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90 seconds at 9 am with BNZ: NZ dollar strength continues; German economy contracts; Euro-zone banks hoard cash; Iranian nuclear scientist killed

90 seconds at 9 am with BNZ: NZ dollar strength continues; German economy contracts; Euro-zone banks hoard cash; Iranian nuclear scientist killed

Gareth Vaughan details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, with news the New Zealand dollar has touched another record high of 62.60 euro cents, has risen to 52 British pence, which is nearing its record high of 53.70 and the Trade-Weighted Index (TWI) is at 71.2, its highest level since September last year. See more on the NZ dollar from the BNZ's Mike Jones here.

This came amid continuing concern Europe will fail to resolve its sovereign debt crisis soon, weakening the euro and shares on both sides of the Atlantic and boosting United States Treasuries. Official data also showed the German economy, the euro-zone's biggest, contracted by about 0.25% in the fourth quarter of 2011 from the third quarter.

It also emerged that Euro-zone banks are hoarding much of the European Central Bank's €489 billion December injection into the banking system, and therefore effectively thwarting the ECB's attempts to prevent a credit crunch. Much of the money has ended up on deposit with the Frankfurt-based ECB instead of being lent to companies and individuals. Overnight deposits with the ECB have jumped by about €223 billion to a record €486 billion since the loans were made to 523 lenders.

Governments are urging European banks to keep lending while also telling them to raise nearly €115 billion of core capital by June to combat the sovereign-debt crisis. But instead of raising equity, Bloomberg reports most European banks plan to meet the capital rules by cutting €950 billion from their balance sheets over two years, either by selling assets or not renewing credit lines, leading to concerns they'll cut lending and kill off any economic growth in the euro region.

Meanwhile, amid heightening tensions between Iran and the US, an Iranian nuclear scientist has been blown up in his car by a motorbike hitman with Iran blaming Israeli and US agents while insisting the killing won't halt its nuclear programme. The scientist was killed by a magnetic bomb as he drove down a busy street near Tehran University.

The killing comes at a tense time. Iran has started an underground uranium enrichment plant and sentenced an American to death for spying; The US and European allies have stepped up efforts to cripple Iran's oil exports for its refusal to halt work they claim really involves plans to build nuclear weapons, rather than the power plants Iran claims.

For its part Iran has threatened to choke the West's oil supply through blockading of a key area in the Persian Gulf - the Strait of Hormuz - leading to a US warning its navy is ready to open fire to prevent any blockade.

Despite the latest development, the price of West Texas crude oil was largely unchanged at US$101.7 a barrel.  See more here at Reuters.

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9 Comments

And the BS kept coming....!

 http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10778205

No surprise is it....the Herald does not employ real journalists..

Had to laugh Wolly, MSM keeps churning the spin.  40% of the population near or below poverty.  What a fantastic banana republic.  Only reason they are not Zimbabwe is they still have the worlds reserve currency, for now...

 "As a country, we still have the opportunity to avoid being caught napping by adopting the Chinese yuan as part of consolidating the country's look East policy." Well, if recently hyperinflating Zimbabwe is complaining about the US as being on the same path as itself, and instead wants to become a Chinese FX vassal state, perhaps alarm bells should go off somewhere. 

http://www.zerohedge.com/news/zimbabwe-bashes-us-dollar-alligns-yuan 

 

Can't be long now....

 "The exercises, called Austere Challenge 12, which both Israeli and U.S. officials have described as the largest-ever joint drills by the two countries, are designed to improve missile defense systems and co-operation between the U.S. and Israeli forces."

I thought it was called "The Great Profit"

U.S. oil imports have slid by 40 percent over the past several years as technological innovation in areas such as shale gas has boosted output

http://finance.yahoo.com/news/goldman-sees-china-becoming-biggest-161706...

It seems China and Japan will be most affected if Straits of Hormuz closed. They are hurt most by high oil prices.

Russia would seem to do best with high oil prices.

Iran and Russia would be hurt most by oil at $25 a barrel (from memory Russian oil costs $10 a barrel to produce).

I think the US are trying to put pressure on Iran in the run up to their next elections.

Its all about Grain and Oil folks. If wheat goes up (very bad for Russia and Iran) then expect the US to do all it can to collapse the oil price. Think they can't do that? Think again, a 1% increase in US interest rates would probably do it, maybe even less. Letting the Eurozone implode would also do it nicely.

http://www.aei.org/issue/foreign-and-defense-policy/regional/europe/the-...

 

We live in interesting times.

 

 

Happy New Year! Consider Keynes’s last words: “I should have drunk more champagne.” To avert similar rue when our own lives end let us pop an extra cork to celebrate a world undeniably confronting a tsunami of … affordable energy.

Daniel Yergin, in his latest and arguably most promethean work, The Quest: Energy, Security, and the Remaking of the Modern World, infuses a rich ingathering of information and analysis with the narrative power of a McMurtry, the human interest of an O. Henry, all shaken, not stirred, with a frisson of Ian Fleming.

Prosperity is emerging. How did the sourpuss Malthusians in the “Limits to Growth” league allow the heretical: abundance? Clearly someone from the Club of Rome slipped up — badly — and is destined to be burned at the stake. Probably with a fossil fuel.

If you want to hear a fat headed fool being run ragged by a sharp interviewer , listen to the  BBC Hardtalk interview by Sarah Montague of European Commissioner of Economic & Monetary Affairs Olli Rehn .....

....... whew ! ..... I nearly fainted , just from writing out his massively bloated title ........ his answers are massively bloated too , great swathes of hot air , and utterly devoid of substance .

Gummy's take on the interview is that these bureaucrats really do not have any financial talent whatsoever . And as Ms Montague pointed out , as unelected officials , they have the power to dictate to the elected governments of financially struggling countries , how to run their economic affairs .

"  Sir Humphrey Appleby " would have been proud of you , Olli Rehn : Unelected , untalented , and so much power !

Classic - you know when you've got one of those friends who will always, always drop a fart in a crowded elevator?  And then when everybody starts choking and protesting, they try to look all coy and innocent, but everybody KNOWS it was them?

Well, that's Israel.  Bomb blast in Iran - everybody's going "Oh my god, who just did that?  Can you smell that?  Was that... oh god.... was that you?  Well it sure as hell wasn't ME, so it must be... oh jeez, that is TERRIBLE... Mossad, you always do this, can't you wait until you get outside or something?  Don't deny it, we all saw your trousers billow.  What have you been eating for god's sake, how can you even DO that on a kosher diet?  Far out..."

And Mossad are all like, "Pre-emptive strike my friend, pre-emptive strike..."