Central banks stage emergency intervention to help European banks; China eases; NZ$ jumps to 78 USc
Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the world's six biggest central banks staged an emergency intervention overnight to cut the borrowing costs for US dollar loans from central banks to struggling European banks.
The US Federal Reserve, the Bank of Japan, the European Central Bank, the Bank of England, the Bank of Canada and the Swiss National Bank announced a concerted cut in the lending rate for US dollar swap lines to 0.5% from 1%.
This makes it easier for European banks struggling to get hold of US dollars to roll over loans.
Many US money market funds have been pulling funds out of European banks and out of European bonds because of fears the European financial crisis will cause catastrophic bank runs and freeze the interbank lending markets.
Also, the People's Bank of China announced an easing of monetary policy to combat a global economic slowdown and signs China's growth rate may be slowing sharply.
China cut its reserve requirements for banks to 21% from 21.5%, the first easing of monetary policy there since December 2008.
US stocks rose more than 3% and European stocks rose more than 4% after the central bank intervention and the Chinese easing.
The New Zealand dollar, which often rises and falls in tandem with appetites for risk in stock markets, rose briefly over 78 USc early this morning and was around 77.9 USc near 9 am.
More soon.
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14 Comments
Rumour has it that a large European bank or banks were about to fail so this is a desperate move to increase liquidity. However the rumour mill also states this liquidity does not solve the underlying solvency issues.
It is interesting that the timing of this intervention happens at the same time a significant geopolitical events are occuring.
& Ambassadors called back from Iran.
Could be a big play in the days or weeks ahead.
A Continent Stares into the Abyss
http://www.spiegel.de/international/europe/0,1518,800285,00.html
Here is a fascinating article from earlier in the year.
http://dumpdc.wordpress.com/2011/04/20/the-floating-dollar-as-a-threat-to-property-rights/
"But if Congress can permit Mr. Bernanke to use his judgment in deciding what a dollar is worth, why shouldn’t he—or some other Ph.D. from M.I.T.—be able to decide from day to day what a kilogram is worth?....
.... To those who say it would be ridiculous to fix the dollar but let the butcher hand you whatever amount of hamburger he wants when you ask for a kilogram, I say, what’s the difference as to whether it’s the measure of money or of weight that floats? "
I read it Scarfie.....a bit on the out there with what if side of things......firstly Bernake does not get to excercise his judgment......like most things his directives will be a collective of interests finding agreement on measures taken even when just bandaiding the problem.
A ,Q E. 3 wll probably get a restart mostly morgage backed securities as a back up to the Twister but only if the nay sayers come onside....and that would require weaker economic reports than those out of the States recently.
Their main aim is to limit the damage from the Euro fallout....and that's the way they will play it I believe.
All care to a point ...then no responsibility as vanishing point is in sight.
A real case of...All the best but don't stand so close to me, if you wouldn't mind as it may be catchy..!
http://www.huffingtonpost.com/2011/11/29/federal-reserve-europe-crisis_n_1119178.html
I tend to agree. Print baby print until it all comes unstuck, I can't see any other option as they have all worked themselves into a corner. You know I have always thought the yanks would come out of this on top, not a pretty on top but on top never the less.
I was actually thinking last week that a probable move would be for the Fed to print and channel this into Europe, afterall they would not really want the ECB to print and the USD to rise. That would unhinge their own recovery plans.
I wonder if that judges suing for a pay rise issue has worked its way through the court, I would love to know the outcome.
Oh and what do you suppose would be a good plan for the growing number of unemployed under 25's in Europe?
Scarfie ...did you mean Judith S Kaye of New York....? because in Vancouver 146 of the buggers got together to sue for pay increase.
Inthe Kaye case it was more a case of litigious provocation or grandstanding...why?
There is a precedent for such litigation. In 1991, the chief judge at the time, Sol Wachtler, sued Gov. Mario M. Cuomo and the Legislature to restore funds to the courts that had been cut from the budget. That case was resolved out of court.
“I think what Chief Judge Kaye is trying to do is prod the governor and the Legislature into once again working out an agreed-upon settlement rather than fight an unseemly battle in the courtroom,” said Kenneth Feinberg, Governor Cuomo’s lawyer in 1991, on Thursday.
As to the under 25's in Europe...short answer..conscription with a nice shower proof uniform and a good supply of sticks and stones.
The writing is on the wall scarfie.....you don't need a reason for war..! you just need a better reason for not having one.
Sooner or later.... the collective someones light goes on...... and the idea there are too many of us in the name of growth....dawns.
Gummy - 'NZ needs safeguard of upper house':
http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10769958 Quoting one of the comments:"Phillip (Franklin District) 12:56 PM Thursday, 1 Dec 2011 It is ironic that the call for an Upper House comes today, because 61 years ago to the day, 1 December 1950, the NZ Legislative Council met for the last time. An appointed house, it voted itself out of existence, by the reckless maneouverings of the fisrt National Party led government. Later a National Party leader in Jim Bolger saw the error of this, and proposed an Upper House.
Most of the time the Legislative Chamber in Parliament Buildings sits vacant, with its upper house traditional red carpet, as opposed to the traditional green carpet of the lower chamber. Yes an Upper House proportionally elected, say by STV as in Australia, would be a positive re-addition to NZ democracy.
John Key got under 50% - most NZer's voting for another party or exercising their democratic right not to vote. An Upper House of review, would at least mean the government formed from the lower house, had to be held to account to the mandate it really attained, which is not the mandate thta is being asserted. Just as Sidney Holland had no mandate to abolish the Legislative Council, this National government should surely be better if it were to be held account by an Upper House. "
What do you think? Why would National seek to remove this kind of legislation modertor?
Digusting is what it is Les....like boundary changes under MMP it's signposting the pegs in the ground to manipulate the advantage.. the apathetic, serve up soooooo generously.
Yes let us have an upper hoose once more.....suitabley attired with gum boots and accessorised with Bull whips.
As a by the by those who did not vote although capable of it ,exercised nothing..!..while demonstrating their silent protest as little more than common ignorance/.....sloth.
It's enough to make you puke....chch
The council's regulations and democracy manager, Peter Mitchell, said the council had taken the "drastic step" of issuing the notices because lives were at risk." herald
I don't remember Peter Mitchell or any previous chch pointy head issuing notices regarding the dangerous life threatening facades of brick shite towering above people who were walking the footpaths or sitting at coffee tables in the CBD....and who were killed by falling shite...
FYI from a reader via email:
Hi Bernard
Just noticed this article on Reuters:
http://www.reuters.com/article/2011/11/30/us-australia-china-idUSTRE7AT2HY20111130
This article positions Australia as having the second
wealthiest population after Switzerland in the world. I
guess you could argue confidently that Australia has the
wealthiest middle-class in the entire developed world.
Primarily as there is no class system in place everyone is
getting a fair crack at the money and resources on offer.
Based on this info - why are our politicians and the media
continuing the long running mantra of New Zealanders
fighting to catch up with Australia? In sporting terms that
would be a little bit like expecting Norfolk Island rugby to
compete with the All Blacks by 2030 – based on the sole
logic that they are physically close to us.
I would imagine most of Europe would aspire to someday get
close to the standard of living on offer for Australian
citizens. I am surprised how unrealistic New Zealander’s
expectations are on this matter.
I've never heard in my lifetime someone saying I wish we had
the wealth and quality of living to match those of the
people in Switzerland. This would be ludicrous. However
trying to be emulate the country ranked second behind them
seems entirely plausible.
I think the air needs to be cleared on this issue - and we
need to drop the comparisons with Australia or else we will
spend the next thirty years scratching our heads saying we
did we go wrong leaving everyone feeling rightly depressed
at the victory they can never be achieved.
Cheers
Pete
Cause we can catch up to Aussie. Plenty of minerals and saleable dirt in NZ if you go looking for it.
I was chatting to a geologist a few days ago who pointed out that if we had a proper port on the West coast we could export roading metal to Aussie.
An open pit at Pike River?
I have a doctor friend who favoured the snails over coal mining. He just couldn't see it meant less money for health and education and decent housing and jobs.
Are we poorer than Aus because we choose to be?
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