90 seconds at 9 am: Elections in France and Greece; Spanish bank bailout; US fiscal cliff consequences; China and Australia improve

Here's my summary of the key news over the weekend in 90 seconds at 9 am, including news that we start the week with commodity prices soft and falling on widespread concerns that economic uncertainty is piling up in the wider world, even if not in New Zealand.

The oil price fell last week - both the US and Brent benchmarks are below US$100/bbl. Gas prices are very low. Many agricultural prices are falling, although not all, as we saw for dairy prices on Friday. But the drift for commodities is down.

French elections are underway, and early indications are that the anti-austerity Socialists are headed for a comfortable win.

Meanwhile, the EU has agreed a massive 100 bln bailout for Spain so that it can recapitalise its banking system. These two weekend actions should clarify euro-zone policy directions and in that sense, markets are expected to like that.

But campaigning is underway in the secound and decisive round in Greece, and until that result is known, the new government formed and the EU response to resulting Greek demands is hammered out, the latest weekend actions will drift fast into the background. There is much high-wire euro action, but little evidence of tough decisions being made. European voters can't bring themselves to pay for the excesses of their middle-class welfare systems and they are avoiding resolutions by adding ever more debt.

The US is in the same situation. But they have forced on themselves a 'fiscal cliff' that is fast approaching - some very tough automatic adjustments get enacted on January 1, 2013 and after their November elections if Congress can't work out a better plan. But as that approaches, credit rating agencies are threatening further downgrades.

It's not all gloom, however. China has recorded a surprise rise in exports and industrial output. Exports were up 15% on the same month earlier; industrial output up 10%.

The Australian treasurer also declared the doomsayers wrong for his country, with their economy and jobs recording stronger growth than market observers expected.

Later today, we are expecting the May house sales data from the REINZ - and indications from the Auckland market is that the result will be a strong one. And later in the week, the RBNZ will deliver its Monetary Policy review which we will be covering in detail. The latest New Zealand trade and housing market data is likely to be important for Governor Bollard's decision on whether to change the OCR.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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A question, David:
How much of the 'bailout' was real money. How much was debt? How much fiat lever?

Ambrose weighs in here. No one really knows where the 100b is coming from...we are long past any pretense that these guys know what they are doing. Their silly financial machinations will continue to cause untold misery to millions of people. Bank directors and shareholders must be wiped out completely......bondholders converted to equity. No more halfway measures here. The problem is rooted in the private finance industry...it's game over. 

Not just shareholders though....you missed depositors and pension schemes..ie in effect all savings are bye bye. I mean from what I can see public and private pension schemes are either directly into the debt (eg local govn pension schemes are overweighted in council/municiable debt) or are closely and irrevocably linked to it indirectly......via say share prices and commercial property.
Now imagine,
the hardship and poverty.
what that does to house prices when the BBs find their private pensions are gone and they cant stay in their McMansions on (if they are lucky) state pensions....
job losses.....
no hope for youngsters getting work, ie 50% un-employment in spain...and it hasnt even exploded yet.
getting the picture?
Thank god im in NZ is all I can say.

Raf, tell that to the RBNZ Governor so he can go home and do a bit of unpaid gardening or swap recipes with the Secretary of the Treasury. It seems our regulators were 'a sleep at the wheel' for the last decade or two, so what will another matter?
It's a binary, zirp market that needs neither commentators or regulators - just a willing and increasingly stupid taxpaying electorate.

Why are you blaing the regualtors when our successive govn's did nothing?

Why are you blaming the regulators when in fact our successive Govn's did nothing despite the warnings?

Grow up Steven, those same government officials chose the regulators and the voters elected the government officials.
It's just that none of them need to be paid the exorbitant amounts their lifestyles apparently demand.

Both the government AND the regulators were asleep at the wheel. However, the regulators are the ones paid the (ridiculously) big bucks to keep an eye on things. One almost expects the politicians to be clueless about financial matters but not the "professionals" they appoint to look after the shop. It reminds how Don Brash and Michael Cullen kept telling me how wonderfully well regulated the NZ financial system was. Umm...a Tui please. 
As i wrote back in 2008,
Jane Diplock aka Plane Jane, was in La-La Land. I have noticed a serious sense of entitlement at the elite level of public policy.....unjusitifable salaries and cushy jobs have gone to their heads. Public service executive pay (like their private cousins) is another bubble that needs a good bursting. 

Bravo, raf - can we put you in charge of the necessary tools of the revolution?

JK has my number but, alas, has overlooked me for the quango appointment. I think I'm regarded as a bit of a maverick. I should probably remind him of an exchange we had about finance companies back in 2006 :-) 

Raf, I think you misinterpret my meaning - I was thinking 'revolution' in the French sense with knitters observing the proceedings of your initiatives.

Ah, oui, je comprends, comme Les Tricoteuse? 
I'm no Robbespierece but perhaps a financial guillotine would be appropriate. Major cut in salaries of public servants earning over a certain amount? 

away with the fairies and yer taxes....diplock name has a lot to answer for...
putting any one with that intonation anywhere near a position of responsibility is challenging to say the least.
so i will endeavour.
I think the english phonetic diallect has it looking like dipstyc, or another region was dipshyte.
i believe an aussie brit had first dibs and came from that region, but has since moved on.
fires up the imagination.
my keyboard has not got the where with all to do it justice.
capslock and diplock has the same meaning to some finance people.
hurts their eyes, but not improves their senses.

I think he's more of a watercolours man. But hey, when we live in a "well regulated and stable financial system", what's to worry about? 
From a historical perspective, the last 25 years will go down as just another screw up from the financial and power elites (the former owning the latter). Plus ca change.

Yes, I heard he spent a whole Jackson's Hole painting the Tetons. Maybe the local ranges will suffice in the future.

Some interesting points re. Eurozone were raised on ABC's finance show with Alan Kohler , yesterday :
1 :  30 years or so has been " invested " in creating the " united " Europe . Vested interests are not gonna allow that to disappear so easily .
2 : France & Germany have achieved what they're wished for so long ; European domination .
3 : After the mid June Grecian elections , some semblence or order will be restored to the Eurozone . That will be the trigger for a massive second half of year rally on sharemarkets around the globe .

Whats the point in dominating a dead duck? if they really are then its a delusion...
Shares, frankly I think you are deluded....or more likely, desperate...just keep repeating "this time its different", "this time its different"...Im sure you will be fine.
or maybe consider your options....like exiting shares.....Im sure as an adult you will make the right call.....and live with it.

...... if " this time is different " , then the world's sharemarkets would never recover .... because they always have recovered in the past ......
I expect that this time is not different , that markets will surge higher suddenly , and catch the nay-sayers out ...... by time the disbelievers dip their toes back in , the biggest part of the equity boom will already be past .....

never, yes correct...to the level they are now......or higher...
lets say they surge......impossible IMHO.....what is going to keep it up there?

..... the only thing that has ever kept markets up , in the longer term , is corporate earnings . Currently earnings are OK , and dividend yields are near historical highs .
Apply the same logic to rentals in NZ , if you will , to assess the sustainability of house prices .

Although some very pertinent observations made by Kohler with number one being absolute,.....He has failed to consider the peasants GBH....the return of confidence to the Market will not bring a reignition to the labour market in the short or medium term.
 Either way it plays out , civil unrest will bring changes to the E.U. both in membership  and equality of the remaining members.
I think you will find influence from the North and East will find the ground fertile for new alliances , economic and otherwise.  

..... the peasants should jolly well eat their cake , if they've run of of bread , my good Count !
Hey , it's Queen's birthday today ! ..... as I'm in Australia ( temporarily ! ) I'm not sure if Queen's Birthday is for the lovelly old lass in England , or if it's some sort of homage to the " homagers " of Sydney's gay & lessie scene ........

Ahhhh GBH..... "Qu'ils mangent de la brioche"....alas attributed to Marie A in error, but the phrase stuck,and as her sweet little head rolled from the block to the knitting basket, some peasant was heard to call.!
Maintenant que vous mangez un morceau de gâteau, voyez, je laisser pour vous.!
For the uninitiated...Now you eat some cake ,see I leave some for you.!
As to the Dear current Monarch, I have forwarded a gift voucher for N.Z. Merino adult nappies,  I understand they are the next best thing to peeing in your wetsuit and so likely to keep the good Duke from catching a chill, post future leakages,......allowing the Big E. to get on with the affairs of State uninterupted.

Only in some parts of Aussie GBH
Queenslanders have their weekend for the queen in October....

I cant see how we wont get considerable un-rest.....hence its the only thing that I can see is keeping them pretending its fixable...
Paul Krugman I think pretty much says what our only option is and thats a dose of inflation, with govn spending to stimuate growth*. ...big enough to allow the pain to be mitigated enough to get bye. Trouble is the neo-cons wont allow that so hello riots.......I wonder just how bad it could get and how fast.........What it comes down to is writing off the present young generation....boy are they not going to be happy....20~30 years of grinding adjustment....
*NB What PK never says is how the growth will occur without the (cheap) energy....

Krugman will be pleased to know that someone on the planet - and I do mean " one " - still takes him seriously .

We get to see whos right soon me thinks...the deluded or the ignored.....I know which way Im betting.
Only one? as opposed to the all the ppl that take the voodoo economists and pollies seriously? really they and you are kneeling at the alter of a false god.....As PK says if you listened to the WSJ and not him you lost a lot of money......and as he says right now and so do the likes Martin Wolfe etc, we are heading for a depression.....you dont seem to believe that....
Meanwhile, I'll settle for the likes of Jeff Rubin and Steve Keen both I think dont go down the liberal hole of thinking its fixable...Keynes comments were telling on the 1930s....(paraphrase) we have the resources we will recover....this time of course we dont...

My problem with Krugman is that prior to 2008 he was, like all the Keynesian economists, unable to identify the hyperbolic increase in debt that was occurring in the build-up to the GFC, unlike others such as Steve Keen, Peter Schiff, Michael Hudson et al.  However he now proposes solutions to a problem that he couldn't see and to which his solutions have already been tried and failed.  His argument now is that the previous Gov't stimuli and Central Bank printing weren't large enough.  But guess what they will never be big enough because you can't solve a debt problem with more debt.  As Einstein said the definition of insanity is trying to take the same actions repeatedly and expect to get different results.

Any economist who believed in the "Great Moderation" should commit seppuku if they had any honour.
However as we all know most of them rely on the current system to keep them in a job.

You know David.....Globaly speaking ,these money go round confidence shows to passify the peasants, would be a whole lot more satisfing if the IMFsubscribers could find some "democratic " way to gag the pesky ,nosey, illusion spotting Media from publicising the magicians tricks while the performance is still on the stage.
Renting a villa on the Costa mia lot anyone...?, learn some German so you can haggle with the landlord.
How many IMF officials  does it take to change a light bulb...?
Two. ...........One to screw it in and one to screw it up.

How many Eurozone bureaucrats does it take to change one light bulb ?
501  .... A group of Frenchmen to verify if a subsidised lightbulb is available at this time..
...  .a team of Belgians  to assess that the light bulb meets EU designated emissions and efficiency standards ...
... .a committee of Germans  to run all over the other Eurozone countries assertaining that your bulb does not exceed their standard bulbs wattage output  . .....
...... a crack  team of Dutch accountants  to check you havn't exceeded your lifetime quota of bulbs .....
And a team of Italians to supervise the safety equipment and procedures of the Greek guy they send up the ladder to change the lightbulb .....


Have confidence trickster.....it is all about how you count the cost.....christov.
We will be bailing out the euro.
The banks are making a killing...
a free auwkland mansion worth 8 million plus, but in mortgagee sale and owned by a property developer bankrupt for the multiplyer....time....and time again.
that must have been a safe bet.
now that is what you call a capital gain, with no capital whatsoever.
multiply that by all the other mortgagee sales in the offing.
jeez, this property finance lurk is fantastic, when can we all join in.
key must be so proud he can count on our banks, sorry...aussie banks.
better than stealing from paper boys, asleep in their class rooms at the back of the large class, as the working class has to work harder to stand still and the teachers do not have the class to work harder to stand still.
a class act indeed, we could give them spanish a run for their currency.
we will soon have a mansion each for each banker and polly, if they share the largesse around, with a trickle down effect.
anyway i thought it was gonna be a paper less office, so maybe we should not count on counting on paper boys to finance and shuffle the good news around.....
much longer.
depends on how you count the assets count........and how you value em.
we may need a few more russian oligarchs tearing up our coastline, aid and abetted by our councils.
(is nothing ..................sacred from their bulldozing away the laws of this land, I thought they concentrated on backhanders, not back hoes).
maybe they are right.....we could  then turn nz into the equiva-lent of the spanish riviera.....concrete all the way.
and make some one else fabu-lousy wealthy...like a certain awkland property developer.
someones loss, is someones gain. papering over the cracks is just what i do.
a bit laughable, under the circumstances, little capital, but lots and lots of capital gains.
soon the banks will own all the property, along with a fleet of m-pees.
wonder how fleet of foot they will be, once the party is over.  
maori party is nearly over for sum, but not for all at the next election.
if our asset sales are anything like facebook, we should all take a rest from investing in anything in no zeal-and.
cos they have nearly all spent ........................out....before we even get it.
if ya can count...that is.

Amen to that Alter Ego....

Hmm - well, Alter Ego, envy is such a perfect basis for civilised economic intercourse.....
And while the common taters busy themselves with the Plans for a Perfect World (otherwise known as Utopia, and always accompanied by its evil twin brother Distopia), may I leave y'all with this working example of a well functioning capitalist system essential to our life ...
Food production, distribution, and retailing.
Say wot yer like about monopoly profits, the Terrible Twosome in the grox biz, or the Perils of Overstocking.
But show me the Central Planners in the Ministry of Food.
Show me the starving moppets with their ribs a'stickin throuigh their cardboard jumpers.
Show me the pensioners ratting through the skips for their single meal of the day.
Show me the armed guards on the Food Storage Facilities.
Show me the political and other favours to be had by the offer of Guaranteed Access to Calories
Show me the Correctional Facilities for those growers who refuse to bow to the Master Paln for Production.
So, folks, be careful what epithets you so blithely toss aboot when it comes to the Weevils of Capitalism.
Because Unintended Consequences are a given.....

Inescapabley Waymad in our democratic utopia, Unintended Consequences, are in fact factored in, as Collateral Damage. 

ah but i do not rail against a system that works, but against a system that works in the favour of a few.
when you have to steal a crust from one to feed a habit of another, then we are morally and socially bankrupt as well as financially bereft.
in my simple example above, it is someone who has borrowed millions to build a monstrosity and the banks went along with it, leveraging a lot of savers munny, which is put at risk.
way to much mad risk.
I can understand unintended consequences, i have used the self same phrase.
stupid consequences is something i do not understand, nor condone.