Here's my summary of the key news overnight in 90 seconds at 9 am, including news US stocks were down around 0.5% in late trade as market attention returned to the unsolved problem of the Fiscal Cliff.
The Congressional Budget Office has said if the US government steps off the Fiscal Cliff on January 1 it would force the world's largest economy back into recession and increase US unemployment to 9% as automatic tax hikes and spending cuts worth 4% of GDP kick in.
Democrats, who control the Presidency and the Senate, want to increase taxes on higher income earners, while Republicans, who control the House of Representatives, want no tax hikes and want to cut spending on welfare. After weeks of talks they appear no closer to a solution. Many businesses have warned they are holding off on investment and hiring until the Fiscal Cliff is resolved, or at least post-poned. See more here in this Bloomberg piece about bond investors worried about growth.
The New Zealand dollar fell slightly to 81.2 USc in tune with appetites for risk. New Zealand wholesale interest rates fell slightly yesterday as concerns grow about the Fiscal Cliff slowing growth globally. See more here in BNZ's Kymberley Martin's bonds report on our site.
European stocks also fell overnight as the debate over how to provide debt relief for Greece drags on. The Germans are opposed to any form of debt restructuring that involves haircuts, so the European Central Bank is now considering other ways of providing relief, including extending the terms of loans, recycling profits from the bonds and allowing Greek government buy backs. However, the IMF is holding firm, arguing for real debt relief. See more here at Bloomberg.
Meanwhile, the Bank of England appointed the Bank of Canada's Governor Mark Carney as its new Governor in a shock decision designed to bring in a 'clean skin' untainted by the scandals of the last 5 years in the City of London. See more here at Bloomberg.
Closer to home, NZHerald reports that Queen City Law has estimated earthquake restrengthening work on commercial buildings around New Zealand could cost NZ$100 billion, or more than 10 times the cost of leaky buildings.
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