kbpd, 4.5 years, hardly uh useful.
regards
Peak Coal too , only 100 years of NZ needs tucked away there we arent supposed to touch.Peak Lignite,Peak gold,Peak hydro,Peak Nuclear etc . Nah - leave it , better to powerdown and become a little south pacific backwater and hope the big boys leave us alone seeing we cant defend ourselves.
Indonesia or China could have us sorted by lunchtime !
While he is right to an extent, he misses so much it isnt funny....this is because Libertarianism is so badly flawed......
regards
Totally agree, its always a matter of moderation though. As a race, human beings cannot exist in an environment where a government regulates everything, or when a government regulates nothing. Its about striking a balance in the middle, and it is a very difficult thing to do.
MK - agreed. Relating fiscality to reality would be a good move. And you're right about Govt, I always laughed when I placed rocks across our creek, so the kids had a pool to swim/play in. Compare that to the hoops the Clyde dam was going through..... Where's the cross-over?
He is indeed on to it as is Peter Schiff (not a poly just a commentator )and others. If I could vote here I would be voting for RP. My wife votes for the US Greens.
damn you saw / posted marketticker before me
:P
".........remember the 1930s. A bank called Creditanstalt turned what was a nasty stock market crash and credit contraction into a global Depression.
Regulators then, as now, ignored the crash's warnings and refused to force those who were not properly capitalized to close. They allowed people to double into bad bets. Those bad bets compounded, and when the economy started to slip for real, instead of just on paper, the leverage they were carrying, both that which everyone knew about and that which people did not, ultimately blew them up.
Now we have a "little bank" in Italy that is teetering on the same edge - Unicredit. It is too big to bail out - it holds hundreds of billions in liabilities. There's no money available to bail them out and the time to resolve them, as with our banks, was two and three years ago.
The risks are extremely high here folks. I know many have laughed at my warnings for the last three years and have hooted and hollered as the stock market "recovered", buoyed by yet more cheap money. But during this the coverage of government debt with employment has not recovered at all - in fact, it's worse now by far than it was in 2008."
and he goes on,
"So now what's available in terms of policy tools? There's no funds available to bail people out, and a bank of that size isn't able to be bailed out anyway in reality - all you can do is lie and hope people believe it. But the market is calling all the bluffs now, one after another."
Interesting times........
regards
This is a great piece showing the history of GDP growth v debt, it isnt pretty...
http://market-ticker.org/akcs-www?post=190174
regards
It seems we cant learn from our mistakes...
"And great fear of destroying the value of the dollar, in the midst of an epic deflation that had raised the purchasing power of a dollar almost 50 percent:"
http://krugman.blogs.nytimes.com/2011/07/18/herbert-hoover-was-hooveres…
regards
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