Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that German Chancellor Angela Merkel and French President Nikolas Sarkozy met overnight in another attempt to calm down markets roiled by fears about European sovereign debt.
Markets had hoped they could agree on a plan for new common Eurozone bonds and a common fiscal policy to go with the Eurozone's common monetary policy.
Instead, Merkel and Sarkozy said the Eurozone was a long way off being ready for common Eurozone bonds and instead suggested a vague plan for closer budget integration, including more strictly-enforced deficit limits and bi-annual summits.
Europe already has budget deficit targets, but they have been widely ignored.
The leaders of Europe's two largest nations also agreed to resubmit plans for a financial transactions tax in September. This tax has been rejected once before. It is often referred to as a Tobin Tax or a 'Robin Hood Tax' and would involve a very low tax on all financial transactions. See more here at Reuters.
The announcements from the Sarkozy-Merkel summit came after European stock markets closed. The Dow closed down around 77 points or 0.7% and the S&P 500 ended down 1% on some disappointment about the lack of European action.
Also, news emerged overnight of very weak economic growth in Europe in the June quarter. Growth in Germany stalled. Oil prices fell overnight on the news of weaker growth and a likely weakening of demand. See more here at The Telegraph.
Meanwhile, in America, President Barack Obama has pledged to come up with a new 'specific' jobs plan next month. See more here at BBC.
Also, Fitch affirmed America's credit rating at AAA. See more here at Reuters.
The New Zealand dollar was relatively firm overnight at around 83.6 USc despite the weakness on Wall St.
Fonterra's fortnightly GlobalDairyTrade internet auction of milk powder saw prices fall just 0.9% in the first sale since the latest bout of economic and market turmoil. See more results here.
However, milk powder prices have now fallen 21.9% since peaking on March 1. Over the same time, the New Zealand dollar has risen 11%, delivering a double whammy to the New Zealand dollar earnings of Fonterra.
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24 Comments
Anyone want to pick a date for when the Euro will be dissolved and countries will go back to their own currencies?
Either Germany et. al. bail out the indebted countries or they let them leave the Euro so that they can depreciate their currencies to a point where they are competitive again.
You can't have currency union without fiscal union in a severe recession.
There was a very interesting interview with George Soros recently where he said (about Germany having to support Euro-bonds) ....
Soros: There is simply no alternative. If the euro were to break up, it would cause a banking crisis that would be totally outside the control of the financial authorities. So it would push not only Germany, not only
Europe, but also the whole world into conditions very reminiscent of the Great Depression in the 1930s, which was also caused by a banking crisis that was out of control
I can see that Greece and Portugal will leave the Euro, but the others will stay in. Germany has no choice but to support Eurobonds or face the prospect of a severe recession/depression. After all - if all those countries went back to their own currencies (which would plummet in value) - what would that do to Germany's exports? How many of them would be able to afford BMW's and Audis after that event?
"It's all filtering down from the bigger picture, the recession and the wineries not being able to pay the vineyards properly and the vineyards not paying the contractors and so on and so on.
"It's not just here; it's everywhere. It's all over Marlborough I think."
They had listed their vineyard for sale, but vineyards were not selling, she said
Haha, I have mentioned before the conspiracy with RE agents over vinyard listings. They don't put all those available up officially as listings, or it would spook the market because there are so many. I would be interested to know if many have sold in the last 2-3 years.
Montana are retiring a large area, they will pre prune and watch to see what happens in the next year. The indians around here are out of work, I drove past a big apple orchard yesterday and was surprised to see two big diggers ripping everything up, this orchard is beside a big Mr Apple orchard that was SCF. It looks to me as if the industry will slow motion implode and we will be left with a few medium wineries and not much else. Costs have been going up at %10 a year and no industry can take much of that, the dairy indiustry is where the real action will happen. I would think you could by any vineyard you wanted to around here, just name a price. Savi-blanc is really in trouble people have gone of the green taste and they will get hammered, productiuon needs to fall %50 and even that may not be enough. A friend in Chile is struggling to sell wine at any price in this market, and they have significant price advantage over us, he thinks that we are stuffed.
Which begs how will the council rates be paid (if nothing else). In marlborough, the council apparantly sets the ratesper acre based on grape returns. Farmers were saying to me that they were being forced to grow grape as a result. So if this wine industry collapses, and i think it will, the income from the councils will also collapse...etc etc...
regards
Fletcher Building has released its annual results and its outlook isn't particularly upbeat:
“Market conditions have been tougher than we anticipated at the start of the year, with no recovery evident in New Zealand, and Australia showing clear signs of having slowed in the second half. Looking ahead, we remain uncertain around the timing and pace of a recovery in the New Zealand construction industry, but are well positioned for the upturn when it comes”, CEO Jonathan Ling said.
"In New Zealand, the outlook is for a very gradual improvement in housing starts, but from a very low base. In addition, the rebuilding of Christchurch is expected to gain momentum throughout the year (to June 2012) which will boost the construction industry overall. Leaky homes remediation is expected to accelerate now that enabling legislation has been passed. The commercial outlook remains patchy with increased activity in some sectors but limited growth in aggregate. Infrastructure is expected to remain robust, underpinned by central government spending."
"In Australia, an improvement in the housing and alterations and additions sectors is not expected in the near term, with demand expected to stay at its current reduced levels. The short term outlook for the commercial sector is also seen as being subdued. The continued strength in the mining sector, and ongoing government investment, should underpin infrastructure spending."
"Trading conditions in both North America and Europe continue to remain flat with no recovery of significance expected in these markets in the near term. Recent external economic forecasts have been downgraded and expectations and timing of any recovery continue to remain uncertain. Conversely, China, South East Asia and Taiwan are exhibiting growth and the outlook remains positive for this region."
"Despite Frank Lloyd Wright's aspirations toward simplicity and economy, Usonian houses often exceeded budgeted costs."
http://architecture.about.com/od/franklloydwright/g/usonian.htm
regards
Don't Architects always run over budget. Lol.
He had to drop his commission on Usonia 1, which was 10%. Still it was a vastly superior house to anything that Levitt did. As I explained to PhilB the other day, Bill Levitts brother Alfred served as an apprentice under FLW for a year. Didn't help him much, particularly when you consider he worked on usonian houses and lived at Taliesin.
I think there will be great opportunity to look at re-designing surbubia etc....The last 50 years has been an anomaly, cheap and bountiful energy has created an unfeedable monster...I dont think NZ has suffered as badly as the US in this respect but is sur elooks like the likes of HP would like it so.
Interesting thing is PDK's house, I must ask if he has plans to look at.
regards
have you seen Stonefields Scarfie? The houses look pretty well built and solid, but the actual aesthetics of the housing design is pretty mediocre. And the detached houses that front the main road are separated from each other by about 2-3 metres - horrible little shaded "nothing spaces" between the houses. Terraces / duplexes would have worked far better. Its a busy / noisy main road too - don't understand the apparent popularity of the houses, which are far from cheap.
I actually did a Tech assignment on one of the houses there, so I agree with your comments except for the well build bit. Well perhaps they are well built as such, just built the wrong way.
I did a sneaky and got a copy of the geo tech report, which I am sure Fletchers wouldn't have been pleased about. Unlike most Architecture students I know how to read one:)
Quote "the use of rigid claddings are not recommended".
There is a variation in height of up to 10m in the base of the old quarry, which has all been filled in. The engineer expected subsidence and so hence the recommendation. We saw evidence of it around the foundation of the house we were documenting the construction of.
God who would want to live down in a hole anyway, it will be cold!
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