Here's David Chaston's summary of the key news overnight in 90 seconds at 9 am, including the news that almost everything is 'down', and Greece is back at the centre of the euro crisis.
Firstly, however, there was an 'election budget' delivered in Australia late yesterday although there is no election due. They are targeting a surplus next year and based on that have announced big tax cuts as part of an attempt to share benefits of the mining boom. To square their books, they are also the first Australian government in 42 years to actually cut spending.
In Europe, the focus has returned to Greece where anti-austerity parties are trying to form a government. Neither of the two main parties can after their trouncing at the weekend's elections. The rhetoric coming out of those ascendant fringe parties has made more real the possibility of Greece abandoning the euro. There's going to be no national unity in Greece. German reaction is not friendly. If no-one can form a government, new elections are likely. Without voter confirmation of their previously negotiated EU deals, no-one is going to honour it, and they will be bankrupt in June.
Stocks are down sharply in the US. The S&P500 hit a two-month low overnight, and the Dow was down more than 1%. But in late trade, both are recovering somewhat. Commodities are down; US oil down to US$97/barrel, Gold fell heavily and was under US$1,600 per ounce at one point. Grain futures are very soft.
All this bad sentiment has seen the New Zealand dollar continue its fall and it is now at 70.5 on the TWI, and it buys just US0.7880 and AU$0.7790 early this morning.
Bernard Hickey is in Wellington today for the Reserve Bank's Financial Stability report. He will be back here tomorrow.
But perhaps the most important 'down' news today is that Maurice Sendak, known for “Where the Wild Things Are,” has died at the age of 83. He was widely considered the most important children’s book artist of the 20th century. He certainly was in my family.
No chart with that title exists.
25 Comments
"part of an attempt to share benefits of the mining boom. "
Oh dear ! Julia, while buying votes is not new at all, surely you could have been a little more innovative with the candy wrapper.
On the up side of smash the rich mining profits, well it's not like their going to go anywhere now or the foreseeable future is it.......and so a calculated risk taken.....but the mining industry knows how to buy votes too Julia.....factored in to the risk I hope.
But scarfie...as John Boy said just yesterday ...people are choosing to save that extra morsel of disposable income.....why he even seemed pleased their not choosing to spend it,,,,sending weird signals to the retail markets...
The implosion of the housing market in Aus may have a little more to do with our new best freinds having a few problems of their own at home......curbing their appetite for foreign land ownership in the interim......or big money players exiting the market as it were.
So don't you just love the spin Treasury is putting on it at this very moment in time....like they had something to do with it....just read breaking news...! I'm now breaking wind I laughed so hard.!!
That's another thing ...Treasury, stay out of spin !! your number crunchers, bookeepers,guardians of the fiscal toolbox...which is a little like the handy home toolbox ,everbody knows it's there...bugger all know how to use it.
...... outside of the mining industry , the other 90 % of the economy & 98 % of the workers , are doing it tough !
Great time to choose " austerity " !
Most economists are scathing of the government , as the economy has got the colly-wobbles .....
.... but if Craig Thomson is found guilty of using union credit cards to pay for prostitutes and for paying off his election costs , then Julia really is one man short ..... or if her dropped slipper falls another peg or two , after his tryst with a young male colleague ...... expect an election faster than an erection ........
I don't know why Craig T. doesn't do the I'm a red blooded man routine....and now I'll go sit in a corner over there.....out of the way....hands where you can see em..............I think it's been done before but just escapes me now...hmmmm.
By the way GBH...just make sure he's not in the family tree uh..?
Simple little chart giving the key policy changes in the Aus budget;
http://www.smh.com.au/multimedia/national/nastiesandgoodies?rand=1336471469154
Certainly looks to me to be more sensible than what's on offer here. All we're getting are announcements about increased government expenditure (spend more in 'assistance wraprounds' to solve existing social ills) and no new revenue sources (aside from collecting a rather insignificant increased amount from ex-students who are largely the low and middle income earners here).
Recovery Failure in Spain and Italy.
http://www.golemxiv.co.uk/2012/05/recovery-failure-in-spain-and-italy/
Sharp contrast to the propoganda coming out of the IMF as of just yesterday A.J.
It would appear ..a lie...as long as it's sanctioned in the interests of Banking stability...is not in fact considered a lie at all......but a departure from the reality inhibiting growth.
MMMMM...nahhhhhhh A.J.....I would need kryptonite proof testicles and lead lined underpants to take that leap of faith.....But I did spot you on the Kiwi slide ...hope you got on it... my guess is John Boy sure as hell did............just disgusting isn't it ......
One sunny day in December, 2013, an old man approached the Lodge from Parliament house where he'd been sitting on a park bench. He spoke to the Guard standing guard and said, "I would like to go in and Meet with Prime Minister Gillard." ... The Guard looked at the man and said, "Sir, Julia Gillard is No longer Prime Minister and no longer resides here." The old man said, "Okay," and walked away. The following day the same man approached the Parliament House And said to the same Guard, "I would like to go in and Meet with Prime Minister Gillard." The Guard again told the man, "Sir, as I said yesterday, Julia Gillard is no longer Prime Minister and no longer resides here." The man thanked him and again just walked away. The third day the same man approached the Parliament House And spoke to the very same Guard, saying, "I would like to go in and meet with Prime Minister Gillard. "The Guard, understandably agitated at this point, looked At the man and said, "Sir, this is the third day in a row you have Been here asking to speak to Julia Gillard. I've told you already That Julia Gillard is no longer the Prime Minister and no longer Resides here. Don't you understand?"
The old man looked at the Guard and said, "Oh, I understand. I just love hearing it."
The Guard snapped to attention, saluted, and said, "See you tomorrow, Sir.
Beautiful...iconolast...just beautiful....LMAO.....left you a scenario the other day on a little matter of the currency slide...can't find it now but shld be among your replies in the mail system .....hope you got on it.
ooops ! got it now, go near the bottomof page.http://www.interest.co.nz/opinion/59160/opinion-bernard-hickey-applauds-rbnz-looking-more-tools-head-another-property-boom-you
Christoff: Thanks .. yes, I saw it .. it raised a number of questions that conflicted with my understanding, so much so I didn't want to display my ignorance of Fonterra and "hedging" ... needed more information .. did some back research but there is too little information available .. so dropped it .. but now you raise it again ..
(a) Was under the impression Fonterra was operating their own global "futures" trading desk .. could only find GlobalDairy operated by CRA.Inc (that wasnt them) ... and from what I understand, Fonterra would be the Market-Maker
(b) An article in interest.co.nz last year (Bernard?) had Fonterra losing $350 million in 2011 on currency hedge contracts, while another poster (Colin?) put it at $472 million.
(c) Your post implied they made a profit of 12% on currency hedge contracts.
(d) If Fonterra are hedging their currency exposure on receipt/issue of a bill of lading I dont understand how they could have lost anything on currency hedging ... are they in fact playing the Forward Forex market?
Can you clarify please?
Nope I cannot iconolast...here's the link you were referring tohttp://www.interest.co.nz/rural-news/58342/fonterra-cuts-201112-payout-forecast-15c-nz675-nz685kg-milksolids-due-high-nz-and-g......taking up positions of insurance can and do provide gains in decline.
Obviously I've got no show of proving those positions being taken up in a Forex sense ., but I remind you it is supposed to be a commodity based currency and so would imply insanity not to protect or indeed capitalise on the downside.....
That position is magnified many times when who knew what when comes into play.....John Boy is in a position of advantage ......what an urge he would need to overcome...eh..?
I agree with you .. I am more than interested in this .. trouble is the mis-information ... re-production of the PR by the msm and fringe-media without question ... hoping one of our farming experts can provide some illumination on the Fonterra Trading Desk, where it is, where can I see it, is it in the public domain ... how much did Fonterra make or lose last year on (a) the "physical" (b) the derivative, and (c) the currency ... the currency fluctuation broken down into (a) production activities and (b) offshore assets.
You are right about the "commodity currency" ... I suspect there have been too many fingers in the pie on a "no responsibility accepted" basis and Fonterra have been scuppered.
With those answers I could give you chapter and verse on the involvement of JK
re Aussie Budget - before all ye Kiwis head for Oz heres a quick analysis on tax rates vs NZ - HT to Murray Pashby
The Australian budget set tax rates for the next two years so how do we compare. The following table sets out tax payable using the basic scales so Working for Families, Medicare etc are not included. Note how Australia “whacks” non-Australian tax resident (“NR”) earners who pop over for a few months!
Income
NZ Tax
Oz Tax
OZ NR tax
$37,000
5,459
3,388
12,025
$48,000
7,420
6,963
15,600
$70,000
14,020
13,138
22,750
$80,000
17,320
17,213
26,000
$100,000
23,920
26,213
33,400
$120,000
30,520
35,213
40,800
$140,000
37,120
44,213
48,200
$160,000
43,720
53,213
55,600
So, at a basic tax rate level, above $80,000 New Zealand has lower rates and don’t pay Medicare, capital gains tax or stamp duty – food for thought!!!
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