90 seconds at 9 am: Cyprus chaos

90 seconds at 9 am: Queues at Cyprus ATMs; US averts shutdown; Japan's trade woes; Gillard lurches on; Mighty River closes; NZ$1 = US$0.833, TWI = 76.5

22nd Mar 13, 8:55am by David Hargreaves

Here's my summary of the key news overnight in 90 seconds at 9 am, including news people have been flocking to cash machines in Cyprus as the European Central Bank warns it could pull the plug as soon as Monday on the country's ailing banks if the country can't get the money together that would allow a €10 billion international bailout to happen.

Cyprus wants to launch a state investment fund to raise money but nothing has been agreed yet.

In the US, the House of Representatives has approved a Senate-passed bill to extend funding and avert a government shutdown next week. But Congress knocked back a plan for the US Postal Service to end Saturday delivery of first-class mail. The Postal Service lost US$16 billion last year.

In better news US house prices rose 6.5% in the year through January, the biggest jump since 2006. However Wall Street was down after Oracle missed expectations with its quarterly results.

Japan posted its eighth consecutive monthly trade deficit in February. That's the longest run of deficits since 1980. The Bank of Japan's new governor is pledging to expand monetary easing in the country.

Australian Prime Minister Julia Gillard’s minority government lurches on after a bizarre leadership challenge that wasn't yesterday.

Kevin Rudd, who Gillard ousted in 2010, refused to challenge for the leadership after Simon Crean, another former Labor leader, had called for a leadership vote. Crean was then sacked for his trouble.

At home there's no major economic announcements slated for today.

Of huge personal interest for many Kiwis though will be the ending of pre-registration for the Mighty River Power share float at 5pm. SOE Minister Tony Ryall said that as of yesterday 420,000 people had registered interest.

The kiwi dollar has been given a lift by the higher than expected December quarter GDP figures and starts today up close to a cent against the greenback at 83.3 USc, 79.7 AUc, and the TWI is at 76.5.

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21 Comments

by steven | 22nd Mar 13, 9:04am 1363896297

Cyprus looks to get a lot worse this round of default is but the start,

Its over-inflated housing market is built on it being a bank haven for Russians...the Russians wont be back after taking 10% haircuts. That means cyprus's housing market is going to implode and with it a second round of bank problems...so,

"the bailout will leave Cyprus with Greek-level sovereign debt."

"will the Cypriots — who haven’t even reconciled themselves to the end of their round-tripping business — be willing to go there (Iceland's solution)?

Truly awesome stuff."

http://krugman.blogs.nytimes.com/2013/03/21/cyprus-the-sum-of-all-fubar/

coming to an EU near us.

regards

by andyh | 22nd Mar 13, 9:10am 1363896653

Your summary is missing the European economic data that came out last night. It was across the board awful. Every single piece came in below expectations.

http://uk.reuters.com/article/2013/03/21/uk-poll-euro-zone-idUKBRE92K09…

by Gertraud T. | 22nd Mar 13, 10:29am 1363901373

Zerohedge: Cypriot Riots Begin

http://www.zerohedge.com/news/2013-03-021/cyp-riots-begin

by Andrewj | 22nd Mar 13, 10:44am 1363902249

Thanks, while on Zerohedge i found this

http://www.zerohedge.com/news/2013-03-21/guest-post-what-could-cause-in…

and then this

http://www.oftwominds.com/blogmar13/inflation3-13.html

by Andrewj | 22nd Mar 13, 9:11am 1363896660

http://www.telegraph.co.uk/finance/economics/9946056/Bank-of-Japan-vows…

drjonathanwilson

Today 12:58 PM

"Mr Shirakawa was more or less shunted out of the door, but issued a final

warning on his way out that quantitative easing cannot solve deep structural

problems..."

Mr Shirakawa is right.

To much welfare (corporate and private) and too little voluntary wealth creation can never be solved by QE.

Abenomics is simply substituting political courage for economic abduction. Mr. Cameron and Mr. Obama have shown the way. It is a pity that the Japanese have chosen to follow down this path to chaos.

Jonathan

by Hevi Groswaite | 22nd Mar 13, 9:14am 1363896857

The FRB and the ECB are hell-bent on keeping the world awash in cash. Swanky Ben left the door open yesterday to increases (and decreases...?) in QEternity.

Houses up 6.5% in the USA! BOJ printing press flat out! Benchmark house-sale in Auckland for twice CV!!!

It's party time, yeeehaaaa!

HGW

by splineman | 22nd Mar 13, 9:31am 1363897876

Banks are closed in Cyprus this week.....wait till they open. Withdrawl limits perhaps?

I for one would not want a significant amount sitting in a term deposit in any bank these days.

QE is supposedly $85 Billion a month and still barely any traction...amazing.

Cheers

by Andrewj | 22nd Mar 13, 9:38am 1363898326

All they wanted is a little inflation just %2.5 percent a year compounded for 10 years. What they are getting is bubbles in the Share market and in NZ housing. So how do they get real inflation and stop speculators creating high risk bubbles, because its the risk thats out of wack, to much for me to handle, Im on the sideline.

Mainly because the business I used to be in is being destroyed by high costs,poor returns and high risk, all the things I dont need to run a business.

by Andrewj | 22nd Mar 13, 9:50am 1363899007

Ha, my council in California has had to put rates up by %8 due to inflation. Part of the problem is they have to get %30 of their electricity from renewables and thats expensive.

Either way inflation is much higher than Bernake is letting on, so lets compund %8 inflation, im no mathematicain but don't I need to have double the wages in 10 years to have the same purchsing power?

by Stephen Hulme | 22nd Mar 13, 9:53am 1363899223

You are right enough: 1.08^10 = 2.1589

by JB | 22nd Mar 13, 4:12pm 1363921965

Please Stephen H, Half NZ's 9 year olds can't add two numbers together.

What is this strange sign language your using ?

Please explain in plain english !

by Stephen Hulme | 22nd Mar 13, 4:32pm 1363923149

caret - means to raise 1.08 to the power of 10

by JB | 22nd Mar 13, 4:37pm 1363923463

Just joking - But when we read a teacher of maths saying people don't know what 30 % off means you have to wonder how many will understand power functions.

by @tony | 22nd Mar 13, 10:03am 1363899781

> %30 of their electricity from renewables and thats expensive

It is expensive, but it's still cheaper than finding Earth #2 and transporting the planets population to it when this one dies...

by splineman | 22nd Mar 13, 10:02am 1363899726

Obviously people feel inflation these days but the bloody stats say it ain't so.

My insurance is up 22% and they tell me i'm lucky??

Is it such a bad idea to buy a steel helmet and gold?

Cheers

by starfish1 | 22nd Mar 13, 10:07am 1363900030

Bernake will print money until he steps down from office, then the next Fed will come in raise interest rates, but it will be to little too late. Bernake will then get blamed for having interest rates low for too long. When rates do go up in the USA, some are worried about a bond market crisis, but really the Middle East and China or Europe are more likely problems in the short to medium term. Hopefully Cyprus will see sense and pull out of Europe collapse everything and start again, and not waste time in the Eurozone, but I doubt they will have the guts to do this.

by splineman | 22nd Mar 13, 10:13am 1363900430

I think Bernanke is going to leave .....http://rt.com/usa/bernanke-hints-he-will-quit-610/

Cheers

by Gummy Bear Hero | 22nd Mar 13, 10:19am 1363900754

Julia Gillard & her deputy Wayne Swan are a laughing stock with the public in Australia ...

.... the only one who's a bigger plonker than either of them is Simon Crean who went ahead with a leadership spill , regardless that Kevin Rudd had clearly told him not to , just hours beforehand ....

....... nuttin's changed here in OZ , the lame duck waddles on ...... with her pet swan by her side ....

by scarfie | 22nd Mar 13, 11:11am 1363903894

I have always thought the Dotcom affair was a significant shift in the faith we can have in out authorities. Selwyn Manning doesn't go that far, but still has plenty to criticise in this lengthy piece.

http://thedailyblog.co.nz/2013/03/22/special-feature-rudderless-within-…

by Mike B | 22nd Mar 13, 1:13pm 1363911225

How much do the government wish to raise for the shares? I thought it was about $2 billion. If that is correct then 420k people buying shares = an average of $5k each.

If the shares end up in the hands of overseas investors, as assumed, then i believe they won't care too much about the Aluminum smelter, they will only care about their return. So what will happen to the smelter and ultimately their return?

If MRP shares have a face value of $1 and are making a profit of 8% per share. Then if people buy those shares at $2 each they will only yeild a 4% return per share.

by Wolly | 25th Mar 13, 7:02am 1364148168

70 seconds at 7am:

"The ministry will give sponsors just under $500,000 for a school of 50 students, or $1.3 million for a school of 500 to get established. Charter schools will be guaranteed $1.2 million each year as base funding for 50 students"press

Right...I'm setting up the Wolly Charter School...and I will teach all 50 students everyfing...and use the local community as my classroom...and run a Parata/Bank flag up the nearest powerpole....and collect $1,700,000 this year and every student will get top marks.