90 seconds at 9 am with BNZ: Gridlock on EU masterplan to resolve Greek debt woes; Mixed market reaction; Gold and U.S. indices rally/Euro slumps; OCR expected to remain unchanged

90 seconds at 9 am with BNZ: Gridlock on EU masterplan to resolve Greek debt woes; Mixed market reaction; Gold and U.S. indices rally/Euro slumps; OCR expected to remain unchanged

Amanda Morrall details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news of a standstill among European leaders over the details of a masterplan to resolve Greek debt drama and stem threat of debt contagion.

Europe Union officials, gathered in Brussels for an emergency summit to address the EU's deepening debt crisis, were stymied yesterday in their attempts to quell the problem through consensus.  (See Bloomberg article for more).

While leaders are reported to be in general agreement on a proposed 50% write down of Greek debt the devil is in the detail. Leaders remain at odds about how to structure the so-called masterplan.

Until they reach a consensus on how to structure their rescue remedy, they'll remain in gridlock.

Analysts say there are three key issues that need to be resolved: (ANZ economists summarise the situation here).

  •  Capital ratios for banks
  • The voluntary aspect of the Greek haircut and
  • The amount of the rescue-bail out fund - the European Financial Stability Fund.

This latest summit is the 14th in 21 months and is far from being the last given the current stand-off which threatens to draw Italy and France into debt contagion.

Markets and currencies had a mixed reaction to the impasse. With the exception of the FTSE European stock markets all ended the day on the a down note. (Bloomberg market report viewable here).

American markets responded more favourably to assurances from Mario Draghi, incoming head of the  European Central Bank, that the bank would use "non-conventional measures" to prevent malfunctioning in the money and financial markets.'' (See Reuters story here for more details).

The Dow Jones, S&P 500 and Nasdaq all made gains overnight

It was good day for Gold as well, given its image as a safe haven. It rose 1.33% overnight closing at $1723 US an ounce.

Back home in New Zealand, Reserve Bank Governor Alan Bollard is set to announce this morning movements of the Official Cash Rate. It's widely expected to remain fixed at 2.5%

Bernard Hickey is in Wellington today and will report on the details this morning.


(Updated with US market close and links)

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Labour is set to announce it would lift the age of eligibility for retirement superannuation.

Labour will support the recommendations of the Retirement Commissioner, which are to boost the age of eligibility for superannuation to 67.


" Portugal, Ireland, Spain and Italy will promptly commence sabotaging their economies just like Greece  simply to get the same debt Blue Light special as Greece"....

We just may have a deal:

  • EU official, who wished to remain anonymous, tells Bloomberg that euro-area leaders are set to approve accord for 50% writedown on Greek bonds





2 hours ago



Angela Merkel has delivered the German people lock stock and barrel into a catastrophic position. There is no formulation including the use of the ECB that does not result in the most grievious moral hazard against the German people. 

The Germans have been blinded by their misplaced desire to "save the Euro and thereby save Europe" . The Euro will very soon be their complete undoing as the Germans work hard creating wealth which is systematically transferred away to those who have not, cannot and will not create sufficient of their own.

Technically the leveraging of the EFSF is as you described it recently, (but now apparently forgotten) as "pure poison" which  it is. But likewise there is no remedy to be found in the ECB acting as the unlimited lender of last resort because the structural insolvency of the FPIIGS will require such levels of debasement of the Euro that inflation will rip apart the competitiveness of German exports.

Angela Merkel has given away the keys to the German treasury and the feeding frenzy is about to start in earnest. There is no way now that she can back away from not allowing the ECB to print like there is no tomorrow. Treaty changes? From now on that is just window dressing. The actual deed is done.

The Bundestag of today has an uncanny resemblance to the Reichstag of 1933. Like Brüning they shout against passing the law but in the end voted for the law. The consequences will be just as tragic in terms of human misery.

And Mr. Cameron? Like Chamberlain's "Peace in our Time" he comes up with "Good progress has been made". At least Chamberlain said it with style.


This is cute - from the Dominion Roast:  Business As Usual found dead after long battle with addictions



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