Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that a shock call by the Greek Prime Minister George Papandreou for a referendum on a new austerity package Greece agreed to last week has unleashed fresh carnage on global stock markets.
European stocks fell 5% and US stocks were down 2.5% in late trade. Most of the gains seen since last week's apparent summit success have been wiped out as investors fear an uncontrolled Greek default and exit from the euro would spark a series of catastrophic bank runs across Europe. See more here at Bloomberg.
Greece's government was in crisis talks this morning with the potential for it to collapse within days, forcing a fresh set of elections. See more here at BBC.
Germany and France called on Greece to stick to its austerity plan, but more than 60% of Greek voters oppose it in opinion polls. See more here at Reuters.
The collapse of US brokerage firm MF Global on Monday has deepened those fears. The broker-turned-investment bank blew up in less than a week after it disclosed US$6.3 billion of exposure to European sovereign debt.
It emerged overnight that MF Global was also using client funds to trade on its own account, which is strictly forbidden for brokerages. See more here at NYTimes.
More than 8,000 Australian investors with Contract For Difference (CFD) accounts with MF Global have had their accounts frozen. See more here at The Australian.
Oil and gold prices fell sharply on concerns the European Financial Crisis is deepening again, further endangering any global recovery.
The New Zealand dollar also fell sharply against the US dollar, as it often does when global stock markets slump and investors move away from assets seen as riskier, particularly those with exposure to commodity prices such as the New Zealand dollar.
It fell to 79.4 USc this morning, having been as high as 82 USc just a few days ago.
However, the New Zealand dollar rose vs the Australian dollar after the Reserve Bank of Australia cut its official cash rate to 4.5% from 4.75%. This tightened the interest rate differential between Australia and New Zealand, where the official cash rate is 2.5% and likely to stay that way until mid-2012. This makes Australia's currency relatively less attractive. The New Zealand dollar rose to around 77 Australian cents from 76 Australian cents.
Westpac and Commonwealth Bank passed on the cut in the Australian cash rate with 25 basis point cuts in their floating mortgage rates in Australia. So far National Australia Bank and ANZ had yet to follow suit by Wednesday morning. See more here at The Age.
Meanwhile, prices fell 1.2% at Fonterra's fortnightly auction of milk powder, extending the run of falls to 9 in the last 10 auctions. See BusinessDesk's article on our site.
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43 Comments
At this moment, there’s a cabinet meeting going on. It's not clear whether the cabinet officials will follow Papandreou’s call for a referendum. We’re already seeing some public calls from within the party for him to resign as leader. If that happens, that could trigger a fresh election.
Another trigger is that the members of the main opposition party could resign en masse, which would make the government unworkable.
Helicopter Ben will pump things up tonight. I'm thinking Armageddon it. Where is the growing economy comming from again? Please explain Key/Goff. Our power companies return on equity 17.9% and key wants to sell them when he can borrow at 5%, our leaders are corrupt and thick.
To early to call a top on the market? I'd say tommorow.
Not if you take back some of it in tax!...and not if you intend to direct the flunkies on the govt controlled board to issue new shares to flog to more fools! and not if you secretly know an extra 5 billion is needed to rebuild aging power infrastructure...or to pay for the new fleet of aircraft needed to keep airnz operational....
That's some gut skudiv....the divs to govt rely on the assets remaining viable...ask yourself what capital requirements an airline could have...or each of the power companies....do the research...look at what has happened to the value of shares sold in all previous such events....Govts do not tell the truth...
Air NZ is headed down the gurgler, borrowing to fund the current account et al. Power companies have a ready captive market. Electricity prices will go up either way, they will make a profit either way, at least with full ownership the costs of upgrades can be met by retentions. Fonterra wanted to seek capital from the stock market, got slammed in a democratic vote. People will vote for asset sales only to stop the other clown getting in, which is a crappy way to decide on something like this.
Wally, your doing it again...
If the National Party can make a good argument for SOE sales. then they should do it.
By your 'argument' you are suggesting that they have not yet explained their 'plan'.
People will listen if it is explained properly, you do not have to make it up for them.
Powerful word.... Referendum.... Great word, Mr Key liked it once too.
"Can make a good arguement"....hah.....you might as well say..."can generate compelling spin"....Cavaet Emptor KWJ.....it's your capital.....
My point is 'they' have not yet told the public the whole truth...open the books wide...let us see what the future capex hole is....Claiming the current div return to govt is 17.9% is misleading if the capex has been put on the back burner.
How much will the airline have to fork out to replace the fleet with new tech planes....?
A Greek "NO" will trigger banking failure across Europe and drive a stake through the hearts of the EU party goers...ask yourself what Greek voters will think of this as a consequence of their voting "NO" to the euro.........I think they will laugh and say "serves you bloodywell right"
Will this Greek vote be free of fraud...fat chance. Look at the Iceland situation...they said "shove off" at the very start and they are climbing out of the hole. That is what the Greek voters will see.
Meanwhile 8000 Australians caught up in another American financial scam...that took place right under the noses of the SEC...again....
It seems like the greek bond holders aren't willing (or more likely able) to accept a necessary haircut to make this situation work, (ie way above 50%). Also the greeks themselves aren't interested in accepting realistic austerity measures to make it work. Will be very interesting to see if an eleventh hour deal will be done... otherwise let the fireworks begin!
..and the problem is, Governmnet debt IS taxpayer debt, and has to be paid back...by taxpayers. As we continue to run a current account deficit, the only way to repay 'our' debt is to increase the repayments and run a c/a surplus ie: more tax...it has to come from somewhere; taxpayers, one way or another. And taxpayer have it locked up in one place....
What will it take for change here? My belief is that so great a percentage of the population have been conned into believing that property is the way to real wealth, that until their hope of realizing that wealth is broken they won't buck the system. That change in outlook can happen rapidly though:)
It's only a matter of time, financial engineering has created such a complex structure out of flawed principals. One piece breaks, the whole structure collapses. Even the mainstream media has been saying it, contagion etc.
The most amazing thing about this whole collapse is that despite all the intervention, everything is unfolding according to the baseline scenario. May as well try and stop an avalanche.
Govt secret released...special accomodation camp to be built at Carnley Harbour on the Auckland islands to house DPB fathers only, who fail to meet required support payments.
The following are MF Global Holdings’ largest unsecured creditors and shareholders, according to the company’s bankruptcy filing and related court papers submitted today in U.S. Bankruptcy Court inManhattan.
Unsecured
creditors rank behind secured lenders in getting repaid in a
bankruptcy, and are ahead of preferred and common shareholders.
Unsecured Creditors:
JPMorgan Chase & Co. (JPM)’s JPMorgan Chase Bank, bondholder trustee, $1.2 billion.
Deutsche Bank AG, trustee for $1.02 billion in bonds:
Deutsche Bank Trust Co., bondholder trustee for 6.25% notes, $325 million
bondholder trustee for 3.375% notes, $325 million bondholder trustee for
1.875% notes, $287.5 million bondholder trustee for 9% notes, $78.6
million.
Alan just phoned to say he expected to put the final clauses in the new regulations which will set an upper mortgage to valuation barrier at 75% with staged drops of 85% from March first 012...80% a year later and the final 75% from march 014.
Banks will be free to lend more but will not be able to use the legal system to secure credit loaned above the barriers. The regs will make first mortgages the only mortgages allowed by law.
It is expected this move will help drive down property prices leading to families having more capital to save instead of feeding wealth into the profits of banks in a destructive credit cycle that can only end in misery.
"Government prosecutors ...... also have their sights on the stricken ship's owners. Costamare Shipping could also find themselves prosecuted" herald......harrrrrrhahaaahaaahaaaa
The greek taxman hasn't been able to get a zloty off them since WW2 but the NZ govt pointy heads believe they can....have you ever come across such idiocy in your life....!
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