Focus on earnings; US wages rise; huge banks settlements; Berlusconi deal; good dairy conditions; NZ$1 = US$0.83.6, TWI = 75.2

Banks Win 4-Year Delay as Basel Liquidity Rule Loosened

Banks won the delay to fully meet the so-called liquidity coverage ratio, or LCR, following a deal struck by regulatory chiefs meeting yesterday in Basel, Switzerland. They’ll be able to pick from a longer list of approved assets including equities and securitized mortgage debt as they seek to build up buffers of liquidity for use in a financial crisis.

The changes are “a very important and welcome development,” Jackson said. “The previous design of the rules threatened to limit banks capacity to lend because of the very large liquidity buffers which banks would have had to hold.”

Hmmmm - the loss of those liquidity buffers will impact unsecured depositors more severely in the event of bank failure - it would seem RBNZ OBR is an untenable prospect as the underpinnings for depositor protection are further eroded in favour of bank dividends and employee bonuses - i.e. profits.

The RBNZ needs to speak up now.

I wonder if Mr Wheeler is at the beach, or in the office. Charts seem to suggest the NZD is trying to set new records against the USD, and that would seem a very bad start to the year. If Mr Key is remotely interested in long term useful employment, as he says he is, then at worst a stable dollar, and at best, one worth a few cents less than it currently is, would be a much better place to start from. Continual appreciation by 5-10% a year just sends a message to all exporters (or import substituters) outside prime agriculture, not to bother.

David do you have access to eftpos data for December? Also the same data going back say 10 years? In past years I have noted a significant amount of publicity(crowing?) around the volume of sales both pre and post xmas but this year reaction seems to have been very muted. However I haven't been paying as much attention and could have missed it.