Morning Marcus: Fed's Twist; Exodus to Aussie; ChCh land

Bernard Hickey talks with Marcus Lush on Radio Live at 6.50 am about the Fed's new Twist strategy; the Christchurch section shortage and the new exodus to Australia

21st Sep 11, 8:13pm by Bernard Hickey

<p> Bernard Hickey and Marcus Lush talk every weekday morning just after 6.50 am about business, economics, markets and personal finance.</p>

Every weekday morning just after 6.50 am I talk with Marcus Lush on Radio Live about the latest news in business, markets, economics and personal finance.

I usually send through suggestions the night before or earlier in the morning.

Sometimes we veer off into other areas or pick up on things that happen overnight.

But here's my suggestions as of 7 pm this evening. I'll update later with a link to the audio.

Marcus,

1. Tomorrow morning around 6.15 am the US Federal Reserve is expected to announce some type of new stimulus for the world's largest economy to try to stop it sinking back into recession. It could unveil a 'Twist' to drive down long term interest rates without printing money, or a full third round of money printing to buy US Treasury bonds and drive down long term interest rates. So far none of these strategies have worked in the last three years.

2. New Zealand's current account deficit was much worse than expected in the June quarter because profits for foreign owned companies are rising again and many New Zealanders went overseas to spend their strong New Zealand dollars on holidays. See more here in Alex Tarrant's article.

3. The government has given the green light for the receivers for South Canterbury Finance to sell 64 hectares of land at Belfast Park on the fringes of Christchurch to developers. The danger here is that developers will drip feed the sections out to maximise the prices and make the largest possible profit, further penalising red zone refugees who are having to pay massive amounts for sections. See more here from Gareth Vaughan.

4. John Key has gone quiet on this one. About 115 New Zealand citizens left each day in August to live in Australia. Net migration in the year to August was the worst 12 month outflow since March 2009 just after the last exodus that John Key was so worried about. This is a silent revolt. It's how the young protest in New Zealand. They buy a one way ticket to Australia and then they stay there. Let's call it the Quade Cooper effect. See more here from Alex Tarrant.

cheers

Bernard

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11 Comments

by Wolly | 21st Sep 11, 9:01pm 1316595682

Bernanke can 'twist' all he wants but it will not bring a recovery. The recession and consumer fear are dance partners in a never ending misery waltz. There is no end to the music.

Obama will be booted out. The replacement will do no better. The usa is on its last legs.

As for chch...no way will the govt allow land prices to fall. They will be pleased to see an exodus from that area of many who will rebuild or buy in other towns and regions. The rebuilding will not be rushed with ongoing shakes...Those that do rebuild in chch will face serious anti quake costs on foundations and structure.

by Andrewj | 21st Sep 11, 9:24pm 1316597063

Wolly the Uk figures are out, what a shambles.

The public finance numbers are out, and the budget deficit for August is worse than forecast - as well as the highest for that month since records began in 1939.

The budget deficit came in at £15.9bn, up from £14bn in August a year ago and higher than the £13bn predicted by economists.

Despite the focus on cuts, government spending rose by 7.2pc while tax revenue only increased by 5.9pc.

by Nick | 21st Sep 11, 9:38pm 1316597928

Well, what else do you expect when successive governments continually take from those that create and give to those that bludge.

I can't imagine why any productive person stays in NZ.

by Wolly | 22nd Sep 11, 7:26am 1316633166

"The central bank(fed) will buy $400 billion of bonds with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less" bloomberg

Who will buy the short term shite?

It's a farce.

by Roelof | 22nd Sep 11, 8:04am 1316635498

Wolly... The Fed will covertly support short term yields.... otherwise short term yields will rise tooo much.... Like u say who will buy the short term shit. ( correcting your typo )

The end result is more money printing... in my opinion.

Looking at the mkts reaction to this.... maybe everyone thinks this.

by Wolly | 22nd Sep 11, 8:10am 1316635825

I'm investing in the company the us Treasury gets to provide its toilet paper that they print the funny money onto...it's a sure bet.

Likely as not the fed will tell their brothers to buy the short term shit with the fat wad the stupid govt gave them and that they have secured at the fed on .25% and to offer to buy the shit at .25% too.

Will this boondoggle scam bring prosperity growth and wealth to the masses....not a fecken hope in hell.

by Roelof | 22nd Sep 11, 7:57am 1316635047

Check out this chart..

It is the Monetary Base... They call this high powered money.. as it is from this that the money multiplier effect of Banking credit creation comes from.

It is scary.... I don't see how the Fed can unwind this growth in base money easily.. if credit growth should ever resume....

http://research.stlouisfed.org/fred2/graph/?s[1][id]=BASE

(Makes me feel pretty sure that they will print money to buy the longer term bonds.)

by Roelof | 22nd Sep 11, 8:03am 1316635428

Just to give some balance to the monetary Base chart..

alot of the growth in the monetary Base has ended up as Bank deposits with the fed.

The rapid growth in 2011 is very similar to 2008... SO maybe the banks are in a precarious position.... and the Fed is giving them "liquidity" at give away rates..????

But we all know that already.

http://research.stlouisfed.org/fred2/graph/?s[1][id]=EXCRESNS

by Wolly | 22nd Sep 11, 8:14am 1316636090

"Christchurch ratepayers have forked out more than $3800 for newly reappointed city council chief executive Tony Marryatt to attend a management conference in the United States.

The Press reported yesterday Marryatt had left to attend the International City-County Management Association conference in Milwaukee, Wisconsin.

The daily schedule for the five-day conference, which runs from September 17 to 21, includes sessions on authentic leadership in the public sector, communicating more effectively with communities, and the differences between leading staff and leading a council.

Other events include a boutique winery tour, a boat tour and bowls.

A council spokeswoman said the organisation had paid $3812 for Marryatt's "working trip".

Mayor Bob Parker said the conference attendance was included in Marryatt's contract when he joined the council" stuff .co

Words fail me....!

by iconoclast | 22nd Sep 11, 9:42am 1316641326

Say what ? Every (or nearly every) state and county in the USA is broke or bankrupt. Why on earth send anyone to America to learn "world's best practice"

by FCM | 22nd Sep 11, 9:51am 1316641903

Its the CCC, they learn from the worst.