90 seconds at 9 am: US consumer spending weakens; major bank downgrades; UK IT problem; our banks most profitable in the world; TAF vote outcome looms

Australia's big four banks have been ranked the most profitable in the developed world by the Bank of International Settlements

Underarm bowling, price gouging?  

My monday morning report from California. Spent some time yesterday with a real estate agent. They normaly have between 3000 and up to 5000 houses listed they are down to 500. The houses are selling before they even get to list them. They are very short of listings. 

 The big news is who's buying, Investors, investors are grapping everything. The interest from genuine home owners is still slow but the investors are out in force. There are investment companies following Buffets advice and getting into residentual housing, backed by the banks of course. If you want a cheap house in the USA get in quick, that is unless interest rates rise and those ARMs kick in, Bernake chickens out, they start another war or some other highly unlikely event, like the sky falling.

Whats the story with the banks increasing a few of the fixed mortgage offers? Is this an attempt to persuade a larger chunk of us to fix? 

Why cant I borrow direct from the reserve bank at 2.5%? What do retail banks do that couldnt be done by govt run outfits? Couldnt our own govt make the profits of the aussie banks on our behalf and keep it all here, nationalise the f&%kers. Take fractional reserve and its benefits back to the majority. Or could kiwis just get a clue and jump to kiwibank en masse.

Hypothetically, if we kiwis had a co-ordinated epiphany and all wanted to bank with kiwibank could we do it? Would that be beneficial to us long term?If it was state run not shareholder driven could there really be a banking system actually working for the majority of us that does not turn into Russia Inc?

Status quo doesnt seem to be working. We can not afford these profits going offshore fullstop. Obviously these suggestions will appear to be lunacy from those of you in the know. Why?

Capitalism has been very successful for a period of time. It has ordered and awarded in line with effort quite effectively I think. Its clear to most that this is no longer the case. How to address the distortion without a messy reset I wonder....

Just got back from a trip around France. The French dont do takeout coffee. You sit on your arse for hours at cafes. French 'farmers' would not have a f&^ken clue how to do a days work. Lazy subsidised ridiculousness. Unbelievable. Astounding wealth in every single village i visited. 8 tractors, brand spanking new for servicing 90 cows, fully automated sheds etc, amazing buildings that would be tourist attractions here are commonplace. Makes you realise just how far down the ranks we are. And these people benefit from the same policies that keep us in relative penury. Subsidies, money printing, devaluing their currencies to out compete us....just not fair man, not fair at all. But the people were great dammit, had to like them.

Rant ends, feedback appreciated,Thank you, thank you all.

 Australia's big four banks have been ranked the most profitable in the developed world by the Bank of International Settlements - for the second year running. Canadian banks were second.....,...

Well a round of applause is in order here for the Big Aussie Four, showing the world just what can be achieved and sustained  when your dictating policy to the Reserve Banks via  the political conduit...particularly in N.Z. where another cheap loan on an overvalued property is the meat and potatoes, follow this with the inevitable trend reversal and it's lashings of gravy.

 Bankers, it's a great day to shout your faceless electronic team to lunch....savings there too..!

Never mind Kanucks...maybe next time, but it's not likely.......try being the best at targeting inflation forever, it seems to work well in N.Z., well I mean for the Banks anyway.

Our banks are the most profitible, great. We're the only monkeys stupid enough to think that exorbitant property prices and rents are a good thing, meanwhile the banks syphon a huge chunk of our GDP as a result.

Apologies to Christoff, and

Apologies to Stephen Hulme for his under-arm-bowling above

I'm not a teller of jokes, but while watching the "Hot Seat" quiz show late last week the compere was going through the introductory motions with a contestant who was a middle-aged female taxi driver who also happened to be a stand-up comedienne, and the compere asked her to tell a joke. This was family time TV and I kid you not this was her joke.

You are standing there with your arms spread wide. In your left hand you hold a cricket ball, and in your right hand you hold another cricket ball. What have you got?

Answer: A giant cricket.

If there's anyone out there who holds Billabong shares ( ASX : BBG ) , please sit down now ....... no really , you need to sit down , 'cos falling over after fainting may damage the furniture ..

.... OK , ... hold hands & sing kumbaya : Your company has collapsed 40 % this morning , from $A 1.88 , down to below a dollar ! ..... Yup , she's gurgling ..... the company has announced another of those ill-timed & poorly priced rights issue , a 6 for 7 issue at $A 1.02 , to raise $A 225 million , to prop up the firm .....

I know , Gummie's an old hand at this , I still maintain thatcha buy shares so that the company pays you dividends , rather than you keep dipping in your pocket to prop them up ... Billabong stock got near $A 18 in mid 2007 .....

.... as per Harvey Moron , retailers are doing it tough . At least youse guys don't own Fairfax stock . Their share price down again , to below 60 cents , as the editors of three flagship newspapers have resigned enmasse ..... ooooops !

Thanks...Gummy.......read it and weep....my post....and the cheques in the mail.

http://www.interest.co.nz/news/59942/govt-sets-public-service-targets-wants-cut-long-term-beneficiary-numbers-30-2017-wants-mo#comment-691890

Which countries banks were going to out-perform the Aussie banks ....european, US, UK ? Come on, the reason for the Aussie bank profitability compared to their peers is obvious, they derive the bulk of their profits from about the only western economy that didnt go into recession, indeed parts of their economy boomed in the past 2-3 years. I don't think little old NZ takes alot of credit for that with just a modest contribution (25%?). 

I suspect that profitability will hold up for a while yet because unlike those earlier mentioned countries, where you can't get a loan to save yourself, the Aussie banks still seem to be supporting local businesses rather than just parking their money in Govt bonds/treasuries as the overseas banks seem restricted to.

The Brits are almost certainly printing another 50 billion next week.

The following today in the Telegraph.

George Buckley, economist at Deutsche Bank, said he expected £50bn more QE on July 5 while Kevin Daly, of Goldman Sachs, said the minutes “shift the likelihood sharply in favour of a July move, rather than waiting until August”.

Expect the pound to go down against the $NZ. I really don't know why our Reserve Bank thinks its clever to sit on the sidelines and have our exporters take another hit, and guarantee the current account to be in greater strife. 

Stephen - bloody good reason why not, its a historically dangerous strategy to undertake that   has inevitable consequences down the track. Just as a multitude of delusional Kiwis wanted an ANZAC currency a few years ago, and now have the euro to illustrate the stupidity, money printing will yet again show a short-term positive, long-term death, for those that practice it.

Fortunately, NZ isn't in the desperate situation the Poms and Europeans are (US coming up again), and Bollard and English have clearly studied financial history.

26 Jun 2012

Basel Bank Official Warns on Stimulus Measures



By TODD BUELL and DAVID WESSEL



The unconventional measures introduced by many central banks in response to financial turmoil could create other problems if carried out for too long, the general manager of the Bank for International Settlements said Sunday.



Central banks currently find themselves "caught in the middle," Jaime Caruana said, "forced to be the policy makers of last resort."



They are providing monetary stimulus on a "massive scale," supplying liquidity to banks unable to fund themselves in markets and easing government financing burdens by keeping interest rates low, said Mr. Caruana, speaking in Basel, Switzerland, at the annual general meeting of the BIS, a consortium of the world's central banks.



"These emergency measures could have undesirable side effects if continued for too long," he said. "A worry is that monetary policy would be pressured to do still more because not enough action has been taken in other areas."



Mr. Caruana's comments come as central bankers from Beijing to Frankfurt to Washington come under renewed pressure to step up efforts to resuscitate the slowing global economy. Some economists and politicians—and some central bankers in the U.S. and the U.K.—argue that central banks are too hesitant, condemning their economies to slower growth and higher unemployment than necessary in the wake of the financial crisis.



Other economists and some central bankers—in the U.S., Germany and elsewhere—counter that curing the ills of advanced economies lies now with government deficit-cutting and policy changes that can only be made by elected politicians.



"Fiscal adjustment, the repair of banks' balance sheets and other reforms cannot be put off in the hope of better times," Mr. Caruana said. "Relying only on central bankers but failing to act on other fronts would ultimately damage confidence and increase the risks to macroeconomic and financial stability."



Among the risks, he said, prolonged monetary stimulus might make structural or fiscal adjustments seem less urgent.



Financial-stability risks may emerge as financial firms are unable to earn high returns and thus shift to riskier investments, he said.



And "if markets come to see monetary policy decisions as constrained by the growing financing needs of government, the ability of central banks to control inflation would, at some point, be seriously compromised," Mr. Caruana said.



Countries with the weakest fiscal positions and those most dependent on borrowing from foreigners will have to move quickly. Stronger economies, particularly those "too dependent on exports," he said—without naming names but making an obvious reference to Germany and China—should "re-orient" their economies to rely more on domestic demand, he said.



Earlier Sunday, the BIS said the euro zone should develop a unified banking system to help stem its debt crisis. Banks in different countries in Europe "must become European banks" to help stop national problems spreading across borders, the Basel-based bank said in its annual report.



BIS Chairman and ECB Governing Council member Christian Noyer called for better financial regulation and more international cooperation to reduce financial imbalances. "We have yet to achieve the goal of a strong and stable financial environment for the global economy," said Mr. Noyer, who also is the head of France's central bank.



The BIS's comments come after world leaders at a summit in Mexico earlier this month discussed creating such a banking union as a means to prevent problems in one country from spilling into others. But no firm decisions have yet been made.



While Europe's borders have "become irrelevant for finance and for central banking," wrote the BIS, "authorities in one country still have only limited responsibilities for actions that a financial intermediary takes in another country."



The BIS praised suggestions made in Europe that would "unify banking rules now fragmented along national boundaries" as well as centralize responsibility in a common regulator, supervisor, deposit insurer and resolution authority.



European Central Bank President Mario Draghi broached the topic of a banking union in late May during testimony in Brussels. Though the idea has gained traction in some quarters, bank associations in Germany have been particularly resistant as they worry that this would transform into a "transfer union"—a shifting of funds from northern Europe to the southern economies, where some argue fiscal policy and supervision aren't as strong.