Here are some stories that are worth noting before we get back to work, plus a summary of key data.
Top rated
Moody's has announced it is going to rate ANZ-National's first NZ$2.7 bil. covered bond program as Aaa. ANZ-National are the third NZ bank to bring a covered bond issue to market, following BNZ and Westpac. The bank itself recently had its Moody's rating lowered to Aa3 from Aa2, as did the three other main banks.
Two halves
The US unemployment rate rose to 9.1% in May, again raising concerns once about the underlying strength of the American economic recovery. Hiring there slowed in the month, with only 54,000 new jobs added.
Dignity and democracy
In today's Europe, the people are no longer in control. Instead, politicians have become slaves to financial institutions and the markets. We are partly to blame - and changes are urgently needed to nurse European democracy back to health. An Essay by Dirk Kurbjuweit.
A reminder to central bankers
"Insanity is doing the same thing, over and over again, but expecting different results."
- Albert Einstein
more below ...
| starting | end of | --- 52 week -- | ||||||
| today | May | high | low | |||||
| -------- | -------- | --------- | --------- | |||||
| FX rates | NZ$1=US$ | 0.8144 | 0.8187 | 0.8249 | 0.6584 | |||
| NZ$1=AU$ | 0.7605 | 0.7645 | 0.8203 | 0.7266 | ||||
| Gold | in US$/oz | 1,540 | 1,537 | 1,567 | 1,091 | |||
| in NZ$ | 1,891 | 1,863 | 2,004 | 1,546 | ||||
| Copper | in US$/t | 9,016 | 9,224 | 10,147 | 6,091 | |||
| in NZ$ | 11,071 | 11,182 | 13,507 | 8,951 | ||||
| Crude oil | in US$/bl | 103.44 | 107.26 | 118.70 | 70.14 | |||
| (Dubai) | in NZ$ | 127.01 | 134.49 | 149.14 | 101.31 | |||
| US Treasuries | 30 yr bond | 4.25% | 4.22% | 4.76% | 3.52% | |||
| Dow | DJIA 30 | 12,154 | 12,542 | 12,919 | 9,563 | |||
Forget Facebook?
Our cognitive capacities max out at three to five intimate friendships. Time to shrink our social networks?
"Look at the world through the eyes of a fool"
“We like to think that we live in a violent time. But violence has declined every millennium, every century, every decade,” says Stewart Brand. “The reduction in cruelty is astounding”. Violence and cruelty used to be the norm; now its news.
Up and down
Term deposit rates are declining for all terms of three years and less; they are holding for 4 and 5 year terms. The shorter the term, the steeper the decline. Offshore funding for banks is cheaper than ours (due to very loose monetary policies in the US and Europe), and loan demand here is anemic. It seems investors may need to start thinking about the alternatives to term deposits and taking an active interest in financial markets so they can make sensible choices about risk - if they want better returns.
No chart with that title exists.
40 Comments
and for the 1,000s following the news on interest.co.nz
Oh dear. Talk about "jumping the shark".
David : As much as I love the picture of the tree , and the hill ...... this is hardly a fitting image for the Queen's Birthday holiday ..
.... We need something more " hearts of oak " and " tally-ho " to uplift us to the finest of Mother-England's supremacy .......
As New Zealand is a loyal and subserviant country , a nice Union Jack , or a piccie of Queenie , or the image of a British Lion with his paw upon a Kiwi's throat would be far more appropriate .
....... lift your game next year , Chaston .... plebian colonial sheep-shagging little oink ! ...
Tinkerty tonk !!! .
Unfortunately..GBH..I would have to decline such an honour with the view that there are those here more worthy than I of such an award......Further I would state that unlike our Mr.Key.. I am not a Monarchist ( even one in hiding).....I do not accept that persons of questionable breeding are fit rulers of Gweat Bwitten........
Which brings a question to mind .....with the changes to foreign ownership..(good character) amendments....Would Frank N Bainimarama now qualify to purchase farms and the like in N.Z.....
If Not why not........? do we not like his poitics.....?
Yours unassumingly Christov............(The Count is of Romanian bestowal.)
andyh:
Yes, we have de-linked our menus to insurance premium comparatives for House and Contents.
Following the Christchurch earthquakes, the cost of all house and contents insurance nationwide will rise substantially. It was reported that the rates listed on those pages might rise by about 50% over the next few months, (although the relative levels may stay similar).
Because the original data was constructed using a mystery-shopping project, and that involved over 1,600 individual quotes, a similar effort while the market is in considerable flux will probably be wrong before we updated it fully - so we have decided to withdraw these pages 'temporarily'.
The major issue is that we have zero co-operation from the insurance industry majors. They don't like comparison, even, it seems, on features. So we are left with mystery shopping.
You can refer to those 'old' pages by using this link ... www.interest.co.nz/insurance The data on those pages will be useful in identifying how high the companies jack up their premiums, post quake.
Greece is for sale
and the wine industry in the UK is in trouble, looks like wine is getting even cheaper. http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8556707/Discount-wine-crippling-the-industry-says-drinks-giant-Pernod-Ricard.html#dsq-contentDignity and Democracy
Escaping the Clutches of the Financial Marketshttp://www.spiegel.de/international/europe/0,1518,766518,00.html
Dirk Kurjuweit's essay should be read. He is particularly good at describing the political leadership problem including some gems that I can translate almost directly to NZ and our politicians:
Hardly anyone is willing to put up with their politicians any more. And German leaders have lost support -- and some of their own legitimacy.
They seem helpless, unable to come to grips with the euro crisis. They meet in Brussels, and they talk, argue and adopt resolutions, and yet nothing improves. Greece isn't getting out of its hole, Ireland and Portugal are teetering on the brink, and Spain and Italy are heavily indebted to a dangerous degree. And no politician is providing leadership.
And then there were the lies. Jean-Claude Juncker, the prime minister of Luxembourg, had his spokesman deny that a meeting of European Union finance ministers on the Greek crisis was taking place, even though that meeting was in fact taking place. It wasn't the kind of lie that frequently crops up in politics: the broken campaign promise. Rather, it was more crass type of untruth: the denial of a reality. Juncker no longer had the courage to speak the truth. He was guided by fear of the financial markets. His lie was a capitulation of politics.
The essay is weaker on how to address the issue.
Greece: there is a method in this madness
Every person with rudimentary understanding of finance knows that preventing Greece from defaulting on their debt by giving it yet more loans (at very high interest rate, by the way) only delays the default and makes it bigger. Everyone knows it is a sheer madness: it is like borrowing even more money on one credit card to pay off the debt on another. A classic financial fools' trap. So why the governments agree to it if it is so idiotic. Well, there is a method in this madness. If Greece defaulted now this would have affected to a great degree private banks. By lending Greece even more money, this time by the countries, Greece is getting into even more difficult financial situation, but it is shifting the debt from private banks onto taxpayers. So when inevitable happens and Greece will eventually go bust it will be mainly taxpayers that will end up with unpaid debt rather than private banks.
This is so trivial: people in power are not that stupid. So why do they do it? Why are taxpayers in business of saving private business such as banks? (Incidentally it is against the EU rules about state subsidies.)The largest heist in history continues and indeed the financial industry loan shark strategy against the taxpayers is meticulously implemented (with the help of the politicians). POSTED BY GREG PYTEL AT 13:08
"rudimentary understanding" its not really that simple is it....ie "more debt" within reason is OK what kills is the interest rate......so lending Greece a little more at low rates where Greece sorts its finances out, and I really mean sorts them is OK....of course all the VAT dodges, under the counter debt hiding deals, failure to cut enough, crazy rates....etc means Greece is a dead man walking.....
regards
"Portugal(nz) has become the poster child of an Entitlement Society – the public sector has extended everywhere and private capital has been crowded out by the need to keep the public sector employment in place. The only solution to(nzs) Portugal’s catch-22 is to create real private sector growth and to cut the public sector down in size. (nz)Portugal has one of the lowest GDP growth rates in Europe with a four-year average of -0.7%, and an outlook for -2.1% in 2011 and -1.5% for 2012, according to the ever too optimistic OECD. Even more importantly than GDP growth rates, unemployment will rise to 11.7% and then 12.7% over the next two years from present 10.8%! That’s a recipe for a social upheaval"
http://globaleconomicanalysis.blogspot.com/
Of course I inserted the nzeds but hey are we really that far away from joining them...NZ Labour's dream state looks just like Portugal....yes that is what Goofy and fellow fools want for you...the pinky greens have the same dream!
Wally - If you've got a serious case, just present it.
When folk say things like 'Goofy', Pinky', Malthusian', Luddite etc, it just suggests that they don't have much of one..
More importantly - are not those who 'invest', and somehow magically expect a 'return', equally guilty of expecting 'Entitlement'?
Ring any bells?
Wolly, you are re-gurgitating crap IMHO.
"The public sector has extended everywhere and private capital has been crowded out"
Some myth IMHO.....what has happened is te demand has fallen away from consumers and Private enterprises are trading less and have excess capacity....so in order to stop us going into deflation Govn's are trying to stimulate their economis. but the task is mind bogglingly huge.....if the consumer is 60% of a 12 trillion dollar per year economy and you chop that by even 10% you leave a huge hole per year...that is almost impossible to fill and when you have set up your tax system to only take in enough tax on a booming economy the downside is going to be really bad....and tahts what we are seeing....
In terms of public v private, public health care for instance is half the cost of the the US in terms of its impact on GDP and gives a better result. Not only that its growing unsustainably in the US...something like 7% per year, so in 10 years the impact of the private healthcare system on the US GDP will be 36% (ish) that is nuts....
Then we look at "growth" not a happening thing....jow and jane consumer have been knee capped, just who does the prvate sector sell to? no one...
Un-employment....the real un-employment is around 20% in the USA...not far off Great Depression territory...
regards
"The public sector has extended everywhere and private capital has been crowded out"
Wally made a good point there. That public sector health care works here better than an out of control and essentially corrupt private sector in the US does not infer that there are benefits in governments dominating other sectors of the economy.
I have in the past taken an interest in returns to R&D spending. This is an area where I seen the damage done by government involvement. On this there is much support. This from ‘The Sources of Economic Growth in the OECD Countries – OECD 2003 Summary and Policy Conclusions’:
The negative results for public R&D are surprising and deserve some qualification. Taken at face value they suggest publicly-performed R&D crowds out resources that could be alternatively used by the private sector, including private R&D. There is some evidence of this effect in studies that have looked in detail at the role of different forms of R&D and the interaction between them.
In 2006 Treasury came to similar conclusions regards New Zealand’s public sector R&D:Julia Hall and Grant M Scobie, 2006. The Role of R&D in Productivity Growth: The Case of Agriculture in New Zealand: 1927 to 2001
Wolly is correct , IMHO . True growth and innovation stem from small private companies , as does employment .
..... Government is by far the biggest player in the NZ economy . And its a massive impost on the tax-payers just to keep the bureaucratic rusty old poorly fitted wheels turning over .
It was a surprise , but shouldn't have been , when Fletchers were awarded the contract to re-build houses in Chch , cutting out all the smaller operators from direct competition .
And a surprise when the CCC introduced its rubbish & recycle wheelie bins , immediately putting 50 private contractors out of business .
.... the shiny bums in their ivory towers still believe that monopolies are a good thing , " economies of scale ", and all that twaddle .
regards
I agree Portugal and NZ have many similarities but we differ in a few ways:
1. Our level of education is much higher for our older citizens. Those bought up in rural schools pre-democracy were barely taught to read and write. There are few jobs for people of that generation.
2. Our government debt is much lower as a percentage of GDP.3. We have some control over our economic polies rather than being tied to a common currency.
4. Our level of land ownership is more spread across the population.
5. We have a more dynamic labour market.
SimonP
We are catching up fast with all of your six points.
Our level of ed for many lower income families is appauling
Our government debt is climbing fast with no plan to repay and our private debt is amongst the highest in the world
We have a veneer of democracy, its just props like a film set.
Our land ownership is concentrating at a frightening speed to ownership by large scale corporate or state / foreign entities.
Our dynamic labour market h appears to be all about Australia, with the best paid jobs in NZ in the Government sector.
You miss some things,
1) we have one of the greatest levels of in-equality.
2) Our private debt is amongst the highest in the world and its now all lumped together....
3) We are paying international prices for food on NZ wages.
4) We are encouraging low paid jobs such as tourism and not high paid jobs such as IT whoch not only brings in foreign income pays higher per capita, result our GDP improves....
5) We have little control over our economy....external events determine our course more than anything else.
6) Land ownership is no biggee...if anything it looks like a stone around ppls necks....as someone said we are paupers living in palaces....that is plain crazy.
regards
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