Here's my summary of the key news overnight in 90 seconds at 9 am, including news that trade success brings out the critics.
Germany is now under review by the European Commission to see if its international trade surplus is hampering Europe's economic recovery. Criticism of Germany is not only coming from other EU members but from within as well.
The recovery in the UK seems to be stronger than has been expected, and the Bank of England may move to raise the UK's main interest rate nine months earlier than previously anticipated, officials from the central bank said when they were reviewing their inflation prospects, sending the British pound sharply higher.
In the US there is growing expectation that the Fed's QE tapering will happen sooner rather than later. Dallas Federal Reserve president Richard Fisher has commented overnight that data from the private sector “have been on a cumulative basis positive” and the Fed's QE program “cannot go on forever”.
These sorts of comments have seem markets hesitate in the past, worried about the lack of easy money. But today, equity markets are up in mid-day trade. Oil is higher, especially in Europe, on the threat to supplies from instability in Libya.
There are reports that the Chinese government is looking to seize the overseas assets of corrupt officials, as part of a worldwide campaign to retrieve some of the $US3.6 trillion estimated to have been taken overseas since 2010. No doubt there could be a rub-off effect here too.
Unrelated, Kevin Rudd has announced that he is quitting politics in Australia.
And still in Australia, the bidding for dairy company WCB is heating up as local competitor Murray Goulburn has topped others' bids late yesterday.
The NZ dollar starts today at 82.6 USc, 88.5 AUc, and the TWI is at 77.1
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
No chart with that title exists.
45 Comments
http://www.stuff.co.nz/business/money/9397380/Ridiculous-prices-for-meat-force-cutbacks
Whats Ridiculous is that a leg of lamb is $42 a kg when I can get in in Costco California for $4.90 a lb and on special at $4.50 a lb. Its good boned leg of Aussie lamb, we eat it all the time.
Carrying on with the ridiculous theme, Fed farmers are worried about dairy farm debt
"Farmers need to be aware that the governor does have a suite of macro prudential tools as he proved with LVRs.
"The governor's increasingly stern tone indicates that he is looking for a more responsible attitude to debt, so it's in farmer's hands to deliver," Wills said.
Fonterra, which controls nearly 90 per cent of the New Zealand dairy industry, and is forecasting a record total payout this season, said its farmers understood the debt risk.
http://www.stuff.co.nz/business/farming/dairy/9397440/Farmers-warned-over-debt
Yes, they are the same Fed farmers pushing expensive debt funded irrigation schemes to expand milk production.
quote'
"History tells us that payouts will fluctuate and interest rates will inevitably rise. Farmers need to take this on board and plan accordingly but retiring debt does create more financial freeboard.
The ANZ Bank, the country's biggest rural lender, said any LVR restrictions on dairy farming borrowing would be "an impediment to effective farm succession and reinvestment".
Don't worry we have Foriegn buyers on the bleachers, just waiting for opportunities in NZ ag.
Buying a home to live in, the incentive would be to clear debt against it?
Gearing up in rental properties, the only incentive would be to clear enough debt and/or build enough equity to be able to leverage again to expand your rental portfolio?
Being geared up in farming, is there a sweet spot for amount of debt carried? I don't know. What incentives are there to reduce debt?
I think you've got Bruce well covered here Andrew. Please reduce your debt levels in preparation for re-financing for these irrigation schemes.
Well I hope that the farmers and other SME's are getting ready for this.
I would like to know if the Feds are going to put in a submission.
http://www.interest.co.nz/business/67324/government-releases-paper-look…
deleveraging is very hard.
1. it has barely begun
2. it will take a long time
3. the consequence in demand contraction will be unpreceded
4. risk will not be rewarded
5. voliatily will be high
6. there is no magic bulet.
http://www.youtube.com/watch?v=ZP8AjMAdql4
observations-
0 to 7 minutes see how the bankers see themselves - yes vicar (and our jockey off getting his riding instructions in OZ)
52 minute - China, and the reason we state owned or state sponsored activity down here.
1.15 minute - the scale of job presented in getting back to thre real economy.
Great Video... watched the bits that henry highlighted and will watch the whole video tonite.
From what I've heard so far... I pretty much agree.
The key question is.... When is the deleveraging going to be forced upon us..???
I'm thinking early to mid 2020s'........ I'm thinking that the nail in the coffin will be Central Banks becoming impotent because of inflationary pressures....
Between now and then it could be a huge bubble in asset prices..... the madness of crowds..
I think that the chance to deleverage in a stuctured way has gone.... so we are now on a path of monetary debasement..... The NZ Reserve Bank seems to be the only Sane Central bank left...... BUT.... if NZ ever had liquidity issues, I'm sure our Reserve Bank will follow in the footsteps of the FED and the ECB,,... etc...
(just thinking )
got the prices of the article
Meat was much pricier, with lamb up 15 per cent last month to the highest level in two years. Some supermarkets were charging $2.50 per 100 grams for diced lamb meat and up to $4.25 per 100g for premium brands of packaged boneless lamb leg for roasting.
Even Countdown is nowhere near $42/kg
http://shop.countdown.co.nz/?banner=www#url=/Shop/SearchProducts%3Fsearch%3Dlamb%2Bleg
You are not comparing the same things. There is a big difference between bone in and boned leg of lamb in labour involved and useable meat.
I could buy NZ lamb in Finland last year at the same price as what I pay here. Often for a better filleted meaning a higher quality product with lower waste in gristle, bone etc.
To start sometime in the next week ..
http://www.stuff.co.nz/world/asia/9396769/Fukushima-now-for-the-tough-part
Yeah, my Dad was a nuclear physicist - government sponsored education, then straight into a TS govt facility. He quit after 5 years (never discussed exactly why but I got the feeling he became anti-nuclear development) and the CIA knocked on his door once a year for the rest of his life to verify his current address.
Yes, this is big. Unlike anything before. Uncharted territory. Global implications.
Can't believe there are no int'l govt initiatives to prepare populations for potential catastrophy.
Kate:
This is big. Unlike anything before. Uncharted territory. Global implications. Can't believe there are no international initiatives to prepare populations for potential catastrophy.
It is big. It is Global. Your concerns are not misplaced
The implications for the local new zealand domain are large.
To see how far these things travel see
The distance atmospheric pollution travels to get to new zealand
Then look at the Pacific Ocean Conveyor
The flotsam from the 2011 Fukushima Tsunami, following one of the largest Earthquakes in recorded history, has struck the West Coast of the United States and Canada after more than two years of floating on the currents across the Pacific
Check the Pacific Ocean Conveyors - pick one - nearly all embrace nz
That's only the stuff floating on the surface
Yes, interesting facts in this article;
http://rt.com/news/fukushima-robot-detect-radiation-729/
The No 4 reactor of the crippled nuclear plant, which contains 10 times more Cesium-137 than Chernobyl did.
And that's just one reactor at this plant.
The radiation levels in the inspected area [the area being in 1 of the 3 reactors with core meltdowns] were reported at 0.9 to 1.8 sieverts an hour, while a typical release of radiation is generally accepted to be 1 millisievert a year.
These cripled reactors are leaking radioactive material to groundwater - TEPCO estimates:
Around 300 tons of contaminated groundwater has leaked into the ocean daily since the nuclear disaster occurred in 2011.
Note this comment from an ex-employee of a US nuclear facility about exposure levels:
Per [US} Department of Energy regulations we were not allowed more than 100 millirem per year occupational dose. 1 sievert is 100,000 millirem. 1.8 sieverts an hour is 180,000 millirem. Which is 1800 times my former allowable dose for the year, in one hour.
That's 1800x the allowable annual dose/exposure - every hour.
Time to stop eating fish.
And for those interested - an Aussie sailors eyewitness account;
http://www.theherald.com.au/story/1848433/the-ocean-is-broken/
Connect the dots.
They will be removing hundreds of them, 0.01% error? Then where do they store it? deal with it?
Then consider how these days they leave all this "crap" in existing power plants because no one will take it these days...
Worried, if I was living in that city.....yes indeed. Well actually I'd be long gone.
regards
Your nuclear fears have no basis in fact. The number of deaths from nuclear is a factor of 4000 less than from coal per TWh of energy produced. And a factor of 10 less than rooftop solar and half that of hydro.
Deaths/TWh:
Coal - 161
Oil - 36
Natural Gas - 4
Biofuel/Biomass - 12
Peat - 12
Solar/rooftop - 0.44-0.83
Wind - 0.15
Hydro - world, 0.10
Nuclear - 0.04
However, "Deaths and Adverse Health Effects To-Date:"
We need to compare like with like and the total cost.
If a coal plant goes pop it effects the area (city) how long term? how about chernolbyl? Areas there still off limits.
Nuclear waste is a problem for a long time, so really the sums are not finished yet. Or what its doing to the pacific food chain as the contaminated water wanders around the pacific.
Or the fact that this process of removing the radioactive mess has not happened yet.
Or that a lot of depleted fuel around the world still has not been delt with.
Then there is the actual total cost. ie when you take into account the actual total cost of building, running and safely disposing of nuclear plant its numbers dont seem to stack up.
Yes sure deaths per TWH are low, that however is only part of the picture.
Oh and Ive actually worked on nuclear PWR power plants, so I know a little, enough to treat them with a great deal of respect and avoid them if I can.
regards
I'm going use a tool normally used by you here steven - show me the numbers/references that back up your argument. Emotional statements, hearsay and what-if scenarios are not going to cut it.
Three Mile Island was 35 years ago, Chernobyl was 27 years. The effect per year can be easily quantified and calculated over the timeframe of likely exposure.
To stats to put the risks in perspective: Huntly power station (8.4TWh from coal and gas) kills upto 8 times more people than all of the French nuclear power generation (407TWh or 75% of French production). Airline crew receive 28% more radiation than nuclear power plant workers. Coal puts more 100 times more radiation into the environment per TWh than nuclear.
In actuality - there isn't really a concise number of deaths recorded due to exposure to radioactive isotopes - but these provide a good start/overview.
http://en.wikipedia.org/wiki/Crimes_involving_radioactive_substances
http://en.wikipedia.org/wiki/Nuclear_and_radiation_accidents
http://en.wikipedia.org/wiki/Atomic_bombings_of_Hiroshima_and_Nagasaki
As per my last comment, any deaths due to radiation are many times more likely to be caused by radioactive isotopes released into the air by coal fired power stations.
The risk of thyroid cancer (the cancer most likely from a leak of this type) in the most affected area around Fukushima went from 1 in 100,000 to 1.3 in 100,000. Iodine-131 which is the main culprit has a half-life of 8 days so every 50 days the amount drops to 1% of the start amount. This is also confined to the area immediately surrounding the incident.The absolute number of deaths is low compared almost any other way of dying - you would be better off putting your effort in reducing deaths by dog bites than eliminating nuclear pwer.
I'm not advocating the elimination of nuclear power - rather the appropriate dealing with its waste products firstly and then secondly the appropriate dealing with decommissioning of mothballed, outdated and unsafe plants.
As to the further proliferation of it as an energy source in future - no problem as long as the world comes up with some safe and sensible means to dispose of the waste. If not possible - then sure, stop building them anew.
My comment / argument was, you only show part of the picture, and there are a lot of other factors. Economics being one, potential contamination for decades near habitation, ruining it another.
What if scenarios are perfectly valid...its a risk / impact process, its an insurance cost that can be (or attempts at) quantifiing,
"The authors of the study come from the Leipzig Insurance Forums, a spin-off of the University of Leipzig.
As a result, a mean insured sum in the amount of approximately €6,090 billion would be payable for a nuclear disaster."
http://www.pv-magazine.com/news/details/beitrag/true-cost-of-nuclear-ex…
So there are other considerations than just using one statistic to justify nuclear.
Chernobly was a small town abandoned for 27 years so far, whats the impact of that? I dont know but the costs of Fukie hint.
Lets look at the possible costs of Fukie,
"The precise value of the abandoned cities, towns, agricultural lands, businesses, homes and property located within the roughly 310 sq miles (800 sq km) of the exclusion zones has not been established. Estimates of the total economic loss range from $250[iv]-$500[v] billion US."
http://www.psr.org/environment-and-health/environmental-health-policy-i…
Then there are costs of nuclear disposal which are "hidden",
As a typical example,
http://finance.yahoo.com/news/real-reason-fight-nuclear-power-120923780…
or
http://grist.org/nuclear/2011-09-29-germanys-phaseout-reveals-the-true-…
or, an interesting one,
http://www.youtube.com/watch?v=h6eLRnHcUO8
regards
Good job it wasn't in Auckland given our land prices :)
My point is that there are many more dangerous and deadly activities (like hydro dam failures) than nuclear.
Todays comment on Auckland property prices - lift-off NZ Herald cartoon of the day
Maybe one of the top 10,
How the TPP looks really bad for us,
Secret details show NZ opposed US on issues such as copyright and medicines.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=111…
IMHO as soon as the US levered its way into the TPP the whole deal was stuffed.
Even if their government intent were honourable ( a dubious assumption) no doubt the lobby groups had the whole intent hijacked immediately.
Time for Trader John to realise the inevitable and forget about any positive result for NZ.
I suspect that there are deeper currents ie vested interests here and abroad pushing for it. Either to get something extar out, or to ensure their sponsors stay important to NZ and hence pampered/favoured.
So we clearly have the Fed farmers for it I believe as thats advantageous to their sector even if NZ overall gets screwed. The fact that the US farmer lobby will find a way to keep us out anyway seems to not get through to them. Then if the intelectual property gets by we'll find we are loaded with compliance costs, fees and we'll probably see our high tech IT exporters broken and baought cheap by US corps.
Then there is Wall street and the ratings agencies and how they view our Govn does to "help" them make loads of money. So maybe it appears that our Govn borrowing rate is held artificially low while the lenders recover the % they feel they deserve via the backdoor that is this.
Given we have good quality, safe food that is in demand I really fail to see why we need to bother with this at all.
I'd just walk away.
regards
If "Australian regulators approved $4 billion in real estate purchases by Chinese investors in the 2011/12 fiscal year" and the chart below that shows the preferred market in percentage terms, can we assume that in fiscal year 2011/12 roughly $1.4 billion AUD was spent in NZ? Lets make it $1.5B NZD. Assume a billion to Auckland that's only a thousand or so family houses.
Riddled with assumptions I know - cna any of you smart guys have a better stab at it?
Or it could be 2500 renters (most of them in Auckland) that would have otherwise been first homes for Kiwis as of now stopped out of ownership. What was the effect on prices with the inevitable demand distortions?
Assuming the demand in the next year was heavier again, where does that get us?
Personal view? The policy is a bunch of arse. The only real excuse given to why it non-residents can buy housing freely is something about breaking free trade agreements which sounds like a cop out. I'd like to see that challenged. The agreements are there for trade not to offer easy places to hide (suspect) cash abroad.
John Key will defend this one to the hilt. There's a saying, "he knows the price of everything and the value of nothing". Sums the fella up completely.
I'd call it 1.3 billion eyeballing the graph, but I'd also add that China is only around 7% of the foreign investment in real estate total, and we have no particular reason to suspect NZ is vastly different, so I wouldn't go singling China out. For comparison with NZ I suspect that NZ money buying in Australia is at least equaled by Austalian money here.
In other words, the problem is probably a lot worse, and China isn't to blame. I think you can get a sense of that flipping back through the Overseas Investment Office decisions and looking at country of origin. While not the same as the real estate area, it does give a sense of where the offshore money is buying into NZ from.
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