90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: RBNZ expected to hold OCR; RBA seen cutting; Chinese non-manufacturing output contracts; China vs US on solar panels

5th Dec 11, 8:52am by Bernard Hickey

Bernard Hickey details the key things to watch for in the week ahead in 90 seconds at 9 am in association with Bank of New Zealand, including the Reserve Bank of New Zealand's expected decision on Thursday to leave the Official Cash Rate (OCR) on hold at 2.5%.

See Alex Tarrant's full preview here.

Most economists now expect the Reserve Bank to leave the OCR on hold for almost all of 2012, while markets have been predicting in the last couple of weeks that a cut was possible in coming months if the European Sovereign Debt crisis worsened substantially.

Meanwhile, across the Tasman, the Reserve Bank of Australia may cut its cash rate from 4.5% on Tuesday afternoon as its manufacturing and retailing sectors continue to struggle while the mining sector is booming. See the Sydney Morning Herald's preview here.

In China, there are fresh signs of an economic slowdown that could be turning into a hard landing. China is crucial for the Australian and New Zealand economic outlooks because it is our first and second largest trading partner respectively. Australia is our largest trading partner.

Bloomberg reported China's non-manufacturing industries, including property, retail and construction, contracted in November.

Also, there are trade tensions brewing between China and America, which is an unnerving sign given the rise of trade restrictions seen in the 1930s after the 1929 stock market crash, which some say deepened the depression.

American solar panel manufacturers and the US government are taking anti-dumping protests against China to the World Trade Organisation, alleging China is subsidising production and suppressing its currency so it can dump cheap solar panels into America.

America is trying to build its own 'green jobs' industries such as solar panel production.

See a Bloomberg report on the dispute. China has rejected a US ruling on the dumping, Bloomberg reported.

The New Zealand dollar was firm over the weekend after US job creation was in line with expectations. See BNZ's currencies report on our site here.

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15 Comments

by Wolly | 5th Dec 11, 9:17am 1323029842

Sorry I missed that...what did the banks tell Alan to do?

This is a Monti week folks...pasta hitting the walls....here a slash there a slash....Bill English we are told has locked himself in the Beehive long drop so he can learn a thing or two about how austerity works...don't worry he has a roll of bank notes.

by Stephen Hulme | 5th Dec 11, 9:52am 1323031962

"..The idea of an independent central bank being “the hallmark of democracy” is a euphemism for relinquishing the most important policy decision – the ability to create money and credit – to the financial sector.." Read more

h/t andrewj

by Anarkist | 5th Dec 11, 11:46am 1323038769

Stephen,

The problem with Michael Hudson, is that he seeks to buttress his political beliefs (Synarchy), by leveraging his (fairly justified) criticism of the private banking cartel. But the primary problem is do so he has to selectively use the historical record, to support his contention that the State has always "planned" the economy. Yes States at various times have indeed strongly intervened in their economies, but given which societies he's talking about, I'd much rather to live in the one we're living in now thank you very much. In the interests of his "confirmation bias" he overlooks periods in history where private actors managed their own economic affairs with limited interference from governments. Ironically when sovereigns did begin to intervene, they left chaos and turmoil in their wake.

"From long before the fourteenth century in England and France (and I think, in all countries), there were in common use large quantities of private metal tokens against which the governments made constant war with little success. It was not indeed till well on in the nineteenth century that their use was suppressed in England and the United States. We are so accustomed to our present system of a government monopoly of coinage, that we have come to regard it as one of the prime functions of government, and we firmly hold the doctrine that some catastrophe would occur if this monopoly were not maintained. History does not bear out this contention; and the reasons which led the medieval governments to make repeated attempts to establish their monopoly was in France at any rate not altogether parental care for the good of their subjects, but partly because they hoped by suppressing private tokens which were convenient and seemed generally (though not always) to have enjoyed the full confidence of the public, that the people would be forced by the necessity of having some instrument for retail commerce to make more general use of the government coins which from frequent "mutations" were not always popular, and partly because it was believed that the circulation of a large quantity of base tokens somehow tended to raise the price of the precious metals, or rather, perhaps, to lower the value of the coinage; just as economists to-day teach that the value of our token coinage is only maintained by strictly limiting its output."

http://www.ces.org.za/docs/what%20is%20money.htm

by Roelof | 5th Dec 11, 12:05pm 1323039929

This is worth repeating....

by scarfie | 5th Dec 11, 9:57am 1323032257

How to take the piss out of the Police.

http://www.youtube.com/watch?v=zKMwigI3mdM

Why the occupy wall street movement might cause some serious trouble for authorities in the long run. While some might be naive, the are mobile, probably smarter than average (certainly smarter than the Police) and have time to scheme.

by scarfie | 5th Dec 11, 9:59am 1323032389

Here is an interesting one.

The Swiss have decided on permitting the downloading of copyright material by private persons based on economics.

by Crazy Horse | 5th Dec 11, 10:38am 1323034724

Bernard, love your article about property in the Sunday Herald ! .... so "tongue in cheek". But the scary part was that so many of the replies actually thought you were talking the "real deal" ! .... Enzud ... land of the "sheeple" .

by Crazy Horse | 5th Dec 11, 10:40am 1323034819

sorry triple post !! ... crazy PC's !! harhahaha as Wolly would say !

by Crazy Horse | 5th Dec 11, 10:40am 1323034857

by JMGoods | 5th Dec 11, 11:13am 1323036806

@ Crazy Horse, yes Bernard's article was an excellent parody and it's such a shame so many sheeple do really believe in the 'house prices always go up' fairy story.

Several other trends related to household income, household formation, and ease of credit, worked together to excessively and unsustainably force up house prices to unfair levels.

These factors are combined with unchecked commodification of shelter for the population, caused by misguided governments who omit to regulate house prices, while unfairly allowing over-leveraged bidders to force up housing costs so they (the government) can benefit from vast streams of tax, duty, and rates revenue.

The dangerously unregulated property environments in Australia and New Zealand include many unfair elements that have pushed prices into bubble territory as is plainly obvious from the bubble charts below.

Property Bubble Chart Gallery

Sadly the truth is that every spare dollar of household income is spent on overpriced housing and capitalized into ever increasing house prices as young families battle for decent shelter while speculators unfairly hoard the available housing stock!

by Stephen Hulme | 5th Dec 11, 12:22pm 1323040958

@Anarkist

"..In the interests of his "confirmation bias" he overlooks periods in history where private actors managed their own economic affairs with limited interference from governments. Ironically when sovereigns did begin to intervene, they left chaos and turmoil in their wake." ...

In retort

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Adam Smith

by Anarkist | 5th Dec 11, 2:38pm 1323049134

Stephen,

Yes for sure, but its very hard for private actors to maintain a monopoly like the banking cartel without public protection from new entrants seeking a slice of the market.

by Andrewj | 5th Dec 11, 2:28pm 1323048515

CENTRAL BANK INTERVENTIONS: Main beneficiary was Credit Agricole

Over the weekend, The Slog has established via credit sources throughout the eurozone that last week’s global central bank intervention was primarily motivated by an immediate and serious crisis at the French bank, Credit Agricole.

http://hat4uk.wordpress.com/2011/12/04/central-bank-interventions-main-…

by Andrewj | 5th Dec 11, 2:34pm 1323048853

Banks

http://www.businessinsider.com/20-big-banks-that-are-most-exposed-to-th…

by Wolly | 5th Dec 11, 3:03pm 1323050638

Crikey...Treasury are breaking news....yes the $500,000 pa lot who blow over $1,000,000,000 a year on themselves have worked out that GDP will not be what they said it would be the last time they spoke up.....we are so lucky to have them....where would we be without Treasury.........