Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that Portugal's government is on the verge of collapse this morning. (It collapsed later in the morning)
Opposition politicians voted against austerity measures proposed by the government of the heavily indebted European nation. The Prime Minister Socrates then resigned. See more here at Reuters.
Financial markets fear that Portugal may not be able to service its debts, triggered a new round in the European sovereign debt crisis.
Portugese 10 year bond yields rose to an unsustainable 7.63%.
This came as Irish 10 year government bond yields rose to an even more unsustainable 10.05% as fears grew of a new banking bailout there. See more here at Bloomberg.
The sovereign debt crisis is coming to a head again as a key meeting in Europe is due to be held over the next couple of days to come up with a solution.
Many financial market players believe the crisis is insoluble without European banks and pension funds taking massive haircuts (losses) on much of the sovereign debt from the PIGS and on Irish bank debt they hold. That would trigger a new round in the financial crisis similar to the problems seen after Lehman Brothers collapsed in 2008.
European politicians and policy makers are scrambling to avoid this and the inevitable stresses on the euro currency itself.
More turmoil in these financial markets will make it more difficult for governments and banks globally to roll over their debts and issue new debt. See more here from Alex Tarrant on the IMF's view about the challenges to New Zealand's funding requirements.
Meanwhile the British government forecast lower than expected GDP growth and bigger borrowing in its budget overnight. See more here at Bloomberg.
The Pound fell because of the weaker forecast and comments from the Bank of England that it may not increase interest rates soon despite retail price inflation running at 20 year highs. See more here at Bloomberg.
The oil price rose to a 30 year high as Middle Eastern turmoil and new Japanese oil demands continued to weigh on sentiment. See more here at Bloomberg.
The New Zealand dollar was solid overnight.
Meanwhile, the Dow was up around 0.9% in late trade despite news of unexpectedly slow new home building in the United States. See more here from Bloomberg.
(Updated with Portugese vote against austerity)
No chart with that title exists.
20 Comments
"Portugese 10 year bond yields rose to an unsustainable 7.63%"......take a long hard look folks because this is where we are heading if Tweak and Fiddle and Bolly don't end the madness.
We will either see an abrupt govt budget flipflop over to austerity and toward a real budget surplus and the paying down of govt debt.............or the IMF will arrive in an M1 Tank driven by the market and intent on doing some bloody sorting out.
Watch now as Gareth Morgan's prediction for a 20% plus drop in property values arrives in your street.
The wgtn property market is in for a bashing as the bureaucrats face the axe and whole departments head to extinction.....coming on top of that earthquake risk report out yesterday on wgtn property....not a good read....hillside suburbs a gonna....vast areas to sink 80cm and return to being bogs....and that's just a wee 7.5 shake!
Watch now as some in wgtn face massive insurance premium rises because of where they are...and how old their house is....isn't Bill's house built of brick? Plus they have to pay the EQC fee jump so the re insurance can be bought....
Fantastic, not what I really wanted to read while having my morning coffee. Whilst most of us here know there would be a futher deepening of the world financial woes (and most people and work think I'm a kook for it! whatdya mean NZ would struggle to issue bonds, I thought it grew on trees..), the timing couldn't be worse given the other goings on in the world..
If the sh*t hits the fan in the coming week or two on the bond markets, will be interesting to see the budget in May.
Portugal's PM...Socrates...to resign...the plot thickens.....
"Portugal's plight stems from a decade of miserly growth. While growing at the tepid rate of 1 percent a year, it ran up debt to finance its western European lifestyle"
http://globaleconomicanalysis.blogspot.com/2011/03/portuguese-government-on-verge-of.html
We can do better than that...we had an average 2% growth over 32 years...fantastic govt not.
Am I correct that a line from NZ through the centre of the planet goes right through Portugal...
"I fear that Monday could be Black Monday for markets," one EU financial source told Reuters
I would pick much worse than a Black Monday, the GFC has finally started to hit. The West's austerity measures have been rendered useless in the face of rising food and fuel prices. Europe will explode in the coming weeks - the king hit will be Spain.
In NZ, investors should avoid property as fuel and food prices will kill disposable incomes. Either keep your powder dry or hammer the food and energy markets.
Good times!
Pernod Rickard have just dumped another 15 contract grape growers in HB. Some have over 100 acre blocks.
one p a liter off fuel in the UK.
http://www.telegraph.co.uk/finance/budget/8401074/Budget-2011-George-Os…
UK inflation out of control
http://www.telegraph.co.uk/finance/economics/8400464/Inflation-could-pa…
Why then , are vineyards still being advertised for sale , at such fantasmagorical prices ? ...
... A 100 acre vineyard at McLeans Island , Christchurch , has an $ 11 million tag .... They do have a winery attached .......
........ and solid ground there . No 'quake damage .
Come on down here Gummy....so many friggin vineyards for sale...all the 'owners' up to their necks in debt...and the returns per hectare are so low...and the future promising much of the same for years...you can get a job ripping out vines wire and posts...if the banks will fund it!
... Even a long ways out here in Tasmania , out on hillsides where one can hear the eerie sound of banjos being strummed ............ Row after fecking row of wine grapes . Birdnetting for Africa . Wineries are a dime-a-dozen .....
........ Watch yer arse ......... and I don't just mean financially !
[ Gummy on Tour : DVD out soon .......... Stay tuned to this station ]
Getting back to Portugal......notice something familiar about this.....
"Portugal is raising taxes and implementing the deepest spending cuts in more than three decades to convince investors it can narrow its budget gap, curb debt and avoid seeking a rescue from the EU." bloom burgers
This from the Securities Commission on Bernard Whimp:
The High Court, on application from the Securities Commission, has today granted interim injunctions to stop shares being transferred to limited partnerships associated with Mr Bernard Whimp.
The Commission is concerned that the offers were misleading or deceptive in that they appeared at first sight to be made at above the market value of the shares, but under the fine print the full payment would not be made for 10 years. The net present value of the offer was therefore much less than the nominal offer price.
The injunctions relate to the following offers, all dated on or around 15 - 18 March 2011:
- Carrington Securities LP - offer to buy shares in TrustPower Limited
- NZ Investment Securities LP - offer to buy shares in Vector Limited
- Chase Securities LP - offer to buy shares in Guinness Peat Group plc
- Carlyle Securities LP - offer to buy shares in Contact Energy Limited
- Energy Securities LP - offer to buy shares in DNZ Property Fund Limited
- Fairfield Securities LP - offer to buy shares in Fletcher Building Limited
Each of the partnerships, and their general partner Mr Bernard Whimp, are prohibited from acting on any acceptances they have received to those offers until further order of the Court.
A hearing will take place on 9 May 2011 when the Court will determine whether or not the offer was misleading.
If the Court does determine that the offer was misleading the Commission will seek to have the offers cancelled and any shares that have already been transferred returned. If the Court determines that the offer was not misleading the shares will be able to be transferred in accordance with the terms of the offer.
All shareholders who have accepted the offer will receive a letter from the Securities Commission explaining the orders made and giving them the opportunity to write to the Commission to say that they wish to go ahead with their acceptance regardless of whether the Court decides that the offers are misleading or not.
The interim injunctions also prohibit any substantially similar offers being made.
The orders also require the partnerships and Mr Whimp to provide the Commission with information about these offers, and other unsolicited offers made in December 2010.
This is "dangerous territory". Misleading? Deceptive? Small Print? Everything is in the offer document. The only difference being is the bit in the "fine print". If SecCom is successful do you think the ambulance chasing class-action guys will be right on to all the banks and insurance companies suing for anything that is in "small print" and disadvantageous to the customer. Right. Can just see it.
NZ, Australia top 'fiscal responsibility' study.
From the NZ Herald.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10714673
"Moody’s Investors Service plans a “massive” cut to its ratings on Spanish bank debt,"
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.