Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the European Central Bank (ECB) failed to sterilise its bond purchases overnight as banks were unable to return enough funds to the central bank. (Video due shortly)
Meanwhile ECB lending to European banks hit its highest levels since the Lehman Brothers collapse as signs emerge of intense stress within the inter-bank lending system in Europe.
Wholesale money markets have virtually frozen in Europe since last Thursday's shock bond auction failure in Europe. Some commentators are warning the Eurozone could break up and collapse violently within the next two weeks as European leaders and bankers fail to stop contagion in the European debt crisis. See more here at Reuters.
Meanwhile European ministers are struggling to beef up their European Financial Stability Fund (EFSF) and have even started talking to the International Monetary Fund about finding help. Also, Italy had to pay a record 7.89% to sell 3 year bonds overnight, which is seen as unsustainable for Italy. See more here at Reuters.
Deposits at Greek banks are dwindling fast and various leaders have warned of wholesale runs on Southern European banks unless a solution can be found fast. See more here at Bloomberg.
A French newspaper warned that Standard and Poor's could warn within days it may cut France's AAA credit rating because of the exposure of its banking system to Greek and Italian government bonds.
Meanwhile, Britain has announced another round of budget cuts as it warned of much slower economic growth and higher unemployment. Chancellor George Osborne released his 'Autumn statement', which included a slashed economic growth forecast, a capping of wage growth for public servants at 1% once their pay freeze ends in 2013, an extra 111 billion pounds of debt issuance over the next five years and a delayed return to surplus by 2016. Osborne also accelerated a rise in the pension age to 67 from 66 by 8 years. See more here at BBC.
Australia also announced a deterioration in its budget outlook yesterday. See more here at Business Spectator.
Although our Finance Minister Bill English remains confident New Zealand's budget outlook is on track. See more here in Alex Tarrant's article.
In the United States American Airline filed for bankruptcy protection. See more here at Reuters.
US and European stocks were mildly firmer overnight. The New Zealand remains firm over 76 US cents.
No chart with that title exists.
24 Comments
Of course NZ cant avoid the world plunging into a recession at the minimum....the Q will be how NZ is impacted....if the banks dont freeze up and we cant buy food and have a few riots....then I'd watch the share market collapse firstly......then Fonterra's payouts should be watched......banks will be nervious....of that drop....ppl just wont be buying milk products.......so the dairy industry could lead the way in knee capping "our" banks...
"hope" yeah right.....good old BE is probably on his knees praying....
regards
This one would make the Trade Me IPO look like a tiddler:
With friends like these: Facebook's $100bn float offer- by: Mitchell Bingemann
- From: The Australian
- November 30, 2011 12:00AM
FACEBOOK is mulling a $US10 billion initial public offering that could value the booming social networking site at more than $US100bn ($101bn), catapulting its worth above that of internet veterans eBay, Amazon.com and Yahoo.
According to reports in The Wall Street Journal, Facebook is targeting April to June next year for an initial public offering worth up to $US10bn.
Ralph Norris switching off his blackberry, last day at CBA today - http://www.theaustralian.com.au/business/economics/finally-norris-can-t…
For those who do podcasts, there is a great 40 min interview with Interest.co.nz favorite Ambrose Evans-Pritchard going into detail into the whole Europe debacle. Its free and well worth a listen! http://itunes.apple.com/podcast/the-disciplined-investor/id217999782
URL?
Interesting, I thought AAA ratings would get as rare as hen's teeth...
Lets see, OZ is all about 2 things,
a) exporting minerals to china, china's outlook looks dubious to say the least........I suspect its GDP is highly falsified....looks like its been makingbuildings for the sake of it for 5 odd years to boost those gdp (growth) numbers.......and it has to sell to the "developed" nations who are broke or soon will be....
b) OZ housing bubble where the over-valuations are I think the worst in the world? and the OZ banks are up to their eye balls in that market....but of course private debt is of no importance...
and this is an AAA rated country according to S&P.
ho hum.....
regards
here goes
http://www.news.com.au/business/sp-affirms-australias-aaa-rating/story-e6frfm1i-1226144601967
Like Allan Bollard said while ago - Australia is lucky that most of their mineral mines are in extremely remote places.. It's something for NZ to think about.
Yes Chairman...a lot of their minerals are in extremly remote places as a matter of coincidence.....to boot their remote places are not as prone to seismic activity.....still we'll give it the old shool try eh..?...bring in some of those guns like we had in Pike River.
Perhaps we should dig a hole in downtown Invercargill n just head north till we hit something......
Aw yeah this is gonna be good...!
I'm over trees Chairman....well n truly over Russell...never was taken by the man..!....Mining responsibly..?
How we doing so far...!
Oh yeah thats right John Boy's had a productive session with that guy ...er... um...Hackett wasn't it ....now he knows a little on oil spills n wot knot .
http://blog.al.com/press-register-business/2010/07/oil_spill_tars_success_of_anad.html
Mining responsibly...? So the wild west arrives on the doorstep ...spades in hand and assures us their the best available techies for the job.
Australia has a long history in minning and the expertise to back it up....that said you may be surprised to learn not everyone basks in the sunshine of all that glitter...not everone feels all minning locations were not detrimental toward people who had an interest in the outcome.
Why Good ol boy George Falcon.....just got on and had anything in his way moved...
Still that's progress eh.....long as the punters have something to invest in they can call their own...................like Transrail....!
This will make Bernard's day, he's been quoted in the Economist:
Writing in the New Zealand Herald, Bernard Hickey, a local financial commentator, pointed out that the government (and the opposition, for that matter) lacks a plan for coping with the very real possibility that a meltdown in Europe should derail New Zealand’s recovery. Such a situation, said Mr Hickey, would result in the government needing to administer “a giant dose of financial Berocca”. Which would be a change from a cuppa, but one Mr Key would dearly like to avoid all the same.
http://www.economist.com/blogs/banyan/2011/11/new-zealands-politics
"So what happened in spring 2011? The ECB raised rates even though there was no sign of underlying inflationary pressure beyond a commodity blip, and even though the needed price adjustment in the periphery clearly needed a reasonably high inflation target.
Trichet might as well have gone on TV and announced, “My colleagues and I are determined to make the debt problems of southern Europe insoluble.”
And they’ve succeeded."
http://krugman.blogs.nytimes.com/2011/11/29/the-ecbs-reverse-fdr/
So congrats to the "sensible" ppl that screamed interest rates just had to go up to combat "inflation" that didnt exist except in a transitionary phase.....maybe we should thank tthe heavens or maybe Bollard that the RB ignored that "wisdom"
regards
Great depression Debt history...due to be repeated by us....and as you can see the debt this time is a lot bigger....so just why this wont be a far worse event I just dont know....
http://krugman.blogs.nytimes.com/2011/11/29/debt-history/
http://www.voxeu.org/index.php?q=node/3421
http://seekingalpha.com/article/112776-the-great-depression-vs-today-s-…
http://www.dailymarkets.com/economy/2010/07/21/the-total-us-debt-to-gdp…
regards
Sometimes I get a sense of foreboding....
"Historians have traditionally attributed the Panic of 1837 to a real estate bubble and erratic American banking policy"
sounds familiar........
http://www.library.hbs.edu/hc/crises/1837.html
"In the 1920s, Florida was the site of a real estate bubble fueled by easy credit and advertisers promoting a lifestyle of sunshine and leisure. Contemporary accounts describe a collective madness that consumed Florida investors: city lots in Miami were bought and sold as many as ten times in a single day. The received wisdom holds that a 1926 hurricane pricked the bubble, but house price indices and construction data suggests that the boom and bust was in fact a nationwide phenomenon whose causes and consequences remain unclear.23
The housing price downturn in 1926 led to a rise in the foreclosure rate. Foreclosures were the cause of considerable hardship in the 1920s, but public attention focused on the plight of family farms, not residential real estate. Heavily mortgaged during World War I, in expectation of continued high prices, many farms were overwhelmed by the postwar collapse of the agricultural commodities market. Yet foreclosures of residential properties also increased in 1926, rising steadily through the stock market bubble and peaking in 1933.
Think Fontera payouts.......
http://www.library.hbs.edu/hc/crises/forgotten.html
yet more real estate bubbles, but this time we are different.....of course we are....
regards
Guess we get to be added to the lengthening list.
regards
Interesting doco - death of the american middle class
http://topdocumentaryfilms.com/an-inconvenient-death/
regards
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