Here's my summary of the key news overnight in 90 seconds at 9 am. Bernard Hickey is in Wellington this morning, covering the RBNZ review of the OCR and their quarterly Monetary Policy Statement. He will be reporting in soon.
While no one now expects any OCR change this time, there is intense interest in how Alan Bollard is reading the euro-zone crisis and how he thinks it will affect New Zealand. Dr Bollard has a tough job making these assessments as the crisis in Europe, and the slowdowns in both China and the US are playing out even as he speaks.
In the US, retail sales declined in May, pulled down by a sharp drop in gas prices, which also drove down wholesale prices. Commodity prices are generally falling; analysts at Credit Suisse are predicting crude oil could fall to US$50/barrel - its is down to US$82/barrel this morning.
The driver in negative sentiment continues to be Europe. The prime ministers of Spain and Italy have called on European leaders for help. Prime Minister Mariano Rajoy of Spain has appealed to the ECB to buy debt from struggling countries like his, while Italy’s leader, Mario Monti, said Europe needed “credible” measures to promote growth. Cyprus is the latest to signal it will need EU help.
The head of the European Commission now says the EU is in a 'social emergency' - his plan to fix things is 'greater integration'. In campaigning, the Greek socialists say they can't lose because they think they can reject austerity, stay in the euro, and get bailed out. Greek deposit outflows are accellerating.
Frustration is growing from the rest of the world. Overnight the Australian treasurer pleaded for 'political courage' in Europe. Australians aren't in a positive mood at present.
All this piles the pressure on the RBNZ today. Yesterday, the Treasury said they expect the euro-crisis to grind on for a decade. Today we hear what our monetary policy experts think, and just perhaps get some signals about how they will respond. Bernard Hickey and Alex Tarrant will be reporting comprehensively throughout the day, starting at 9 o'clock.
No chart with that title exists.
11 Comments
Here is a fascinating story. The question that springs to mind is why? Put this in the context of the US putting Marines on Australian soil.
Kiwi soldiers are being head-hunted to join the Australian Army with $250,000 cash bonuses.
The Eurofiscal Corruption Contest – The Spanish entry. by Golem XIV on JUNE 13, 2012 in CAJA, LATEST, SPAIN
Let me make it clear straight away – the lies, corruption, cowardice and greed of Spanish bankers and government officials is nothing special. What is happening in Spain now, reminds me of Northern Rock in the UK, Hypo in Germany and CountryWide in the US. So please do not think that I dislike Spain or of the ordinary people of Spain. The people I detest in Spain are the same people I detest in Britain and every country: The Cabal of corrupt Bankers and Political parasites.
http://www.golemxiv.co.uk/2012/06/the-eurofiscal-corruption-contest-the…
If the price of crude stays at its present $82, or drops below, I predict world-wide oil production will drop. Why? The income from marginal oil must exceed the cost of marginal oil production otherwise it's not worth pumping it out of the ground. I believe marginal oil production costs are in the $90-$100 range.
Production is not likely to drop immediately for marginal cost reasons, Saudi etc wants $85~90...so politicaly/financially they can shut the values to restrict supply.....however everyone else seems to open up fully as they are desperate for revenue....so turmoil is an understatement.
The worry is not today however....that marginal cost (and it will rise) is for future production lost. Such production takes 5 odd years to bring on line....if an oil company and these days its the small/medium players finding and developing the oil cant see a safe profit ie average price is $100 they wont develop the fields, if nothing else no one will finance them. This speaks of a very big drop some years away, way beyond the expected 4% per annum.....and 4% suggests a drop in global GDP of 6.5% per annum.....say we see 8% (and some see 14%+) that is a GDP drop of 12% which is depression territory....
regards
Mwahahahahahahhh
there is intense interest in how Alan Bollard is reading the euro-zone crisis and how he thinks it will affect New Zealand. Dr Bollard has a tough job making these assessments as the crisis in Europe, and the slowdowns in both China and the US are playing out even as he speaks.
Mwahahahahahah
600K to do nothing.
Thanks for the humour David. Please keep it up.
Hmm ...
http://www.zerohedge.com/news/due-extreme-volatility-some-market-analysts-foresee
Weekend shopping list ..
http://www.thepowerhour.com/news/items_disappearfirst.htm
Better to be safe than sorry.
"According to a Google Translate from Libre Mercado, Spain will receive €100 billion for 15 years at 3% interest with no payment due for 5 years.
How will Spain pay for this?
By sticking it to taxpayers, that's how"
http://globaleconomicanalysis.blogspot.co.nz/
Bollocks 'they' will...in 5 years 'they' will borrow the 3% to pay the bill
Spain and the other piigs pollies will protect themselves and their fatcat banking mates.
"Rabbits in the hat"....quiet now as the magician reaches into the black hat...yes he has rolled up his coat sleave and that's a really deep hat...now his whole arm is out of sight...you can see he is desperate to get hold of something down there...it's written on his face folks...he has something..yes he is pulling something out from the black hat...
Take the kiddies away quick,,,don't let them see this...it's it's...oh jeez what a diseased and rotting hunk of....errrrk
http://globaleconomicanalysis.blogspot.co.nz/2012/06/any-rabbits-left-in-hat.html
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