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90 seconds at 9 am: New Italian govt; Spain going backwards; Japan and US growing; China slowing; huge Aussie budget problems; NZ$1 = US$0.848, TWI = 78.3

90 seconds at 9 am: New Italian govt; Spain going backwards; Japan and US growing; China slowing; huge Aussie budget problems; NZ$1 = US$0.848, TWI = 78.3

Here's my summary of the key news over the weekend in 90 seconds at 9 am, including news that Italy has a new government

In something of a surprise development, Democratic Party Deputy Leader, Enrico Letta, becomes prime minister at the head of a "grand coalition" featuring much younger leaders and including Silvio Berlusconi's party but not him. The swearing-in signals the end of two months of political deadlock. The Five Star Movement is the largest opposition party. Not everyone is happy though.

Spain's government lowered its forecast for the Spanish economy this year, warning the level of contraction is likely to be worse than previously estimated. They now expect a 1.3% contraction.

Meanwhile Japan has raised its forecast for growth in 2013.

The American economy grew at an annualised pace of 2.5% in the first quarter of the year, weaker than expected despite strong consumer spending figures.

Profits of China's large industrial companies showed much slower growth in March than in the first two months of 2013, suggesting key industries are struggling with weak demand and overcapacity.

On Saturday, Australia announced a package of financial aid to help the country's debt-laden farmers cope with rising costs and the strong local currency. The package offers more debt

In fact, that is what their government is calling for, for the nation.

It looks like Aussie government debt will balloon next year with Treasury officials advising that there will be a AU$12 billion shortage.

Whoever wins their election may have a big problem to deal with. And those stresses may affect New Zealand.

The Kiwi dollar starts today just slightly lower at 84.8 USc, 82.5 AUc, and our TWI is at 78.3.

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14 Comments

“Viable farmers are struggling under the weight of a high dollar, and of course reduced land values,” Mr Swan said.

 

Does he not mean debt is the real cause of the farmers' woes?

 

“Banks were lending irresponsibly – $20 million was being paid for cattle stations where you would be lucky to get $200,000 in revenue – it was never going to be viable,” he said.

 

And the RBNZ response to such lending practice undertaken by Ausralian NZ banking subsidiaries is to make the local depositors wear the cost.

 

It's about time the Labour/Green think tank reviewed the local supparating sore of financial mismanagement.

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Yes, debt, both directly, ie how much the farmers overpaid based on la la land estimates of how high their incomes could go and indirectly.  Indirectly via the blind belief that the buyers had no problem paying whatever the market demanded despite those buyers in turn being constrained with similar levels of debt, so one huge "free market" oops.

Not sure just how at fault the RBNZ is given our successive Govns outlook/policy stance that teh RB has to work inside.  Now Im not suggesting their hands are clean...but I'd suggest they are wearing Govn placed handcuffs.

The thing about depositors is they are a free agent ie free to remove their money from the banks, they are not forced to keep it  there. So in terms of "wear" its simple, you want the reward you, take the risk.

regards

 

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And here in NZ our Prime Minister said this yesterday:

 

“Treasury has revised upwards its estimate of the total capital cost of the rebuild from $30 billion – the number in last December’s half-year fiscal update – to $40 billion. This will be contained in next month’s Budget.

 

“This estimate includes capital costs incurred by entities, such as commercial entities, as well as the Crown.

“The Budget will also show that the estimated net fiscal cost of the earthquakes to the Crown will rise from around $13 billion at the half-year fiscal update last December, to around $15 billion.

 

“Despite this, the Budget will still show the Government is on track to a surplus in 2014/15.

 

“The estimate increases are due in many cases to more precise information becoming available about what the actual costs are across a range of areas, from housing and social investment to infrastructure and commercial development.

 

“These estimates will continue to be updated from time to time, but they do not change the Government’s commitment to Christchurch and Canterbury.

 

“We will do what it takes to rebuild our second largest city, and that commitment will be unwavering.”

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“Despite this, the Budget will still show the Government is on track to a surplus in 2014/15.

 

We are now in desparate need of a Key declaration setting out the conditions of when it won't.

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The Poster pinup of Austerity  and how to recover from bankruptcy...Iceland , has dumped it's Govt at the polls .....cue Christine la Garde.......bbbbbbb,bbbut it was all going so well.

 Apparently Christine, opinion's divided, but resolute in their disatisfaction.

 Aussies black hole..? didn't need a hubble to see that coming....but we'll be right,right..?, course we will , we got John Boy , ahhnd Billy Bob, and all sorts of financial genius to guide us.

 Now the fingers on the pulse good n proper , John's found the 10bill short in the ChCh rebuild , I've got no doubt he'll find the ten year short in the surplus. 

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In Iceland, the voting population did not see "with a bit more Austerity we will be able to join the EU" as the way foward they wanted.

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No they didn't did they dh, it was an observation on my part not a judgement call on whether they were right or wrong in doing so......but let's face it , if they react at the polls this far in , it bodes badly for members of the E.U to think they can maintain voter confidence in a return to better times. 

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Mark my words..... the NZ Dollar has to weaken , it cannot be sustained at current levels without us getting into the same mess as Australia where they are battling to compete on export markets.

Eventually , when the Strong Aussie $ starts hurting the Aussie  mining sector, and as a consequence  Aussie employment levels drop  , Aussie Tax receipts drop and Aussie Pension funds lose value and dividends streams , we will see action.

 

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10/10 for the obvious, of course at some point the NZD will weaken, the Q is when and why.

Its going to be driven by fear...the Q is what's the first bogey man (there is a queue really),

Peak oil realisation?

EU/China economic melt down?  (clear Depression/deflation)

US stock market crash?

So at some point there will be a run to the USD (imaginary safety) and that means the end of the carry trade and lots of $s will exit NZ and fast I would think.

So how low will theNZD v USD go? 0.6?  0.5? 0.4???

 

regards

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How low Stevo...? well limbo's a place where you hang out while your getting down......an I think what he was saying there was, ...you'd hope so...Aus suffering the consequence of  a very high exchange rate....while NZ tells us it's all ok, consumers are ....Loving it..!

 Of interest is just what the experts think the AUD is over valued by compared to the Kiwi, as the latter really is a play pairing for F.X. punters to party with......not a fundementals driven reflection of it's support.

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Ok, so thats plan A. If the dollar instead goes to parity whats plan B. Roast in hell?

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Hypertiger

 

The Australian budget is blowing out...



This is just the start...You will be crushed into silence...



Your elected officials just lied their asses off to you for the past 10 years and now it's time to pay the price...Sure hope you enjoyed your time as jerks of the world.



Just so you know...China has been collapsing and hiding it...They have been importing massive amounts of resources and stockpilling them to keep prices high so that deflation doesn't show up and wipeout the producers the past year.



Show me the so called theory that you say I'm promoting...

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Sorry Kimy you lost me at "drug pushers"

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