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90 seconds at 9 am with BNZ: European leaders told they have 1 week to find plan to solve Eurozone crisis; G20 eyes list of 50 big banks; NZ$ surges to 80.5 USc

90 seconds at 9 am with BNZ: European leaders told they have 1 week to find plan to solve Eurozone crisis; G20 eyes list of 50 big banks; NZ$ surges to 80.5 USc
17th Oct 11, 9:00am 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 G20 Finance Ministers have told European leaders at a summit in Paris over the weekend they have a week to deliver a plan to solve Europe's sovereign debt crisis.

European leaders are due to meet next weekend and are expected to unveil a plan to bolster its sovereign debt rescue fund known as the EFSF (European Financial Stability Fund), recapitalise its most vulnerable banks and increase the size of the 'haircut' or losses on those holding Greek bonds.

US Treasury Secretary Tim Geithner said the plan had the 'right elements' and growing hopes for a successful rescue package bolstered stock markets through last week, including on Friday night.

See more here at Bloomberg.

Also, G20 Finance Ministers indicated a list of 50 'systemically important' banks would be published at the full November 3/4 summit of G20 leaders in Cannes.

See more here at Bloomberg.

The New Zealand dollar rose to 80.5 USc and is now up from 74.5 USc 10 days ago.

The S&P 500 has rallied 11% since October 3, while the New Zealand dollar has risen 8%.

See more here at Bloomberg.

The oil price rose 3% over the weekend.

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7 Comments

by  Roger Witherspoon  |  17th Oct 11, 9:28am 1318796918

Not wanting to be alarmist but:

http://www.zerohedge.com/news/biggest-market-headfake-ever-wholesale-fr…

Basically, as I understand it: European banks are selling all their US denominated tradeable assets to reduce their balance sheet assets so their capital ratios are improved, specifically PrimeX, which are Prime US Mortgage Packages. 

If that is not scary enough, the trading algorythms are interpreting the resulting rise in the Euro as a risk on event and are therefore buying stocks and other currencies

So a banking collapse is causing a short term stock and NZD spike up.

It is plausible (and definitely at the limits of my ability to comprehend)..

 

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by  Andrewj  |  17th Oct 11, 9:39am 1318797584

Love those Germans,

 

It's always much easier to give advice to others than to decide for yourself. I am well prepared to give advice to the US government," said Wolfgang Schaeuble.

  http://www.telegraph.co.uk/finance/financialcrisis/8829980/German-forei…  
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by  Roger Witherspoon  |  17th Oct 11, 10:18am 1318799882

Yes, we underestimate the effect of the Franco-German Alliance on world affairs. They deal behind closed doors, command the biggest economy in the world and because they largely refrain from war mongering we only hear the "look at us, we're so clever" noise coming out of the US Empire and it's war dependent economy..

 

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by  Roger Witherspoon  |  17th Oct 11, 10:56am 1318802179

Look chaps, perhaps I'm not making myself clear. The contest in world affairs is not between the US and China. It is between the Franco-German Alliance (euphemistically called the European Union) and the US. Look at world GDP here:

http://en.wikipedia.org/wiki/World_gdp

The world economy is dominated by the French and Germans, not the US.

The US is dominant militarily, but not economically. It is a weakening force in world affairs. It's economy is war dependent, it's exports are weapon systems. Dying Empires all seem to follow the same path. increased militarism abroad to distract from increasing poverty at home. As the economy weakens indebtedness and income inequality increases. As miltarism takes hold human values decline - in the case of the US they have now suspended habeas corpus, legalised torture and the killing of people on suspicion of criminal intent. Dying empires are dangerous.

The currency of the US Empire is still the world reserve currency but the creation of the Euro was specifically designed to take that position. Witness the slip up by Christine Lagarde about the "exorbitant privilege" of the USD. That was a clear insight into how the French and Germans see the status of the USD as world reserve currency.

The French and Germans have kept their gold reserves for a reason:

http://en.wikipedia.org/wiki/Gold_reserve

Hope that helps clarify matters a little.

"But what about China" I hear you say. China trades more with Europe than the US so the Euro/Yuan exchange rate affects them more keenly. As does the price of oil. The whole US/China debate is just a US policy smokescreen to distract the gullible. The USA is a master at framing the debate as they call it.

Just as an aside:

http://en.wikipedia.org/wiki/List_of_states_with_nuclear_weapons

The centre of world affairs is Europe, not the US and certainly not China. That's why the Brits decided to join the EU as a junior partner. It's why the Russians and the Arabs are so keen to supply oil and gas.

 

 

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by  goNZ  |  17th Oct 11, 11:50am 1318805423

Disagree - this a major understating of US influence. Remember it was USA alone that could rescue Europe twice from  tyranny AND  the  resulting financial ruin  last century.  Europe has got big issues with the rapidly growing  Muslim population and the resulting tensions with other cultures let alone their stifling EU rules and competing economic agendas. As for the China comment,  many Asian countries are  petrified at its military expansion and are relying on US to protect sea lanes.Finally , Iran,Al Queda  & Co dont wait for habeus corpus niceties and Id rather let US get on and deal to them

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by  skudiv  |  17th Oct 11, 12:48pm 1318808900

Take it easy there, this divide and conquer wont float.  America is franticly trying to create bogeymen to scare the sheep.

http://english.aljazeera.net/programmes/insidestory/2011/10/201110149153861830.html 

and of course fast n furious

http://english.aljazeera.net/indepth/opinion/2011/10/201110121715573693.html 

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by  Roger Witherspoon  |  17th Oct 11, 11:17am 1318803436

A lasting solution??

http://www.spiegel.de/international/europe/0,1518,791914,00.html

The desire for speeding up the centralising of control of the EU is gathering.

 

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