Here's my summary of the key news overnight in 90 seconds at 9 am, including news that India's growth is slowing faster than anyone expected. Their gross domestic product grew at its slowest pace in almost a decade in the January-March period, adding weight to growing evidence the nation's economy is heading into troubled waters.
And, US growth was slower in the first quarter too, being revised down to under 2%. The latest jobs data is not very robust either, and that fact along with reported rises in weekly unemployment claims, add to the view that the US isn't going to rescue the world anytime soon.
China is under pressure too - and its way of trying to cope is risking trade retaliation. It's devaluing its currency again by setting weaker and weaker daily “fixings” for the renminbi against the dollar; China’s central bank has pushed down the renminbi almost 1% against the US dollar in the past month.
Of course, all of this down news is on top of the worsening situation in Europe, and world leaders are now looking on with alarm. ECB boss Mario Draghi has called the eurozone structure 'unsustainable', and pressure is piling on the Germans to stump up rescue funds. In Spain, funds are leaking out of their banking system at the fastest rate since these records began.
All in all, its a tough way to end the week, and it is not going to get better - it's possible things could come to a head this weekend, especially regarding Spain. Note that Greece is a sideshow now.
The immediate reaction locally is that Australia and New Zealand government bond yields are at record lows as funds seek safety. Wednesday's NZ DMO auction was five times oversubscribed. The RBA is widely expected to cut its official rate again over the rest of the year.
But it's not all bad news - there are many kiwi businesses that are thriving - and we are launching a new section on Tuesday to celebrate these successes. More from Bernard then. And interest.co.nz has just come off its best month ever with traffic and readership growing strongly to record levels. From all of us at interest.co.nz, we thank you for your support.
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10 Comments
But it's not all bad news........... interest.co.nz has just come off its best month ever
I would suggest that it is precisely because of all the bad news around that your traffic is going up, especially since the MSM still seem to be in gagaland wrt what's going on in the world economy.
Keep up the good work Bernard,David + co
Despite govt spin NZ competitiveness going in the wrong direction
Interesting stuff in the influential magazine Wirtschaftswoche (a bit like German version of the Economist) this week, a sort of cost-benefit analysis on the euro that comes to the conclusion it's not really worth it. Translates something like:
The euro has economic and political benefits. Its end would be a disgrace, which is likely to cause the world to doubt the political competence of Europe's leaders. However, many positive developments would have occurred even without the euro - conversely, many hopes that are tied to the euro have been disappointed. Moreover, everything suggests that the eurozone will turn into a transfer union, in which reform-resistant debtor states sponge their way through. The Monetary Union is therefore a high risk for Germany. The truth is: there is no alternative to Europe and the European Union. To the euro however there are certainly alternatives.
Wiwo chief economist Malte Fischer also provides a plan to disestablish the euro, basically existing deposits, debts, contracts etc. get converted into a synthetic currency (ECU) based on a basket of the newly introduced national currencies. Each country then trades in its own currency which would float freely against the ECU. Evidently the only disadvantage of this plan is that the pollies would need to accept that the euro has failed in order to prepare for its disestablishment.
Baltic index,
http://www.bloomberg.com/quote/BDIY:IND
and oil,
Dropping...uh...nicely.....WTI now $86! brent below $100 tomorrow?
regards
off thread but pretty significant --- There's more incentive for New Zealanders to cross the ditch for better pay.
Australia increased the minimum wage yesterday to $AU15.96 an hour, based on a 38 hour week, further widening the gap between the two countries.
A representative of lower paid workers here, FIRST Union spokesman Robert Reid, says yet again the Australians are showing up New Zealand.
"If you translate that to New Zealand dollars, that's almost $20 an hour. Whereas our minimum wage in New Zealand is languishing on $13.50 at the moment."
Mr Reid also says workers across different occupations have higher wages based on the national awards covering their jobs, and that could push their wages to over $30 an hour for the same job that's paying paying around $15 an hour here. ( Yep - I know a rest home slave/ carer about to move to a Oz job for this exact reason )
"The missing ingredient preventing the Fed from action had been the equity market, but now we are seeing it softening," he said. "Equities are falling and that was the last hurdle for Fed policy action because all the other criteria have been met."
http://www.reuters.com/article/2012/06/01/us-usa-stocks-weekahead-idUSBRE8501DK20120601
"softening" hahaaaaahaaaaaa.....remember punters, 80% of the trades are the parasites playing with the cheap fed poop money anyway....and still the farce that is the Dow is falling!
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