90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: Bernanke's giant flick pass to Obama; IMF' Lagarde calls for recapitalisation of European banks and US mortgage relief

29th Aug 11, 8:59am by Bernard Hickey

Bernard Hickey details the key news over the weekend in 90 seconds at 9 am in association with Bank of New Zealand, including news that US Federal Reserve Chairman Ben Bernanke has not announced a third round of quantitatitive easing or money printing, as some had expected.

Bernanke delivered his hotly anticipated speech at Jackson Hole in Wyoming on Saturday morning and gave no indication of QE III.

Instead he talked about the need for an extended two day meeting of the Federal Reserve's policy making committee. Some interpreted this as Bernanke creating an opportuntity to gain some consensus for additional stimulus. See more here at Bloomberg.

Stock markets initially fell on disappointment of no QE III, but then firmed on hopes something may emerge next month. Gold rose on expectations of more money printing eventually. See more here at Reuters.

Appetites for risk rose late on Friday. This boosted the NZ dollar over 84 US cents and it was the best performing currency over the weekend. See more here at Bloomberg.

However, Bernanke did call on US President Barack Obama and Congress to do more to stimulate the flagging US economy. Essentially, Bernanke was executing a flick pass to Obama that Ma'a Nonu would be proud of. However, it may turn out to be a hospital pass.

Obama is scheduled to speak after Labor Day on September 5 and is widely expected to announce a new jobs creation and mortgage relief plan, but there is no guarantee it will be accepted by Congress or voters worried about budget deficits. See more here at Bloomberg.

Meanwhile, new International Monetary Fund (IMF) Managing Director Christine Lagarde gave a surprisingly strong speech at Jackson Hole about the need for Europe to recapitalise its banks and for America to give mortgage relief to home owners to stop house prices falling.

Lagarde said the global economy was entering a dangerous new phase. See more here at Reuters.

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11 Comments

by skudiv | 29th Aug 11, 9:14am 1314566042

Bernanke is another clown who thinks that pumping money into the stock market makes the economy improve. The stock market is a windmill and the economy is the wind, hooking a QEI,II,III generator up to the windmill will make a little bit of wind untill you stop the generator, then what?

by Andy Rodgers | 29th Aug 11, 9:17am 1314566262

We are now clearly seeing the disastrous results of Government and Central Bank interventions into financial markets. However no doubt there will be increased intervention until the whole financial system collapses. The only people who are going to come out of this debacle relatively unscathed are those with physical gold.

by Plebian | 29th Aug 11, 9:38am 1314567499

So... not much came out of Jackson's Hole! I'd say the US economy has a bad dose of constipation and Bernanke has run out of laxative options to get things moving again. This unfolding story is truly gripping but it is difficult to see a happy ending to it. Many, many people in the end are going to finish up being badly burnt.

by Boatman | 29th Aug 11, 9:55am 1314568521

When embarking on something new or untried , just remember the term " THE LAW OF UNINTENDED CONSEQUENCES "

There have already been all sorts of consequences from QE 1&2 most of which I would wager have been expected or intended .

Wait unitl the unintended consequnces show their ugly hand.

There are two possible scenarios , one is a gradual slide of Western economies, the other is a big bang meltdown.

Either one is not a good look

by andyh | 29th Aug 11, 10:23am 1314570204

Satyajit Das: Full scale credit crunch 2 on the way:

http://www.abc.net.au/unleashed/2857194.html

Before xmas I would say. Anyone for the return of the NZ deposit guarantee scheme?

by scarfie | 29th Aug 11, 10:43am 1314571389

"Managing Director Christine Lagarde gave a surprisingly strong speech at Jackson Hole about the need for Europe to recapitalise its banks and for America to give mortgage relief to home owners to stop house prices falling."

Why? Surely in a healthy market prices rise and fall with changes in demand? Lol.

by hamrod | 29th Aug 11, 12:03pm 1314576211

a finance system where prices can fall and the whole thing wont topple over? haha

by anonentity | 29th Aug 11, 11:35am 1314574523

The unthinkable is the only way to save the western economy.It wont work pumping money into the banks and large business houses.It must be given directly to the people..who will spend it, and then the economy will get going..This dropping of cash out of helicopters will never happen.Ergo no recovery..

by steven | 29th Aug 11, 11:40am 1314574842

What happens if now so many ppl are worried they save it or pay down debt?

So for me directly to the ppl, no.....IMHO the better way is to do Govn large projects.....infrastructure....the Govn gets something directly for the money and ppl get employed....then they spend.

regards

by Landlord | 29th Aug 11, 1:15pm 1314580514

Global Housing markets under pressure...

http://www.globalpropertyguide.com/investment-analysis/Global-housing-markets-under-pressure-says-Global-Property-Guide

I was told that house prices always go up.What the .... is going on in this world?

by Christov | 29th Aug 11, 2:40pm 1314585633

Don't know how you got your comment o the day so wrong there Bernard....there is no QE3.....I'm enjoying the told ya so ....