Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that China's economic growth rate slowed to a weaker-than-expected 9.1% in the September quarter from 9.5% in the June quarter.
Economists had forecast growth of around 9.3% in the September quarter from a year ago. China's economic growth is crucial for New Zealand's economic future, both directly through exports to the world's third largest economy, but also indirectly through Australia, which now has China has its largest trading partner. See more here at Bloomberg.
Some economists are worried China faces a hard landing with growth slowing to 5-6%, rather than a soft landing with growth of around 8-9%. A hard landing would drag commodity prices lower and soften demand for imports from New Zealand and Australia.
China's US$1 trillion stimulus programme early in 2009 to accelerate infrastructure spending boosted demand for Australian iron ore and coal and helped produce half of the world's economic growth since the Lehman Brothers collapse. Some worry that China may not be able to save global growth again because inflation is running hot and the Chinese government has pledged in its latest five year plan to slow growth rates.
Meanwhile, US stocks surged more than 2% in late trade after The Guardian reported France and Germany were ready to agree to a 2 trillion euro rescue fund, therefore helping to ease nerves about a European financial crisis.
Earlier, Bank of America reported better than expected profits, which helped boost its shares more than 6%. Goldman Sachs reported only its second ever quarterly loss.
In Europe, Standard and Poor's downgraded 24 Italian banks on fears about the European debt crisis. See more here at Reuters.
Also, Moody's warned it may downgrade France's Aaa sovereign debt rating because of its high level of debt and the potential costs of supporting French banks. French bond yields rose to their highest levels in 20 years.
The New Zealand dollar was firm over 79.5 USc in morning trade as global stocks rallied. See more here in BNZ's overnight currencies report on our site.
The strength also followed Fonterra's fortnightly milk powder auction saw prices rise around 1.7%, the first rise in five months and the first rise in 9 auctions. See more here in our article.
53 Comments
Funny stuff isn't it ostrich....people might start to think there are problems if this keeps up! Got your millions in a French bank have you?
Mine are in a Greek bank...safe as the euro ostrich!
Check out the link from bleep ostrich...mind blowing!
ostrich do you have any links to that? The Guardian story was also carried as an "exclusive" by FT-D, the source seems to be Schaeuble himself.
thanks Christov I was actually hoping for a link to the French refutation to the story referred to by ostrich...
I think there is some confusion here over which deal is not on the table.....as all the financials are still repeating the Guardian story as current.
Thanks ostrich, but I would have thought that Schaeuble going on record as supporting leveraging the EFSF would make it pretty conclusive. Remains to be seen if the threat to downgrade France throws a spanner in the works though?
It's half way through the week and time for a wee joke.
The Banking Crisis Simply Explained....
Young Paddy bought a donkey from a farmer for £100.
The farmer agreed to deliver the donkey the next day...
The next day he drove up and said, 'Sorry son, but I have some bad news.
The donkey's died.'
Paddy replied, 'Well then just give me my money back.'
The farmer said, 'Can't do that. I've already spent it.'
Paddy said, 'OK, then, just bring me the dead donkey.'
The farmer asked, 'What are you going to do with him?'
Paddy said, 'I'm going to raffle him off.'
The farmer said, 'You can't raffle a dead donkey!'
Paddy said, 'Sure I can. Watch me. I just won't tell anybody he's dead.'
A month later, the farmer met up with Paddy and asked, 'What happened
with that dead donkey?'
Paddy said, 'I raffled him off.
I sold 500 tickets at two pounds a piece and made a profit of £998'
The farmer said, 'Didn't anyone complain?'
Paddy said, 'Just the guy who won.
So I gave him his two pounds back.'
Paddy now works for the Royal Bank of Scotland .
In terms of peak oil, and a finite planet, all resources required for our mordern way of life are limited and being depleted at an alarming rate. How is >9% growth in China good for anything? Do people realise what this means? Growth especially from consumption cannot continue at this rate for very long. GDP doubles every 7.5 years, consumption needs to match this or else it is not even close to being sustainable. This means in the next 7.5 years China will consume more then it has consumed in the past 3000 years (or since it became a place that people live in) The human mind really struggles to understand the exponential function.
People are generally pretty ignorant of the exponential function. There's a good series of lectures on youtube where a physics professor attempts to explain the exponential function, and the implications in layman terms:
"The most important lecture you will ever see"
http://www.youtube.com/watch?v=F-QA2rkpBSY
Wouldn't hurt if those spouting infinite growth had a look at these... ***cough Gonzo cough***
****cough national, mandatory kiwisaver, labour cough****
No countries GDP grows exponetially. Idiots.
Don't tell the PM that, he thinks China will have 9% + GDP growth forever.
Thanks David.
Seeing as a 1% growth in GDP per year is an exponential growth, I'm glad to see you've finally accepted that this kind of growth is impossible to sustain in the long term.
GDP growth is all over the place, as any half-wit knows. In some years it’s negative. Exponential (growth) functions make no provision for negative numbers; therefore GDP growth is not an exponential function. 0.5% GDP growth will double an economy sooner or later, but that doesn't make the growth exponential. It just means its growing. Growth is not a constant. Kapeesh?
Thank god you economic and financial geniuses aren’t running the economy, that’s all I can say, or we really would be in the sh*t.
What you forgot to mention is that when grow is negative, especially for long-periods of time, the debt ponzi scheme collapses. So, we are stuck between a rock and a hard place aren't we!
So what are the long-term options David?
- Grow economy - As you and I have both alluded to cannot go on for ever.
- Zero growth economy - Which would mean a collapse of the current banking system.
- Reduce our economy - Which again would lead to collapse of the current system.
So, to be blunt David, I don't think it really matter who's in charge, one way or another this house of cards is coming down!
LOL not cough o neptune - earths a pretty big place -lots of resources untapped
drill baby drill !
This graph is the shocker. We are in the triangle at top left.
http://oilshockhorrorprobe.blogspot.com/2011/10/when-might-new-zealands-oil-imports-dry.html
Got to give it to those french, they know how to a deal
http://www.spiegel.de/international/europe/0,1518,792189,00.html
Worth keeping an eye on the unfolding disaster that is the UK economy. The BoE has been printing away like billyoh and has now embarked on another round of QE. Unfortunately the first round did virtually nothing to lift growth which the UK govt is desperately dependent on as it has a massive government debt problem which would be assuaged by the increasing tax take off the back of growth. The BoE action has caused the Pound to tank which in turn has led to inflation soaring. Tthe authorities naively probably want some inflation as supposidly it will help devalue the debt problem - BUT WAIT - and here is the blackly funny part. Many benefits (pensions etc) are inflation linked in the UK, and next April's rise is dependent on the Sept inflation figures which just printed at 5.2%. So the govt now has to shell out an extra 5.2% to millions of beneficiaries. With tax takes not increasing as the QE doesnt seem to be stimulating growth (merely inflation) all that is happening is that the governments outgoings are INCREASING, making their debt position WORSE.
You could not make this stuff up. Unless something miraculous happens to promote UK growth it is entirely possible to see them falling into a debt spiral not too disimiliar to Greece in the next few years.
Interesting times. If you look 10 years ahead can you see any country not falling into this death debt spiral? Its a race to the bottom IMO.
& the UK welfare system is similar to ours...it's silly to promise entitlements when revenue can fluctuate...similar to employing a sales rep on a fixed salary, and promising this rep a lifelong job regardless of sales performance...
My parents are currently in Athens. Got a text from my mum this morning saying there is rubbish in the streets, demonstrations and armed soldiers roaming about.
Here's some lovely pics of the mess in Athens Gareth. Love the one of the massive pile of trash outside the Eurobank. Bet that'll be the last one picked up when things get back to "normal".
Cheers.'
Crikey, probably wise for them to keep their doors shut or some of it might find its way inside the bank!
Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trades
http://dailybail.com/home/holy-bailout-federal-reserve-now-backstopping-75-trillion-of.html
JP Morgan making a similar move.
And the nominees for First Against The Wall are...
Now that has got to be the warning of all warnings bleep.....seems the US taxpayers have ended up owning the piigs debts and all the bets on the piigs debts and the insurance on the bets and the debts....hey Yanky taxpayer...hopw you like them apples?
Well they wouldn't would they Wolly.....that said their impending misery seems to brighten you day so it's not all bad is it...
No I haven't got the wrong end of any stick here your words not mine....
.hey Yanky taxpayer...hopw you like them apples?
Oh my ...I wasted a pee! ....shame
Far Queue.too!
''rubbish in the streets of athens' sounds like garden place hamilton on a normal day.
Then one day in Noddyland it came to pass that one dozen of the wealthiest people and families in the world, emigrated to live in the semi peaceful land of Rugby, bringing with them potential taxation reward for the govt of a nice fat $50 billion a year!
The govt was stoked. The media did handstands down mainstreet. The peasants all screamed in delight. The immigrants got together to determine their gameplan....which didn't include handing $50billion over each year to the govt without some serious agreements about what policies would be put in place and how the annual payments would be spent....
And so it came to pass that a dozen stonkingly rich entities took charge of policy setting and they did this to ensure they would end up no worse off when the time came to leave.
How is the arrival of this capital any different from the credit pumped out of the banks that operate any which way they want in this economy. Anyone for a cheap mortgage. Don't you miss out now. You better buy that poperty quick before it goes up in price.
Can anyone confirm what I heard, (from a reliable source), about banks removing loan interest charges from kiwifruit growers affected by psa?
The way I heard it is that gold kiwifruit land has dropped from $500,000p/ha to $25,000p/ha if it has psa. Given the trouncing the banks will take if they forced sales they are instead offering to remove all interest payments from loans 'and once things come right again the borrowers must make principal repayments'. It is being commonly referred to as 'discounting' though is different to that which occured in the 1980's for farmers.
There are also some grumblings about the $8+ per tray payout if you removed the vines agreed early on, compared to the $6+ you got if you harvested the fruit.
Land values are all we have keeping the rotten hulk 'afloat' CO. The banks will protect their bubbles. If they can't, the taxpayer will bail them out!
Takes us back to the scam of allowing banks to sell too much credit. Every $1 deposit generates $9 in loan credit and each of those loan credit dollars generates another $9 and so on and so on.
The whole mountain of debt sits on top of a pile or filth that is the 'system' being protected by Bollard and Co.
The answer is in the hands of the peasants. Stop borrowing and start saving but beware of runs on the banks.
CO Its not looking good here in Kiwifruit land. It would not surprise me if what you wrote was correct. Although this Monday a neighbor was told by his bank, that he is to be sold up. but no one will buy it. His orchard has not got psa but Kiwifruit orchards are not selling and if they were the banks arnt lending.
Lincoln University's council has voted to increase student fees by 4 per cent next year......
The university was "facing increases across the board, from wages to insurance and pretty much everything in between", he said. stuff.co
So they are falling like Domino's......all of them will go 4% I would assume.
regards
Oh no no no steven...4% just doesn't cut it for some courses...8% is necessary! And who cares a trot when it's borrowed money...backed up by govt. Funny that...debt is guaranteed by govt but not savings in a bank! I wonder who owns the debts....oh silly me...the banks.
Merv is telling it as it is, how does he keep his job?
Britain is at risk from a fundamental crisis in the world economy and “time is running out” to solve it, the Governor of the Bank of England has said http://www.telegraph.co.uk/finance/financialcrisis/8835221/Mervyn-King-… Unless overspending by Western economies was curbed it would bring about an ever-larger debt crisis that would mean much lower long-term growth rates, he said.Worse, he suggested, some of the measures being deployed to counter the short-term situation could actually exacerbate fundamental economic problems, worsening the debt crisis and leaving taxpayers footing an even larger bill.
Silly taxpayers, paying for the mistakes of the finance industry.
Bit naughty though...
"That spending was made possible because fast-growing emerging economies such as China spent much less than they earned, then used their surpluses to lend to the West"
I don't remember ever having an account with a Chinese bank, or borrowing from one.
Sir Mervyn King is getting a lot of flak here. But consider this statement and who do you think he is addressing here?
"Despite record low interest rates, printing new money and other emergency
measures, governments had not yet addressed the underlying problem of
overspending that was at the root of the financial crisis, Sir Mervyn King
warned. The consequences threatened to “inflict pain on everyone”, he said."
And again here...
"The root cause of the debt crisis threatening major Western economies was a
long period of “unsustainably high levels of consumption”, in which
governments, companies and individuals spent more than they earned, the
governor said."
And here...
"As well as supporting banks and the eurozone, he said, Western nations must embark on fundamental changes to make their economies more efficient and
reduce government spending from recent levels."
The message could not be more direct - politicians are the root cause for the economic mess we are in. Amongst other things Sir Mervyn King is calling for the dismantling of the socialist welfare state.
For that he should be congratulated.
Jonathan
dont know where you get that sort of info from CO, I am involved in that industry and havnt heard that one.True, there is no enquiry for K/F orchards and I doubt there will be for a long time.Orchards will now be valued the same as lifestyle blocks, and only so many of them will sell. Some growers, particularly green K/F growers reckon there will no Gold vines left in 3 years.
The comments came from a kiwifruit grower affected by psa, realist. I was wondering if the offer made by their bank to them re no interest, was the reality for those affected or only being made to a select few.
Our neighbour is grafting gold kiwi on to some of his green vines. So there are still some optimists in the industry. ;-)
Do the Green vines get infected? I hear conflicting reports from a straight yes, to only certain rootstocks.
Yes, green vines are getting infected, go to www.kvh.org.nz and find out all the info.
Sounds like they are all floundering around in the dark a bit, what do you think of your future?
Bernard heres a great deal for you and the wife, right down the road and cheap, you could even take the kids.
http://www.travelcafe.co.nz/index.php/RWC-Final-Weekend-berthed-next-to…
"Private schools in Christchurch are considering increasing their fees to help pay for skyrocketing insurance costs".stuff.co
That's a 2 million dollar payment for one school over just one decade..Anyone guess where this leads to?
So ok the parents pay higher fees....and then the doctors lawyers dentists and so on, do what?
Well done..ten marks to anyone who realised they would end up paying one way or another whether they have kids at the private skools or not.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.