Here's my summary of the key events overnight that affect New Zealand, with news today that is mainly about public anti-corruption efforts.
Firstly, the IMF issued a report on worldwide corruption, and unsurprisingly noted the way it undermines trust and growth. It claims public sector corruption siphons US$1.5 trillion to US$2 trillion annually from the global economy in bribes and costs far more in stunted economic growth, lost tax revenues and sustained poverty. They did not review private sector corruption.
Then the US reported that its federal government had a US$106 bln budget surplus in April. That seemed good, but it is down from a $156 bln surplus in the same month a year ago. They are on track for a full year deficit of US$511 bln, slightly higher than the previous year. In perspective, their government budget deficit will be less than 2.8% of GDP.
In the US, Google said it will ban all ads from payday lenders. It said the move was to protect its users from such lending, which often leads to unaffordable repayment terms and financial harm.
In Australia, its prime minister was 'named' in the Panama Papers - but only for a brief exposure as an outside director in a mining company from 1993 to 1995.
In Europe some very large banks are purging their customers in large numbers, trying to rid themselves of exposure to corruption-tainted funds. Each of UBS, Barclays and Deutsche Bank have apparently culled about 25,000 customers. It gives you an idea of the scale of the problem. The move could see up to 40% of all their customers forced off their books.
And China is reportedly getting ready to abide by an OECD plan to clamp down on the transfer pricing rort used by most multinational businesses. Bringing China into the international effort will make a major difference.
In New York the benchmark UST 10yr yield is slightly lower today at 1.74%. Locally, although swap rates rose some, they flattened as well. In fact, they are now their flattest in a year.
The oil price is higher today with the US benchmark now at $46/barrel and the Brent benchmark just over US$47/barrel.
And the gold price is up as well, now at US$1,272/oz.
And finally today, the NZ dollar will start more than 1c higher today after yesterday's RBNZ Financial Stability Report at 68.4 US¢, at 92.5 AU¢, and at 59.8 euro cents. The TWI-5 index is now at 71.6.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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31 Comments
Banks dropping dodgy customers: Light is a great disinfectant.
So ethically, the Leaker of Panama Papers has done a good thing?
If the Panama Papers etc were not made public, & the Mossack Fonseca & similar documents had not come to light, would those banks have acted to remove certain customers?
Reminds you of:
"light has come into the world, but men loved darkness instead of light because their deeds were evil."
The only light that has been put on is the one that all the bureaucrats and public officials in the world are incapable of solving criminal activity in the first place......so are they on the take?
These Panamanian structures are legal structures used for legitimate purposes and criminals .....but everyone who has one of these legal structures will be tarred which ends of taking the focus off the criminal activity that has been going on uninterrupted for years.........the thing is with light you can focus it on whatever you want.
Yes and wow! About time, I only wish that our government had the same backbone as the UK's.
And here you go hot off the BBC press: Anti-corruption summit; Cameron announces UK property rule changes.
Foreign firms that own property in the UK will have to declare their assets publicly in a bid to stamp out money-laundering, the government says.
http://www.bbc.com/news/business-36272225
Even the Fed is owning up to missing money.
The Fed never anticipated low rate impact on financial sector: Fisher
The companies Fisher said he's most worried about are insurers.
"Insurance companies, particularly life companies, are like noble oxen. They pull the cart forward steadily forever and ever and ever. They're living in a 1 percent world in this country, but they're pulling a 3-to-6 percent liability cart. It doesn't square," he told CNBC's "Squawk Box."
Low interest rates are a major risk for insurers because the income they derive from investments — mostly in safe assets like Treasurys — may be insufficient to fund payouts to customers in low-rate environments. Read more
He must be joking, right, because the promoters of this carnival barking piece know exactly what the consequences of the called for actions entail?
BT Investment Management predicts the Reserve Bank of Australia will cut its cash rate to 1 percent and could even take the benchmark below zero as inflation and economic growth disappoint. Read more
Two examples come immediately to mind.
Thus, then, while Keynes was hell-bent on impounding the “unearned” interest income of the “parasitic” rentiers with his left hand, he would inadvertently grant unprecedented capital gains to them in the form of exorbitant bond price with his right. Read more
The rate-cut increases the present value of all bonds outstanding to the benefit of all creditors (bondholders), but to the detriment of all debtors (issuers of bonds). Read more
Bill Gross will be choking on his tea with uncontrollable mirth.
You know , some of the things coming to light out of China are more than just a little worrying .
With regards to transfer pricing , we have known for some time that Chinese exports have been under-invoiced to local and Aussie related -party businesses .
For China it means the recorded profits are down in China , it enables the Chinese exporter to externalise funds that should be going back to China and it distorts prices locally ( it has the same effect as dumping )
The other scary news is the sheer quantum of debt in Chinese SOE's
The whole thing could crash
'Firstly, the IMF issued a report on worldwide corruption, and unsurprisingly noted the way it undermines trust and growth. It claims public sector corruption siphons US$1.5 trillion to US$2 trillion annually from the global economy in bribes and costs far more in stunted economic growth, lost tax revenues and sustained poverty.'
Local government in NZ.
Well, the Very Important People in Charge really have whipped up a storm of Righteous Indignation at the goings on in Panama. It was Barzinni all along! It turns out they created these tax havens in order to allow dirty money from African dictators to flow to the US and Britain, just like the City of London is a tax haven for Russian billionaires today.
http://www.counterpunch.org/2016/04/18/panama-and-the-criminalization-o…
The question is, what are they intent on distracting us from?
Thank you for the link Roger, fascinating and scary! Would explain the limp wristed response from the authorities to all the money laundering, manipulation and outright fraud by the TBTF banks and finance big boys. These global finance and banking crooks are rotten to the core.
I cannot really take credit for the link. Someone else posted it a few days ago. Michael Hudson is always good on what happened and why, but I am unconvinced about his policy suggestions. The Cold War was a very strange time and we live with the twisted and incestuous consequences.
Oh I was serious. Downing Street is a short walk away. Caught up with Dave, he said lots of corrupt money gets laundered in property and it's time to clean it up. The queen was there too, she said those Chinese are very very rude.
John could learn a lot from his counterpart. Like how to act like a grown up at question time for a start.
Lets just be glad that a Prime Minister has finally had the courage to do something to fight global corruption on a large scale and highlight how it has such a huge detrimental affect on everyone. Since most of that laundered money gets channelled through to property.
It is becoming more and more evident that corruption inflicts devastating damage on societies and economies, a cost served on ordinary people and the businesses that underpin economic development.
You only need to look at Auckland housing market to see that, and do you think any of us, believe for one second that the number of overseas investors is 3 or 4%.
Judging from the out pouring of comments on this site and others, we all know that it is far higher than that. Sorry but I vividly remember how the Auckland property demand halted and started to decline (By -8%) from Oct 2015 to around Jan this year as a direct result of the IRD requirements for Overseas Investors.
Then there's the really shocking way in which this government just tried to sweep away the 35% of property buyers that are on students or on temporary visas. Really that should be raising some big red flags in regards to possible money laundering activities.
Plus, there's the whole fiasco with Foreign Trusts that also looks as though it will be also just swept under the carpet by this do nothing government.
World prepares for massive storms (oh; they are already here)....
GREAT image:
http://assets.climatecentral.org/images/uploads/news/5_9_16_Andrea_Temp…
We still get to see the storms that can level cities (that are not already under water) in my lifetime though.
The article to go with it:
http://thinkprogress.org/climate/2016/05/10/3776465/everything-you-know…
On a "happier" note:
90% of the new energy production last year was renewable (Mainly solar and wind).
A great example of what should have been done 20 years ago.
Yes, this fossil-fuel-based civilisation is in the process of wiping itself out.
Another huge surge in atmospheric CO2
Daily CO2
May 10, 2016: 408.08 ppm
May 10, 2015: 403.50 ppm
Accompanied by ice melting like never before.
The latest value： 11,633,343 km2（May 10, 2016）
David, put your ear to the ground for news (or intentional absence of) of a biosecurity threat I was advised of last week. It is second hand, but comes from a fairly conservative neighbour. He reports that in a part of Auckland all the fruit crops are being destroyed by some sort of insect. It apparently gets inside the fruit and turns it rotten, any type of fruit!
I hope there are some significant exaggerations in that information.
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