90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: Europe somewhat calmer overnight as Greece finds PM and Italian bonds improve, but volatile; NZ$ falls to 77.3 USc

11th Nov 11, 9:02am 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 European markets were somewhat calmer overnight after Greece finally found a Prime Minister and Italy managed to sell some Treasury bills in an auction.

Greece named Lucas Papademos as its new Prime Minister. He is the former head of Greece's central bank and a former deputy governor of the European Central Bank (ECB). Well known and liked by Europe's bureaucrats and bankers, he is not popular with Greece's voters and has never been voted into political office before. See more here at CNN.

Meanwhile, Italy successfully sold 5 billion euro worth of one year Treasury bills in an auction, helping to boost sentiment in the Italian bond markets, which collapsed on Wednesday night. See more here at Bloomberg.

However, Italy's government had to pay a yield of 6.087% in the auction, up from 3.57% in a similar auction just a month ago. The problem for Italy is it needs to roll over 200 billion euros of bonds and 108 billion euros of Treasury bills in the next year, which would embed unsustainable interest servicing costs at current interest rates, assuming they were actually bought by investors.

Italy's 10 year bond yield fell 25 basis points to 6.98%. Its jump over 7% yesterday was seen as Italy's Lehman moment as a rise over 7% was the threshold beyond which Greece, Portugal and Ireland needed to ask for bailouts.

Former European Union Commissioner Mario Monti is shaping up as the likely successor to Silvio Berlusconi. He is another Papademos style technocrat who appeals to Europe's bureacrats and bankers, but may not be as popular with voters. See more here at Reuters.

Meanwhile Chinese exports were weaker than expected in October as demand weakened from America and Europe. Also, there are initial signs that trade finance between Europe and China is seizing up as European banks become more stressed. See more here at BBC.

Closer to home, consumer confidence in New Zealand fell in October despite the Rugby World Cup. Also manufacturing contracted.

The New Zealand dollar was weaker overnight, hitting a low of 77.3 USc. It was around 77.8 USc this morning.

No chart with that title exists.

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10 Comments

by Andrewj | 11th Nov 11, 9:15am 1320956133

http://peterlbrandt.com/federal-regulators-asleep-at-the-switch-once-ag…

I am in a state of shock and disgust. The email flood I have received, reflected somewhat by the reply chain below, presents a general theme on the matter of MF Global. The emails I am receiving are from people who likely have other email address with the suffixes of .gov or .edu. Or else they are lobbyist who make their seven figure incomes by inserting single sentences in massive bills that get voted on before members of Congress even know what they are voting on.

by Wolly | 11th Nov 11, 9:33am 1320957202

Similar scene playing out here in NZ AJ....when the banks tumble the depositors will lose their life savings. The RBNZ couldn't give a rat's about the peasants...they are 100% behind the banks...the banks are free to flog covered bonds and to push the credit drugs to prop up the bubble on which they have been allowed by the RBNZ, to lend out many tens of billions.

Ponzi scheme it is.......so how come the FSA is not pressing charges against the Minister of Finance and the Gov of the RBNZ and the bosses of the banks.....!....what a farce

by Rudderless | 11th Nov 11, 4:06pm 1320980793

My research on MF Global indicated that they used their London office to sell Contracts of Difference. Wikipedia explains these strange products which have always been banned in the US. The reasons they were created and who now pushes them are also explained.

Interesting product - put simply - margin trading on vapor.

Apart from MF Global, there seems to be one other pusher of Contacts of Difference. That familiar brandname advertises frequently on New Zealand TV - promising instant riches. How many Kiwis now own Contracts of Difference? Or understand them? Why is this product not banned in New Zealand?

by Gareth Vaughan | 11th Nov 11, 9:34am 1320957260

Aussie banks chasing David Henderson (the Auckland one) for $100 million, the Sydney Morning Herald says - http://www.businessday.com.au/business/banks-chase-developer-for-100m-a…

by scarfie | 11th Nov 11, 12:16pm 1320967010

36°29'46.64"S 174°43'0.27"E

Plug that in to Google Earth Gareth, he owns the whole point there but not in his own name. With exclusive access to the beach at hight tide it is about $5M worth.

by Roelof | 11th Nov 11, 1:07pm 1320970043

Just started reading .."expect the revolution to Grow..""

Very nice graph ...What would be really revealing would be a graph of Money Supply growth and Govt spending coming out of each recession.

I'm very sure u would find that each recession has required more and more Money Supply growth and stimulus to achieve these... diminishing... empoyment growth figures..!!!

The "heroin Addict" is at the point of destroying his body because the fix he needs to use to get the needed "high"... is almost an overdose...

When u look at the Global credit growth ( eg Chinas money supply grew 30% in just 1 yr ) since the GFC ...and Govt Spending ( globally ).. The results have been ... I would say....a cause for concern.

Cheers Roelof

by Wolly | 11th Nov 11, 11:21am 1320963715

Some advice to the dithering liars in Europe....the banks need the EU if they want to make fat pay and bonuses...the EU determines the policies the ECB operates under....the ECB therefore needs new guidelines which force it to force the banks that want to ride the EU gravy train, to buy bonds from the piigs and other EU member states on a ratio to balance demand between piigs muck and german quality...Each bank is allocated a set bond figure based on that banks profits and or capital and or revenue...at a % determined by the ECB.

Buy or shove off.

This policy will hand the stupidity back to those who created it..the bank bosses. They would have no option but to buy piigs debt. The % would be kept 1% above the German bond rate. Each bank would know what all the other banks had bought. Since the purchases would be compulsory, the risk of a piigs nation defaulting is removed. That would remove the need for the farcical pretence that the banks had passed capital adequacy tests which everyone knows is utter garbage.

At the same time the ECB would in association with the IMF, gain the right to apply whatever taxation measures were deemed necessary to knock the piigs into shape.

by Wolly | 11th Nov 11, 12:19pm 1320967158

"The peasants are starving"

"Let them eat Lettuces...the price dropped too far....have to jack it up a tad"

by Wolly | 12th Nov 11, 9:36am 1321043762

"Christchurch representatives are returning to the motherland in the hope of attracting a new wave of skilled migrants to help rebuild New Zealand's second-largest population centre.

A team from the regional Canterbury Employment and Skills Board (CESB) has travelled to the UK to exhibit at two recruitment expos organised by Opportunities New Zealand. One is in London this weekend and the other in Manchester on 19-20 November. Both have been organised with a view to recruit many of the 30,000 skilled workers needed for construction, engineering and IT roles in Christchurch over the next 10 years."

http://www.guardian.co.uk/world/2011/nov/11/christchurch-recruits-britons-earthquake-reconstruction?newsfeed=true

Is this the leading edge of the govts immigration plan...will the skilled migrants and families be guaranteed work...be given citizenship...settle in chch...have any capital to bring with them...be any better than many unemployed Kiwi who could be trained to do the work....

And what about the migration rule book you ask....where employers have to prove to immigration that a shortage exists...have they burned that book already...is it cheaper for the construction firms to hire foreign labour...and boot them out when the jobs over?

What promise does this put in front of Kiwi youth studying right now for engineering and related degrees...Surely it amounts to large posters on campus walls with the headline

"You Kiwi graduates... get stuffed"

by Wolly | 12th Nov 11, 12:53pm 1321055582

"The Financial Markets Authority has warned ............. to stop disguising poor financial results" herald

Does not apply to govt ..............