Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that US stocks fell a further 1.5% on Friday night as fears of slowing global growth continued to fester.
The S&P 500 has fallen 18% since the end of April as growth worries have emerged.
Hewlett Packard shares fell 27% last week on concerns about its profit outlook and a massive restructure that will see it spin off its Personal Computer business.
New Zealand stocks have fallen to a lesser extent over the last 2 months, given our listed companies are more exposed to the local economy than global conditions and do not include banks.
New Zealand companies have also reported solid profits over the last week, including Telecom and Port of Tauranga.
Shares in Caterpillar and Alcoa fell sharply on worries about global growth after Morgan Stanley, JPMorgan and Citigroup downgraded their growth forecasts. See more here at Bloomberg.
Meanwhile, there were fresh signs of division in Europe with comments from German Chancellor Angela Merkel that she did not want common Eurozone bonds. See more here at Bloomberg.
The New Zealand dollar was weaker in morning trade at around 81.8 USc as investors appetites for riskier assets waned.
The Gold price rose over the weekend to a record high of over US$1,850/oz as investors sought safe haven investments. See more here at Bloomberg.
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39 Comments
NZD (and all other fiat currecies) really dropping in value fast now... it takes 2263 NZ paper "dollars" created out of thin air (that aren't backed by anything) to buy 1oz of real money. I wonder how long it will take now before the NZ dollar becomes totally worthless?
Which will make everything you own, including whatever gold you have, worthless, also. After all, even you are valuing gold in terms of 'dollars'; and without that medium of exchange, the alternative is barter. I doubt the globe with 7 billion people can get on with that, these days. It was hard enough when there was 700k of us.
Actually barter featured in a miniscule portion of exchanges historically and instead most occured within a framework of recipricated gift. It worked better when the exchanges happened between people with regular intimate contact, so as to easier assess the other's trustworthiness and catch and discipline free-riders.
"The problem was, as Mauss was quick to note, there is no reason to believe a society based on barter has ever existed. Instead, what anthropologists were discovering were societies where economic life was based on utterly different principles, and most objects moved back and forth as gifts – and almost everything we would call "economic" behavior was based on a pretense of pure generosity and a refusal to calculate exactly who had given what to whom. """""
http://www.freewords.org/graeber.html
And we do have a modern historical case study to explore the ramifications and effects of a time which saw the total breakdown of banking system. That of Ireland during the 1960s and 1970s when the banks went on strike. Instead of relying on banks to play the role of credit intermediaries, a high complex credit system evolved that often coalesced around the publican (who better to assess the creditworthiness of the public?) where cheques or rather cheque balances circulated as a form of currency.
http://digitaldebateblogs.typepad.com/digital_money/2009/02/payments-without-banks.html
well what if you have lost faith in fiat money - namely US fiat money - being the reserve currency of the world? Its in the US constitution that money must be backed by gold/silver but that has been overlooked for 40 odd years now
im no gold bug and i hold no physical or paper gold myself - but i am tempted to have a small holding of silver oz coins
maybe the next reserve currency (China) will be backed by gold and silver
Hi,
Too many ppl and too much fiat money to back with gold and silver IMHO....money is the lubrication of the economy....
Some precious metals if you have that capacity makes sense I think....silver or maybe platinum....which ever is relatively the smallest bubble.
regards
More trouble in Greece
Economic performance unitl July weak.
http://www.reuters.com/article/2011/08/21/us-greece-finmin-letter-idUSTRE77K1LV20110821
Here are the banks, from automaticearth
Ilargi: And this from August 16:
Europe on the Verge of Breaking
- Bank of America: +7.93% Aug 15, but -22.4% in past month, -34.95% in past 3 months
- Citigroup: +4.76% Aug 15, but -18.53% in past month, -24.71% in past 3 months
- Morgan Stanley: +6.10% Aug 15, but -15.03% in past month, -25.74% in past 3 months
- Goldman Sachs: +2.28% Aug 15, but -8.28% in past month,-15.79% in past 3 months
- Société Générale: +2.06% Aug 15, but -28.53% in past month, -41.23% in past 3 months
Ilargi: The reason why I wanted to revisit the stats is that it's important to understand to what extent what we see happening is a structural, rather than an incidental or circumstantial turn of events. To wit:
The Domino Effect of Europe Bank Woes
by John Carney - CNBC.comThere’s also the problem with hedge funds trying to hedge exposure to European banks. The short-selling ban on European banks makes hedging exposure more difficult. One response by some hedge funds will be to short U.S. banks as a proxy.
Ilargi: I'm sure you can agree that that is funny, no matter how tragic it is.
The tragedy that's unfolding is shed in an even clearer light when we expand the stats series to include the longer term, in this case 5 years.
In the past 5 years (dating back to August 25 2006, a date I took from Google Finance), these are the loss numbers for financials, as taken at noon, August 19 2011:
- Bank of America : - 86.68%
- Citigroup: -94.33%
- Morgan Stanley: -70.72%
- Keycorp: -83.46%
- Fifth Third Bancorp: -76.06%
- Barclays: - 76.85%
- RBS: -96.83%
- Société Générale: -83.57%
- BNP Paribas: 60.64%
- Crédit Agricole: -81.39%
- UBS: -75.27%
- Credit Suisse: -52.92%
- Deutsche Bank: -65.26%
The numbers are made even more poignant when we look at losses at the Dow and the S&P in the same time period.
- Dow Jones: -3.97%
- S&P 500: -12.81%
Just a thought of my gut.
I think Friday, the 19th of August 2011 was the beginning of the fall of the financial global markets and will trigger off entire economies to break down. Daily turmoil/ events on many fronts will occur and many societies are at risks to fail. The world will change again – faster, dramatically, more violently.
This will be extraordinary - the NZgovernment needs to take urgent measures now to maintain stability.
Looking into current developments on many fronts – the world will never recover again, simply because among the powerful in societies ethic and moral requirements and standards don’t prevail.
I agree. Men, and women too, quickly, race to the beach with all due haste. Man the dugouts! Launch the dingys! Arm the kayaks! There’s not a moment to lose. Take your pitchforks and hammers with you. And don’t forget last year’s cell phones. They make great missiles when flung by slingshot. We need to build an impregnable wall of sea defences spanning our islands ready to take on all invaders, and a boat load of angry Samoans! In fact let’s get really nasty and throw chemically fertilised turnips at them! We’ll keep the organic ones for ourselves!
Don’t you worry; we’ll show the invading hordes a thing or two!
I sometimes wonder if Kunzie is Winston Peter's speech writer ! ...... Fortress NZ !!!
.... d'yer suppose Walter boggles his eyes and roams the streets of Kaikoura muttering , " we're all doomed , the world will never recover , doomed I tell ye ! " .... sort of 'like Fraser the undertaker , on " Dad's Army " ....
during the great depression only 22% of gold was actually handed in - so the the other 78% that was hidden under floorboards and inside walls was immediately worth more the day after it was finally made illegal to hold it.
it was worth $20~/oz when it was legal to hold and then the US govt fixed the price at $35/oz immdiately devaluing the cash they had just paid out to confiscate your gold
agree, do not have any records of any sort that you have gold - be careful who you tell as well......if anyone
Maybe they'll start by confiscating Theresa Gattung's gold.
I would like to think ' Gold ' is a bubble and about to burst but my close sources tell me that the Feds will somehow get the ECB to start printing $$$, which will only make Gold and silver go up. Also, the super rich are converting all their cash to either gold, silver, farmland etc. Hence we must not sell our land to overseas interests.
Calm before the storm
x
Evenly a wildly overvalued asset class such as gold , or NZ housing , can remain up longer than you can hold onto your shorts .
.... but you will be proven correct , eventually .
Who are these " super-rich " that many believe are hoarding & hunkering down for a financial storm ? ...... the Bill Gates , Carlos Slims , and Warren Buffetts of the world are maintaining their business investments . If anything , some ( notably Buffett ) are actually putting more money into equity investments .
Super rich out of cash, well I'd rather listen to Roubini who says they are going into cash.....but if you are that rich whats a mil or two of gold.....no biggee. Farmland, yes I suspect the paper money is trying to buy real assets at a decent clip before it disappears.
regards
For what it's worth Rabobank was one of the banks subjected to the EBA's 2011 stress test. This test has been conducted by the EBA in co-operation with De Nederlandsche Bank (DNB), the European Central Bank (ECB), the European Commission (EC) and the European Systemic Risk Board (ESRB).
A total of 90 banks were assessed in the stress test, which together represent 65% of the total banking system in the European Union.
One of the items assessed in the stress test is the banks' exposure to the peripheral countries of the eurozone. As disclosed previously, Rabobank's exposure to the eurozone periphery is limited. At the end of June 2011, the bank's total exposure to Greece and Portugal amounted to EUR 240 million and EUR 19 million respectively.
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